Transcripts For BLOOMBERG On The Move 20160725

A broadening verizon. Yahoos long fight for survive comes to an end. This episode of sportscenter is presented by verizon. Is said to be offering 4. 8 billion for the assets. Carol massar take it caroline hyde, take it away. Ericsson shown door after 28 fantastic years. The shareholders went out. The c. E. O. Is shown the door. Futures up and ready to go. We are seeing currently flat outlook. Not a single move when you are looking at the futures. Cat 40 down by. 1 . A little bit of profit taking. Remember the b. O. J. This week and the Federal Reserve as well. Check on the assets. Asian stocks have been trading. We have seen the asiapacific up, clinging on to gains by. 1 despite the slump about we have seen in nintendo. Scales of opportunity are limited when it comes to the exuberance surrounding pokemon go. So much hope for stimulus coming from the bank of japan. Gold as you see currently down. 4 . Lastly, oil up by. 3 . That is what we see, the pick up in riggs making the numbers sending down shivers to the spines. Here is bloomberg news. The turkish Prime Minister has ruled out early elections saying the government plans an Infrastructure Fund to keep growth on track, speaking exclusively to bloomberg, he says the company is open for business. What we are saying to Global Investors is this has come and go gone. And the national will and the will of the citizens has destroyed the plotters. Life is back to normal in turkey, and you can continue your longterm invexes. We will eliminate obstacles before you. We are laying out the turquoise carpet for investors. We have all kind of tax incentives, investment incentives, and we are getting priority to investments. A bomber has wounded at least 10 people in germany indian. The attacker was a syrian refugee who had been denied asylum, but allowed to remain in the country for fear of returning home. On friday an 18yearold german gunman killed nine people. Rizon has announced a bid to to buy yahoo for had. Billion. The deal is said to include real estate assets. Yahoo will continue to hold takes in alibaba and yahoo japan. This is bloomberg. Thank you very much. Focusing in on the g20 finance chief. Signals escalating concerns about a wave of antiglobalization sentiment as the u. S. President ial hopeful donald trump took a starchly isolationist stance last week. The warning comes as the u. K. Prepares to leave the e. U. And continued tensions on immigration, headlined this week by a suicide bomb attack in germany. A month after the decision to leave the e. U. , bankers stepped up their emphasis ton policies to boost growth and renewed a policy to have encollusiveness. We need coordination and cooperation, and we need investment. We need also the involvement of each of the part of the g20 and each of us make take our share. But no, we are not in the climate of 2008 or 2009. Now the world grows even if it is riskier than in previous years. It is now positive, and we are not in a climate of crisis or precrisis. I am a champion. We are the champion of free trade. And we are very worried with anybody, candidate or not to be president of the United States who casts doubt on benefits of free trade. Or like we had in the case of brexit, who uses a particular the of the consequences of free flows of people in order to inflict some misinformation or some disinformation on an otherwise unsuspecting public. Lets bring in our guest, allen higgins. The world leaders, g20, they are worried about the slow down, the overall sluggishness. Here are my nets. Post lie man 50, banks have done a total of 670 rate cuts, approximately one every three trading days. They have added 24 trillion worth of assets. Morning. You are right, but what happens if there is a World Without Central Banks . What would rates go toe . They would probably still be low. There is excess savings in the world. Wore in a low growth world. Actually things have picked up recently. There is this view that delusions and this is alberto i am quoting, which it will hurt them more than it will hurt us. That is just not the case if you look at the p. M. I. Of europe versus the u. K. That is the problem. How concerned are you . I am literally pulling this up here . This is our p. M. I. Number here in the united kingdom, or Services Number versus the eurozone. How much more concerned are you about this kind of number at this stage . We are. It has a very good fit with g. D. P. Growth, so it is clearly an issue. The judgment is, is it a quarter three or quarter four things for this year or long lasting . Our judgment would be it is an immediate smack, but it is a survey of people who are very, very nervous post the referendum result. So yes, definitively a negative quarter, but we probably would be a bit less pessimistic. We are seeing sign, m a, commercial property deals coming back. Caroline . I want to get into some of the nervousness cited by the g20 in china. You have worries about protectionism, the lack of inclusiveness and the steps they will take to promote that. We have not one, not two, but four attacks that have happeneded in less than a week here in germany. What is your key concern right now when it comes to global destabilization. Is it the lack of inclusiveness . Where should they be focusing their attention . To step back a bit, big picture, it is low income growth, and in some cases negative in real terms, has led people to say we have had a number with the referendum, whether it be favoring trump. They want some kind of big change here. That is a key factor. We are not as pessimistic as the g20. If you look at the eurozone, a and as you see the chart here, it looks probably. The u. S. Is going from strength to strength, and it is really on the u. K. We suspect the reality of what trump will be able to do should he be elected would be much less in terms of the u. S. Political system. Congress is also very important. Stay with us. Allen higgins. Central banks in focus. We have the decisions from the bank of japan and the Federal Reserve. We are playbook at this weeks market movers. Then when it is the open, we are watching julius baer, and william hill. We are going to hear from turkeys Prime Minister after that failed coupe attempt rocked the nations government and markets. This is bloomberg. Just over 15 minutes to your trading day start. The Bloomberg Business flash now. Here is rich. Ericsson c. E. O. Will step down. The move is effective immediately. The firms c. F. O. Will take over. 6 billion has been wiped off shares of nintendo. Ey said either move from pokemon go limited. Nintendo shares doubled since the games release. Verizon set to buy yahoos corvo assets for 4. 8 billion. The announcement could come before the beginning of trade today in new york. This is coming from people with direct knowledge. They say it includes real estate assets and some intellectual property sold videogately. Ryan air has warned it may lower profit forecast. That steps from britains decision to enter the union. They say the uncertainty around brexit could lead to an 8 drop in farris. Net profit actually increased 4. 5 . British book maker william hill may be facing a take over. 888 holdings have confirmed they are evaluating a possible joint offer. Some say the offer could be w. T. O. About three billion pounds. That is your Bloomberg Business. Thank you. It is a busy week for markets. Some of the highlights for you. First up, the Democratic National convention. It kicks off in philadelphia today. Hillary clinton is to accept the nomination on friday. Wednesday, Federal Reserve policy makers will release a decision with no change. Investors will be closing walking will be watching. On friday, the bank of japan releases its Monetary Policy and updated g. D. P. And flation forecasts, with many forecast ago fresh wave of l. S. U. The u. S. Flark g. D. P. Figure. Allen higgins is still with us. A big week for markets. Stimulus, as you said, in a world if we didnt have center field banks what would we do . But looking at dollar yen, it personifies everything there is to do with risk. I look a lot terrorism on one side, which is growing week by week, and i look at markets and stimulus on the other side. Clivity to take more equity risks, is it still there . It is still there. It is a hated bull market. We see things relatively depressed. I know volatility is low, whether we are looking at cash balances in portfolios, whether they are looking at the American Association of individual investors. It popped up from low levels, but if you put that on a longer term chart, still relatively depressed. Now just somewhere in the middle. Year alltime highs certainly in the u. S. , but if you drew a line this tchart right here, which is aaii, this is what you are talking about . Individual investors in terms of bullish sentment are in the middle. Quite unusual when we are at alltime highs. It is a hated market, and the reason is we are not seeing too much in the way of earnings growth, and it is all about these bond approximatelies investing in stocks proxies investing in stocks that act live bonds. I think it is positive. Allen, interestingingly, you are over weight to merging ee markets. I have a chart showing where we are looking at the world Interest Rate probblingts. We are starting to gather pace when it comes to the United States in particular. We are looking now at a 45 chance that we will see a rate hike come the end of the year. That has picked up significantly from the depths the e selloff and paranoia we saw post brexit. We seem to be game on again a little built that we could see a hate hike again. Where does that leave the dollar and your emerging market call . Caroline, i think you are right. I think rate hawkeyes are coming in the u. S. , but at a modest level. I think e. M. Market are taking cover from that one. Obviously japanese rates are ultra low, yet the yen is strengthening. So it is not just about rates. And previous rate hiking regimes, the dollar has sold off, notwithstanding the slight move we have seen now, it has followed this more recent state hiking environment we have been in, in the sense the dollar has not strengthened. People say rate are up and currency should go up. But it doesnt play out like that. To reiterate, modest raises in rates, and that is important for emerging markets. What the emerging market doesnt like is the idea that rates could go up 1 or 1. 5 , getting to the 2 to 3 rate structure in the u. S. Is the fed already vicariously tightening by the very nature you have bank of japan in an ease mode, and the u. K. Set to do more, we understand. The Central Banks dont seem to be at the end of their game. They are waiting for the fiscal stimulus. The fed are dealing with doing nothing, leaving them in a tightening position . Yes. A good way to look at it, looking on a relative basis, the u. S. Is tithing by doing nothing. But it looks pretty robust, and you can understand. They say they are data dependent, and we think they are also market depend en. This will allow them to raise rates later in the year. We have to work out from a statement saying it seems likely as opposed to being clear. Allen higgins, c. Ism o. Sticking with us. Thank you very much. Now we are minutes away from open. Up next we will look at the potential corporate movers in todays closers. We will be digging in to ryan air. This is bloomberg. 7 52 if you are viewing in london. 8 52 here in berlin. A beautiful morning. Dax futures gaining across the board. Minutes from the open, and we have to be digging into some of the stocks we are watching. Notably changing of the guard that ericsson had been anticipated. Those heavyweight Share Holders of ericsson have got a new c. E. O. Hans is being shown door immediately after what he called 28 fantastic years. It seems he is handing over the reins to the c. F. O. In the short term, but it looks like they are on the hunt for a new leader. This is a company that really did miss estimates in the second quarter. So much competition when it comes to telecom equipment. And julius baer is going to be very much in focus. They reported a rise in the first half profits. They have been hiring bankers. It is all about keeping your costs under constraint there. The earnings adjusted 1. 84. The market was looking for 1. 61. A pretty interesting and bullish things coming from him. We caught up with him earlier. Their Business Model, they all of the managers need their clients to be more engaged. But of course with julius baer, their model is linked to money and active trending on the business. Ryan air, interesting set of numbers there. Caroline . Fascinating. This is a stock that is called up to the tune of 7 to 8 . All because of the relief that there isnt an immediate profit warning. There may be a profit warning going forward. Fascinating things. We did a great interview with the c. E. O. Earlier. They seed they could lower profit forecast in the future. But for now they still hold steady. They still see the overall profit they had seen before. Travel demand hid by brexit. As a boating man, they are up 10 to 12 . A potential merger with 888. That could send all of these shares flying higher. M a, we want to get to you seeing more m a to come allen . Yes, especially here in the coverage. It was interesting, william hill that we are seeing some sterling are here. It is the most high profile, but we also say odian and buy into a chain here. I wonder if we will see someone from overseas look at the combination of where william hill is trading as a business and sterling dollar or sterling euro. That is interesting. After previous big devaluations of sterling. We see more in the u. K. We are going to talk about the potential for more m a later in the show. Allen higgins with us. Coming up, we are going to go through this market open. It is a Beautiful Day in london. Markets up. Guy welcome back. This is on the move. We are counting you down to the market open. Caroline, you have the morning brief. Caroline i do, manus. Globalization is at risk. Signal ever chiefs building anxiety. Warnings of a possible profit downgrade on brexit. We hear from executives from both companies. And broadening verizon. The long fight for survival t comes to an end. Verizon is offering 4. 8 billion. You say, same to pick up as we enter the market open. We are but 10 seconds away. Futures are signaling that we could cling on to some of the gains. Will there be more money come more desire to go in as we see hope of more stimulus to come. Lets get into wti, because we are starting to see the market begin to open here in berlin. Over all, it is flat on the ftse 100. Precious metals are falling as the dollar strengthens. We are waiting for the cac 40 to. Open overall the dax, always a bit of a laggard when it comes to the open. But manus, so many individual stocks to talk about. Potential profit warnings from ryanair, but i pretty flat day when it comes to the open. Manus yes, it is fairly anemic. We have the bank of japan at the end of the week. Crystallize,will maybe the view of u. S. Equity markets. Lets get into the european imap. You can start to see that mixed or of what is going on. It is going to be a huge week as momentum builds. This friday we are going to see ubs. I want to take you inside some of the main stocks. Ryanair, we caught up with the cfo. He basically said, we are not ready for a downgrade on profits yet. Up 5. 6 there, sticking with the for your guidance for now. Sticking with the for year guidance for now. They will pivot away from the u. K. They will take capacity out of the system during the winter time and that is probably what the market is focused on this time. Hans is stepping down as the ceo. The stock is up 5. 13 . A total return of 3. 73 , less than his peers. Huge competition. A huge restructuring story at play. It is going to be a big week for the julius baer sorry, we have the banks. Net income rose by 4 . This is good news and the clients are trading. That is what the market wanted to hear. I caught up with an edwards and boris this morning. I think prebrexit we were still looking at the relatively low trading volumes. If there was good news relating to the brexit, it is definitely that investors are back in the market, trying to understand what to do. Activity levels have picked up across the board. Asia is up. The americans are up. We see clients being engaged, needing a lot of guidance. We have a lot of msnews ahead of us. Elections being out there, political process is going on. I expect that if everything goes well, the second half should be quite interesting. Some of theris, banks have given us a little bit of detail regarding the money and the brexit volatility. Will june 23 go down as a good day for julius baer . Boris i mean, we have seen clients really come through on currencies, on fixed income, on equities. Everybody is taking a closing position. I think many of them are reopening them on the back of frankly, stronger momentum than what was expected in the u. S. As you look at the index is continuing to be very strong, and high volatility here back in europe. So, i see that income pattern. The base income pattern continuing. Di,us that was boris collar the ceo at julius baer. Alan higgins is the cio at coutts and co. I thought that was actually quite heartening news. His Business Model is so much more linked to trading, and perhaps in a relative sense, to ubs and to Credit Suisse. Clients are back. That shows you what a Good Business World Private banking is. Credit suisse wants to go that way. Ubs is already there. The trading part i think he is referring to, especially asia. In europe, especially in the u. K. , there is a lot of discretionary management, but in asia, it is all about trading. So, it is very encouraging, the we also saw it in Morgan Stanleys results. Anus as i sit here with the flag. Is that setting us up for a slightly less negative Credit Suisse and ubs at the end of the week. Paralyzing volatility, that is how the First Quarter of described. It has not been ane as easy quar to do business in. Brexit,run up to we saw a real pull back, didnt we . Is a pretty decent fixed income returns. Suisse, there seems to be some workin in progress there. Manus a very measured response. Kept depends if they hold of them. We shall see. Caroline on friday we get numbers out. And of course on friday, we get the stress tests results as well. How much of a risk is the italian Banking Sector for you right now . It is a risk, but if you look at monte, visit very old and very large bank. I believe last time i looked, it was well below one billion euros. You are looking at very strong banks. But you can look at some of the banks that basically run for bond holders. In some of these banks, the dividends are nonexistent. And it is all about whether they are literally survivors. There is a whole category of banks, Credit Suisse, deutsche bank, where really, they run for bondholders right now. Caroline i know you like investmentgrade credit as well, alan. You will be sticking with us. Coming up, we head to tokyo ahead of thursdays boj decision. And a ninth straight month of decline for japan. And then we take a closer look at europes troubled airline sector. Later, we bring you our exclusive interview with turkeys Prime Minister. This is bloomberg. Manus welcome back. This is on the move. Lets check in on the markets. A pretty big week for markets all round. We have gone from a dip in the futures to a dip in the stoxx 600 at the top of the board. The dax, comfortably above the 10,000 level. It is a big way, caroline. We had the bank of japan, Federal Reserve, and gdp numbers from the u. S. And the eurozone on friday. It is still my bad litmus test in terms of what the central bank is going to look at. Caroline exactly. We heard that from the finance chiefs over the weekend, manus. The Bank Stress Test coming up on friday. The worst performer today, have a look at the key performers on the stoxx 600. Trading has been halted. The worst performer, down some 5. 5 . M a is inher side, the air. That approach is confirmed by 888 and ranks. So, we will see if we get a bid coming from william hill. Son, we areics up 5. 7 . But the big shareholders wanted a new ceo and a new strategy focus for the business. , also, ryanair doing very well. No profit warning for now. For the moment, they stick to the overall numbers. Lets get the rest of the bloomberg first word news. 12 finance chiefs have signaled concerns about antiglobalization sentiment. Members of the g20 discussed renewed efforts to use fiscal measures to boost Global Economic output. Christine lagarde said there was a consensus that more needs to be done to share the benefits of growth. A suicide bomber has killed at least 10 people there and Music Festival in germany. This is according to the press association. The attacker was a syrian refugee who was denied asylum, but allowed to remain in the country because of the dangers of returning home. Another attack occurred friday night, in which an 18yearold German Government killed nine people. Purchase. Said to this is according to two people with direct knowledge of the situation. Global news 24 hours a day, powered by 2600 journalists in more than 120 countries around the world. This is bloomberg. Caroline thank you very much indeed. Just the reconfirmation. There was in fact, 10 people injured in that blast we saw outside of and Music Festival in germany, for somebody did indeed explode themselves. So, at least one fatality and 10 injured. Now, looking at the world of japan. Japanese exports fell for the ninth straight month in june. This, ahead of the bank of japans latest policy decision on friday. 78 of economists expect the boj to expand the record Stimulus Program this week. Lets get more on that from tokyo now with jodi schneider. Exports are not looking good, a ninth month of interaction, and imports are down. Give us a sense of what is actually behind these numbers. Any sort of bright spots . Jodi it is somewhat of a mixed picture. Obviously, it is another decline and that is worrisome. The numbers are also down, off 10 to china, japans biggest trading partner, off six by 5 to the u. S. As you know, the decline was not nearly as sharp as was forecast. This trend could be near an end. And secondly, we we are seeing ona bright spot is volumes. Volumes are up. They are much less affected by currencies. Of course, the strengthening yen was behind much of this picture. Ko, you know, generally noa wea picture, but some bright spots contained within. Caroline so, what does the boj . There is so much being banked on them, in terms of further stimulus. We have never seen so much hope for stimulus at this high a level from analysts. What is it, 32 out of 41 analysts thinking we could see stimulus. Jodi it is the largest percentage of analysts in our survey who are predicting kurodas since governor took over three years ago. So, there is a lot banking on stimulus at this meeting. And the increase in the Exchange Fund is the largest bet with a cut in the negative rate, give further reduction in the negative rate, the secondmost th adjusted way analysts think they could ease on friday. Weaker numbers and more data from this week could play into this decision, certainly. The bank and governor kuroda have surprised us before. Guy jodi, thank you very much. Jodi schneider, using the famous word surprise. So, surprise. What will they do that could surprise you and the market . Ok, so more aggressive purchases of equities. That would be a bit of a surprise. And mabye, looking at the banks. Mabye, if they do have to cut rates, make them more negative. Some kind of scheme to protect the banks because they have been week in terms of performance. I am concerned that could spill over to the japanese economy. So, that would be a surprise, but the main thing is yet more jgbs purchased. It would be nice to see a lot more in equities. Caroline alan, you are overweight on japan. Are you desperately waiting for a bit of stimulus to come through as well . Alan caroline, this has been a painful one this year. Yes, we have been overweight in japan since 2012. Initially, it was value. It became a very cheap market. That is still the case. And yes, there was a macro story that goes with it in terms of stimulus, but generally, when we look at the japanese market, we attract a very cheap valuations. Caroline talk to us therefore , about what Monetary Policy can do . How much more negative can yields go . What are you looking at in terms of the credit space when it comes to japan . Alan the credit space in japan is a limited market, even for the likes of toyota. Credit. Less in hat over,oes is t relative values start to work. So, people do start to pick up these 2 to 3 dividend yield available in japan, as opposed zero for the negative on negative ono 0 to the jgbs. Manus alan, you and i were chatting and you said, manus, pull up sterlingyen. This has got ramifications. We have seen it with softbank. It is also a challenge, isnt it, in terms of the whole japanese story, the strength of the yen. Alan yeah. The move is we were looking at exports earlier. The move is driving exports down. With sterling, it is the most about it, but obviously the same with the dollaryen. It is still an issue. It,s the issue, as i see as they have to do something shopping to move the dollaryen , to move the sterlingyen. Do you think that is what we will get this friday . Alan we had this program in the u. K. With kurdo where he said, no helicopter money. So, that could be a shop. H that could be a shock. He could introduce some form of helicopter money. Maybe Something Like that would be a shock, but the markets are not pushing that aside. Caroline and it was just a few days ago when they said they would never go into negative rights, and then they did with kuroda. Alan higgins, thanks for joining us. It has been brilliant having you throughout the morning, but we will be digging into the other mma moves later on. Up next, we are talking about broadening verizon. Verizon is expected to enact a 4. 8 billion deal. This is bloomberg. Caroline welcome back to on the move. I want to talk mma now because verizon is set to purchase yahoo s core assets for 4. 8 billion. This is according to two people with direct knowledge of the situation. The deal is said to include yahoo s assets. You will continue to hold stakes in alibaba and yahoo japan. Check out this chart. Thinking about, what are the valuations of you who . Of yahoo . This is verizon in the blue and yahoo in the white. In the late 1990s, yahoo was more valuable than verizon. Since then, you can see the doldrums within yahoo has remained. Alibaba holdings are in and yahoo japan. The core business is worth less than 5 billion. It shows you the turnaround and the lack of competitiveness. Lets get to alan higgins from coutts and co. You like verizon. Is this a good addition . Alan well, i dont know about that. I like it in terms of its dividend profile. If you pull up the screen, you can see that it yields over 4 . It is the kind of stop that has really been in demand, both in the u. S. And globally. That is the kind of stuck we like. An extreme version of that would be companies that have increased their dividend each year over 20 years in the states. So, to give the a lot of buying power, especially with stock. That is a very incredible chart that goes back to the tech boom. Guy we are going to get a few f of the tech earnings this week. Is that where i look for tech dividend play . Alan well, old tech the likes of microsoft and such it is certainly in that space. We think it is attractive to pay that kind of company, in terms growingy dividends. We are in a new era. Full functionality of bloomberg, one of my favorite functions checks both the current dividend and the trend in dividends. That is exactly the company that is in vogue. Apple, coming this week, another increase in the dividend, no doubt. Manus alan, thank you. The rest of European Equity markets are rallying. We are going to talk ryanair and brexit blues. This is bloomberg. [hip hop beat] olympics 2016, let me get you on my level. So you never miss a moment, miss a minute, miss a medal. Why settle when you can have it all . Soccer to wrestling. Track and field to basketball. Fencing to cycling. Diving to balance beam. All you have to sa is, show me, and boom its on the screen from the bottom of the mat, to the couch where you at . Show me the latest medal count xfinitys where its at. Welcome to it all. Comcast nbcuniversal is proud to bring you coverage of the rio olympic games. Manus welcome back. It is on the move. 67. 30 on london. Off 00 financials are you are seeing a rally there. London, paris and frankfurt, all have rising markets. We get Federal Reserve and the bank of japan, we are expecting to cio alan higgins. Alan caroline telling us he is expecting more more bond buying in the program. Big week today pit we get stories in u. S. And u. K. Airline, take it away. Caroline caroline, take it away. Caroline m a taking charge. Coming up, more than nine percentage points. Being tied up i some rivals. Being eyed up by some rivals. Ericsson up on the back of waving farewell to its cheese to its chief executive. The own about 40 of the Voting Rights in and. Ericsson. Rights in ericsson up 5 as he hands over the reins for the shortterm to the new ceo of and well see who takes the lead in the fullterm. Ryanair up six percentage points. This rallying, managing not to have an immediate profit warning. They warned of a buffet warning in the future saying lower risks for the fiscal 2017 profit amid weakening travel demands. Overall, further that climbs could lead further fair climbs could lead investors were happy that for now they stuck to their forecast. Manus that is it, caroline. Hang in there. What will they do with their capacity echoed these are some the questions that we put to the cfo of lufthansa. Cooks we have we have three domestic groups in the u. K. If the u. K. Were to have a full exit, then we would have to make which was a which would enable us to fly in the u. K. That is a challenge for competitors who are based in the u. K. That may open up opportunities. Manus you talk about this pivot away from the u. K. You have done contingency planning, where is the prime privet to prime pivot to jacqueline pivot to . Cooks we have more airports he our aircraft that we have aircrafts we have more aircraftseeking our and we have aircrafts. We continue to grow in portugal and eastern europe, the likes of whole and is the likes of poland is an exciting market for us. E open a new base in prague we have a huge amount of scoop and depth. Is the risk with all of this new capacity coming in, the new aircraft, the risk is with the ongoing pure threat, people will want to travel a a lot less . People are continuing to travel in numbers. We are 1 better than we were at the same time last year. We have increased our passenger target to 117 million passengers. The great thing about ryanair is we have the lowest costs, we have the lowest fares. When there is a terror event, we do see dip in booking, but if the price is right, people tend to travel. Manus lets get more the ryanair results and European Airlines in general. Ryanair sticking to 1. 38 billion euros. The Downside Risks are there p to this market seems quite impressed that neil came here and held onto his fullyear guidance. A 40 had easyjet seeing probability and issued a warning. Iag announced a profit warning. Ryanair is possibly sparkling. Manus they are taking capacity in which a scheduling. Some people thought they would wait until the spring. What you make of the capacity withdrawal . John between 50 and 70 aircraft on the ground challenges of an financial crisis. Number oneabout that is their biggest base. Have more than 60 aircraft based their. The u. K. Market is one of the most important markets in europe. It would not close any roots. Any routes. They are on the case. What specifically it has to do with the recent exit events, it is not clear. Caroline it seems that brexit is the one paid the most lipservice when it comes to travel. After a weekend of reeling from three individual terror attacks, many of them not always related , butparticular viewpoint still the fear of terror is driving higher. How much is that something that is being affected in to the future of travel . John it is a set of reality that we are facing these kind of challenges more free glee today. Been masters long at managing crises it would go back to 2001, the 9 11 terror attacks. That caused a major shock to the airline business. At that time, it was a lowcost carrier that kick started the market again, led by ryanair and easyjet to cut fares. It can be done as long as customers can be reassured that everything is being done in terms of security which is an evolving threat. The response has to be adapted to be at ryanair has indicated they are better booked than they were at this time last year. They will do what it takes to make sure we keep traveling. Caroline theres talking about cutting fares, the tune of 8 . How much can this continue . Is it only while Oil Prices Remain relatively low . Are we going to see consumers demanding these sorts of low fares . Favor asnair has had a a lowfare operator. Fairhave always used a mechanism to drive. They did that before fuel prices fell. They managed their overall cost base. He talked about airport deals. Their Statement Today about ball game deals. They negotiate with manufacturers. They do it on a multifaceted spectrum to make sure that every cost they can control is kept down to a minimum. Manus we saw a cut on the back of brexit risks. Beyou expect there to repercussions . Becauseloose airlines will be loose airlines . Will we lose airlines . If we do not see failures, well see a redistribution of capacity. Ryanair talked about other markets. Germany is one key focus is lufthansa announced worse than expected earnings. They are still grappling with how to manage their operations. They have the euro wing subset not delivering strongly. We have air berlin was losing money supported by the shareholder. Weve been talking about lufthansa buying i think ryanair will watch Something Like that. Do these guys have a strategy . Theyll do more of the same. Keeping prices low, keep their campaign for improving for them improving for business customers. Manus they are the vanguard of the price. They are the tesla. The cup the market share. Pick up the market share. Is that the logical take on where we are . John we are seeing that already. I think if we look at the spectrum, we are talking about low costs. You take some business customers, it is good to be a system when we get more details from img on friday. , theyes in the iag group rely on the premium segment. That is something they will look at closely. Confidence in sentiment is affected, that means legacy are in a very difficult position. Caroline if you could pick one, which has the best future if we are looking at the european winner . John it has to be ryanair because it is overriding vigilance on cost focus. I dont deviate from their model. Everything they do is organic, theyre not distracted by mergers or acquisitions. They are very strategically focused on they might not talk about it much but they are analyzing every detail what is happening to our competitors. They are ready to react and apply pressure. Caroline and the share price shows it today. John strickland, great to have you on the program. Thank you for joining us. Up next, we will bring you bloombergs exclusive interview with turkeys Prime Minister after a failed coup attempt rocked the nation and the market. This is bloomberg. Caroline 44 minutes into your trading day. Lets get to bloomberg is his flash. Bloomberg business flash. Ericsson will step down as chief executive. The move is expected immediately. The cfo will assume the role as a search for a new leader is completed. Shares fell 4 in this tenure. Compare that to a 90 gain. As much as 6 billion has been wiped off the market value of nintendo shares. The company says the Financial Impact from pokemon go will be limited. Theychange rules said the maximum shares can fluctuate if the margin the correction coming up. The nintendo shares doubled. Verizon is poised to buy yahoos core assets. Include is set to militant outfits with some intellectual property to be sold separately. Yahoo will still hold stakes in alibaba and yahoo japan. Weakening travel demands stemming from british theains decision to exit european union. 4. 5 . Ofits increasing uks Bookmaker William Hill may confirmed theys are evaluating a joint offer. Arounder could be worth 3 billion pounds. That is your Bloomberg Business flash. Manus. Manus after turkeys failed coup attempt, bloomberg has spoken exclusively to the Prime Minister in interview. That turkey hammadi would not stand for the attempt to seize control. Life is back to normal. Take a listen. Elections, it is out of the question i am underlying than this underlining this and being very clear, there are some circles who are trying to confuse the situation saying the party has come up stronger after this kill after this coup and will have an ambush election. This is not going to our minds and we dont find it ethical. We have power for four years and we will use that power for the next four years. If there is anyone who is trying to seize that authority, we will fall from their heads like a sledgehammer and we did. From now on if anyone is thinking about doing such a thing, they should watch their step. What we are saying to go investors is this is coming gone in the national will and the will of the citizens have destroyed the plotter. The plotters. Life is back to normal in turkey and you can continue your investments. We will illuminate obstacles. We are laying out the turquoise carpets. We have all kinds of tax incentives, investment incentives and we are giving priority to added investments. Caroline claiming life is back to normal in turkey. It certainly isnt in germany because germany woke up to his fourth major attack. A suicide bomber that needed himself in the vicinity of a Music Festival near nuremberg late last night. Peopleident left 12 injured and the attacker killed. This comes days after a gunman donahue, it seems notable that this was a syrian refugee with a machete just a day before. This is unprecedented, four attacks. How is germany reacting . It is too early for any political statements. We are waiting to see what the interior ministry is saying. These attacks plaintiff years that were much more intense. Big. E influx was so it will be a question on how Angela Merkels government handles this. Caroline this test so far her government has been so far her government has been gaining popularity and she has been one of the longestserving leaders in europe and the turn to the guidance. How does this play into her strength . Whether she runs for a next election . So much has related her door that patrick the larger picture, if you looked beyond the moment come all of the crises that are buffeting europe, brexit, the turkish coup, also terrorism in other countries, she has seemed like a bit of a polar of stability bit of a pillar of stability. That would play into whatever decision she makes to run again given these immediate attacks in south germany, i think we have to wait and see what happens. Caroline in terms of of how the german audience response, is there a growing sense of demonstration . Anger . Or is it individual attacks that are not being linked . There are two Syrian Refugees but generally they do not seem to have a clear line to be drawn between them. Patrick it doesnt seem like it so far. Authorities are being very careful on the motives. Friday evening we had a horrible mass shooting event which turned out to be a classic mass shooting with no apparent next into any sort of International Terror organization. I dont think that does much to qualm fears and anxieties. Those anxieties existed in the right and that is not going to change. It plays into a narrative of anxiety that existed to the right of angela merkel. Caroline and the new party that has come to the forward. Patrick amd, that is the outlier. There are Still Holding a 10 . There are two state elections coming up. They might go big in the east. You need to look at how much that cuts into support for merkel and her party. We will be looking at that. Caroline patrick, great to get your take and your view. That was Bloomberg Government reporter, patrick donahue. We will look at the roundup of what you need to be watching this week, including bank earnings, that comes as Rate Decisions. That is all coming up next. This is bloomberg. Guy manus Democratic National Convention Kicks off in philly today. Policymakers will release a Rate Decision on friday. Bank of japan announces his Monetary Policy with many economists predicting a fresh wave of economic stimulus. In we get eurozone and u. S. Gdp. We have Richard Jones to give us a bloomberg perspective. Gdp which is backward looking is the Rate Decision backward looking. It is the Rate Decision that matters. Richard i think bank of japan is going to be interesting to the extent they are going to do anything, it is probably going to be seen as a part of a Monetary Policy and this coup policy package with fiscal policy to hollow afterwards. To follow afterwards. Manus caroline had a lovely line which is kuroda is like denial, denial, and then some form of helicopter money. He needs something quite substantial to shift gears. Richard i think it will be conjunction with mr. Abe on the fiscal side. Realistically, weve got an overwhelming of economists expecting an additional qe, more etf purchases, perhaps a cutting rates. I think youre right to highlight the fact that helicopter money by some of the name is what investors are looking at. Manus theres brexit, the probability of a hike drop. Our guest this morning on countdown saying you need work to be at 80 . Will this shift to get it up to 80 . Richard i think is too soon after brexit for them to really ramp it up. I think i would be interested to see what their take is on brexit could what we have served thats what we have heard is it it what we have heard is it is to soon. Caroline manus, thank you very much indeed stay with bloomberg television. Up next, it is the pulse. Digging much more into the week ahead. The fed and the boj all up. Francine the g20 takes on the global ambition backlash. Trump and terror, how much will politics play on the boj and fed decisions . Controversy ahead of the convention. The today as the head of the committee resigns over an email leak. Clinton comes through unscathed. The long fight for survival comes to an end