Transcripts For BLOOMBERG Countdown 20151023

Countdown. United states what a surge after hours. Stellar techhad earnings. Marketlion added an capitalization to amazon, microsoft, alphabet is the Parent Company to google. Being carried over to america. Lets check in on those tech moves. Amazon really did add a phenomenal amount. I have the afterhours trading of amazon, up 11 . That is now making jeff bezos, the chief executive the third wealthiest man in the United States. After bill gates, and of course warren buffett. All of the moves coming afterhours. Now we have to check on asia. We know that they have been following the market. Rebecca has everything for us. Walk us through it, the warm breezes coming from the ecb, potential to stimulate has been helping the equities. Zeb you see that green on your screen, the asiapacific index advancing. Take a look, this is something unusual as of late, the entire map its showing green is showing green. That gives you the indication that investors are optimistic. They are taking on a bit of risk. 225 rallying 2. 3 . The hang seng up 1. 5 1. 25 . The jakarta market, all advancing on the prospect of additional stimulus. We are closely watching the ecb. We will be watching of course what is happening in the asia pacific with central bank action. Wilby boj stood like the market . Will the boj stimulate the market. We have 39 out of 70 major cities of the chinese the Chinese Government monitors posting rice gain price gains. That tells us the stimulus efforts are helping the economy. The Housing Market very important because people invest in it. Property shares are leading on the upside. Of the Property Company has big business in china. Youre seeing oil shares. Businessge china shares are up 3 . The macau casino stocks remain under pressure. There is a 1 drop for galaxy entertainment. As we look across the asiapacific, and back to london. Amazing with more than half of those china home sales improving since may. That is falling on the back of u. S. Data. Lets talk about markets closer to home. Equities rallying across europe. Draghi says he left investors little doubt he is ready to employ stimulus to boost economies. Now the prospect of more qe saw the euro dropped to seventh against the dollar. Mr. Draghi flagged the Downside Risks to growth. Mario draghi well your area of domestic demand through test concernsesilient over Growth Prospects in emerging market, and possible repercussions for the economy from developments in financial and Commodity Markets. Continue to signal Downside Risks to the outlook for growth and inflation. The degree of Monetary Policy accommodation will need to be reexamined in our december meeting, when the new euro system microeconomic projections will be available. The governing council is willing and able to act by using all of the instruments available within its mandate, further lowering was discussed. It is one of the instrument of Monetary Policy that i referred to when i said all instruments have did the been discussed. There were a few members of the governing council which hinted at the possibility of acting today. I will not say it was a prevailing theme of the discussion. Lets bring in jon ferro. The euro, biggest move in nine months. Jon ferro if you with a gauge of how dovish a News Conferences, you watch the News Conference at another screen with eurodollar, literally as soon as he opened his mouth, Downside Risk to growth inflation, the euro goes lower. Negativesed the deposit rate, even more negative from the. 2 it is now. Some members wanted it now. Going into it, the bar was high. It was a matter of when, not how. Now it is a matter of what. Caroline the lending data was out earlier this week, better than expected. This is more dovish than had been on the cards. They have this quandary, december the sixth is before the fed meeting in december. Will they release to be late before that . John wayne i think they will john boy i think they will. They are looking at the asset purchase program. September, replac it with another date, or drop it altogether. He focus on the negative deposit rate a lot of people thought they were done it might. 2 . It seems they are not done. Experiences of the of some of the scandinavian countries, there is almost no floor for the deposit rate. They can take it much lower. A lot of people think december is a matter of what they will do at that meeting. The bar with high going into this one. Caroline talk about the floors the german two year rate, record low. Jonathan by forget that, the italian with the negative yield. We are below 100 basis points now. Ferro i dont know how much further in it can go. I have been proven wrong again and again. Caroline more cheap money for longer. Thank you. All across every word that mario draghi others. Others. Home prices in more than half of the 70 major cities monitored by the government are accelerated. It is a sign that Interest Rate cuts and other stimulus measures are finally taking hold . We are joined by beijing bureau chief. This data seems to be the First Time Since may we have seen more than half of the home prices rise across the city. Change in the outlook for the chinese economy . Guest it is such a rare bit of good news for the chinese economy after so many months of bad data. It does change the outlook a little bit because the property sector accounts for about 15 of gdp. In a lot of ways it really is the beating heart of chinas economy. Very encouraging may have targeted the property sector in some of their simulation efforts, including cuts to mortgage requirements. Yes, a positive sign, indicating that still is measures are working at the same time however, there are still some problems very Serious Problems in the property sector. A huge supply overhang. We need to see how serious this turnaround is. Longlasting the impact on the broader economy will be. Caroline it is interesting today. We are seeing equity markets in asia in the green, apart from the likes of the csi 300 and a shanghai composite. Is it a question of good news and data is bad news for future stimulus . Next nick i think there is very clear expectation across the board there will still be stimulus. Interest rate are very high come over 4 , compare that to the United States. Also the reserve requirement, the amount of money that banks are required to hold in reserve is high. If you look at the government had her last times they have been intervening has been every two months. We are now at that moment. There is still a high expectation that we could get a new stability measure in the next coming days. Caroline the central bank will go next. Thank you very much. Lets take a look at some of the data we are watching for the rest of the day. We of course give those euros and pmis this morning. France at 8 00 a. M. U. K. Time. Expecting a slight deterioration in french pmi data. It is still about 50. Germany,e likes of eurozone pmi data to the clock a. M. U. K. Time. We then get retail figures from italy. Well hear from cindy chief hi chiefe later fend executive later. , the 19ountdown billion Silver Lining amazon, google, microsoft search with their cloud business. What a move. Jack dorsey gives a third of his twitter stock to the companys employees. Stay with us. Caroline welcome back it is 6 14 here in london. Here are the stories you need to know this morning. Asian stocks and currencies have jumped on the prospect of more stimulus from the European Central bank. U. S. Tech earnings and rising chinese home prices have helped with that. The fed has for its longest streak of gains since april. Former secretary of state, Hillary Clinton has defended herself to congress about whether her department provided sufficient security to diplomats. She was being can questioned over the 20 12 attacks that killed a u. S. Ambassador and three other americans in benghazi. Faced tough republican questioning, but said she accepted responsibility. Hillary clinton i would imagine i thought more about what happened then all of you put together. I have lost more sleep and all of you put together. I have been racking my brain about what more could of done been done come or should have been done. Caroline Lloyds Banking group will probably take enough a further one billion charge. It will undermine efforts to clean up the bank of the as the u. K. Government prepares to sell shares to Retail Investors. Their thirdquarter earnings are due next wednesday. Took center stage and after hours u. S. Trade. Trades. Google, amazon, and microsoft earnings eating estimates. We have a plethora of good news. Reporter it was a over day for technology. Lets start with amazon thirdquarter sales surprise profit. What was driving this a number of things. Fastgrowing Cloud Computing. Also a boost from july prime day promotions. Also the company kept a watchful eye on spending. The shares are now up 82 . After hours they jumped 11 . Bezos isd off jeff the third richest man in america. Google thirdquarter sales and profit a beat as well. Add cliques up 23 . And theyb traffic, managed to keep cost under control. The other thing they announced for the First Time Ever was a 5. 1 billion Share Buyback. What is interesting that is not a precise number. He precise number is the square root of 26. I have not memorized that. There are 26 letters in the alphabet. That is now the new holding company. It will be in the next set of results in the fourth quarter. The main Google Business is separate from alphabet other ill bets other ventures. Profitst First Quarter Beat Estimates. This is on growth in cloud service. The Company Announced more jobs would be cut. Caroline not knowing the square root of 26 by heart, how could you . As you mentioned, growth in the cloud seems to be an ongoing theme for all of the companies. Reporter that is right. This is the theme tying together all of these company earnings. These data centers capable of bringing a broad range of services at low cost. It means that these companies are becoming centers of Computing Power to another group of growing Companies Looking for lowcost. Cloud, we have talked about this before, the shift from hardware to the cloud. What this did for the three stocks together they added more than 90 billion. A staggering number. Caroline making jeff bezos the third wealthiest man in the u. S. We know the first earnings from googles new holding company, alphabet, Beat Estimates. Paid launching a new Subscription Service that could namedflix, dumped youtube red. The man in the know when it comes to technology, give us a sense. Guest the numbers were outstanding. The key here was the top line growth was about twice 6 26 . That post about some of the concerns these Technology Companies may be subject to. They slowing going on in the broader economy really not the case. Caroline even though we are , theyg at mobile far more are managing to ramp up the amount we are clicking. Is always this tradeoff between a number of cliques and price per click. The price per click was down 11 . The volume was up substantially. Caroline tell us about the clever ways they are growing the business. Of course they have rivals. They are being more adept when it comes to the youtube offering. Is this the way you want to see google diverse . Diversified . To moveey have managed an enormous base of business is a Large Company to mobile. Perhaps the jewel in the crown is youtube, they have over one billion users now. Theyre looking for alternative opportunities for revenue like subscription. Rumor theythere was were looking to raise prices by double digits. It is an extremely strong offering on youtube. Caroline what about the new ceo. There has been his lip service and action taken to show they are trying to be more disciplined, potentially. They are showing us how the business really works, taking out the exciting endeavors like self driving cars and google asked and putting that aside and showing as google. Are you impressed by the fact that they are trying to bring transparency . Mark on the Conference Call last night, they talked about getting Greater Transparency to the core Google Business. Maybe when we get those new numbers we will get a breakdown within google. Perhaps we will see more youtube numbers and see how that is doing. In principle, the key here is by splitting court google c ore google, we may see their earning 55 a share against another number of 38 or so. It is easy to value the business at a higher level than perhaps it has been in the past. I think the new ceo is putting on Greater Transparency. Caroline amazon, bringing profit once again. Is that the way that jeff bezos is going, he too can be disciplined . Mark and i think it was interesting on the amazon Conference Call last night they talked about cost discipline. That is something they do not talk about a great deal. I think the cost discipline is almost implicit. They areis so big, still investing heavily, but they cannot invest more. They are getting massive leverage. Perhaps the key number to take away is within the net north american business, they had a 3. 5 breaking launch, the market was looking for 2. 5. Caroline i remember speaking to to view years ago, you said it was all about amazon. This year and it has come to fruition. The cloud is behringwerke fruit behringwerke fruit. Basically we have become assessed with amazon when it comes to ordering goods. Real do you see amazons Growth Potential . Mark amazon is the key disruptor. They are driving at all of the right kind of opportunities. The cloud is going to be huge. Google, on their Conference Call so that everything will move to the cloud overtime. I am a strong believer in that, as is amazon. The Amazon Web Service business could be generating maybe 10 billion after twice 17. It is still growing. Caroline 78 wasnt. Wasnt it. Mark that is a big company. There is no Software Company that comes close to the growth rate. You could value the business. Ante frankly, you could get evaluation close to the entire amazon market cap, just looking at a web Service Business optimistically. I think the opportunity is exceptional. Caroline great to have you on. Mark horton, the investment director. Stay with us on bloomberg for more text coverage. We will be speaking to none other than the former chief executive of microsoft at 1 00 p. M. U. K. Time. It will be interesting to get his take on the company. Chancellor merkel has called for solidarity in europe among the refugee crisis. Merkel the migration crisis is a great crisis that europe faces. We will face it was solidarity. We must continue to talking. We must not continue to be in isolation. We can do this together, i am convinced. Caroline hans nichols is in berlin. Is increasingly strange strained. Well merkels rallying calls the welcome . Be welcome . An emergencyd summit is on sunday. He said he did not expect a resolution anytime before christmas. This will dominate discussions as far as leaders can see. We also heard from victor organ, the premier and hungry, he seemed to suggest the very foundation of the eu was at stake. Can this issue will determine the future of our political family. We are in deep trouble. Is able toon crisis destabilize governments, countries, and the whole european continent. We need a strong, clear cut answer, tame timetable, and action plan of epp. Hans that summit in brussels, that will be the 20 up summit in brussels this year. With either finance leaders or leaders. You look back and you have had eight or nine in previous years, we are 10 months into the year. Caroline 20th meeting. Thank you. Before we go, we will be back after this short break to give you some of the volvo airings earnings. eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. Caroline welcome back to countdown. Here are the stories you need to know this morning. Asian stocks and currencies are up on a prospect of more stimulus from the European Central bank. That is an estimated u. S. Tech earnings and rising chinese home prices. Microsoft shares rose to a 15 year high in extended trades. This is after they Beat Estimates and the physical Third Quarter. At 4. 26ncome came in billion. On improvingocused Cloud Services and subscriptionbased Office Products. The pc market want. Slumps. They announced they would cut jobs. The twitter ceo is giving a third of his stock to employees. Jack dorsey announced the move in a tweet, two weeks after he took charge. The shares amount to about 1 of the company. They are worth about 200 million. The move may be a bid to boost morale after recent job cuts. Lets get you some breaking news. We did have numbers coming out of the volvo a moment ago. We can see the numbers are looking interesting on a regional basis. It was a beat when you look at billionincome at 3. 7 Swedish Krona. They are down 40 in north america. Down 54 in south america. Asia is growing 9 . They are trimming back there forecast for asia. They are saying the market could be smaller than originally anticipated. In china they are cutting the heavy duty truck Market Forecast to 525,000. They are raising the Market Forecast for europe. Very different regional breakdown. China slowing, south america and north america, slowing, but europe doing better. Now, lets stick with europe. Rallyday we saw equities across europe as mario draghi signaled willingness to use monetary stimulus for growth. Druggie flagged the downside draghi flagged the Downside Risk. Mario draghi while it remains resilient, concerns over Growth Prospects in emerging markets, and possible repercussions for the economy from developments in financial and Commodity Markets continue to signal Downside Risk to the outlook for growth and inflation. The degree of Monetary Policy accommodation will need to be reexamined at the december meeting. New euro system projections will be available. The governing council is willing all the to act by using instruments available within the furtherrthering lowering of the deposit rate was discussed. It is one of the instruments of Monetary Policy that i referred to when i said all instruments have been discussed. Come a few, few members of the governing council which hinted at the possibility of acting today. I will not say it was a prevailing theme of the discussion today. Lets dig more into the Market Reaction to this comment. Moves, biggest fall in the euro in nine months. Reporter absolutely. You heard his comments suggesting the ecb does stand ready to step up stimulus. Of course the move i have been focusing on here is in the euro. You can see here, it fell to a to a low print you do not have to come into close, wait for my next chart. Trading flat today. It fell against all of the major counterparts. That also brought in that affect of the euro being used in carry trade. We know that some of the strength has been about unwinding those carry trade, all except to a 43 potential ones funded euros. That means you fund at a lower rate and by higher yields. While the euro came down, we saw. Boost of Commodity Currencies the new zealand kiwi in particular was flying off of the back of that. We saw the mexican peso go up. That is what happened off the back of the weaker euro. Let me show you what happened with options. I love options. They can tell you more than they eurodollar trade. Yesterday the euro was flat. What we thought with options was that they were actually signaling the traders were acting more of a drop. Here, i have drawn on the zero mark, below means that trade is pricing in more of a drop then gain than a gain. Look at that drop. That happened as mario draghi was speaking. You can see they are coming down a little bit today. This is the lowest point since july for these options for sale. We are talking about onemonth options. Caroline girl. Aroline thank you for more on Mario Draghis comments, the chief executive. First of all, what did you take from the meeting . He really is giving us a early christmas present. Guest he is living up to his super mario reputation. Figurese strong credit we had, the expectations were relatively low for him to say anything of what he said. Look, wery much will do what it takes to keep the every going. Recovery going. Caroline it is more of the euro strength he is trying to talk down . Is of the fx area he is worried about . Is it more of the cooling in china Global Growth . he wanted to give a positive signal to the markets that the ecb is the there, quantitative easing is continuing. We still have quantitative easing. Muchingo that he used very of the euro under pressure. It is exporting some of that growth in the u. S. Back to europe. That is going to begin for europe. Particularly, and the headwinds that we now have an the slowdown was china. Caroline we have an interesting balancing act, we will be looking for deposit rate cuts. Meanwhile, the Federal Reserve is not going to go until the meeting. The market is not think the Federal Reserve will raise rates until march. Will mount be unfolded by the ecb before the u. S. Starts to bring it back . Lothar i have not heard him say that. He has put us on notice that they might. They always might. There is still a while. Caroline you dont believe we could go for december . Lothar i think the odds are against it. I think we are seeing better figures. The earning season so far in the u. S. Has been dreadful. Overnight it brightened up. Perhaps it is not as bad as we thought. Lets see what the pmis bring later on. Maybe it is not as that is thought. A signal theyally are vigilant and they will be doing something is needed. If needed. I dont think it is necessary. Caroline is he just talking . Lothar i think is a super mario at his best. Caroline in terms of data up,ts, lending we saw pick when youre looking at investment decisions, are you betting on a slow down or improvement in europe . You have the volvo numbers coming out saying that european truck numbers are up versus a slowdown in north america. I certainly think europe will be better place to be globally, compared to the u. S. There is still more catch up to be done. That, although is always conditional on the global slowdown. Given that it will not turn any worse. With regards to volvo and cars, a little bit nervous about the vw impact. I am not holding my breath for the manufacturing pmis later. I think that could of dampened it more. Caroline we are expecting 50, do youbers above think we could have a four below that . Lothar no, i dont think that. I think the manufacturing figures could come in worse. There is so much connected to european car manufacturing. I think that has taken a hint fit over last month. Caroline thank you. Lets first get out to some breaking news. It is all about erickson. Reporter that is right. Lets take a look at the earnings. We have thirdquarter growth margin, excluding restructuring, 34. 5 . The estimate was 35. 3 . We are looking at a miss of their. Miss there. Miss for the at a Swedish Krona the Third Quarter. Amazon sales and growth margin. Onare looking at a miss operating income. Erickson said their mobile business in north america remains stable, at a lower level than last year. I did see a slowdown in 4g deployment and Mainland China in the quarter. Certainly not the only Company Facing challenges in china. Caroline a recurring theme. Thank you. Stay with us on bloomberg because we will speak to the chief executive. He is on at 10 50 u. K. Time. Meanwhile we will speak to more chief executives and the italian fashion just how fashion is doingndhi particularly well in mens fashion. The brand moved to a new location in rome. We are balanced. We have regional sales. I would say that we have a strong momentum with men. Caroline they said that fendi was based in asia for a long time. I think the changing strategy is not the right move. I think we are here for longterm. Hat is not typical of fendi what i tell you is what i tell the market, it is big, the demand is big. We need to steal market share from competitors. There is room for that in every season. Now, next on countdown, we take a look at londons bid to be the first port of call for china. Caroline it is 7 47 if you are viewing in paris. Here are the stories he needs to know. Asian stocks and currencies have jumped. The asiapacific index raised in the last four days. It appears to be headed for the longest streak of games since april. Amazon surged in late trading after a beat in the Third Quarter. They saw a surprise profit of 79 million. Amazon has been keeping a tighter rein on ending spending. They say the figures will help with the cloud division. Rose inhome prices september and more than half of the 70 major cities monitored. That is thanks to easier credit. New home prices rose in 39 cities. The recovery also extended to a larger number of small cities. The easing of buying restrictions helped. The president will fly back to beijing later today from manchester, following his whirlwind tour of the u. K. It was a visit that saw a slew of deals between the countries. One of the efforts to further financial ties, the London Stock Exchange hosted several chinese banks. Joining us for more on the relationship is nikhil rathi. Also with us is the lothar mento. Give us a sense of just how important to china could be to the London Stock Exchange. How much tangibly could this mean . Anhil rathi it has been exciting week. A lot of big entrances. The first foreign currency by the China Development bank and 10 years. The first green bond. To go to your question, that shows how how much of an impact china is making. Of the largest four largest 10 banks are chinese. They want to be big Capital Market players. I think we will be seeing much more of them. They will be very active across all Asset Classes in london. Interestingly, china is catching up with the u. S. Does that mean that china will eventually become for london, where the u. S. Is today . london has always been a market at the front of emerging trends. Whether it is financing of u. S. Railroad, or the industrial revolution. As china is poised to be the largest economy in the world, i am sure Capital Markets will play a big role in the stock exchange. Predicting sizes, but if anyones game that is anyones game. Ambition ofr is the chinese authorities is to make london the center of international finance. Caroline is of the secondbiggest . Is it the secondbiggest . Lothar not quite. The Capital Markets are developing. I had the pleasure of meeting the president at a summit briefly. Chinake of the desire of to use Capital Markets more. I expect we will see fast growth. Caroline what about Investor Sentiment . We are seeing these debt instruments being sold. Primarily there are chinese buyers. U. K. And u. S. Is investors by amys instruments investors buying these instruments. one great thing is their ability to bring investors from all over the worl europe, asia, and the u. S. Are investing in these. The bank of china bond with four times over. We have had other green bonds this week as well. Not just chinese, but the Development Bank of japan issued the first bond in london. That had european investors. Lothar do you think the greater influx of nonchinese money into the Chinese Market will dampen down some of the volatility that we have grappled with . Especially at least of professional managers have stayed away from chinese investments for that reason. Nikhil rathi i think that is one of the concerns. Primarily they have had retail markets. Time we would expect institutions, like your own doing into the market, therefore reducing some of the volatility that we have seen. That is part of the reason why we are speaking with the shanghai stock exchange. We want to do a study of how we can connect the markets together effectively. We can bring the Institutional Capacity of the london stock Retail Companies in china. The depreciation , and the volatility, would you be a buyer . Lothar not as of yet. The Retail Investor basis to bumpy. Base is to caroline how much did they talk about hoping to internationalize it. We saw while he was here in the u. K. , banks supported the value. While they were here, they were trying to make sure it does not have any drops while they try to export. Think we will start to see less volatility . Is this something he spoke about . i think there is a lot about desktop about that with china working with the london market to improve the rmb with london at the may center outside of the asian main center outside of the asian time zone. The make of china opened the major foreignexchange Trading Center in london. We saw other infrastructure agreement being reached here. I think it was at the forefront of the announcements. Time the policy framework will develop. The chinese Capital Markets are not yet at the stages that we have seen elsewhere. We need a high degree of openness to talk about it. Caroline interesting lip service paid by him, he said they wanted a level playing field. How much is Corporate Governance a concern . Lothar it is very much a concern by investors. They are increasingly focused on these issues. This is a scenario where we are all learning. Conference wethe are hosting at the exchange this morning is a green bond conference. That is an area where the peoples bank of china have taken a lead globally in developing standards for grain finance to and green finance to enable investors to make informed decisions about where they want to place their money. Caroline what is your feeling of this u. K. Tour . There has been criticism that perhaps the u. K. Is spending too far backwards. Do you think it is the right course of action . Right i think it is the course to be a close to china, even if you do not agree with everything. Only if you connect can you have influence. China is becoming a second most important economy in the world. We want to trade and be connected with them. I think yes, that was the right thing to do. I think in terms of talking about concerns with china, they have been overdone with too much focus on manufacturing, not enough focus on the Service Industry which is growing fast. That is making china and more mature economy. Caroline great to have your opinions. Thank you very much. Hat was nikhil rathi staying with us, lothar mentel. In the next hour on countdown. How Mario Draghis stimulus comment drove a global rally. After the break. eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. Anna marios market rally. Asian stocks higher after the ecb president hinted at a stimulus boost for the end of 2015. More data for draghi. A deterioration in eurozone pmi could fund more stimulus. And 90 billion Silver Lining. Amazon, google, and microsoft surgeon after our trading. Welcome back to countdown. Lets get straight into where the markets are set to be opening. Does the rally continue . It looks as though we are currently set for green, futures up 8 10 of 1 . Is pretty phenomenal given we saw the stoxx 600 rise more than 2 yesterday, highest in two months. That rally just continues. Dax set to leave more than 1 once again, following on some stellar numbers we saw coming from amazon, from microsoft. Severalbring you screens from amazon, spiking afterhours, an 11 jump in trading. Shat now means jeff bezos i now the third wealthiest men in the United States after bill gates and warren buffett. Phenomenal numbers. We saw the amount of their market cap if they hold onto those after our trading numbers jump 90 billion combined. Lets have a look at the breaking news from mullen mirsky. Lets get straight over to nejra. With them me start cutting their fullyear profit versust to 3. 4 billion 4 billion previously. Headline, cut to the profit forecast. Weaker worldwide container shipping market. Maersk is the worlds biggest container shipper in the shipping industry is often seen as a bellwether for the Global Economy. Ae fact that it is citing weaker shipping market does that tell us something negative about the Global Economy . has been one of the best performers this year on the stoxx 600 oil and gas index they are saying their outlook for 2015 year remains robust. Third quarter comparable operating profit, 281 Million Euros versus an estimate of 276 Million Euros. They did say last month that they are expecting healthy margins to continue in 2016. The reason for that is Lower Oil Prices. As a refiner, low Oil Prices Mean costs are lower in Profit Margins are higher. Fullyearm up, a profit forecast that has been cut. Neste has come in on its operating profit, fullyear results to remain robust. Chris a big said engage when it lets gothat now, out to see what is moving in asia this morning zeb eckert has them standing by in hong kong. I green day, up on the back of the rally in the u. S. Zeb absolutely. The prospects stimulus from the ecb, that early Christmas Gift m mario draghi, is one of that is lifting markets today. The bank of japan, all of it is powering the equity markets. Asiapacific, you see this quite rarely, all the major markets open today advancing. Very healthy gains, given the abysmal summer. Shanghai composite d oil and gas pulled back somewhat. Is on fire today, the nikkei to do five bouncing. We have been watching telecommunications shares they have been leading the way across asia today, and some of the heavy industry stocks are up a in the session broadbased rally across the asiapacific. This is all we have in hong kong. Sinopec advancing 3 . We did see oil stocks selling off, registering the biggest losses in energy and material companies. But now you see with those losses, buying activity, that is why sinopec leaveds the way. Other shares remain under pressure. I want to bring you up to speed there ises, because speculation that chinas big three airlines, air china among them, China Southern and china eastern, it may come together in semi, perhaps the merger of their cargo units, one, two, or all of their passenger divisions. That would create a mega airline, with the fleet similar to what you see in united. We initially saw the shares up 10 overnight in new york. Yesterday, a big surge. That is the story with chinas southern this is asias biggest carrier by passenger numbers as well as by the size of its fleet. Finally, the dominant carrier in the shanghai market, china eastern. Andill watch this closely, it all falls back into chinas ongoing effort to reform state owned industry, reduce waste, and make these businesses more competitive in what will be the worlds biggest Aviation Market in two decades. Finishing in red on a sea of green. Thank you very much. Lets talk about markets closer to home. Equities rallied across europe yesterday and it looks like the row yoally will continue today as mario draghi left little doubt that he is ready to deploy more monetary stimulus. The prospect of more qe for the euro dropped to a twomonth low. Speaking at the conference in malta, he flag to the Downside Risks to growth. While euro area domestic demand remains resilient, concerns over Growth Prospects in emerging markets and possible repercussions for the economy from developments in financial and Commodity Markets continue to signal Downside Risks to the outlook for growth and inflation. The degree of Monetary Policy accommodations will need to be reexamined in our december Monetary Policy meeting, when the new euro system stock microeconomic predictions will be available. The council is willing and able to act by using all the instruments available within its mandate, further lowering of the deposit facility rate was discussed and it is one of the instruments of Monetary Policy that i referred to when i say all instruments have been discussed. There were a few members of the governing council which hinted of actingsibility today but i wouldnt say it was a prevailing theme. Caroline lets bring in our on the move anchor, jon ferro. Equity markets phenomenal moves yesterday. Looks like futures on the same today. Jonathan our colleagues have been breaking down the stats it is the biggest equity market move meeting since july, 2013 more than when they initiated quantitive easing. It is a huge move. What is really interesting is that the bar was so high going into the meeting. To really rubberstamp december for a lot of people it was a matter of when, not if. Caroline and what. He talked about deposit rate cuts which rabbit is he going to pull out . Jonathan for a lot of people you start with the asset purchase program, 60 billion euros per month. The mandate is september, 2016 scrap it and replace it with a new on or replace it. But on the deposit rate, that is what surprised a lot of people. 2 was the floor for a lot of people and now they are thinking they can cut it further. There is an option for them to do more and that was another reason to keep selling the euro, which was battered in that News Conference yesterday. Caroline still with us youre a little bit concerned about were equities will go today. I have observed is that we seem to have two camps in the market at the moment those who are focused on rate rise in monetary easing and those who are mokre concerned about the growth story. We have the pmi coming up this morning they could be disappointing. Bad news,be good news bad news bad news it could go either way. Jon, you are going to be breaking all these numbers. Its still expansion, though, isnt it . Jonathan the numbers have been ok the last couple months. It could be that bad news is good news scenario. That was remarkable is that navigate draghi had to not disappointing people and not overpromising, but not speaking people by saying the domestic economy was doing badly. He did just that. He didnt talk about the domestic economy doing badly, he talked about headline inflation. He made it very much a conversation over the headline inflation rates and what impact s that, reemphasizing how important it is for the ecb. Caroline amazing, but that man can do to markets. With just his voice. Thank you, jonathan ferro. He will be taking the helm in less than an hour. Lotha stays with usr. And 90 billion Silver Lining amazon, google, microsoft surge, adding 90 billion to their market cap. Clouds helpen their them Beat Estimates. A tweet idea. Jack dorsey gives a third of his twitter stocks to employees. More on that after the break. Caroline welcome back. 7 15 in london. Here are the stories you need to know. Asian stocks and currencies jumped on the prospect of more stimulus and the European Central bank as well as better than estimated u. S. Tech earnings. The loss from this week heads for the longest weekly gain since april. Volvo, the worlds secondbiggest truck maker, has seen thirdquarter operating profit rise 75 , helped by a boost from the weaker Swedish Krona. The company said that adjusted earnings were flat. 1 billion kroner. Were 5. 1 billion krone. Miller mirsky has cut its profit kerfit, citing a weeark container ship market. Technology took center stage in afterhours and u. S. Trade with google, amazon, microsoft earning and beating analyst estimates. Lets get more with nejra. The good news kept on coming. Nejra thats right. A bunch of earnings lets start off with amazon where thirdquarter sales Beat Estimates and also had a surprise fastgrowing, Cloud Computing and a boost from a july prime data and keeping a bit of a watchful eye on spending. The shares rallied on that news, so much so that jeff bezos is now the third richest man in america. Amazon shares are up 82 . Google well we saw was a bead to the thirdquarter sales and they Beat Estimates. The average price per click was and by total clicks were up we saw a robust web traffic managing to keep costs under control. Really rewarding those Tech Companies managing to keep profits under control and show that they can maintain profitability. Announcedat google was a 5. 1 billion Share Buyback for the First Time Ever. The precise amount of that of 26k is the square root because there are 26 letters of the alphabet and as we know, fourthquarter earnings will be the ones where we really see the difference other companies within the alphabet group. Moving onto microsoft, another beat. This was about a growth and Cloud Services and also do with job cuts announced in july and growing, that moved to the cloud and what that did is that together these three Companies Added more than 90 million in market cap in afterhours trading. Really, some staggering stats. Caroline phenomenal move lets see if they can hold onto it. Is none other than steve ballmer. Get his field on whether the turning of the tide is focusing on cloud is the way to go. Certainly seems to be. Luxuryurn from tech to the italian fashion house sendi is growing according to the chief executive, but what thes doing in particular brand moved its headquarters into a new location in rome. Category we are quite balanced in regional terms. I would say that we have strong momentum for men, which was a category which was a little bit underestimated. You see more coming. Caroline he also said that fendi was in asia for the long term and that decisions based on shortterm volatility was not the correct strategy. Changingk that strang strategy is not the right move. Term, in it for the long so that is not typical as far as i know. What i tell you is what i tell my people, which is that the market is big in the demand is to there is room in every season and in every situation. Caroline lets dig into this more, bringing in andrew roberts. Andrew, thank you for joining us. Why is fendi succeeding where others fail . They are saying they are in it for the long term. Andrew good morning, caroline. I think the key point out of this is that in china, the bigger you all, the harder you fallen. Dollar a one billion brand at the moment and it is also doing some things which make it more interesting to local and traveling consumers, namely sorting itself out online, introducing ecommerce, trying to target a younger consumer. One of the things he said in the interview which he didnt show is that the average age of their consumer is down by four years. Tohink that is a testament some of the success they have had by introducing cheaper products. They are still expensive, but an 800 euro pompom is enabling consumers to have less in their wallets to try the brand, and maybe graduate up to some of their more expensive products. Caroline how much for a pompom . Andrew about 800 euros. Caroline [laughter] money well spent. They are taking earnings out of burberrys book, getting the young early. Talk to us about caring group. Gucci is still not so pretty. This is the perfect way of showing whats going on in it was one of the best performers of all luxury companies. That is a brand that is sub 1 billion in revenue, with low exposures to macau and hong kong. And like fendi it is doing the right things in terms of design. That new designer has really made the brand interesting and exciting, appealing to a younger consumer group. When you look at the keys to success, what we are seeing is scale plus sexiness is equal in growth, equal in success. Gucci is facing a bigger problem because it is five times the size of yves stlaurent. It is going through a revamp as we speak. Sales were down in the quarter and that wasnt a surprise for analysts. There was an expectation that it would happen is the reef and continued. But the good news is this hit stores and we are already seeing doubledigit growth and handbags, pointing to a pretty strong fourthquarter. I think the market is expecting a rebounding growth from 2016 as some of those products hit stores worldwide. Caroline maybe the sexiness is back. Thank you. Lothar. T back to lets talk a little bit about china. We are hearing that it is laying on the luxury sector and we have numbers showing concern. They are downgrading their profit forecasts and we have although trucks downgraded as well. How worried are you about the fundamentals in china . Lothar china is undoubtedly slowing but it is slowing in a planned way. The markets are a little bit overexcited or confused by what we have seen in china but they are not a reflection of what is going on underneath. Will have to see how much that explosion in one of their major ports has actually contributed. I wouldnt be surprised if it had a Market Impact so i am not overly worried. It is not something that is going to shore up the Global Economic cycle. Caroline what do you look at . Some amazing steps taking away with the government tells us about 6. 9 growth, you have rt phone sales last year 20 up in china. This year, 1. 2 up. When you look at some of the smaller details, what do you look at to build a picture of what is really happening . Lothar you need to build a broader picture of whats going on. One of the big stories is that manufacturing is an is important anymore in china as everybody still thinks. Outgrown manufacturing just like any other major economy it is not just manufacturing and the sale of individual products, it is services and the whole economy we have to change the way we look. Caroline we are seeing equity futures pointing to another day of gains. Where should we be buying this morning . Is it still all about european equities at the moment . Lothar i think it depends on the horizon. If you are more on the shorter term, watch the momentum. Watch the technicals. If youre in a for the longer term, recognize that bonds are poor values, and you want to be in for the longerterm. That is where european equities have the longest to catch up with the rest of the world. They havent really done as well as the u. S. Or i would be focusing on europe. Caroline we will be doing exactly that today. Thank you. Caroline welcome back. 7 30 here in london. Here are this top stories you need to know. And currencies jumped on the prospect of more stimulus from the European Central bank. Better than estimated u. S. Tech earnings have also helped along with rising chinese home prices. Asiapacific index erased losses from the first four days of this weekend is headed for its longest weekly streak of games since april. Microsoft shares rose to a 15 year high in extended trading after it Beat Estimates. Net income came in above. Has talked about promoting Cloud Services and subscriptionbased Office Products as the pc market continues. In july the company said it would cut jobs in a wideranging shakeup. Twitters ceo is giving a third of his stock to employees. Jack dorsey announced the move in a tweet two weeks after he officially took charge of the site. Aroundres amount to 1 of the company. It may be a bid to boost morale. Lets see whats moving in asian markets. Theack or zeb eckert, rally is continuing as we see more stimulus here in europe. Thatit certainly is, and stimulus prospect is really igniting the currency markets today. We saw that yield hunt continue in new zealand and the south korean won moving on easing prospects of the ecb. Also have the bank of japan expected to announce that is giving a left to stocks today. It all translates into what we see here green across the screen, a nice way to end the week, certainly a good uplift. Lets take a look at what is happening. The hang seng is up 1. 5 and a similar move in shanghai. Marketng pleasing the because the chinese city posting gains in september and what we are seeing is a gradual march ho higher in housing prices. Some others are seeing more dramatic rises. It is generally suggested that the economy there, at least the property linked economy, is recovering thanks to stimulus and Interest Rate cuts. There has been a rebound in Interest Rates today after a big selloff in oil prices. Asia, we areeast watching this friday session. Caroline green to end the week. Thank you very much. From the an hour to go european open 27 minutes. Looking at the futures, we could add 8 10 of 1 . We are coming off of highs with a 1 gain expected for the germany dax. Every Industry Group gained. Lets focusing on one stock that potentially has had headwind aplenty the volkswagen scandal could cost germany 3. 4 billion in tax shortfalls due to three german towns that depend on the manufacturer. Lets get to our international correspondent, hans nichols, in berlin. How will the local governments be affected by this . Hans well, it will loosen tax revenue because the way tax revenues allocated is that it is based on land and a percentage of Corporate Income tax. If revenues are over down, so will tax revenues. They will have fewer peoples working and fewer taxes to collect. When you take a look at the cities where they are built, they are basically company towns. That city south of berlin, 125,000 people, 60,000 workers from the city that are at the volkswagen plant. They have a budget freeze and they will be trimming about 19 million in projects from ice skating rinks in a variety of other thing. Further down in bavaria, where they make audi, 40,000 of the towns 131,000 citizens work at the factory. Another said has already talked about having a production shift, taking off one shift on the production line. All across abouty, it will amount to 3 billion euros in lost revenue. When you look at the one place where they make the diesel , 75,000 workers at that one diesel factory are involved. Up, lostadd it all revenue of the corporate side, lost revenue if there are going to be layoffs, that is how you arrive at these numbers. The cities are trimming their budgets and sales had no one doesnt know no one knows what the total cost will be. Wholine no ice skating knew the ramifications could be so wide. Lets get back to one of our top stories mario draghi used yesterdays ecb meeting to try the euro area for flash stimulus. For fresh stimulus pmi data is coming our way and jamie murray joins us with more. What should we be looking for . It is going to be a slowdown the we are still going to be seeing growth. Jamie one of the fascinating things about the press conference yesterday is that the outlook hasnt changed a great deal over the course of the year, let alone the past month. The fact that there is such a big change is really important it tells you about the thinking of the ecb more broadly. What we will be looking for in todays data is some evidence of any slowdown. My guess is it will be fairly contained stop if you look across the euro data it is coming in pretty much ok with some weakness in Industrial Production stop the only downside in the case has been those expectations for people like me. What you want us to look at the pmis. Ta in the Caroline Jamie murray, thank you. Sticking with the theme of the ecb, less than a halfhour before European Markets open. , oneing in our next guest of the cofounders of one of the most established names of the hedge fund industry, recently said that fixed industry will become more volatile. We are now joined exclusively by pierre lagrange. Thank you for joining us, pierre. Stimulus potentially on the horizon. Should the good times continue to roll . Pierre we think the stimulus will continue and it will probably be more than expected. There are a lot of different ways. Toare working with the team see where will the next cut of stimulus be. It seems that targeting some categories would probably be the most yielding areas, for instance there is a whole area of infrastructure that could be quite an extraordinary target for the Central Banks to apply the stimulus, because that is where there is still massive demand. It could be very efficient for the overall economy. We think there will be more stimulus and also there is a way to get ahead of the other markets. As a relative measure, it looks watered down. Yesterday we saw german twoyear yields hit record lows should be focusing on the sovereign bond market index acting it to continue to outperform or turn our attention to the Corporate Market . Pierre it is a lot like dominoes, the most obvious in the most liquid and ultimately less ethical question of how you create a credible. Hen you go into equities in europe we have the ecb going as far as that although we are not there yet. Where can you influence more, longer duration investment, longer lasting effect . Ofhink some of the landings the infrastructure bonds could be a good target. How we make this money in a very low Interest Rate environment questio . Where do you make money in this . Which areas . How do you ride this wave . Pierre i think we make money from relative value because the bonds, it is difficult to see where they go. , verya fear of some game that aretionary forces still relatively fragile but doing better. Then you have the everincreasing stimulus. You can see how i can go both ways with a lot of volatility. The equities have come up relatively over the last summer there is, you can see still a lot of value in europe. Relative value with quantity of are the areas where one can make good money. Think of what do you the United States in terms of its one economy going the other direction, but still not actually putting the brakes on stimulus . Do you have an idea of what we might start to see a rate hike happening . Pierre i am more in the camp that it will be later than people expect and the main economys that the main is Getting Better but it is not as strong as they would want to be. Pool ofook at the disposable income that has been created with Lower Oil Prices utility bills, it has been much less spending. It is still relatively fragile, and if they do it too early he will go back to the same problems and it is better to keep that for later. Especially because Deflationary Forces are still very strong. Caroline when you have treasuries falling to 1. 5 do you abide by that or do you think i thinkont think the trend is still the same. Japan, everyone has been incapable of predicting how it could go. Caroline so when it comes to stimulus measures, deposit rates being cut by the ecb, you are feeling it will be much more quantitive easing side. Pierre i think there will be a , cutting theasures reserve rate and direct intervention. The key thing is to find areas where you dont create a dangerous bubble. Keeley is creating inflation of assets, so you really want to make sure that the negative side yout, you want to make sure get an increase in productivity gdp that you apply. Caroline no dangerous bubble anywhere . Pierre of course, but you dont have a choice. You need to throw money at the problem to make the economy restart. Caroline which asset is the dangerous bubble right now . Pierre i dont know if its dangerous, because you would have to take an assumption of which is difficult to predict. I would be period left covetable with bonds and equities. Definitely from the evaluation point of view you just dont find so much value their. People are therefore safety or by default because there is not much else. A total return over 10, 20 years, with deflation caroline we will speak much more about deflation and the wider economy. Pierre will stick with us. The flash profit forecast in the warm up to european Equities Trading they with us. Caroline 7 47 here in london. Here are the stories you need to know. Asian stocks and currencies have jumped on the prospect of more stimulus from the ecb. Better than estimated u. S. Tech earnings have also helped. Erased the lost from the first four days of this week, heading now for the longest weekly streak of gain since april. Amazon surged. They saw a renue rise of 23 . It has been keeping a tighter ion spending and says the figures were helped by the growth of its sales from the july primed a commercial. Prices rose weaving banks to easier credit. The recovery also extended to a larger number of small eddies underpinned by rate cuts and the easing of buying restrictions. We are but 12 minutes from the nejr has i know that some stocks should keep an eye ona. Nejra a lot of stocks to watch they, starting with volvo, worlds secondbiggest truck maker. It said that the weaker Swedish Krona did help boost thirdquarter operating profit, this is even though truck orders, which predict future sales, dropped 15 . The earnings rose 75 . To give you a bit of context, full those restructuring at the moment to become more profitable, because it is struggling with decline in china and brazil. Is being called higher by analysts if you look at ericsson a Third Quarter profitability that missed analyst estimates, a longawaited rebounded north american sales, slowing to materialize. We are talking about the growth margin. Ericsson is expanding into other services as well as tv and Media Technology to try and counter this slowing growth. That stock is being called lower for the open. Maerks, we know that sk owns the biggest shipping lines and they cut their profit outlook, citing a weaker global container shipping market. That is often the bellwether for Global Growth, so this is not only concerning for them but also for Global Growth as well. This stock is being called down as much as 7 . Caroline thank you very much. We are back with p and the grunge. With pierre lagrone. How exposed are you at the moment . Is this an area you have . Pierre we have been very busy in china for quite a long time, but in terms of investment, theing the property real start of the decline in growth in china was coming from the property in 2014 but it is interesting that it is changing slightly. Mlas and property the social spending that was cut and then the corruption measures, it was really a difficult period. Another year, yearandahalf. But like in everything, it is a china of Industrial Production and the oversupply of plenty of industrial goods and bridges to nowhere where we had here in europe. Then there is the other china where you have Phenomenal Growth for health care, internet, infrastructure. Especially because now we have a ,ot of different sectors quoted quite a lot of nuggets in china. Especially because it is so obvious to be negative that everything has been painted with the same brush which is typically good value for us because you can then find great growth factors at relatively good multiple. Caroline so the equity sector and health care would be where to go. Pierre we think the three main areas of the health care, internet, and ecommerce, which is growing you saw the amazon numbers. Companies exposed to china rather than chinese Equity Companies pierre unfortunately, you really have to find chinese companies, because exposure to , they aremmerce smarter than that. They kept it for themselves. But there is also some great innovation, like a private Company Ecommerce is really phenomenal. One of the reasons, a lot of , they didntets Start Building fixed landmines they dont even know what it is. Directly went to ecommerce for quite a lot of areas and we see the growth is very strong. We are still way below penetration, ecommerce sales, gp there is a lot of headroom. Caroline is alibaba a buy, then . Pierre i cant comment on the specific stocks but it is the dominant part. That is where we find a lot of growth. Caroline its interesting you are talking in terms of how you have been looking at the sector in china, the initial moves the 2014 its the 20th anniversary. Are you finding this business changing . Are people them our numbers in terms of inflows, are people looking more at alternatives . Pierre yes, totally. People are looking more to investment, especially because people are realizing that it is really tough to time. It is something good to have for a longterm trend, but you really need Something Else with the multiple different strategies. Whats interesting is that things have changed its an interesting conversation about why the cta is beating the macro being on the same raw material. You can see that this area is flying,g like airplanes where the machine is going better than the human. Machineill beating the but a human can be a machine anymore and we have seen and this is the leading edge of the numeric side. Hand, we see that nothing replays an individual equities, the season defined ed mind,this season and min that cannot mind fools. Caroline i hope we get you on again to talk. Here lagrone should. Jonathan good morning, happy friday and welcome to on the move. With our moments away from the start of european trading. Before the end of 2015. Draghi. A for b be pushed into action . So much to discuss this morning. We are a few seconds away from the market opening. Up 120 points. Lets get straight to the European Market open. Equityr yesterdays rally was the biggest in any ecb meeting. Bigger than january even. Draghi really gave a crowdpleasing performance. That really reassured investors that the ecb is ready to step up. What we saw was the rally yesterday. We are still waiting for the move today. Futures were pointing higher. We are waiting for the equity markets to open to see if we have a second day of gains. I can tell you these stoxx