Transcripts For BLOOMBERG Countdown 20160506

Everybody. Im anna edwards. Lets update you on australia. Getting a few headlines coming through and if you market moves as a result of a reduced inflation forecast. Ive got a chart here. Inflation going down under. This is the headwinds, the challenge that faces the rba, like many Central Banks, hit by this global disinflation. This chart goes back to the 1990s. As a result, you saw the aussie on the move. Lets have a look at the risk radar. Real weakness coming through in the aussie as a result of this move. Yields on bonds lower. Threeyear yields hitting a record low in australia. Eightweek low on the australian currency. The big question, whether the central bank will do more to sperry inflation. Ive got the dollar index pretty flatness hour, but it is of course jobs day in the u. S. Headed for its biggest weekly increase in six months. The yen increasing against all major peers. Wti at 43. 84. Lets get to Arcelor Mittal, getting numbers from the steelmaker. This is the Worlds Largest steel maker, contending with slumping prices of the material and the fall in iron ore prices. Millionarter 927 against an estimate of 924 million. Broadly in line. The other numbers, net loss of 0. 2 billion u. S. Dollars. They see themselves being Free Cash Flow positive in 2016, repeating their forecast. Sticking to their forecast. Steelmakers have been hurt by china, exporting record amounts of the material as its own economy has been slowing. That has been undercutting prices in europe and the u. S. The ceo has had to scrap the dividend, cut expansion plans, shot various plants. Sticking to the forecast message from Arcelor Mittal this morning. Lets get the bloomberg first word news. Rishaad salamat joins us from hong kong. Good to see you. Rishaad thanks for that. U. K. Voters giving their first voting on Jeremy Corbyns leadership of the labour party. Sustained losses across england. The brightest spot for labor maybe the london mayoral elections. Defeat theely to conservative candidate. Hes distanced himself from the leftists and corbin. The Election Results may give us some hint of Voter Sentiment. Japan may not be able to ignore the yens growing strength for must longer. Prime minister shinzo abe going so far as to say he may raise the issue at the g7 talks later this month, saying the Exchange Rate must be stabilized and japan will carefully watch and respond as necessary. Meanwhile, David Cameron has been using japan to press his case for britain remaining within the eu. Cameron said britain could benefit to the tune of 5 billion pounds from a japaneu trade deal. We both want to see more jobs, greater growth, and increased prosperity. We both agree that the way to do that is through a comprehensive japaneu freetrade agreement. This deal could be worth 5 billion pounds a year to the u. K. Economy. And i haveter abe agreed to redouble our efforts so we can all start reaping the benefits. Rishaad Goldman Sachs is cutting more jobs in its Securities Unit to roughly 10 of workers there according to people with knowledge of the situation. They build on cuts that already have targeted about 8 of fixed income personnel through last month. The Largest Exchange traded fund that buys junk bonds is flashing potential warning signs and the market is losing steam. Bondsghyield corporate have seen about 2. 6 billion in redemptions in the last few days. Short interest climbing since midapril. That all according to financial analysts. With you each day, every day, with 2400 journalists in one hundred 50 news bureaus around the world. Have a look at our stop stories. Anna thank you very much. Weekend. Od lets stick with the story coming out of hong kong and the broader asian picture. Juliette saly has the details of the trading day. Juliette good morning. A week we would probably rather forget. We are seeing more losses today. Japan has come back online, the nikkei down, extending those 3 losses that we saw during mondays session. We are seeing significant selling coming through in the a share market in shanghai. Theres concerns about a slowdown in growth in china and a lot of nervousness in the region ahead of the allimportant u. S. Jobs number. A number of stocks falling quite significantly in china. The regional index down by 1. 75 . The hang seng has been in the red five sessions in a row. That is the longest losing streak in six months. We are seeing casino stocks and Energy Players coming under pressure. Similar to australia, the a sx 200 down in late trade. The regional index is lower for a fifth session in a row. That is also its longest losing streak. We have been watching cut a, coming back online after that announcement of more recalls. Its share price down 10 . Sharp also under pressure in japan with nikkei news reporting that it could post a ¥300 billion loss. Its share price coming under some selling pressure. Anna interesting stuff on macquarie earnings. Thank you, Juliette Saly. President sal fed said on thursday they were open to considering an Interest Rate increase in june, something that has been almost ruled out by derivatives traders. Futures put the odds of a hike next month at 10 , down from 20 a month ago. Investors are keeping an eye on u. S. Nonfarm payrolls data, with economists projecting 200,000 workers added last month. Charles, great to have you on the program. Lets start our conversation in the u. S. What do you think we are going to learn from the nonfarm payrolls report to inform the debate around june . Chanceaid, only a 10 according to Interest Rate markets that we will see a hike in june. Seeles i think we wont much in june, if anything. I think some of the fed commentary has just kept traders on their toes a little bit. Commentaryof the fed is more about just trying to make sure people dont get too certain. Anna keeping an alternative view in the markets. The got on the bloomberg function which tells you the u. S. Nonfarm payrolls forecast that we got from various economists. Muchstimate pretty 200,000. The average estimate 2005000, the median 200,000. How does that sit for you . Is it all about wages and other factors . Charles we think longerterm, the u. S. Is fine. Shortterm, it does look like it is slowing down a little bit. Expectations had got a little strong. S pou look at the u. S. Equity chart, you can see sort of a rolling over going on, which would clearly indicate that equities are likely to be under a little pressure. Anna what does that mean for your investments . Where are you looking if that is what you think the picture looks like . Charles this is kind of difficult. It is the best of what looks to the a bad lot for equities at the moment. We are reluctant to reduce our exposure to much in the u. S. But also feel we dont want to enter it much either. Having some cash on the sideline , waiting for opportunities in time, seems like the best option. Looking for equities elsewhere in the world or a reinvigoration of the u. S. Growth story . Charles a bit of that, a bit of a selloff in the u. S. , with some discounted prices that look attractive, with markets that get of it too negative. I think cash is a good option here. Anna Charles Newsome joining us from Investec Wealth and management. U. K. Voters have given their first verdict on Jeremy Corbyns leadership of the lever party overnight the labour party. Early results suggested sustained losses across england and scotland. Lets get more with Alan Crawford in edinburgh. Good to have you on the program. Take us through the latest results. A tough night for labor, do you think . Said,well, its as you the results are still coming in and it varies across the united kingdom. These were elections to the scottish parliament, to the regional assemblies in wales, northern ireland, local councils in england, and a new london mayor. The picture is very mixed at the moment. What we do know is that labor has done badly in scotland. P has secured a convincing victory. We are waiting to see if they will have an outright majority, 10 labor has lost almost since the last Scottish Parliamentary election. The conservatives have made something of a comeback in scotland. In england, the picture is far more mixed. Labor is well ahead of the conservatives, but that is votersfor a midterm that seek to punish the ruling party nationally. Seatshas dropped some from the last time these elections were held, but not as many as had been forecast. It is a very mixed picture so far. Anna help us draw a line between what weve seen in the last 24 hours in this voting situation and the brexit referendum that is coming up, the membership of the eu referendum. Help us draw a line between the two. Do you have to focus on what you cant has done . What else do you see in the tvs . Examiningtly that, the tea leaves to determine anything. England, labor losses are not actually necessarily good news for David Cameron. Labor to deliver their support for a proeu antibrexit result next month in the referendum. Wante moment, he doesnt to see massive losses suffered by labor that would complete the undermine Jeremy Corbyn. Is veryand, the snp proeu, but they have indicated they may go for another independence referendum if they were to be a vote in favor of brexit. At the moment, it is very mixed. Certainly in terms of you cant. They havent gained the seats they were expected to. They are doing well in wales, not so huge in england. But notill early days, Massive Gains for them. Anna thanks very much, Alan Crawford joining us from edinburgh with the latest on u. K. Voting. Here are some highlights. Snapshot ofa fresh italys Banking Industry at midday u. K. Time. Later, the a half macro item on the agenda, the u. S. Nonfarm payrolls. And after the European Market close, we get sovereign ratings updates for turkey, the netherlands, and portugal. Might delay the start to some peoples weekends. Next, as north Koreas Kim Jongun is set to outline his Economic Policy direction, we are live in pyongyang. Anna welcome back. Lets get the Bloomberg Business flash with Rishaad Salamat in hong kong. Rishaad thanks. Ta shares in japan plunging again. Weve got 40 million airbag inflators added to the original recall. Cooperates it will with the national highway Traffic Safety administration. , the italiany bank, seeking a buyer to shore up its finances. Find tos provisions to a fouryear low. With the 23. 5 million euro average estimate. Apple and sap joining up to deliver software. A new avenue for apple to reach businesses when sales of iphones have tapered. Sap will develop hundreds of apps for apples operating system. The Companies Say the deal has the potential to attract millions of software developers. That is a look at your Bloomberg Business flash. Back to you. Anna thank you very much. North Korean Leader kim jongil hisis expected to outline Economic Policy direction today as the Ruling Workers Party holds its First Congress in 35 years. Mackenzie, istom live in pyongyang. Good to have you live from pyongyang. Not something i say often on this program. What can we expect . Tom they just let me set the scene here as well. Im staying at the hotel where all the foreign journalists are put up, surrounded by water, so we cant explore. This is the river behind me. Earlier, we went with our government minder to the congress hall. Delegates have come from all over the country. Kim jongun expected to be addressing those delegates now. What we expecting is a cementing of his grip on power. Were also hoping for some signals on the economy and the Nuclear Program being developed. On the economy, it was interesting to see if there will be any blessing by the Workers Party congress of the gray market economy that has developed in the past few years. Rival taxi firms, money exchanges, and even farmers keeping some of their produce. Diplomaticrms of isolation, could this be a step away from north koreas isolation diplomatically . North korea has rarely been as isolated as it is now. We know that sanctions imposed by the united nations, the toughest in 20 years, and crucially, china supported those sanctions and is angry at the two Nuclear Tests that have been carried out under the current leadership, and the multiple missile tests. But it is a key policy of kim jongun to develop a Nuclear Deterrent as well as raising the Living Standards of people here. There are some analysts who are hopeful that once they get over the Nuclear Program, then maybe they will start to look at the economy and maybe start to repair ties with china, on which it remains very dependent on aid, a relationship that was once described as being as close as teeth and lips. At the moment, north korea very isolated. Maybe there will be some overtures to rebuild those relationships with china. Anna thank you very much. Tom mackenzie joining us live from pyongyang. Lets move on and get more thoughts from our guest in the studio, Charles Newsome at Investec Wealth and management. I wanted to ask you about the recent experience of the agm at berkshire hathaway. Lots of people go there spend a long time digesting the sorts of Warren Buffett co. What did you learn from the meeting and why is it a valuable experience . Charles ive never been before. I thought about going for years and years. I thought to myself a few months experience is not going to be available for that much longer. Those two individuals are still very capable. Charlie, i think, is perhaps not at his best but still a very intelligent man. They talked for six hours and answered questions from the public and from journalists. I certainly enjoyed it. Anna what did you learn about his Investment Strategy . Charles he talked about a lot of things. The first thing was capital allocation. Particularly allocation of his available cash and his future purchases. More capital intensive businesses. He always tried to buy businesses which didnt need much money spending on them. Anna i followed him on a European Tour once where he went from european country to european country, looking for private businesses that he might be interested of buying. One of the key things was, you only invest in things you really understand. Charles completely. I think that is one of his number one rules. He must understand the business. And also, you must trust the management. He runs a very small team in omaha and lets the Business Managers get on with it. Trustsnd here clearly the management at amazon. Charles he hasnt got an investment, but he thinks quite a lot of jeff bezos. Hes obviously been quite surprised at how quickly for instance in insurance, people have moved on to the internet, how quickly that has developed. Anna ive talked to Insurance Companies recently who are excited about the opportunities for very few clicks and you are insured on the internet. Still a long way to go perhaps. Charles laurens approach to insurance is very interesting. What he did say is a float in these businesses, using the premiums to invest that money well, is less attractive than it was. Hes disposed of two investments recently which clearly says that things are much more competitive than they were and the returns within the float are less attractive. I think the point about going online and getting online is a good thing. Provided they are done at the correct pricing. Weve seen a bit of a war on sugar in recent years. Increasingly in the u. K. In particular. Heres a man famous for his consumption of cherry coke. Did he give defense up that kind of investment . Charles there was one journalist who asked him about sugar and cocacola. His answer to that question, i would encourage people to look at it, it was brilliant. I thought his answer was something that came down to, this is more about personal responsibility. Trying to control sugar is difficult to achieve. His point was, ive enjoyed these products for all my life and im still going well at 86. Anna Charles Newsome stays with us. Up next, the u. K. And the votes we saw overnight. Anna welcome back. 6 30 in london, 7 30 in brussels, paris, or frankfurt. Heres Rishaad Salamat. Rishaad weve got the aussie dollar dropping and threeyear bond yields falling to record lows after the rba reduced its outlook for core inflation. The quarterly statement sees underlying inflation of 1 to 2 this year. Disinflation will be a key challenge for the Incoming Reserve Bank governor. Few policy weapons in his armory. Giving theirs first verdict on Jeremy Corbyns leadership of the labour party. Sustained losses across england and elections in the scottish parliament. The bright spot may be the london mayoral elections where khan is likely to defeat conservative zac goldsmith. Results may also give hints of Voter Sentiment ahead of junes eu referendum. Japan may not be able to ignore the yens throwing strength for much longer. Prime minister shinzo abe going so far as to say he may raise the eu should the issue at the g7 talks. Abe says much of and would carefully watch and respond to these moments as necessary. A weaker yen has been a linchpin of abenomics. Goldman sachs cutting jobs in securities, roughly 10 of workers. All this according to people with knowledge of the situation. The dismissals in new york and london build on cuts that have targeted 8 of fixed income personnel through last month. Fundargest Exchange Traded is flashing a potential warning signs of the rally in the 1. 4 trillion market is losing steam. Namedocks cunningly Corporate Bond etf seeing about 2. 6 billion redeemed in the last four days and Short Interest climbing by more than 80 since midapril. All that according to a financial analyst firm. Global news each day, every day, 150 news bureaus with 2400 journalists. Find more on the bloomberg itself. Visit top. Thanks very much. Asian stocks are headed for the biggest weekly loss since february. Nejra cehic has details on what is happening in the market. Nejra weve got japanese markets reopening today, training lower if we look at tokyo, but asian stocks in general, looking at the msci, falling. Set for their biggest weekly loss since february. Today, energy and finance stocks leading the losses. We had increasing concerns about global growth. I want to look at the aussie dollar. The rva cut its inflation forecast today. Weve seen the aussie dollar tumbled to an eightweek low against all 16 of its major peers. It is the worstperforming major currency against the dollar today. Yesterday, we saw it again. The aussie dollar is heading for a third weekly decline, its longest losing streak since november. Ive tracked in blue the threeyear yield. That has dropped to a record low on speculation there may be room for rates to drop even after the surprise rate cut earlier this week. The australian economy, very sensitive to china. Those concerns over chinese growth affecting australia too, but also copper. Down more than 5 this week. Lme copper on track for its steepest weekly decline since january last year. The London Metal Exchange index in general on course for its biggest weekly drop since february 2013. Not a great week for metals. The dollar heading for a weekly gain. Bloomberg dollar index headed for its biggest weekly gain in six months. Weve had comments from fed officials saying the june meeting his live. Those comments perhaps driving this dollar strength. Are noten if they driving Interest Rate expectations. Thank you very much, nejra cehic. Japanese Prime Minister shinzo abe has weighed in on the Brexit Debate. Speaking at a News Conference with David Cameron, he made his position clear. Japan very clearly would prefer britain to remain within the european union. It is better for the world that britain remain within a strong european union. We want to see britain and europe remain influential actors on the global stage, contributing to a rule based on piste and stability on peace and stability in asia. Anna cameron highlighted how britain could jenn benefit from japaneu trade deals. We want to see more jobs, greater growth, and increased prosperity for our countries. We both agree the way to do that is through a comprehensive japaneu freetrade agreement. This deal could be worth 5 billion pounds a year to the u. K. Economy. And i haveter abe agreed to do everything we can to get it signed so we can start reaping the benefits. Ona john wraith joins us set now. Charles newsome from Investec Wealth and management still with us. Great to have you on the program. I see that next week were going to get new forecast from the bank of england. Some commentators saying it doesnt really matter because it all depends on the 23rd of june. John that is clearly true. Anyone would say that after the 23rd of june, we have an impact one way or another. Reflect they do have to on what has been going on recently. We have seen some clear slowing in economic data, perhaps some related to brexit risk, perhaps some not. They have to tell us how that affects their mediumterm forecast. Anna ive got here on the aoomberg the chart showing bloomberg composite of the u. K. Eu referendum polling. Put remain and leave at fairly similar points. That hasnt moved much. We saw some divergence in april. We saw president obama visit. Since then, things have gone back to that 4140 kind of level with a very high level of undecided. John clearly no revolving trendiness. It just tends to oscillate around these levels. Clearly it would be complacent to assume that the outcome is already certain, and the fact that around 20 of voters constantly appear to be undecided is very important. Will they go out and vote at all is the first question. If they do, which way will they break . Anna quite difficult, charles, to draw a line between the voting we saw over the last 24 hours at local and National Voting for assemblies and parliaments, difficult to draw a line between that and the 23rd of june. Are we likely to learn anything that helps inform the Brexit Debate . Charles the difficulty for Jeremy Corbyn and the labour party is, last year when they had these elections, it was at the high tide of david miliband, when labor was looking like it was going to come back to power. Anna ed miliband. Charles ed miliband, sorry. So whatever was going to happen today was going to be difficult. Anna john, drawing a line from how you cap does . John hard to stretch the point too far. Have done very well in scotland and they are strongly proeu. Perhaps theres a sort of guide their. At least in that part of the u. K. , people may be minded to vote to stay in. I think this is a very separate issue we voting on at the present moment. Anna and a lot of the polling in scotland has told us they are proeu. Its interesting, but maybe not so new. You mentioned weakness in the data. Where do you see you can us in the data see weakness in the data in the u. K. . John if you think of the pm eyes, they are reliable forward indicators. They have been credible for a long time. If you go back three or four months, the u. K. And rising pmis by a distance. They are now the weakest. Theyve fallen sharply and the composite reading is only just really above the pivotal 50 line now. We and lots of others were expecting the Second Quarter to see some economic slowing ahead of the uncertainties around the referendum. This is a pretty serious slowdown, it seems. Risks of whether or not we can reaccelerate become more serious. Anna where does that leave the bank of england . There seems to be a divide between economists and what the market is factoring in. Actually factoring in a cut at the next move. Once we get the other side of the 23rd of june and the referendum is no longer on anyones radar, they will look at how the data bounces back, if it bounces back at all. If it does, i think they will be unhappy with the market continuing to price the first hike so far away. If we see the u. K. Leave the eu, and were that to trigger a slowing of the economy, they wouldnt respond with dramatic easing quickly. Anna do you think, charles, that International Investors need to watch this carefully . Is it too parochial . Charles i think International Investors should take an interest. Our view at investec is that we see pluses and minuses on both sides. Shortterm, there are some risks of an exit. It could cause a slowdown. Pollsok at some of these and the polls are quite close, but if you look at what the bookmakers are saying, the bookmakers are much clearer. The bookmakers seem to be indicating stay. John do you look closely at what the bookmakers say . Charles clearly the Financial Markets do. Depending on your interpretation of what has happened in the andy and the ability volatility markets, i think it is fair to say that the expectation is exactly set. Anna the pollsters had a bad election. As i said before, what strikes me most of all is the sheer level of undecided voters. I think it is fair to say that circumstances can be conceived which could tip a lot of people one way or the other. I wouldnt say it is a done deal yet. Anna International Investors are focused on the nonfarm payrolls data out of the united states. Dont want to let you go, john, without getting your thoughts on the u. S. Is it all about the nonfarm payrolls number . I bet these predictions and history back to 2013. This is the history of nonfarm payrolls in white. Then the forecasts in blue. What are you expecting to see . Is it the number that matters, the wages . John everything. We need to see wage strength pick up. Theres a sense that the u. S. Is at something of a tipping point. The question is about whether the fed are able to an act the next move in a tightening cycle. If you look, leading indicators relating to the u. S. Have been sliding for some time. Strong data would reassure markets. Anna june still live . John certainly still live. We dont think they will hike in june. Anna john wraith from ubs and Charles Newsome from Investec Wealth and management, thank you for joining us. Up next, as spain heads into an election rerun, we look at what politicians can do to break the stalemate. Anna welcome back. Nonfarm payrolls numbers out later. New york will be watching that closely. Looks as if we might be on the back foot of u. S. Equity trading. Got to get through the session in europe first. For now, lets get to Rishaad Salamat with the Bloomberg Business flash. Rishaad Arcelor Mittal dropping 33 . It is the worlds biggest steelmaker. Pricesing with slumping of the material and a decline in iron ore but maintaining its fullyear earnings target. Ata shares plunging again. 40 million and bank info leaders will be added to the previous recall. Takata says it will cooperate but is unaware of any substantial risks from the products in question. Monday to pesky, the italian bank, seeking a buyer to shore up its finances. It posted firstquarter business profits ahead of estimates. Income falling to 93 Million Euros from nearly 144 million a year ago. Compare that with the 23. 5 million euro average estimate. Apple and sap teaming up to provide software. It opens up a new avenue for apple when sales of mobile devices have tapered. Sap will develop hundreds of ap ps. The company say the deal has the potential to attract millions of developers and sell millions of devices. And that is your Bloomberg Business flash. Anna thanks very much. North koreas most important political meeting in 36 years gets underway in pyongyang today. Reportsg Tom Mackenzie from the country arch capital on what to expect from the congress. North koreas leadership is putting on a show and everyone is expected to be in lockstep, even the kids. The seventh Party Congress is likely to cement kim jonguns grip on power. Analysts say a new Central Committee will be appointed and key loyalists will be given top positions in the party. It is a chance for the leader to present a united front to his people and the world. We hope to report on the economy in the runup, but our government miners instead took us here, pyongyangs childrens palace. To them, this is proof that kim jongun is fulfilling his promise to improve peoples Living Standards. His policy is to do that at the same time as developing nuclear arms. Across town, we were driven to an old armory, a reminder of the armies central and continuing role in north korean life. Weve been taken to see some military history in pyongyang. This rifle apparently fired by kim ilsung, his wife, and later his son, kim jongil. They apparently all hit bullseyes. Hitting economic targets will be harder. There are hopes the party will enact reforms to formalize a nascent market economy. A new middle class has sprung up in parts of pyongyang, but much of the population remains poor and malnourished. Sanctions against north korea are the toughest in years. The government continues to rely on china for aid. To have to wait for the curtains to come down on this political pageantry before we get a clearer insight into north koreas history. Anna Tom Mackenzie reporting from pyongyang. Spanish voters are heading back to the polls six months after electing the most divided parliament in the countrys history. King felipe called a fresh election in a bid to break the political stalemate. Prime minister Mariano Rajoy explains the economic recovery has so far shrugged off the political uncertainty. Joining us now to discuss what the party needs to do to effectively lead a coalition is isabel. She is land of the conservative think tank and she joins us now from madrid. Great to have you on the program. Youve been reading a campaign, i suppose, within the pp, against Mariano Rajoy. What will it take to remove him as leader of the party . Good morning. Thank you for the invitation. What weve been trying to promote his renovation within the party to give it a chance to have a result in these new elections. Weve been demand and the direction of the party to put together a group that can start the National Congress and will allow to renew the direction behind the party to have a better chance at this election. As you very well know, weve been having a deep and complex situation in spain, where none of the parties have been able to achieve the coalition. Now we have a new chance, a new opportunity, and weve been demanding this renovation to have better results in june. Anna and why has the party not already if that is what you would like to see happen . Why has the party not done that yet . Were not only focused on Mariano Rajoy. We are focused on the project for the citizens of spain. Whether with the same politics, programs, are we going to be able to have a better result, or instead, we try to change the project, the citizens in spain will have a better chance to have a better result. It is not only Mariano Rajoy. It is the politics hes putting together that we are demanding to change within the party. Anna how Much Division is there within the party . How much support do you have . We are a Grassroots Movement. We started with very little support a yearandahalf ago. For thisass Grassroots Movement, weve been able to change important things within the party. Right now, Everybody Knows that the next congress of the Popular Party will be based on right now inich spain, the Popular Party does not have primary system. The party is of appointed by the direction of the party. We saw pressure with the Grassroots Movement that weve been putting together. Weve been able to change minds within the party and convince the party that the next congress will have to be a primary system. Anna meanwhile the spanish economy stages a recovery. Oy deserve some credit for that . Absolutely. It was very difficult when he entered office four years ago. The efforts that the spaniards have made and the politics that have been put together has been very important. One of the things that is very important in politics, economy is very important, but there are many other issues that you need to focus. Has beenar party losing one third of the vote in these four years, so theres much more to offer to the citizens. The party has faced a number of corruption scandals in recent years. What can you do to restore trust among the spanish voting public . Corruption is in all of the parties right now that are in spain. The most important thing is how you react to corruption. What are the measures you take to confront corruption and try to stop new cases of corruption within the party . Weve proposed a huge renovation within the party. The most important thing is you have checks and balances, measures that you can control the different leaders of the party. If there is corruption, you need to ban them from the party sorry . Anna who do you think should be banned from the pp . Anyone involved in a corruption case, should get out of the party. But more important, all of those who had the political responsibility over those people should also take responsibility. Anna isabel, thank you very much for joining us. Spain set to take place just a few days after that brexit referendum on the 23rd of june in the u. K. We will talk more about the u. K. When we come back. U. K. Voters have given their verdict on Jeremy Corbyns leadership of the labour party. We will look at what clues the results give us ahead of junes european referendum. We will look at results from intercontinental hotels, the owner of the holiday inn and crowne plaza brands. That is next. Keeping june in play. For chiefs say the meeting is still alive. Markets to the chance of a hike markets say the chance of a hike are at 50 . Jeremy corbyns party and election bond fares. The worlds biggest junk eps epf to 10 . Anna welcome to the countdown. I am anna edwards. It is 7 00 here in london. Breaking news for you from the hotel sector. We got numbers coming through comparative aty 1. 5 according to the business. Numbers are up 1. 5 . Interesting to see what they are doing in the americas. The estimates were for an increase of 2 . On that globally comparable the rev par said the number is below estimates. Up 1. 4 in euro. The estimate of an increase of 2. 2 . Asian is down. Looks things are sluggish and parts of asia and europe. The china number is up by 2. 2 and that was against of an estimate of flat. This is intercontinental, the owner of holiday inn, the crowne plaza brand. They derived more than half of are in theals u. S. As they are giving an update on current trading, he gives us confidence. M a is a seat in this is this. They did their own m a last year. They dipped their toe into that. Elsewhere, it it was big moves. Katter is in talks to buy parts of the regions as well. Financial position that their financial position remains if i there were look at the futures, we could be on the back of it this morning. The handover from asia is not a pretty one. Expected to be down from. 4 . By. 4 . T it to be down lets tell you about what is been happening overnight. Australian debt market on the back of expectations around inflation from the rba, the central bank. They see a little target this year. They have been hit i this quandary that so many Central Banks have been done with. By this quandary that so many Central Banks have been done with. Jobs day over in the u. S. The dow extent the dollar index headed for the biggest increase in six months. All of this talk for june being a live meeting is supporting the dollar. Wci on your screen, 43. 86, the price of a barrel. That particular measure of the oil price separate, the first weekly drop in a month. Curbing supply in the Canada Oil Sand regent. Region. Lets get to first bloomberg first word news. You mentioned what is been going on with japan. They have not been able to ignore the yen. Saying the abe g7 talks. Abe saying Exchange Rate must be stabilized. Japan would carefully watch and respond as necessary. Theweaker yen has been linchpin of economics. Conference,news cameron said he could benefit to the tune of five lean pounds from a japan eu trade deal. 5 billion pounds from a japan eu trade deal. We both agree that the way to do that is through a conference of japan eu freetrade agreement. This deal could be worth 5 billion pounds a year to the u. K. Economy, that is to enter pounds. That is 200 pounds. Reapingter abe the benefits. Goldman sachs is cutting more jobs in its securities and extending the reductions in fixed income operations. All of that from people who have knowledge of this. Building on cuts that already had a target of 20 . Of. 8 . Indicate an epidemic that overs the potential up for 1 trillion. Estimated in the reports that was released yesterday. Oh the comparing with the official 1. 67 . Junk bonds is flashing a potential warning sign that if the mother rally in the market is losing steam. Blackrock ishares but carpet bond etfs. Corporate bond etfs. Short interest in the fund climbing by more than 80 since mid april. This coming from the analytic firm. Bureaus, 150 news populated by 24 100 desktop to 400 journalists. Anna. Anna lets stick with the Market Action over in asia. Juliette saly has the latest. Not a pretty not a pretty picture. Juliette, what did you do . Juliette absolutely. I am not on markets next week, but we have seen a lot of filling coming through. Japan coming back online. 25 . Y it is not been a great week for japanese investors. The market was only open on monday. And on friday. In between that come we saw the yen have three sessions of losses. Higher against the dollar again today. The dollar weaker so that has pressure coming through on japanese equity stocks. Buying andod also the go stocks today. A story of risk off appetite ahead of the usa nonfarm numbers. Elsewhere the markets that are thee have been seeing sink on compass it down by 2 the shanghai composite down by 2 . The hang seng holding on to those overnight lows. This is a session of losses. Both the hang seng index in the eighth share index has been on a losing streak since december last year. Sincengest losing streak december last year. If you look at the numbers excluding japan we see a longer losing streak of eight sessions. Selling pressure by materials also sold off and defensive buying coming through from Consumer Services and consumer bones. Asian stocks at a fourweek low. Have a look at that yen which is stronger against the dollar and the late session. 127 point 23. 23. 7 the inflation target had that 3 inflation target for a number of years, cutting Interest Rates to a record low of 1. 75 . The central bank now saying we do not think they will get inflation targets in 2016. They cut the inflation target to 2 so that has put pressure on the aussie as well. Anna Juliette Saly in hong kong. Lets turn our attention to u. K. Policy. Voters have given their first verdict on Jeremy Corbyns leadership of the opposition labor party. Lossesesults suggest across england and scotland. Lets get more from Alan Crawford. He joins us from edinburgh. Give us details from the early numbers that have been coming through. A patchy night for Jeremy Corbyn. Figures, thedline Scottish National party has declared victory in the Scottish Parliamentary elections. That is the third consecutive victory. At the moment, the seats are still with the seats are still the decorations are still being made. Majority in the parliament. This is april washable representation system which is constructed specifically to try and hinder a majority. It looks like a big night for the nationalists. Conversely, it is it has been a disastrous night for labor in scotland. Labor lost Something Like 10 of it of its vote share. Equally it has been a good night for the Scottish Conservative Party led by davidson. In england, it is a very mixed teacher. Labor has more seats. There is not surprising. These Council Elections are used to bush and used to punish the governing parties. Labor has lost some seeds but not as many as have been predicted. As has been predicted. Anna help us draw the line within the voting that we have seen and the brexit on eu membership that takes place on the u. K. On the 23rd of june. You mentioned the performance overnight. Most that was what analysts were looking for, any kind of indication as to how this whole set of elections right across the u. K. Might play out next month at the brexit referendum. The most obvious thing to look for was any movement in the u. K. Abroad. It looks like they made 20 gains. These are 20 seats across more there is nond evidence of a huge swing. Perhaps as a result of that, i saw the pound is really little changed in early trading. Anna alan, thank you so much. Macdonald, cal for global equities. Lucy, great to have you on the program. Give us your thoughts on the u. K. Investment seen as we look ahead to this exit referendum this brexit referendum on the 23rd of june. Lucy it is too close to call. You can see it is little hacking. Little packing. Bit aa versions a divergence a bit in april. Theo this go looks like lucy looks like how well they get the young in aged out to vote. Young and aged out to vote. It is about age. Anna does it stop you from investing . Do you think i am going to wait . Lucy there is no point in going ahead and less there is a negative outcome ahead, and less there is a negative outcome. If you look at sterling and bond markets in equities, it doesnt look like a brexit is priced in at the moment. [indiscernible] i think it is just worth waiting. A potential absence by indulging. Anna what kind of stocks would you be interested in we do not have this looming . You would take a look at for the u. K. If we do not have this referendum hanging over us . Lucy it does not change the sort of stocks we be looking for. We always look for companies that are looking to grow. Clearly if there is a vote to leave, then we will need to see what terms they are going to be for trade. That could take a long time. I think we just need to wait. Anna someone suggested that a company that would benefit from inflation could in the shortterm be of interest post a vote to leave the eu. There are so many unknowns. Difficult to make any investment decisions. Lucy absolutely. That is logical but we cannot make a judgment. Anna d. C. Weakness in the data and concerns around the brick do you see weakness in the data and concerns around the brexit. Lucy not discounted yet and prices. As far as data, things have slowed down. How much of that is due to this is difficult to say. Not surprising if there is holding back on major decisions. The Property Market is slowing down a little bit. That is more to do with taxation than with brexit. There is evidence on the margin of a little bit of slowing down. Much. Lucy, thank you so she stays with us on the program. A snapshot of italys financial sector. Next onive from milan countdown. Anna welcome back this is countdown. Around byeing bumped moves overnight in australia and a negative handover coming through from the Asian Session in japan. Difficult to make a direct link. Lets get to Bloomberg Business flash with Juliette Saly. Profits First Quarter dropped 33 , that is the road biggest fuel maker contended with slumping prices and a declining iron ore. The government has maintained its fouryear earnings target. The cottage shares have plunged limited. Shares have have plummeted. They will cooperate with the national highway traffic and safety demonstration. They are not aware of any substantial risk. Taking a bitenk to shore off its finances. It posted First Quarter profits that be analyst estimates. It declined to a fouryear low. That compares with the 23. 4 Million Euros average euro estimate. Apple is teaming up to deliver software for iphones and i pads ipads. Sap will develop hundreds of apps specifically designed to apples operating system. The governor says the deal has the potential to attract and sell millions of devices. That is your Bloomberg Business flash. Anna. Anna italys bank has posted Fourth Quarter profits that beat analyst estimates. Bloombergs danny green joins us. Analysts haveut viewed it positively. Why the positive reading . Dan the credit quality of the bank improving Going Forward. Every european financial analyst is expecting the Banking Sector to show week revenue for the first three months because of all of the turmoil on Financial Markets. Outflows of customer deposits. Kospi monte paschi is representing what happened in the First Quarter. Emphasized that is a positive sign that he is moving forward with his plan to dispose of a plc and meet their target Going Forward over the next three years. Anna what is the biggest challenge for this bank we talked about nonperforming loans bank. We have talked about nonperforming loans. Dan what is been forgotten in the last three months a miss this turmoil in the Banking Industry amidst this turmoil in the Banking Industry, this state orchestrated rescue plan the fact that monte carlo monte paschi has been searching for a deal. That has to be resolved Going Forward. Anna thank you for joining us. Dan leaf green joining us. Were idents say they four president say they were 10 ,to considering at down from 20 a month ago. Investors are keeping an eye on u. S. Payroll numbers that are due out today. Economists predicting 200,000 workers were added last month. Lets bring back into the conversation, lucy macdonald. U. S. Datas link the picture with what is happening in stocks. Ive got here on the bloomberg terminal which shows economic surprises for the united states. You can see in 2016, we had policy surprises. We had some moves to the downside and stocks as a result. Are these two moving in lockstep . Lucy is cyclical and independent it is cyclical and independent. As far as the recent weakness, particularly in employment, that comes after a period of strong labor market. I think we have seen some shortterm weaknesses. It seems to be related to the mining manufacturing. Some of that is quality prices. Some of that is to do with currency. Weighted,are equally we could see a rise in rates this year in the u. S. We are still talking a big picture of very slow rises. We may get one in the shortterm. The overall picture is that changed. Does the june meeting still look like a live meeting to you. Anna does the june meeting still look like a live meeting to you that go to you . Focus for the fed. It should be. It is important. It does lack. [indiscernible] anna i wanted teacher thought about something i was reading earlier today and it has to do with valuation clustering. Ive got a graphic that shows how populations have been pes across there is sectors have been very similar to each other. Now we have this move back to the norm. Does that throw up more opportunities or fewer . Lucy fewer really. We know [indiscernible] not all companies are the same. There are not valued at the same rate. That does not make sense. More sustainably. Get back that it is spreading out and normalizing does that mean more opportunities, but it could have further to go. Anna where you might dish where might you be interested in mind more stocks where might you be interested in buying more becks . Lucy you have to selective within sectors. Not necessarily a question of Sector Allocation if you find companies within the sectors. With technology coming can see [indiscernible] a spread of different groups. We have seen that [indiscernible] yet seen facebook on one side and apple on the other side. Anna thank you for joining us. Lucy macdonald. That will do it for countdown. On the move is up next. They will continue to bring you analysis and ahead of that payrolls number. Look out for the market open. Show me movies with romance. Show me more like this. Show me previously watched. Whats recommended for me. X1 makes it easy to find what you love. Call or go online and switch to x1. Only with xfinity. Show show me more like this. S. Show me previously watched. Whats recommended for me. X1 makes it easy to find what blows you away. Call or go online and switch to x1. Only with xfinity. Guy welcome to on the move. We are counting you down to the european open. What are we watching this friday morning . Dead or alive. Will todays payroll figure change the markets mind about the hike at the june fed meeting . A big question. That story were talking about. Disinflation down under. Aussie dollar drops to a low. Fts, the italian lenders the nrs