Transcripts For BLOOMBERG Countdown 20141030

Despite the Global Economic slowdown, the fed moves ahead with ending qe. We are joined by the head of investor services. Us. K you for joining keep smiling. A more hawkish fed . It was a more hawkish fed than we imagined. I think i would welcome the more hawkish tone. U. S. E optimistic on the recovery side of labor markets. I think it was a welcome statement for us. On the inflation side, what does it tell us . Inflation is running pretty low. Fed thinksell us the this is just a temporary move in oil prices . What can we say . Typically, the next central Something Like, you have to try and see through the first round of Oil Price Declines or commodity price declines. It probably takes place within a twoyear horizon. You cant do much about it. We can interpret that the fed is doing what it should any textbook. Looking for some of the longerterm Inflation Expectations, which are not as bad as the shortterm ones. Would you have expected the fed to a knowledge volatility in markets in the last month or so since the september 17 fed meeting . Is the great question. Issue marketss an will focus on. A tetra, ande , and you a tantrum comin ignore it, it can either get better or have a bigger tantrum. Whether the dog is waiting the tailare the or is wagging the dog. Mandate is to look at the u. S. Economy. And of course, the world fx. If you arer hand, sitting there in emerging markets and looking at compressed spreads, i dont think is the fed going to take any notice of that . Maybe not. Emerging markets could see about the nervousness. What sort of epitaph should we write for qualitative easing . Quantitative easing . Devonte buying program has come to the end in the u. S. What should we write for them . Are you a big believer . Or should praise go to the Banking Sector in the u. S. . Is it the law of diminishing returns . Qe3, the s pk at 500 has risen 40 . Ly,bably more important theployment has fallen 2 . U. S. Is in a better state than it was. The world now probably looks jealously at the u. S. Large, the policy and the way qe has been done has been much closer to the textbook than elsewhere in the world. I was interested in your notes. You said there was a point where more qe does not help much but less phils markets with fear. This is almost a description of an addictive state. That is why it is appropriate. Equity prices are being fueled by liquidity to a point where they are above thinkentals, and then you one of the main reasons for qe is to boost wealth, that consumption affect is weaker if you think is going to go away. On the other hand, then you might nervous. There is a point at which qe reaches the stage of not being useful anymore. I think the fed has chosen the right time. Is it time for investors to get more in line with the fed . Projectionhe median for the end of next year. Markets are not quite there. Twoyear treasury note inching upi9 aces points inching points. Basis will we see the gap narrow . I think we should see it. Our own forecast for the fed to start to rise next june, we the end of next year. Markets should eventually come to realize that is what is going to happen. The slightly more hawkish tone is in keeping with that. Whether they follow that kind of path, does it depend on some extent what happens with oil prices . Proved to be prolonged, that could have a different location for central bankers implication for central bankers . We have run some simulations over the last week. Was three times as big as last week. If the fed did not respond immediately, you could get a major slowdown. Into the tune of world gdp falling down to 0. 6. You can imagine scenarios in which the whole World Economy gets really clobbered by a Financial Market reaction. The fed at that point has to respond. If that does not happen, i think markets have to come around to the fed. Ecbnother central bank, the and the bank of england is it hold steady for both of them . I think for the time being. The u. S. Is ahead. The bank of england will be next. The ecb will be on weight and see wait and see. I think the ecb is in wait and see mode. It will be a long time before we see them raising rates. When you think for the bank of england . We have been asking our guests who is going to go first. The answer seems to change depending on the week. Ultimately, there is a lot of activity in the u. K. Maybe a bit more hot air. U. S. Is in ahe strong place. The bank of england will raise, probably in the next half of next year. Would you think of the budget tussle between the u. K. And the rest of europe . Is it warranted . David cameron refusing to pay 2 billion because the economy has outperformed in recent years . Whether you believe in rules or common sense or a bit of both and in the case of europe, rules can get ahead of common sense sometimes common sense can get ahead of rules. Ultimately, you need to say, there are the rules. You could have done your numbers and known when you that the gdp revision how many years is it ok to go back . In this case, there must be other president s for going back. If you got a tax will that went back within a certain number of years, i would be annoyed. I think if David Cameron really wants to play it hard, there is a long history in the eu of larger countries been able to bend the rules. Especially when there is common sense behind it. David cameron does have common sense his side. On the other hand, some leaves about the politics ultimately it is about the politics. Position, difficult playing to political constituencies. Why pick this fight . There will be bigger ones. Exactly. In the end, it is still small gdp. Ive the overall. 15 of gdp. E will see, they are both great portable operators and play to their own constituencies. It will come out in the muddle of traditional eu negotiations. Thank you for joining us. 10 minutes past six. You can join the conversation on twitter. Tell us what you think about the fed, more hawkish than anticipated. Up, berkeleys ceo ceo. Ays coming up after the break. Time for today plus company news for todays coveting news. Samsung has reported the lowest Quarterly Earnings in two years. Helpeddemand for renault to a 6. 2 increase in revenue. They have reported thirdquarter increases in earnings. On the french drugmaker is ched out toe rea another ceo. He has said to be not interested in taking the job. Barclays. Eek for they report earnings at 7 00 ti with moores caroline hydeme. U. K. Time. Lets start with caroline hyde. Down and some 3 . Really, this is a company with a new chief executive. It has been scandal ridden. They are trying to change the culture. Trying to change the culture after they lost their previous ceo. Trillions of dollars worth of since then, they have come under scrutiny. We understand they are talking to the regulators about potential manipulation. They have had to settle in terms of gold market rigging. Of course, the dark pool, there private trading venue. Misledve been sued and clients. Ceo Antony Jenkins is shrinking the Investment Banking unit. They are slashing 7000 jobs by a quarter. Being cut back. You want to see how the bank is reorienting itself. Tells about some of the regulations set to be changed. You have talked about how they are shaken some of the riskier parts of the business. How is that meeting regulatory requirements . Barclaysr this week, stress test, they checked all the boxes. Brand or stand the u. K. Is going to be tougher. Like the u. S. Has been but we understand the u. K. Is going to be tougher like the u. S. Has been. Tomorrow. Leverage ratio is where it is at. That is going to be the sexy thing for tomorrow. It is not going to be 3 . The amount of capital will be more than that. It could be four or 5 . Barclays have to set aside that much more capital, they could have a shortfall on their hands. The last time the u. K. Did this, barclays did this. We know they set up a bad bank back in may. They are trying to sell off risky assets. That should reduce their overall capital needs. Morgan was stanley ran some numbers. Shortould see a couple pal of 24 billion pounds if the bank of england sticks to a 5 leverage ratio. Hbc. Would be worse than already, barclays is doing worse than those banks in terms of share price. Down 19 . What is it . The lowest among the major u. K. Banks there is a lot to prove. Some have discussed whether it is not just selling off the bad assets. Could they actually rain back on their dividends . This is something analysts are saying, no way. It is so important to the investor base. We understand to the stand dividend coming in at one pe nce. I would like to see the dividend changed overall. 5. 8 billion pounds last year. Unlikely to want to do that again. It is all about coming down, becoming leaner and meaner. What is interesting is where they are going to focus on for growth. Africa, they have become bigger in africa. Unitthe Consumer Banking to read the bread and butter. On credit cards. What is interesting about the it is not just, barclays but all the u. K. Lenders. They are saying this could hit you and i. People that want to get mortgages are going to be charge that much more because banks are going to be less willing to lend. Is a 5 ratio to tough . Tough . This is what the bank of england to have to deal with. They settingy are aside for litigation, ppi. Insurance. Thanks caroline. We will have further analysis later in the program. Up, numbers coming bayer. We will be speaking to the ceo. Move. Us on on the does samsung need a smarter strategy . More after the break. Welcome back to countdown. Time in london is 623. Samsung feeling the heat from smartphone riles. They posted the smallest Quarterly Earnings and two years. Good to see you. Seems they are struggling on the smartphone side, being squeezed from both sides. They are. Samsung ande are the rivals, apple. They are in a headtohead you have the chinese products, which are cheap. By offeringsqueezed lower margin products. The smallest Quarterly Earnings in two years as a result. A big blow. The concern Going Forward is can they try and take on the likes of apple in the asian markets. Smaller, why are the shares higher . Because thehigher earnings have now bottoms. It is a very low valuation. Overall, earnings bottoming. Hence, the share price writing. Rising. It is about what lies ahead for samsung, which could be positive. In terms of the competitive environment, what about the larger phones we have seen coming from apple . Is that it is going to impact samsung . Theyof the reason introduce them is to take on samsung. Question is the big screen, the tablet. Where the trends are going. That is one of the areas. Samsung, having been the giant of the larger screen. The consumer will tell you future. Thank you very much. Just a simple man with a simple phone. You have two of them. Im sure that mean something. 6 25 in london. Number three smartphone vendor, still quite a small player in china. They are targeting 10 new markets in 2014. Starting with sales in india and singapore. Operating system. It sells direct over the web. It is amazing how it has become part of the vernacular. I thought i would look at the markets. Index, how global at these are faring, was more hawkish. Down 0. 4 . Th looking at. R the two year yield on the treasury note. It rose by nine basis points. Already, investors reappraising their rates expectations. You can join the conversation on twitter. Coming up, we are going to stay with us. For combat. Lets welcome back. Lets look at the Foreign Exchange markets. How much divergence are we seeing after the fed has ended quantitative easing . The dollar hitting a threeweek high against the yen. Being described as considerable. That stayed in there. The number of commentators suggesting what the fed is doing is more hawkish than they had expected. Keep in mind that there are two sides to the dollar yen. The boj has a meeting taking place tomorrow. A great deal of division. Three out of 32 expect an increase in quantitative easing. 10 expect absolutely no action on qe. The boj governor is going to be in Parliament Today around 7 30 u. K. Time. Keith and i on that one. Keep an eye on that one. That is versus 68 . Things shifting around in terms of when the fed moves on rates. I am mark art. These are the top headlines. The u. S. Defense secretary chuck hagel is returning all troops ebola stricken areas to be held in quarantine. There are nearly 1000 military personnel in liberia and just over 100 in senegal. President obama says the only way for the u. S. To be safe is to deal with the disease where it is most acute. The truth is until we stop this out rake in west africa stop this outbreak in west africa, we may see individual cases in america in the weeks and months ahead. That is the nature of todays world. We cant seal ourselves off. And the new administration in brazil they have surprised investors with a rise for straights. They rose by a quarter percent. The president faces the challenge of reviving growth, slowing inflation, and narrowing the budget deficit. And no agreement between the u. K. s chancellor and his german counterpart. Osborne says he is confident persuade them can to pay a surcharge. He says he is confident the u. K. Would remain a leading eu member. Lets talk about breaking news. Bayars reporting and it looks to be a strong performance. At 2. 01 euros, better than the estimate. Netnet sales number sales 10. 1 9 billion. The number coming in better than estimates. As a result of this, the company is raising its fullyear forecast. Strong performance coming through from bayer. This is a business moving more toward the health care side ereader reorienting. Going on to talk about the individual performance of various products. This is a blood thinner drug. Sales well ahead of last years 407 million euros. They also say the merck acquisition added to fourthquarter sales t. A strong performance. Lets stay with matters of a german nature. Cons a has cut profit forecasts for next year Louis Vuitton lufthansa has cut profit forecast. Has impactedpact to the tune of 170 million euros. Still, it sees the operating ly aboveignificant 214. But the result will be depressed by a sharp pension cost. They have lowered their forecast. It will forecast specify the forecast Read Oil Prices coming down. And Foreign Exchange effects. Amazing they are moving in that direction. Usually, they dont think the Oil Price Fall is going to last for they have all kind of protection against fluctuations. Outweighede benefits by other more negative factors. Itself,conomic outlook that is the news. Life after qe. The fed is ending its bond buying program. They also pledged to keep Interest Rates low for quote a considerable. Time. You would have to say they are little bit hawkish. The market interpreted it that way. Stocks closed it down slightly in the u. S. Thats because of the characterization of labor markets. They should did from saying underutilization to gradually diminishing. They werent as dovish as expected. Longerterm measures are more stable. In the shortterm, we talked to gabriel stern. He was saying the same thing. Referring to what he called the central bank used to work at the bank of england. Sayings shortterm moved lower for inflation. Us that is what the fed is doing . . They are not worried about downward pressure it says the opinion of the committee, the market was a bit saying they are concerned about the drop of Inflation Expectations. Potentially the fed would be a bit more dovish. Is there a sense the fed is confident that they will push through the you economy the u. S. Economy . The headwinds they are worried about elsewhere in the world . There seems to be a sense that they are confident the u. S. Can withstand that. There was no mention about International Risk or anything like that. Essentially comes back to the fact that the u. S. Is a large, closed economy. Its not really worried about the slowdown in europe. It seems amazingly have gone from a time where we did hear the fed talk about Global Growth and the strength of the dollar to not much but the global environment. That it hastion moved off the radar as the most important thing. How can you would your that, the volatility we have seen since the last fed meeting . How can they not at least mention it . Easily, they did not do it. [laughter] like i said, it comes back to the notion that the u. S. Is a large closed economy. Time for markets to a reappraise their forecasts on when rates are heading higher . As we heard, the expectations have increased. The rate hike for october of next year, essentially looking like markets are repricing that. Thank you very much. David powell joining us on the latest from the fed. The Prime Minister Mariano Rajoy has but spanish unemployment remains at 23 . Thank you for coming in this morning. The spanish economy has held up as a fine example of what reform can deliver, by those in the eurozone who want to preach reform. And yet this unemployment whys it so stubborn . The labor market in spain, the reforms are still inefficient. A problem for the owners of credit. If you look at the structure of the spanish economy, two thirds of jobs are provided by small and Medium Enterprises. They are highly dependent on credit. As long as you dont have credit, the trend will continue. They will not be able to hire people. More credit flow spanish is a debate banks have in capitalized for a year after the intervention and reforms. And yet credit has not been flowing. The banks will tell you a lot of people from the Banking Sector say, i am looking and nobody is coming to me. Small ander hand, Medium Enterprises say that is not true. Some of them are looking for credit and not eating it. Who do we believe . It goes to the argument both are right. There is a lack of projects in certain regions in spain, especially since they were depended on construction. There was a hand, reversal in risk as well. Banks are worried of risky about risky areas. Which of the labor market reforms has impressed you . What should other countries try to replicate that spain has done . The labor reform has been good. For the shortterm. Also for the longterm, the next crisis. Collective bargaining at the firm level. It allows unions to negotiate conditions when there is a crisis. That will allow for the reduction in working hours that will allow employees to retain best employers to retain the workforce. That means the negotiation takes place in the company. This isr level positive for the next crisis. The problem is, all the people who need to be fired were not hired. But im not sure about the impact. Reforms . T it for we have a big electionyear coming up. Our reforms being put on the shelf ahead of elections . Not only a big election, we have missable of actions in municipal and Regional Elections in may. He wants to sell that this is the government that has taken spain out of the crisis. That is why they are putting a lot of emphasis on the positive economic data, in order to sell some into voters. The economic recovery is important for voters. What sort of impact will we see around catalonia and the push to have a vote on independence . Will we see a vote . Hows this a way to get will this manifest itself . You will see a mock poll, some sort of industry should of bydemonstration of power independence forces. You will see an early election in catalonia. That will give a very fragmented government to read what you have is a negotiation with the central government. That emerges after the next election. Negotiate aroom to deal. Haverruption allegations surfaced. How will that affect things . X that is a problem for mainstream parties. It does not affect the stability of the government. In the past cases, they have known how to contain corruption problems. In the longterm, this will fit the newly emerged party. It thrives on denouncing parties of the political cast. Thank you very much for joining us today. The spanish gdp figures are out at 8 00 london time. We will see how the wheels are made as we head inside the worlds biggest car factory. Stay with us. Welcome back to countdown. Time is 6 47. Volkswagen plans to cut 5 costsn euros in operating by 2017. Thet means making biggest auto plant more efficient. Hans nicholss joins us for a progress report. 40 million volkswagens and counting built at the biggest auto plant in the world. The factory is so big, most workers have a bike to get around. Size doesnt always mean economies of scale. Volkswagen wants to raise Profit Margins to 6 by 2017. Last two years, we started to rebuild all plants. This is a high expenditure, but it goes down because we have spent a lot of money the past to have the highest flexibility we can have. With the company says is unique about this factory is the assembly line. You can swap them out, depending on demand. Heres the gulf. Up there is the gt. We are the only manufacturer able to produce with very high flexibility bumper behind bumper. To improve efficiency is never the wrong way. These are self driving engines. They are being ferried around and they will know when to stop, right about here. We are here at the station the marriage spot. This is where the union happens between the engine and car. I will give them a little privacy for their wedding night. Germany has strong Workers Councils. They enforce their breaks and they also enforce the music. The question for management is how to enforce efficiency in a factory so big, it has its own rules. Hans nichols, bloomberg. Us fromnichols joins berlin. We will get volkswagens earnings and a little bit. What the Profit Margins are, 1. 8 in the first quarter. 2. 3 in the Second Quarter. They want to get to 6 . They want to overtake toyota as the number one manufacturer. They are closing that gap. Down 72,000 vehicles. It will be a photo finish. We will get an update and wait for the end of the year. Hans, thank you. For you allowed to ride a bicycle . With that in the rulebook . I have yet to hear back from the management. I have the feeling i broke a few rules. It did in fact involve a pilsner on the roof. That is for the next hour. Hans nicholss, thank you very much. Coming up on the program we will take a look at the u. K. Industry. Makersely from the car new plant. Also on the program, a look at the newspapers. And chris for nolans film interstellar. Welcome back to. Countdown. I am so excited about this dome film. This is what got me. The smartest blood western ever made blockbuster ever made. Matthew mcconaughey. Five stars. Breathtaking. I am on the edge of my seat. It is about space . We will return to the scene in a moment. This is about activision blizzard. They make call of duty and the number of games. The dictatoret of panama was upset they used his likeness. Said it was not very flattering. Areu. S. Said, sorry but you a notorious character. Your views and rights do not outweigh. Activision blizzard wins. Allowed to keep the x dictator of panama in. This was the picture today yesterday. The explosion of an unmanned rocket heading to the space station. It exploded as it was taking off. Following the aftermath. Plenty of newspapers picking up on the same story. It had nothingid to do with the engine. The u. S. Had been using russian and other engines in some of its exploration. The russian coveney saying it was the modifications that lace in the u. S. That were to blame. The blame game continues. Russiane, an unmanned spacecraft successfully launched from kazakhstan hours later. Tell us what you think of the show on twitter. What you like, what you dont like. We will continue with next hour. In the stay with us. Goodbye, qe. Good morning to a new era for the Worlds Largest economy. Love tons as profit warning. The airline blames the economic downturn or reducing its forecast for 2014. Barclays braces itself for tougher leverage rules. Hello, welcome to countdown. The time is just on 7 00. Still waiting for numbers from bt, barclays and shell. Bt is crossing now. Bt group, Second Quarter adjusted, 1. 45 billion pounds. That is just a touch ahead of the estimate. In line on that. Other numbers on the statement you might want to be aware of, interim dividend of 3. 9. The pretax income coming in for the first half, 1. 11 billion pounds. In terms of where the business is heading, they are reaffirming their outlook. A lot of fascinating subjects to discuss in a few minutes time. A lot of focus on their sports channels. Happy late birthday to some of these sports channels that bt has launched. They have been trying to win for those tv and broadband businesses by broadcasting highprofile sporting games. That is a big topic of conversation. How much are they prepared to pay for those new licenses . What is it worth to them . That is one big talking point. Another is the development of their mobile phone business. Bt used to have a mobile phone business. They are having conversations with ee about developing a mobile phone plan. That could be available by the end of the fiscal year. They currently offer mobile phone services to business customers. Proposition. Er all that will be interesting to discuss with the ceo, gavin patterson. He will be joining us in a few minutes. Bt, 1. 4 5r from billion pounds. The Second Quarter in line. Shell named its new chairman. Charles holliday is the man. Mr. Holliday was named nonexecutive director in 2010. He is the new chairman to succeed. Lets get to the earnings. Adjusted profit 5. 8 billion dollars. The analyst estimate was 5. 48 billion dollars. Shell has beaten on adjusted profit excluding onetime items and inventory changes. Shell has been increasing output in the gulf of mexico as well as on sure cost savings. Those factors outweighing i hit from lower oil prices. A Deutsche Bank analyst is prioritizing spending cuts by selling underperforming assets. It lost almost a billion dollars to sabotage last year. This week, it asked the u. S. For five more years to explore for oil off alaskas coast where it halted operations in 2012. Thel managing to offset weaker oil prices. Oil prices have tanked since july. The Global Economy is slowing. The price of brent crude averaging 103 a barrel in the quarter. That is 5. 6 less than in the same period in 2013. Shell has a new chairman and the earnings have beaten estimates. Barclays. It is a beat. It is quite substantial. Thirdquarter adjusted pretax profit almost 1. 6 billion pounds. The estimate had been for 1. 1 billion pounds. That was a fall from the previous year. They managed to eke out growth. That balancing act, the rebalancing act of anthony jenkins, shying away from Investment Banking, looking towards the consumer area, seems to be working. They say they saw growth in their Africa Banking franchise, in their powerhouse of personal and corporate banking. That helped offset what they call a poor quarter for the Investment Banking unit. Overall, we are seeing some heavy provisions coming in. Litigation is the name of the game when it comes to banks. They are having a half a billion pound provision for the foreignexchange investigations. They could be getting close to a settlement as soon as next month. Half a billion there. 170 million provisions for ppi. Much smaller than what was seen at lloyds earlier on in the week. We expect one pence to be paid on the seventh of 2014. And leverage, this is where many analysts are worried about barclays. Tomorrow, the bank of england new regulations. They are going to look across the banking area. They want to see what safety caps they need. What sort of capital the banks need. It could be higher than what europe wants. Barclays could come under concern. They say they have a fully loaded leverage ratio of 3. 5 . Up just 0. 1 versus june. Many feel the bank of england could impose a cap of 4 or 5 . If they do, what is their capital . Barclays would have to raise 24 billion pounds more in capital to offset this. Already, barclays has unveiled a lot. In may, they said, we are setting up a bad bank to sell off. We are narrowing on the Investment Banking unit. We are going to have less risky assets. It is a question of whether they have to really sell more assets, raise more capital, cut dividends. They already sold 5. 8 billion pounds last year. We will have to see if tomorrow they have a capital shortfall and they have to raise anything further. At the moment, they feel they have done enough. Profit up, that is the big beat. Caroline, thanks a lot. Join us on twitter. Let us know the stories you want to hear about. Us know what you want more of, what you want less of. If you want less of us, let us know. Coming up, bt group secondquarter earnings. Who better to speak to about those numbers than the ceo himself . Welcome back. Time for todays company news. Lufthansa cut its operating forecast for next year. Say operating income will be significantly higher than this year but lower than an earlier forecast of 2 billion euros. Company is blaming the impact of the Global Economic downturn. Lufthansa says earnings will also be hit i a sharp increase in pension costs. A strike by pilots is costing the airline millions of euros so far. A pharmaceutical giant reported thirdquarter results that beat estimates. It came in at 2 billion eurosb. Ayer rearranged 2 billion euros. Bayer rearranged its fullyear forecast. Worlds Biggest Smartphone maker, samsung, is stealing the heat from apple. Reported smallest Quarterly Earnings in more than two years. Net income fell 49 in the three months toward the end of september to around 4 billion. 11 minutes past 7 00 in london. Bt just reported secondquarter earnings in line with analyst estimates. Joining us now it is the ceo, gavin patterson. Thank you very much. Happy belated birthday. Of the sports channels have now been around for more than a year. Are they still delivering customers . Absolutely. It has been a very successful launch for us. What we ask is to be judged on whether the consumer business is growing. You can see that in the numbers. Consumer business up 7 in revenues year on year. Tohow long can you continue give it away as a freebie to broadband customers . How long can that model work . It can go a lot further. It is part of a bundle. You get it free if you are a pc broadband customer. If you want the hd version, you pay for it. We get direct revenues through advertising as well. It is not free to everybody in that respect. It works very well for us and it is clearly helping the business, helping the brand and giving a shot in the arm to the whole organization. How much is it worth . Morgan stanley recently wrote a note where they were wondering how aggressively you were going to be bidding for the rights as they come up, and particular for the premier league. What kind of math is going on in your head . It is too early to say. That untilexpecting later this year, maybe early next year. What i can say is, the strategy has worked. We have the financial power to arrange different options. Morgan stanley is saying you for the Million Pounds premier league and you could pay Something Like one billion pounds a year. Are those numbers in any kind of ballpark you recognize . Significantd be inflation over what was paid last time. It would mean that whoever took that position would be the leading position in terms of the football rights in the premier league. It is one of a number of options we have. The good news is, the business has the strength to have the choice. It is your dissertation. Could be a wonderful dissertation. All sorts of words bandied around. Prices have gone up. But there is still value in it for customers. You can see that in our numbers. What i will say is, we will remain disciplined. A very clear understanding of how rates drive up business, what types of rights, how they work with each other to create an offer for our customers. Give us an idea of viewing figures for a lot of your sports. Some of the sports that maybe our viewers wouldnt be aware that you show on bt sport. Premier league games typically get over a Million Viewers per game, particularly the big ones. We cross that in over five games this season. That is going very well. 200,000 or 300,000 people watch a rugby game. We just ring thinned our offering with the new champions cup, the european version of rugby. That is going very well for us. , motorcycle racing, that usually pulls in 100,000 per show. They are quite distinct groups of customers. People into moto gp arent necessarily into premier league. You can attract a wide group of customers if you think about how the sports complement each other. You announced a deal early on in the year. It is the bt motor field. It is not going to lose to murrayfield. That takes me on to another question. This is a big preoccupation this year. I wondered if your business was relieved that we have seen the outcome that we saw, and what you thought of the way the various ceos around the British Business world expressed views around independence. The position we took was that it was a matter of people and they needed to take a view. In the weeks before the referendum itself, we felt that it was important that voters understood the consequence of the decision so they could make a balanced decision. Known and saidws that costs would go up. Now that the vote has been made, i am delighted that the scottish people decided to stay part of the u. K. Business speak out about the next vote that might come, membership of the European Union . I think there will be my. Wn view will be more active i think it is a more significant issue for the future. What is your view, gavin, on consolidation within the telecoms space . It is above the sector, isnt it . , orange, america movil, telecom australia, sky. You are a ceo of a big, wellestablished Telecom Company which is moving into phonetv bundles. What do you think when you see all these deals . What role are you going to play in that consolidation . While we are a british company, we do operate around the world. 25 of our revenues are outside the u. K. We are available to customers in 170 countries. Move to there is a consolidate telecoms. I think it is driven ultimately by convergence. , customers market are increasingly looking to get better value, more innovation. That comes from combining telecoms companies, media companies, wireless operators. You can see consolidation going on in Continental Europe and in the u. S. Are you going to take part in it . We dont have to. We have a clear strategy. We know what we are doing. But we keep watching the market. Do they knock on your door . Do you get offers at all times . General,k about it in but it is just out of interest more than anything else. Any plans on the mobile front . Tell us how bt feels about the mobile space. Ee e have a deal with. They are already providing products and services in the business market. In the last three months, we launched a couple of new propositions. Which is proving to be very interesting to many customers. Services in got 4g a pure mobile offering available to business customers already. We will be moving into the consumer market. What is your favorite sport . What do you like watching the most . Black football. You have a team . Verpool fan. You on. I thank you very much for joining us. Gavin patterson, ceo of the tv. The worlds biggest luxury factory run by volkswagen. Can it help vw overtake toyota . That is next. Welcome back to countdown volkswagen plans to cut 5 billion euros in operating costs by 2017. That means making the worlds biggest car factory even more efficient. Our correspondent, hans nichols, spend the day on the assembly line. Volkswagens and counting. The worlds biggest auto plant spread over 6. 5 square kilometers. The factory is so big, most workers have a bike to get around. But size doesnt always mean economies of scale. Volkswagen wants to raise profit margin above last years 2. 4 to 6 by 2017. Years, welast two started to completely rebuild the plant. Down because we have spent a lot of money in the past. What the company says is unique about this factory is the assembly line. You have six different versions. You can swap them out depending on demand. Up there is the gte. Manufacturer only to produce with very high flexibility. Efficiency is never the wrong way. These are self driving engines. They know when to stop, right about here. Here at the marriage spot. This is where the union happens the tween the engine from below and the body of the car. I am going to give them a little privacy. Germany has strong Workers Councils that enforce their breaks. They also enforce the music. Question for management is how to enforce efficiency in a factory so big it has its own rules. Hans nichols, bloomberg. Hans nichols breaking all the rules in germany. Im sure that was his music choice. It sounded like blackeyed peas again. Dont get me started. Coming up, is it a bubble . We will find out. We are live with manus cranny. Stay with us. Welcome back. Lets have a look at Foreign Exchange markets. Lets have a look at dollaryen. We got the statement coming through from the Federal Reserve yesterday which shows they were ending quantitative easing. That gave a lift to the dollar. The dollar hit a threeweek high. That is the language they have been using to describe the gap in time between the end a quantitative easing and the start of any rate hiking cycle. There, but some commentators talking about the fed being more hawkish than they anticipated. There are two sides to dollaryen. Thats look at the yen side of things. There is a Monetary Policy meeting taking place this week. Economistsf 32 surveyed by bloomberg expect to see quantitative easing increase this week by the bank of japan. Increase see q qe increase later. Question, how big a divergence will we see in Monetary Policy from here from the Central Banks around the world . The bank of japan governor is going to be in parliament. We are keeping our eye out for any comments we might see on that. In london. K barton these are the Bloomberg Top headlines. U. S. Defense or qatari chuck hagel ordering all troops returning from west africa to be held in quarantine 21 days. The u. S. Has nearly 1000 military personnel in liberia. President obama says the only way for the u. S. To be safe from ebola is to deal with the disease where it is most acute. Until weuth is that stop this outbreak in west seeca, we may continue to individual cases in america in the weeks and months ahead. That is the nature of todays world. We cant hermetically seal outsells off. Brazils central bank surprised investors and analysts with a rise in its benchmark interest rate. To 11. 25 . E agreement between the u. K. Chancellor and his german counterpart when eu finance ministers met in berlin. Osborne said he is confident he can persuade the eu to change its demands for britains 2. 1 billion euro surcharge. Sure block declined to comment. Bloomberg markets latest edition puts dubais boom and bust story into context. Hotel is a symbol of revival. The Global Economic downturn ended dubais dream for a while. The emirate says it is bouncing back. Manus cranny is there, not just enjoying the sunshine. Putting in some hard work. Good to see you. Good to see you, anna. It is interesting. I have been coming here for 20 years. I have seen it go through at the dottie dominating the scenario. When you go back over the years, 110 billion worth of debt, abu dhabi had to bail it out over 10 billion. You look at the dubai exchange, the index, it is three times higher than at was at the height of the crisis. I have been going around the region, seeing a couple of different people. It symbolizes what this am a rent wanted. Building projects were idled. They may jump. They are overcoming a lot of those major issues. This is a place that once to rebalance its economy. It doesnt just want to be all about real estate. It wants to be a broader story than that. It does. Part of the reason i am here today is, the center of investment around here is celebrating 10 years. That was a vision to build it and they will come. Build a mall and they will shop. Ill day hotel and they will stay. Build infrastructure for finance. This is a city of paradoxes. I quite like that. Encouraginga Difc Companies to come here they set up the infrastructure. India,lion economy of that of africa, that came up during the conference just moderated. There is a wonderful line in the markets story. The geography of dubai is almost defining the gulf. The geography is its destiny. The Emirates Airline started in 1985. They have 140 destinations. The port is something a lot of tourists dont see when they come here. There is a huge port of industrial activity. End, they really have reincarnated what dubai is and put it on three pillars of a much stronger footing. Manus, thank you very much. Busy week for the Banking Sector. The ecb stress test, earnings from Deutsche Bank, from barclays. Our creditme analyst. Good morning. On the service, barclays looked like an ok set of figures. Profit rose in the third quarter. Adjusted pretax profit 1. 5 9 billion pounds. Is all as well as it seems . I believe the bank is in transformation. Recent. Was very we need to give them a couple of quarters. The market looks a little bit soft in comparison to yesterday. We have to look at the small print. Some of the banks talked positively about the very end of this quarter had boosted their trading revenues. Any evidence that has happened . Actually not. If you look quarter on quarter, year on year, they are a little bit down. That is in line with what we were expecting. They set aside 500 Million Pounds to settle probes in the. Urrency markets, pbi when is it going to end . All this litigation. Toit probably is not going end for another couple years at least. More money put aside as well . , how muche a figure barclays is going to have to face in litigation cost . On the pbi side, 900 million last quarter. This quarter, Something Like 130 million. Based on the market share, [indiscernible] it is a complex organization with Investment Banking. It wouldnt be very scientific to say that amount of money. How much importance should we attach to the Prudential Regulatory Authority and the announcement about leverage ratios in the u. K. . Is this something that is going to give barclays a headache . They already have to readjust. [indiscernible] wont jeopardize the plan of many banks. It is important for bankers. They have a lot of mortgage on the balance sheet. It actually creates a lot of headaches for them. We will have to see if we have a fully loaded leverage ratio. What do you think the target is going to be . Theyre fully loaded ratio is 3. 5 . Lets say the target is 5 . To ey going to have a lot depends on when is the deadline. There is a little bit of time. I believe they would have to shrink even more. Also there is the technical calibration. We dont know if the leverage calibrate. They will tell us about the changes they are making to the business. Theyve identified a large amount of with grated assets riskweighted assets. Tell us what will, of those. There is some activity in the middle east. Also, the spanish banking activity. That actually was a faded acquisition. [indiscernible] there is a shortterm derivative which you would expect would run off relatively quick. There are more structural derivatives. [indiscernible] they could overshoot this target for this year. Have had a few days to digest the ecb stress test results. Were they credible . I believe that they were credible. The markets judged to be credible. We have to remember that a lot of secondtier banks are not making the equity cost of capital. Thank you very much for joining us. Next up, we have an exclusive interview you will not want to miss. The chief executive of Jaguar Land Rover joins us here from the carmakers new plant in the english midlands. Lots to talk about after the break. Welcome back to countdown. I am mark barton. Lets talk Jaguar Land Rover. We have a bloomberg exclusive. Its opening up a new plant. Lets talk to the carmakers chief executive, ralf speth. He joins us live from the factory. Good morning. Thank you for joining us today. Good morning. Why is the opening of this Engine Manufacturing Center in the midlands in england . Why is it such a seminal moment for the company . It is a historic moment for the company because we have an opportunity to deliver the best british engineering. Our customers ask for performance but also efficiency. British engineering can now make this contradiction happen. It is a clear commitment of the u. K. So committed to the u. K. . Does this prove we are witnessing a renaissance of the u. K. Auto industry . Britishness, but also this compelling combination of british design and creative engineering differentiates Jaguar Land Rover from all competitors all around the world. Isrefore, Jaguar Land Rover not one british company. It is two separate brands. How much money will you save by making your own engines . Can you give us an idea . How much an improvement in margins will that provide . Day, it isnd of the not only improvement in margins. It is an improvement for the customer, for the environment, and an investment. Of about 500stment Million Pounds. Not considered, the Overall Investment in the design of the engine. How we hadneering, to send to make this up. Your investing a lot of money, a record 3. 5 billion in the 12 months through march 31 to add capacity. Planis your spending beyond that timeframe . Where will you spend the money . How much money will you send beyond that timeframe . Thisou we are sending in engineering also in development. We want to continue this trend. We are leading technology. We are a premium company. Our customers expect a very premium products. Ofcan you give us an idea what those products are going to be as part of your five year plan . You have already unveiled the lowerpriced jaguar, the discovery sport suv. We spoke to you in paris. Give us an idea of some of the newer vehicles you are going to launch next year and the year after. The new jaguar xe and discovery sport, really caninating models which you drive even better with the latest technology. They look great, also an addition. Andemphasis is on jaguar xe discovery sport. Programs, we will introduce when we are ready to talk about them. Uv fitoesn does an s into your plan . You said the jaguar wont introduce an suv, but you did say it could introduce something that is suvlike. Jaguar suvwould a look and feel . I didnt change my mind. Jaguar will not introduce an suv. Jaguar can do something very roadorientated. Will you be opening other factories elsewhere . What are your plans around the world . Overall, we are expanding. The Engine Manufacturing Center highlights the commitment to the u. K. And we are not in a volume race. We will do everything stepbystep. Only eight days ago, we opened up our first fullfledged operation in china. One after the other. Quality, quality, quality goes first in order to deliver our customer a very special experience. Does this new factory mean you are going to stop using engines from forward . Is there a timeline . Can you tell us when that might happen . We are committed and we will fulfill a Good Relationship with ford. We will fill all our contractual obligations. There is a good piece in the Financial Times today talking about industrial action. You could be facing your first ever industrial action since 2008. Workers have acted a threeyear pay deal. Why hasnt pay in the u. K. In the Auto Industry kept up with production . There is a very attractive offer on the table. We have submitted a very attractive offer. We are really taking care of our employees. Committed,bsolutely that we will find a commitment in discussing with our partners. Thank you very much for joining us today. Good luck with the opening of the Engine Manufacturing Center. Thank you very much for joining us today. The chief executive of Jaguar Land Rover. Two car plants in one show today. We are moving on. It is something to do with the fed. Stay tuned. Fedow worried should the the about low inflation . Should they be worried about inflation . Lets look at three charts. The top chart is Inflation Expectation as measured by the yield differences between the fiveyear treasury note and government inflation led ons. The middle graph is another inflation gauge, the personal consumption expenditures index. That is the feds preferred inflation measure. 1. 5 in august. The bottom graph is crude oil. It is down to 81 a barrel. Dropped 24 since june. The fed said the risk of inflation remaining persistently below 2 has diminished somewhat. Time will tell if the fed was right. Keep looking at these inflation gauges to see if low inflation becomes entrenched. Volkswagen earnings just crossing the bloomberg terminal. We have a narrow beat. Stay with us. Welcome to on the move. I am Jonathan Ferro here in london. We are Just Moments Away from the start of european trading. This is what we are looking at. Reserveing, the federal wipes down there Asset Purchase Program and shows concern for the labor market and the outlook for inflation. The rate debate and tense of eyes. Lufthansa profit takes a seat in economy class. Europes secondlargest airline cuts the 2015 forecast for operating profit as weaker Economic Growth ways on ticket prices. Barclays crushes estimates. Thirdquarter profit jumps 15 from a year earlier. Just under 1. 6 billion pounds. We will bring you the full breakdown of the numbers. There is plenty of corporate earnings. U. S. Gdp, german unemployment, german cpi. I will bring you all of those numbers as they come in. Lets get the open with caroline. I think we are going to see an uptick in equities as well. All eyes on the united states, on the Federal Reserve. No more bond buying. Will see Interest Rates low for a considerable amount of time. Barclays says that is going to the june 2015 until we see any sort of rate hike from the Federal Reserve. It is all about strong employment. Unemployment just 5. 9 in the u. S. That is why we are seeing a continuation they are going to the reigning back on the bond b