Transcripts For BLOOMBERG On The Move 20140110

Lets get over to berly and talk to hans. Youre looking at it has had the strongest quarter in the last two years. Incidentally, it coincides with the c. E. O. Coming back. The cofounder is now back with the company. It is an improving outlook for europe and the united states. Manus . Thanks, hans. Jon, what else is going to drive these markets . We have Big Industrial data. We have the chinese trade data. Trade falling 5 for 2013. That could be a seen going into 014. Were expecting a higher open. That is exactly what we aring. Up. 4 . France up. 6 . The stoxx 600 inching into positive territory. Literally only one gain and it is u. S. Payrolls expected to come in at 196,000 for september. 2. 27 million jobs created for the year, 2013. Some pretty strong data through the week. It has led some banks to upgrade. It is no longer about will the fed begin to taper. That process has begun. How fast will they ease back . He euro trading at 1. 3611. Pretty much dead flat on the day. What is going on in the u. S. And the eurozone, expected strong jobs growth in the u. S. It is going to be a fragile year for a lot of people who trade in these markets. Lets bring some of the spanish data to you at the bottom of your screen. This is industrial output rises 0. 2 . In the last 24 hours, when it is nearly 24 hours since the e. C. B. s first News Conference of 2014, decisiveness to act was the promise. The e. C. B. s tool kit has access to all the possible instruments. The recovery is there but its weak. Its modest. As i have said many times, its fragile, meaning that there are several risks from financial to economic to geopolitical to political risks that could ndermine easily this recovery. Joining us now for a reaction is the director of investment at London Capital with more than 3 billion under management. I watched the entire briefing. Very dovish, but a real stark warning. What did you make . I think that preparing ofly the marketplace obviously the marketplace. The telltale sign is inflationary pressures continue. It is coming down. The number that came out a couple of days ago is. 7. On inflation risk. I think we are not very far when we have to continue to provide more stimulus. Cutting rates is more limited. It is going to be another version of eltro. Ltro. Everyone to wait to see how else they can inject liquidity into the system. Part of his question and answers was this is not a japan style event. We do not see this as a japanese situation and he really, really reiterated the definition of deflation. Would you agree or disagree . Obviously because you have some negative inflation and others coming down, youre not completely like that but the longer they way to help the e. U. System as a whole, the nearer you get to a situation where we sit maybe two quarters from now, the numbers are going to be probably zero inflation rate. We have the fed obviously in a very, very different kind of mode as you look at 2014, do you think it is going to be a very consistent quantitative easing process or maybe a few momentses of where they pause . What we have seen in the past couple of months is the economy cycles have good recoveries taking place if the u. K. We have it is difficult to judge in a proper recovery is happening in japan. The recovery in europe is so the psych realize not synchronized. What happens to q. E. . The need for the q. E. Cons to reduce in the u. K. And the u. S. While the need for the q. E. In europe is rising all the time. With regards to japan, they already said they are going to have q. E. Running all the way to the end of 2014. In a way, the economys cycles are following different parts. With all of that in mind, talk to me about where your view is globally . Where do you want to be positioned for a good run in 2014 . I think there are opportunities across the board in all of the four regions that we are talking about, in case of the u. S. And u. K. You want to bring in a bit more economics in terms of the way that you would be positioning your location. In europe, you want to be a bit more in case of japan, of course, a yen devaluation. Exporters continue to drag the market ahead. Do you see a lower yen . They will have the quantitative easing going all the way to the end of 2014. The weaker yen is the only safety wall that is left for japan to stimulate any growth. Stay with me. Well get into the nittygritty f where to put your money. Heres a look at whats coming up on on the move. Ocados deal with morrisons finally transform the company . Plus it is the commodity outlook for 2014. Cease black rocks evy hambro joins me. Im manus cranny in london. This is on the move on Bloomberg Television, radio and streaming on your phone, tablet and bloomberg. Com. Here is a stock that is on the move this morning. It is swatch. The bigs maker of watches coming out of switzerland. A positive outlook for 2014 even though Foreign Exchange writes off 100 million swiss francs and they have the challenge over the chinese not giving as many gifts. Caroline hyde will have a run down later in the show. The best performing european stock in 2013 was ocado. Caroline hyde, two for one in this show. How is the story . Talk to me about ocado . What are the ambitions here . They are a technology company. If you have been thinking it was retail, you would be mistaken. What has got investors so excited that the Share Price Rose 410 last year so, excited that they are on a fresh record this year up 17 year to date despite never making a profit, it is all about technology. This is a company that has built its own software to have state of the art delivery. At the moment, it is focused on grocery delivery. It can be expanded. They have taken significant chunks, a big stake in this company betting on technology licensing. They feel this company can expand its remix from the u. K. More than 50 of their office staff are actually technology employees. They have been building the software to make it the best in class. Analyseses say there is not a retailer or a company out there that doesnt want to replicate what ocado has and what they have to offer. So far, the grocery Delivery Business is their forte. But have they expanded . What are they going to do with morrisons . What are they going to do for morrisons . It is all about groceries. They are the hardest thing to deliver. The most volume this and the least value. If you nailed this, you basically nailed online retailing. Today, their website has gone live for morrisons. They are delivering in the midland. A 260 Million Pound deal they struck back in may last year. In a quarter of the time and in a fraction of the price, they managed to bring morrisons online. Remember, morrisons had a profit warning yesterday because they are not online where its competitors are. Licensing, technology and Services Helping them ramp up and get where they need to be in the marketplace at the moment. Ocado alone offers 35,000 products online. They cover 73 of the u. K. Well just have to see how fshtly they do it for morrisons efficiently they do it for morseons. The potential now is where will they go abroad and what other kidse of retailers will they offer . Pets . Baby products . Thanks for that roundup. Well see you later on. With me now is the investment director at london and capital. Ocado a performance. It is. One needs to be careful. They have not yet turned any real profits. But the market and the way people shop is changing. Quite quickly. Internet is becoming bigger and bigger. It initially started with the electrical good and so forth and has moved into groceries and a long way to go. Going to supermarkets is not something that is funny and takes a long time. You were saying give me more. So you i want to get through these. Did the u. K. , you say that smiths group, that is a multinational company. Its engineering and all of hese facets. 3 dividend . I think it is going to rise. It is a global company. Youre trying to capitalize. A strong balance coming with it. Nice and steady performer going forward. Talk about this is tobacco. The chinese are talking about perhaps banning smoking in public places. Switching on to the Smokeless Cigarettes and so on. The innovation will continue. All in all, the globally, declining in the developed countries. Economies are still doing ok. This is what they have been doing. More of the same could come through. The sector has been a little bit under pressure because of the moves to ban smoking indoors in china and other places. Ive got to get to america just before we go to the break. Nordstrom. Looking at who they are up against. Blooming dales and lord and taylor. There is a great mall up in westchester that as has all of these stores in it. You said nordstroms is going to come out the best . Were going to talk about employment later but in a way, the economys recovering which means the disposable incomes will do very well. The Housing Market is also recovering. You really want to be able to play this game, which is going to be very good for all of 2014 and it is a question of how you capitalize on this and i think this is a great place to do it. Youre going to stay with me. I want to flash up one stock. Have a look at this. One of the main calls. Were going to get into the reasons on that readout for the year. Almost 4 . Well have a look at that when you come back and why you want to have more of that. Coming up, more on the companys revival and talk to hans nichols. Stay with us. Welcome back to on the move. Im manus cranny in london. Here are some company s that areon the move. Swatch is forecasting a positive 2014. Even as 2013 revenues grew at its slowest pace for four years. Swatch is the biggest maker of swiss watches. Euro necks named its chief executive. Plans to sell at 30 for an i. P. O. French and dutch regulators have differing views on the future of your next. Your next. Your next. 2013 was the worst year for computers. U. S. Commerce left out desktops if the Holiday Shopping lifts. Buyers in asia opted for smart hones and tablets. Lets head to our international correspondent, hans nick nols berlin for more. The turnaround, hans. Where, why, how . Well, they have one of their cofounders, murphy, is back as executive chairman. He was gone for two years. Now their numbers are better. Part of this is an internal turnaround. They changed a lot of Staff Members. They lost some 8,000 Staff Members globally. It is all about improving Economic Conditions in the states and in europe. Uarterly profits are good. It is more a trend story about whats happening elsewhere. They have raised their forecasts. From 11 to 12 . Previously it was in the 9 to 10 range. Youre seeing stocks like s p here in germany and s. A. P. In germany. Overall the trend seems to be another example to have recovery taking hold. It is not taking off. But it looks like positive nose the tech sector in india and globally here in new york. This when a gets most of its revenue from yeah. But this is what was interesting. They have gone up to almost 25 of revenue is coming from europe. Before it was up about 1 . They gained 1 in europe but lose 1 in the states. What is interesting about that is over the last four months, six months, the story has been about growth in the states bolstering these Tech Companies elsewhere in the world and europe dragging them down. Here is one example where they have seen more growth in europe than in the states. It is marginal. If you think of the trend, anemic growth in the states. And less than anemic growth in parts of the eurozone. Ok. Hans, thanks for that. Stay with me now because the investment director at London Capital is still with me. We just had a nice story there on infosys. Is European Tech on your radar this year . It is too early. The Bigger Companies that are running, i. T. Departments are getting more and more expensive. What you have seen is it has moved to cloud computing, basically outsourcing. Supplying services to the cloud. That is where the Business Opportunities are going to keep expanding. I got overexcited and read my digits wrong. 44 over the past year. Publishing company, media company. Talk to me about why you think because there is a bigger story. I think so. To start off with most of the companies mid year and that kind of publishing. Going from 2008 to 2010, 2011. Growth is stabilizing. Going up. Diversify. This is a very low risk way of capitalizing on the implement that is taking place in the Global Economy environment. Clearly the Marketing Budgets are going to soon start rising and a lot of the publishing is going to see Margin Expansion over the next 12 months. It is a very good way of capitalizing on what is in store. Nonfarm payrolls, we were talking about the shopping there. The rescue free trade. Talk to me about your sues. In the shortterm, we can look at the jobs report. Of course they are very volatile. We have had cold weather. That is going to do a lot of havoc on the numbers but the point is it is an improving trend. We are going to soon be at 6. 5 before the end of the year unemployment. This means that the improving cycle, consumers disposable incomes, you want to be able to capitalize on this trend. The easiest way to do it is through the original story and there are a lot of choices. I think there is a lot more in store for that area. Great to have you with us. Wish you well. Have a great year. After the break, dont miss my conversation with blackrocks vy hambro. Knows a thing or two about commodities. Welcome back to on the move. Im manus cranny in for Francine Lacqua today at bloombergs European Headquarters here in london. Were 30 minutes into the trading day and it is jobs day. Lets see how things are shaping up. China seeing imports rise the most in five months. It is jobs reports today. 197,000 jobs expected to be created. Were waiting for industrial production. We saw nice growth figures out f spain. Some people would consider it to be a very dovish mario draghi at yesterdays News Conference. The dollar is just off by. 8. But you are looking at the dollar complex being at a fourmonth high. The longest stretch of gains in 10 months. Dollar yen dipping ever so slightly. Goldman sachs saying youre going to see a bigger and faster ove to 107 against the dollar. Euro dollar, draghi seems to have put a cap on where the dollar will go to. Cable just off a twoyear high. One stock that is on the move. Lufthansa are making jouments about the state of play of their announcements about the state of play of their costcutting program. Youre looking at 80 million in term of restructuring costs for 2014. A little bit better in terms of in the plane. The factor rises slightfully 2014. Those are your markets. That is one stock. Here are the headlines. Inese imports rise the trade surplus topped 25 billion. They became the top trading nation in 2013. Seeking to join the Transpacific Partnership for trade talks. For months south korea has been considering whether to join the u. S. Led negotiations. The Company Wants to progress toward a commercial deal with hina this year as rising won threatens exports. The forecast rises by 197,000. The gain would cap the best year for u. S. Employment since 2005 the Unemployment Rate is expected to remain unchanged at 7 . That is a fiveyear low. Lets get into those numbers now with jon ferro. He joins with us a rundown on the first jobs report of 2014. How excited are you . Incredibly excited. You should be excited too. Ill give you to number of the day. 27 million. The most since 2005. Looking for 197 k since december. After all of that, manus, the u. S. Will still not have recovered all of the 8. 8 million jobs lost as a result of the 18month recession that ended back in 2009. Let me just give you a sense of demand. The tie it still for jobs in the u. S. Southwestern airlines advertised for 750 openings back in december. 10,000 people applied for them in just two hours and five minutes. We have seen the pictures of the freezing weather in the u. S. It is going to be quite a distorted report that were going to get. There is a lot of noise around this report. If in doubt, blame the weather. Freezing temperatures across the u. S. Not only this month but back in november. What dont you do when youre cold . You dont go outside. You cant build as much. Maybe you dont travel as much. Two industries that be contributing jobs to the u. S. Economy. A couple of analysts out there they we could see some underperformance in todays number, but even it is viewed as temporary. Many expect jobs growth to accelerate back towards 200 k a month for the rest of this year. Joining me now for his 2014 commodities outlook is evy hambro. A mardi gras for block rocks fund. Are you going a manager more blackrocks fund. Last year was a very difficult year, especially for gold. The gold prices suffered in the first half of 2013 and was flat through the second half of 2013. I think what were seeing obvious sli a lot of trends in the gold market and seeing incredibly strong consumption of gold from china. Looking forward to another trong year in china in 2014. Banks again net buyers buyers, four or five years down the road. After three decades now selling of gold. It does look as though things are supportive and the rate of sales from the holdings are starting to diminish. It is very low right now. That is actually quite put in all of those statements together, that is a substantive statement. Are we putting in a floor in gold . Are we at the floor level . That is a good question. There are many different points to look at with regard to a floor comment. The comments that are already made. The demand and factors that are a series of those. The headwinds, that gold prices are related to Monetary Policy and change in q. E. And if they were to start to rise, bond yields are going up. One thing we look at is cost of production for the industry. With gold trading around 1,200 n ounce, very few Gold Companies are making large profits 368 it is close to the margin of producing gold. They announced plans to cut marginal ounces outside their portfolio. I think if this trend, better management of these assets continues, supply will start to decline rapidly. One of the themes you and i kicked off last year was about vanguard capital looking after the the mining industry. What i want to know from you, are the gold miners really starting out on that, the on that journey of, you know, reducing production, being better vanguards. Where are we in that . Versus the industrials . That is a good question. Certainly there is the gold company and the management teams there were the worst offenders in terms of value destruction. They ticked every box on things not to do. The industrial players, right at the point of results. Are we going to see a continuation of the themes they promised in 30s continue forward into 2013 . Are we gorninge to see this restraint on going to see this restraint on m a . Reduce debts . If those kind of themes exist, it will be hard for them to ignore that. I think the lessons that they should learn from their peers are very, very real. Do you expect deals to be done . One of the big things with bloomberg reporting is they are they have more cash than they have had in a while. Do you see consolidation as being the theme within the gold industry . We see it at the junior end. There are companies out there that had an advantage against their pierce. They probably have a better balance sheet. Assets that are worth developing and building a pipeline of growth opportunities. I would be surprised if we saw large scale m a taking place outside of ones driven by cost rationalizeations. If you have assets owned by large companies, put those things together and stream line the business. Aggressive takeovers not in the cards. Wouvent things that has come up one of the things that has come up in the conversations is the margins. Im looking at it and really lots to report, hold it in there at 110. Again, the cost of production versus where we are with pricing. These are very important elements when it comes to my decision about whether i hold rio or as well as dividends. What is your thinking on the metals . There is a big key for us, copper. I know there have been now for a number of years. The Iron Ore Price today is 131 a ton. At the start of 2013, analysts were fork forecasting us to see 90 a ton. Well see where things develop over the year. Certainly there is more supply coming into the market this year than happened last year. Are the industrials behaving themselves . Are they better vanguards . I think the really great litmus test is the results that are forthcoming. If if they continue to deliver on the promises they made to us last year. Be disciplined with their Capital Allocation and then there is a chance we might start to see renewed interest. We have to leave it there. We could go on forever on this. It is such a big area. Well see how this reporting season turns out. Come back and tell us what your scorecard is. Evy hambro. Coming up, it has been a rough tart for 2014 for twitter. Investors begin to doubt its evaluation. More on that story next. Im manus cranny in london. This is on the move on Bloomberg Television streaming live on bloomberg. Com, your tablet, your phone and now any windows phone. The biggest message of swiss es the numbers were 2013 were not great. What is so great about swatch s it is such a bellwether, manus. They have several brands and they are also the biggest maker for come opponents. It supplies components to 2 3 of the swiss watch market. Oday shares are higher because they posted sales where people had estimated. Ey slowed down to their slow nest 12 years. 2014, were off to a strong start already and they are outperforming the rest of the market. They are stealing market shares they are telling us. Exports of wristwatches were up 1. 8 . Last year, swatch managed an 8 growth. Despite all the head winds, they are still managing to outperform. When you say that, what comes to my mind is are people trading down . People are trading down in asia. Currency is sls a big thing. It is going to be a big element of this reporting season. What about the swiss franc . 100 million swiss francs more than. Just the second half of the year all because of the strength of the swiss franc. They put very strong words on it. Extremely adverse conditions. This is going to continue. If the overevaluation is persisting, the dollar and the yen is what they are saying. Were worried about a slowdown in china. A quarter of the swiss watches go to china. Last year, 8 is how much we saw exports fall off to china. There are concerns ahead. Bank of america, Merrill Lynch saying look, were getting higher production costs. They had a fire in a come opponents workshop in december. Foreign exchange will continue to eat in. They have a lower price for gold. Shares are higher. Do you a swatch watch . I do. The pulse is coming up in 15 minutes. It is Francine Lacqua and she has a preview. Fran . Thank you so much, manus. We have a diverse show. First off, we are talking about infosys. We heard reports this morning. Hans nichols is on the scene. We want to know about companies, tesco, are trying to get into india. Well look at the challenges there for retailers and what infosys means the read across a lot of Tech Companies. We have been talking about online retail. What does it mean for logistics . If youre an investor do you want to be in the logistics business, such as ocado, that may expand to countries around the woled . World and of course it is u. S. Jobs day and well be talking about where we expect the e. C. B. To do the opposite of what the fed is doing. What does it mean for investors around the world . That and much more on the pulse. Ok, fran. Back to the pulse in 15 minutes with fran seen. Francine. Niolo shares gained as much as 144 in tokyo trading today. Cine world spsp world said combining they would have more than 200 sites and more than 200 digital screens. The carrier plans to employee ore than 200 people. Contact lenses from google. Perhaps not yet. With employees tied to its group have met with regulators. Lets bring in our international correspondent, hans nichols. What do we know so far . Are you wearing google lenses . No, i should be. Then we could scroll through stories and be faster on our feet. Here is what we know. The food and Drug Administration that regulates everything in the states in terms of biometric device, new drugs, pharmaceuticals, new member of google staff met with the group at the f. D. A. That regulates eyewear and also medical devices hat monitor cardio vascular. A professor at the university of washington in seattle is on leave working for google. He is an electric engineer and a contact atent on lens that can transmit data electronically from your eyeball to some sort of receptor. One thing we can say about google is they are always ino vating. Whether it is a hot air balloon or wifi. When they meet with the f. D. A. , it is quite interesting. Lets talk about twitter. These guys are the results coming up in february but the stock is down 17 . What is going on . Basically analysts are all calling this stock negatively. Not all negatively but when you look at the number of sales of twitter cared to facebook, linkedin and google, it is still up more 100 since their i. P. O. Last year. Basically there are questions about its dwrothe. No new information. About its growth. Manus . Ok, hans. Well keep an eye on those numbers. Hans nichols in berlin. As we head to break, just one day after the rapper turned businessman Sean Diddy Combs business, is tequila Justin Timberlake announced a tequila label. Up next, the italian shoemaker that caught hollywoods attention. Thats up next. And a wonderful shoe package. Has been making shoes in italy for clients including formula one driver nikki lauder. Known in racing circles as the master, frencesco has been making driving snuse sicily for over 50 years. His customers including World Champion niki lauder. I had to in 187 5, i got a phone call from the race team. I was dumb struck. To get an order from ferrari was the best of the best. They pushed years, him out but that hasnt stopped hollywood from knocking on his oor. Rush brought business back. Ron howard asked him to make a copy of the shoes he made for lauder. Being part of the movie such a bones for me. Now i can die a happy man. At 78, he still makes handmade snures private clients, the same way he always has. He climbs liz the fastest shoes on earth. There is a man at bloomberg who i can see in those little yellow shoes. It is johnny. I know a man who has got a talk to me about the jobs report. Looking for 197,000. Deutsche bank it is a lot. If you look at the a. D. P. Report, private payrolls reading at 108,000. It may disappoint. Is there a sensitivity how much it has to do with the feds tapering now . Does it mean they will go faster . We have had phenomenal jobs growth in 2013. 2. 7 million jobs. How much better than 2012 . Ill talk about that at 9 02. He is very precise. Francine lacqua is up next with the pulse. You can follow me on twitter at manus cranny. A cause for celebration and concern. The u. S. Is set to cap the best year for jobs since 2005. That leads to investors nervousness about the pace of tapering from the central bank. Is google about to go big on sensors . And delivery for morrison after an online christmas. The future looks bright. Welcome to the pulse, live from bloombergeu