Transcripts For BLOOMBERG On The Move 20140910

Down by a 10th of 1 . At the u. K. ,oking you will be looking at Governor Carney speaking again today. Minister that, prime David Cameron. That is the focus in scotland. Terms of how to trade these markets, if you think that is a reasonable benchmark, you would say the Canadian Dollar dropped by 1. 6 when quebec went into voting. Yields on the canadian bonds rose by 40 basis points. Are we anywhere near those kinds of moves in the u. K. Market . There is the leader of the pack in the news agenda. U. K. And ireland have the best performances in 10 years. That says it all. Also the message telling us france is in better shape than it was. Kingfisher is the top of that agenda. He delivers 15 return for shareholders. Next generation is what the stock is moving on, bucking the overall equity trend. Market inl equity italy is down by a 10th of 1 . The news is they have received a bid on the transport business. Awayhe chairman has passed at the meeting of the group to decide who will replace that member of the dynasty and terms of the banking position. Bond markets, where they go and what they do, are going to be the driver in terms of what can happen in the Interest Rate differential between europe and the united states. The worstperforming bond market in the past month has been in the treasury market. Treasury yields are stalling. The question you have to ask yourself is the fed moving in a different direction. Two or 3 , is that attainable . Of everythingal that happens with the currency. There is only one currency dominating the news agenda. In our conversation there are unknowns innown terms of sterling. You might see one dollar 50 in the next few months, but mediumterm we would possibly return to form. Has a smalluntry election. You are seeing momentum. The polls showing a disparate vote. This is the worst performing currency so far in 2014. The next could be for a higher dollar. All about elections. That is the market open. A slightly lower open if you are looking across europe. Lets get some perspective. He is a member of the invest and committee. Show. E to the the big focus if you are looking at one company. Everybody is looking at apple. I huge runup this year. Anything released yesterday you were looking at and thought, this run might go longer . I guess the question is whether it is a case like september of 2012 or whether there was something really new. I think a few things. One is that they delivered. A big effect . E probably not. Are witnessing is the transition. I think they realized its going to be more and more difficult to create a new product that is going to make a major change from the iphone. We are talking incremental changes. Beforeoing to take time this apple watch makes a huge difference. I think the theme is the following. Todays software is 20 . That is the challenge for apple. To grow this part of the business and to have a bigger , as they can continue to deliver these services, then they can get their second wind in terms of growth. It takes time to get the confirmation. Ts not a disappointment. Certainly something that would take the stock much higher. If we are looking at hardware, what i see is a phone that looks more like a samsung. Samsung the loser . They have been the loser for a while. It has been difficult for them to hold a case, not so much against apple. Clearly investors have switched from samsung to apple. In terms of competition, the key is not so much apple. The key is china. That is where the local player has taken market share away. Is more about the path of the market, which is much more the broad market in asia, for which they had a leading edge. It is still expensive. Smart phones cheaper. They want to talk to china and increase sales. Do they have to do something about the price . Probably. They have not managed to position themselves on the market. Here is a big challenge as an investor, samsung has moved as opposed to a growth case. Is interesting for an investor. The payout ratio remains extremely low. It is a very cheap stock. In terms of potential they have a lot of challenge. His take on break debt and fixed income. Look forward to that. Welcome back. We stream on everything you know. Lets talk about fixed income. Still with me is a member of the invest meant committee. Lets talk bonds. Heading atlds were 2 . You hold spanish debt. Would you be buying at these levels . We will be holding at these levels. The main thing is mario draghi is really working, not so much that its intention, but the result of his action is very much in favor. Basically he is providing so much security to the market via this safety net that the sovereign bond markets are more trading like local debt. The risk is being if that is then case you are looking at inflation expectations. The sense of what should be the rates. Evel for if you look at growth and inflation, they can justify low rates. Spain i want to ask what and spanish bonds have in common. Perhaps people start to think about another referendum that happens in november. That is the catalans voting for independence. Something you are thinking about . I guess it is tempting for shortterm trading to associate what is going on with spain. As you said, its very different. Situationking at the which is an old one whereby catalonia has been requested more autonomy, but it has been negated for the time being. The spillover is shortterm. Fundamentally the key issue for spain is what is happening to the real economy. It is an economy that is improving. It is still going to grow very slowly with very low inflation. I want your final thoughts. The, the pilots are on strike. They are rated junk, yet they issued fiveyear debt. There is no doubt the european corporate on market has become expensive. They are back to before the crisis levels. Much value left. The only exception is if you do the same comparison the spread is european banks are paying still higher. If it is considerably higher than before the crisis, so much of the value we see is in the financial sector. So many others have become expensive. Certain areas of corporate debt are getting expensive. The World Economic forum is meeting in china. More than 1600 delegates are on hand to represent 60 countries. Stephen is on hand with an exclusive interview. Good morning. Ceoguest this hour is the of the Worlds Largest aluminum producer. Thank you for joining us today. You just returned to the possibility for the first time in five quarters turned to profitability for the first time in five quarters. What does that tell us about demand . First it tells us about our approach for the last reyears. Flightunt we have deficit outside of china, maybe around 1. 2 million and very good Sustainable Growth in all major sectors of transportation construction, and that helps to recover and create positive outlook. What do you see the outlook . Significant. S there are important science there is more demand needed. I gives a lot of advantage for our customers. Its great for the opportunity. See more packaging and construction. How about chinese demand . The partnership has been gaining strength. What do you see from china . Isthe China Partnership about energy. We have quite a good result from the first half. Growth expected to be 10 , and we can see better results for the second half. How do you see the russian economy shaping up . In recession . Definitely not growing. Stable. A lot has been happening with ukraine. Do you see further problems with the ruble . I can see the ruble. Actually the russian economy is more affected from the policy. It will clear up in the next x months. Feel personally . I know in the last 10 years you tried to have it her relations with ukraine and business interests you have. Feel a personal tie to how this has unfolded . Itthe sooner we can resolve the president made a reasonable decision to support europe and the united states. We should pay more attention. It would help us to find a way out. How damaging would further sanctions he . Not really. Not so. There has been an outflow. It is the result of the which is Second Quarter of last year. Your assets in ukraine, i believe you have a smelting others. We have a few no problem. It is not on the market . There is no issue. We have a situation that should be resolved. All parties should do efforts to stop it before winter. The you with the ruble, expected to fall any further . It is dependent on russian position. They have significant reserves, and oil is on quite a high level. The ruble depreciated almost 20 in 12 months. I know you asked the central bank for a freefloating ruble for many years. It has weakened to this point. How do you see that relationship as something you have asked for and now were in a situation where the ruble is in trouble . We asked for different measures. We asked for more advanced monetary policy. We asked to pay more attention to financial reform and capital markets. A slightly different scenario we hope would happen. At this moment we believe this situation is temporary and will be resolved as soon as the ukraine is stable, and russia will pay more attention. Maintaining a ceasefire. We will be back will you be back . There is no other choice. We have 7 Million People who live in the area. Thank you so much for your time. We are going to send it back to you in london. Thinks. Thanks. Up next, we are going to talk about left on the. Three strikes for the airline. Pilots walkout leaving 13,000 passengers in munich. We will tell you what the third strike in two weeks means for germanys biggest carrier. Stay with us. Up to speedng you with some companies on the move. The chief executive will step down before the end of this financial year. The Home Improvement retailer said the head of the french unit will replace him as ceo. Vivendi is said to be planning a market. They atv are pursuing a stake in Silvio Berlusconis company. They are interested in buying telefonicas 11 holding. Microsoft is said to be near a deal to buy the Company Behind the game mine kraft. The kids love it. The company may reach a deal as soon as next week. Would be the biggest since february. Lets talk airlines. A pilot strike in munich has left 110 lefthand the flights grounded and passengers. Unhappy. Its the third strike in two weeks for germanys against carrier. Is in berlin. I was in frankfurt a month ago. I was you laid. Someone told me it i was delayed. Someone told me it was not called latehansa. Clearly you were flying private. On the strike. It is going to be eight hours. 13,000 passengers. 110 flights. Decision byctical the pilots. They are not shutting down frankfurt. They want to be able to retire at 55 and have 60 of their pay. The company says that is out of date. Regulation says pilots can fly until they are 65. The is struggling with their pilot units. They shut down airports. You mentioned lufthansa. You mentioned frankford. Hey did a german strike then i walk out with 218 flights grounded. Today looks smaller. They are being pressured from above and below. Andw they have easyjet ryanair. Above they have challenges. They are being squeezed. They have got this labor problem in their home markets, very high labor costs. They need to restructure. Want to renegotiate with their pilots. We could be at the beginning of the end or the middle process. The ceo says he will come back with an offer next week. We will see if they have any resolution. I am sure there will be some upset people in germany. The people who have the privilege of flying private air jets will be happy. For me there is not enough of this. Watch to rule them all released by apple . We think so. If you want to discuss apple and the launches from last night follow me on twitter. Welcome back to on the move. We are 30 minutes into the trading day. Lets see how things are shaping up. Ftse 100 down by 0. 3 . David cameron heads to scotland to rally the troops. Get people to vote no to scottish independence. I will be talking about bank of England Governor Mark carney. Special three stocks to watch right now. Mark barton is going to deliver this. Ferrari, the disappointment, was that the final now in the coffin for the man at the top . It was a clash of strategies. The two big ms. Owns 90 sorry, fiat of farah rate. If you missed the news, the man who headed ferrari for 23 years has stepped down because of this clash of strategy with the ferrari head, mr. Marchionne. Suite tale for you today, ian cheshire will leave kingfisher. The lady will be taking over. She is the head of the french unit. The change will take place before the year end. Bad news from spain. One of the great Business Leaders in spain, the chairman has died. Er he died of a heart attack last night. Instrumental in building this bank over 100 years ago. He was chairman in 1986. He built the bank, turned it into spains sixth biggest bank through a massive acquisition spree. His daughter heads up santander u. K. The board will meet later to name a successor. A big loss for spain, a big loss for santander. Shares are down by 1. 9 . Thank you very much, mark barton. I hope you come back. Here is three top headlines for you. Eu leaders meet in brussels today to consider whether to pull the trigger on tougher russian sanctions. The talks allow the decision to while hold for a few days waiting the viability of a ceasefire. The meeting is set to begin in the next hour. President barack obama is preparing to expand the u. S. Defensive against extremists including in syria. The u. S. Has stepped up a real severance in the country. Obama will deliver a televised address to the nation tonight explaining the new plan. You can see that live on bloomberg. Most seniorree politicians had to scotland today to convince voters to reject independence. Davids Prime Minister cameron, nick clegg and Opposition Leader admin the band. They all canceled parliament appearances to campaign for unity. We take note of the positions of all the major westminster unions to rule out a between an independent scotland and the rest of the u. K. Context, a Currency Union is incompatible with sovereignty. Yesterday has been about the battle between scotland and apple for the headlines. Lets talk about apple now. In a room packed with executives, media, celebrities, apple launched its latest products. They did pretty much everything we thought they would do. We got phones, we got a watch, we even got payment. Replace this. We are going to start by focusing on payment. Payment is a huge business. Every day, between credit and debit, we spend 12 billion. That is over 4 trillion a year and that is just in the united states. Caroline high joins me now. Tim cook calls this a key day for apple. Was it that . The fanfare was huge. He said it is a new chapter for apple. I was impressed by the fanfare. You had u2 onstage announcing their new album coming to itunes. You had gwen stefani, the Fashion Press out there. What i am disappointed by the key announcement, but watch. Lets have a look at what you get. It costs 350 for the most basic one. You could get it in 18 karat rose or yellow gold. It is strong. You are not able to smash it that easily. It has crystalline sapphire to make it very strong. It has got clever little gizmos. I can send you my pulse if you have another watch. I can send you pictures that i happen to have drawn. , the voice,se siri to write messages and the like. The key issue is, what are the questions about this . What if other people dont have a phone and a watch. Will i be able to interact with other phones if i send a heartbeat . Probably not. What about the fact that you still have to own an iphone for it to link to this. You cant have a watch that does everything. This is not a changing movement of the tide in terms of wearables. You still need to have an iphone to work with this watch. There is also many questions as to when exactly it will come on sale. They say early 2015. When will it come to the u. K. . Basically, i am not wildly impressed. I dont think it is that different from the galaxy gear that samsung has unveiled. What i am excited is the payment. This i want. I want to walk into a shop, whole foods, pay for my groceries with just a click of my fingerprint on an iphone 6. I want to gravitate towards that when i am using uber. The fact that i will be able to seamlessly use my phone to pay, that is what i am excited about. The payment element. That of course builds on the cushion though of the new iphone the crescendo of the new iphone 6. They want to make us want these new pretty expensive phones. Costing you plus anywhere up to 500. Thinner frame, you have got what we expected. 4. 7 inch and 5. 5 inch. 100 better battery on the 6 plus. My key disappointment, the sapphire crystal, second most strong material, hasnt yet made it onto the phone screen. It is still a type of glass. There are my disappointments. I dont think the watch is that revolutionary. I do like the payments. Lus areone 6 and 6 p going to fly off the shelves. , icaroline, a better battery am sure a lot of people are smiling about that. Lets get some insight from james kroll and. You are a fan of tim cook, it is fair to say. Do you consider this evening a success . I think it is a big success as they have finally been able to go through a whole Product Development lifecycle since the change in leadership. Wearable technology has been a difficult market to crack. We have seen big missteps from google with the glass and samsung products have failed to take off. This may well be the first Consumer Product in Wearable Technology that captures the hearts and minds of the buying public. Do i buy that because it is apple or because i need it . You buy it because of the ecosystem and how it fits to the other products. The apple phones are expensive but they own two thirds of that premium product market. The people who are already getting that phone, the new 6 orth their contract renewal, the watch will add on to that. The payments could be the killer app. It is going to be exciting. Lets talk about payments. Absolutealk about the fail that was the live stream but i will talk about the naked selfie. If i cant trust him with those pictures, not that i have any, how do i trust them with my credit card details . My credithis phone as card, i need to be sure about security. Right now that none position is of their security was compromised and the issue was the choice of passwords. I agree that Everyone Needs to be better at making sure that People Choose Strong Passwords that are more difficult to crack. , theft happens and crime happens offline as well as offline as well as online. This is increasingly a market that information is going to move into. To takeeed responsibility. As far as the smartphone is concerned, they always left us wanting more. Is this the end product . I think this is the first product in a range. The way apple innovates to create new markets around the ipod or the ipad or the iphone, this may be. There is more competition in that space than there was in the past. It may be the beginning of a whole range of exciting products. I understand why they are building this ecosystem. I understand the products launched. Trend withnteresting the live stream, it was in chinese. That is a market they want. At that price, is that a market they are going to get . They have been losing market share. It would be interesting to see in the same way they did with the 5c products, if they want to introduce Lower Consumer priced products. Apple has always been an aspirational brand. They go for the people who care about style and seamless inter operability. Apple,question aimed at is also and always, what next . We have got a bigger iphone. Is that going to cannibalize sales for the ipad . I think we have seen consumer demand driving a lot of samsung products, where different people have different requirements for their phone. Mini with of the features of a smartphone makes the device accessible to wider parts of the market. It will be interesting to see whether apple breaks the tradition of delivering a tight product line in order to offer Solutions Across the market. Will you buy the apple watch . I will. There is one buyer. James cronin, thank you for joining us this morning. Up next, sterling and independent scotland. Governor carney warns that Currency Union would be incompatible with sovereignty. More on that. Stay with us. Sterling at 1. 5135. Welcome back to on the move. Lets talk about scotland. Threens britains most senior politicians arrived in a lastditch effort. Ladyore, i am joined by a that knows about this issue. It is anna edwards. Big day. These three englishmen have ripped up their schedules as scotland has looked increasingly it looks increasingly possible that scotland could rip up the union. They are heading for scotland. We are going to hear from David Cameron later on this morning. The other two gentlemen, nick clegg and ed miliband will be there as well. David cameron puts on the front page, the right place for us to be is scotland. That is what is at stake. We desperately want you to stay. That is what all of this is about. It is a plea. We have seen a change in tone. No accident of course, because we have evidence from the polls that a lot of the undecided voters are women. We have seen a real change in the way the tone of this campaign, and we are set to see some news later on today. Go head tooing to head. We spoke to justine roberts. Ofy have done their own poll the scottish moms net users. It is interesting to look at their results. They show 48 say yes to independence. 41 say no. Perhaps more for independence than the National Polls have shown. Interesting for me was what they found when they asked about the pound. Polled by moms net in scotland think scotland will be able to keep the pound. If it is a yes vote, if they dont manage to keep the pound, there will be a lot of explaining to do. It is interesting, the whole sterling issue. A lot of people take it on face value that it is symbolic. It is about the things that thatr, the guarantees comes with it. I think the businesses get that. We have been talking to business about this. We heard yesterday from Michael Oleary over at easyjet. This time around, manus was talking to ian cheshire of kingfisher. He is a big fan of us together. He says that is the message of being stronger together. He says it is not scaremongering. I think this is a stronger, better deal. It is much better economic and social future for scotland. I understand the point on negatives but these are real risks. There are extra costs with a new country. There is no way there is going to be a Currency Union. None of that to me as a businessperson looks very attractive. Is Current Situation extremely attractive and the risks are genuinely there. This is not a scaremongering exercise. It is a business reality. Are you making plans . Have you and the board discussed what you would do in terms of the size of the business . 5500 employees. There is a host of issues. What is on the agenda around that or table . The problem is, the level of uncertainty. What is extraordinary is there are claims that we can the pound will continue. I dont see that happening. There are lots of people in europe who will object to scotland becoming part of europe. Ae problem we have from business perspective is, it is not clear how this will plan out. What most businesses have to do is carry on. What we will have to do is review the investment plans. We dont understand what environment we are coming into. Repriceple, you have to and relabel. We trade across lots of country borders. This is not a small undertaking. There is a lot of uncertainty and a lot of companies will be thinking, lets see what happens. In the meantime, lets wait. We were talking to investors. We talked to patrick leblanc. He says this is such a topical issue. It is all anybody wants to talk to him about. That currency is one thing, the pound has moved lower, but bondays now, spanish yields have been rising. Up another six patients points right now. Basis points right now. You talk to people and they are starting to talk about what might happen in spain. What might happen in spain, what might happen in flanders, in parts of italy . These are questions that many people are starting to ask. I read an editorial that said if scotland goes independent, why cant london have more independence . Cant london have more tax raising powers . There will be all kinds of that conversation. A0 catalogs have descended on small church to watch all of this unfold. This is being watched around the ared by those who fascinated with the story and those who think they might have an interest because of what it might mean for their lives. Low probability, highimpact, was the view a month ago. A lot of people suggest the probability of this. Thank you very much. The pulse is coming up. Guy johnson joins us with a look ahead. John delaney is joining us. Asked toampaign has call him scotlands finance minister. He is the scottish finance secretary and we are talking about the issues that you have been talking about. Is it a bluff when it comes to the pound . If not, how is responsibility held . Who will be responsible . Will he resign his job if the u. K. Decides they are not going to offer the pound . If a Currency Union is not aspatible with sovereignty Governor Carney put it yesterday. We will talk to john swinney as well about capital flight. There is evidence that money is leaving scotland. There is concern surrounding what the results will be here. Way,e result go the yess will there be more capital flight . We will talk about that with him. Have they had any discussions about that very subject . About the legacy at santander. We need to talk about the implications of that on european banking. We will talk about what is happening at fiat as well. Takingseeing marchionne over on an interim basis. What is the future of that business . Time,at 11 00 london is going tojuncker announce his new commission. London fears that britain is going to get energy. We will take that News Conference live. Jon, back to you. Very embarrassing weekend for ferrari. I imagine it did have some influence and what happened with the man at the top of the company. Anyway, lets move on. We are trading lower. Ftse 100 down by 0. 4 . Cac 40 down by 0. 2. Now there is talk that they could delay meeting eu deficit targets. Big surprise, probably not. We will be back on on the move in about two minutes time. Welcome to on the move. Jeanclaude juncker is set to unveil the makeup of his team later today. Sure you willi am be watching this one very carefully. We will be watching it. We know some of the names. It is going to be a very eastern looking team. The president of the Eu Commission will be the former Prime Minister of poland. It looks like Angela Merkel is from the same party as Jeanclaude Juncker and got most of what she wanted. When you look at the core, the Vice President s, three of the seven come from eastern europe. You have the former Prime Minister is of estonia, latvia is oldoverall, this europe getting the shaft and new europe getting more positions. Thanks, i will be watching. That is it for on the move. If you want to talk markets, follow me on twitter. All hands on deck. Britains top politicians head to scotland to beg voters to reject independence. We are going to be live with the scottish finance secretary. Fast and furious. S chief quits after clashing with fiat. And, spain loses an icon. Santander chairman emilio botin dies at the age of 79. 9 00 in london. You are watching the pulse