Transcripts For BLOOMBERG Countdown 20160816

Welcome to countdown. We are encroaching on ¥100 to the dollar but we are keeping a close eye on where this next leg in the dollar goes. Is this a yen strength story or is it a dollar weakness story . I would contend this is now more eight dollar weakness story. The fed is fading. The dollar is down for a third day, the lowest since brexit. The last time they posted a trade below 100, that was post brexit. That thehown 80 odd yen will touch 100 in the coming months. It looks quite sneakily as if it might get through today. Mulls theams possibility that 2 inflation targets are no longer really that relevant and they are not welding not working. The flows in dollaryen over the past hour have been significant. They are hitting record levels in model funds and they are filling in the asian session. Keep an eye on those. Lets look at the risk radar. Little bit lower as well. You have the dollar index down for the third day in a row, the lowest since brexit. Atan equity, which you have 140. That is on the currency side. , 45. 5 is where we are. Holding above the 45 level. Open free talks if necessary. Nigeria more scathing. Gold is rallying again. I think more to do with the fed and the dollar story. You are seeing a little bit of a move in bar gold. Derek lowe bar gold. Yesterday in Central Bank Cut Interest Rates for the second time in four months. The rba argued that it would increase gdp. San franciscos had president is calling for a new way of central banking. He argues that rates have not stimulated or stalled the economy. The feds policy of targeting lowinflation will no longer make sense. Russian equity has closed at their highest levels on record. The rebound in oil prices has lured investors to cheapest areas. Big investment banks with European Headquarters in london was start the process of moving jobs from the u. K. That is according to people briefed on the plans drawn up by four of the biggest firms. The u. K. Will lose passporting rights. Donald trump has laid out his plans to defeat i. S. And prevent terrorist attacks on america. In a speech, the nominee said he would halt immigration from countries with a history of exporting terrorism and implement an ideological Screening Test. Time is overdue to develop a new Screening Test for the threats we face today. I call it extreme vetting. I call it extreme, extreme vetting. Our country has enough problems. We dont need more, and these are problems like we have never had before. Jill biden has called Donald Trumps rhetoric a threat to u. S. Troops. A campaign for Hillary Clinton had bite innia trump sharply criticize biden sharply criticize trump for condoning Cyber Attacks against america. He has asked russia to conduct Cyber Attacks against america. Even if he is joking, which he is not. Even if he is joking, what an outrageous thing to say. Haidi global news 24 hours a day, powered by more than 120 countries. You can find more stories on bloomberg. Manus . Manus lets get to davidday en. Dollar yen is heading towards 100. To me, it looks like we have the hallmarks of a wall of money going there. Take it away on the markets. David lets get started there. That is what pushed the nikkei liff. Ally off a c this is where we are at the moment. We saw a steep drop. We hit the session low yesterday which bounced back. Once we went below that level, it triggered a lot of losses and that is where we are right now. 146. The last time we were at these levels was on july 8. That is when it went down to about 100. That seems to be where your support level is at the moment. Is it a strong yen story . Is it a strong yen or is it a weak dollar story . Biggest percentage mover in asia currently. You look across the asian currencies. The dollar is getting sold off as well across the asian area. That is also seeing strength into that currency. Have a look at where we are for the kiwi dollar. Strength going into that currency. Roughly speaking we are looking at a weak dollar story. It is fading. Fx. Is the story across watch dollaryen. That is your support level. Currency up, equity markets have been doing this at the markets. We are looking at weakness across developed asia. We have seen weakness across developing markets in south east asia. The nikkei getting pushed off a cliff in the afternoon. At this level, down about 1 . We are a little bit off session. Hour left in trade. One of the markets you want to watch out for, hong kong and shanghai. Stellar day yesterday. A little bit over at the moment, perhaps why we are seeing consolidation right now. Manus . Manus thank you very much. Equity and currency markets. The latest notes from the rba. Lowerhow that inflation and a cooling on highpriced concerns were fundamentally behind their decision to cut Interest Rates for the second time in four months. Joining us to discuss this is michael. Trait to have you with me. The rb says it wants growth. Others people other people see that as an enviable position in the first quarter. There are a couple of factors at play. One of them is if you can grow faster, use Spare Capacity more quickly, you get a chance of generating some of the inflation that everyone in the world is after as well. That is part of it. Australias growth figures are flaccid to some extent. Growth export going on now, soon ore, andural gas, iron coal. They bring about 1 to growth and you have about 1. 5 population growth. You have 2. 5 before you have even opened your eyes. A cap same time on databases, incomes have been declining in australia. Part of the push for growth is to try to get growth that people feel, people actually recognize rather than looking good on paper. Manus as you said, you blink and you have already got the growth. Lets talk about the central bank. Currency ist the also an issue for them. I was always given the impression that Central Banks did not necessarily target currencies. They have not had a good run of it, have they . Michael no, no. They are quite capable about that. Try to stick to the International Agreement that they will not directly target the currency. It is understood that the Services Industries that they want to take over from mining are better when it is a bit lower. The truth is for australia, 1. 5 Interest Rate i our standards is ridiculously low. Standards,d world it is still attractive. The forces in australia allpowerful. Japan and europe at zero and negative rates. The u. S. Hesitating about raising rates. I think the rba has not said this, but what they are trying to do is grow before depreciation. They are trying to discourage it from depreciating and making things tougher on the importcompeting industries. ,anus it is a tough job michael. Thank you very much, michael heap. Lets bring in my guest host for the next hour. Seniorredit suisse advisor bob parker. I love that line. Blink and you have 2. 5 growth. This is the issue. Here is the aussie rate. Down we go. The currency is not playing ball at all. You say it is comfortable. Bob absolutely. When you compare the yields on 10 year government bonds with jgbs, we still have 10 year jgbs close to a 10 basis points. We are still in a range of 02 25 points. Manus 1. 84. Rate. Ou have a near2 japanese capital flows and. We compare 10year australia with european bond yields, we even have spanish yields close to that as we talk. That trade is driving capital flows into the Australian Dollar. That poses a problem for the rba. Although they are cautious in what they say, they are clearly very uncomfortable with the. 77. Alian dollar at that positive kerry could drive the Australian Dollar carry good drive the us trillion dollar higher. The differential is still there. Manus where could that momentum take the aussie dollar against the dollar . Bob put it in historical perspective. We came from a high of close to dollar was grossly overvalued. Down to a low 70. We have retraced to 77. I think we may edge of towards 80. I would be surprised if we edge much more above 80. Against the u. S. Dollar, i think would bel shortterm technically overboard. I also think those investors who went into the Australian Dollar in the low 70s will be very tempted to take profits at that level. Manus lets talk about the trade relationship. There is a symbiotic relationship between china. This is ecp. To australian relationship show the trade relationship with china. It trumps Everything Else in the world. I understand the rebalancing story. Fundamentally, the stability story in china, it is certainly a big blow, potentially a big blow for the aussies. Bob two questions there. The first answer is the data on china, i think, is reasonably clear. I. E. We are still going through this longterm operation in the chinese economy. No second half of this year annualized chinese growth of close to 6. 5 as we go into the first half of next year, i think annualized growth close to six point 25 . That longterm slowdown in china is very clear. With that longterm slowdown, the demand for commodities eases and the rally that we have had an critical commodities for , onealia, like iron ore has to challenge if that can be extended. The somewhat negative outlook for Industrial Metals and those in the iron ore, copper, and other Industrial Metals is a factor in the deceleration of the to seller factor in the deceleration of the a strong and economy. Certainly i think we will get less than 3 growth. Manus back to one of my main headlines. Numbers. Iting for bhp a 6 billion loss is what we expect. Losswill be the first since the merged company. 25year low for medals at the start of this year. Is there anything out there from what you hear . Maybe we have passed through the eye of the storm in terms of writedowns in metal, writedowns in oil, or do we have more pain to bear given the china story you reflected . 99 i think we are probably through of the major writedowns. Clearly the last two years have been extremely painful for the industrial metal companies. What we are going to see today is cleaning out the covered from these major writedowns the these majorm writedowns. Those middle and Commodity Companies have low cost basis because they are reducing in over devalued currencies. That is the case in south africa where it has recovered in recent weeks. We still have a super week South African rand. If you are a producer, be it gold or other materials, your cost is very low indeed. Where you have those low cost basis, south africa and russia, that provides support for corporations. Manus lets get you set for your day ahead. We get the official u. K. Data in data. Ly cpi and ppi there is the june house price index. Half an hour later, the cw survey zew survey out of germany. Coming up, the brexit postmortem. Is it too soon fourweek pine to feed two to higher prices . Crude reality. Talk of reviving an outlet wpi above 40. Can it really happened . Waitopper market likely to on firsthalf numbers. That is all to come. This is bloomberg. You are manus looking manus at a rather gloomy victoria harbour. My future role in life. A weather forecaster. It is 1 20 in the afternoon in hong kong. Something to brighten your day. Haidi lun. Has held talks with combination the would create the largest supplier of industrial gases. The nbc has halted shares over in its gear company over potentially manipulative transactions and concerns about the identity of the person in control. Neuromamas value has quadrupled to nearly 35 billion. Morgan stanley is being targeted for a 2 stake. According to a person simply with the matter, the hedge Funds Investment is valued at 1. 25 billion. Berkshire hathaway boosted investment in apple and the Second Quarter when the stock flipped. Berkshire raised its stakes by 55 . 15. 2 million shares. That is your Bloomberg Business flash. Manus haidi lun with the latest. Lets talk about cpi inflation data from the brexit. It comes out at 9 30. Investors will want to know if filtered through to consumer prices. U. K. Data coming fast over the week wednesday. We have the latest rating on the jobless rate. Thursday, retail sales was the latest gauge of u. K. Finances. That is released on friday. Chief advisorthe over there. When we look at the rapid data that will come through, this is the inflation data, the numbers expect a 12 drop. We will add about 1 to the cpi. How hot do you think the bank of england will allow cpi to run before they balk . Bob as you saw from the statements, when they cut interest, they reintroduce quantitive easing, the message is clear indeed. They are concerned about lending by the banks, which they want to boost. They are concerned about the slowdown in the economy and a revised their growth forecast for 2017 down to 0. 8 , a grievous growth report as reports before that were at 2 plus. The inflation target frankly is a secondary order. What is going to happen, your question, what is going to happen to inflation with the decline in sterling. I think there is a high probability that sterling will decline further. As we going to september or october, i would not be at all lowrised if cable is at the 125 and sterling close to 110. Further sterling weakness i think is likely. I would have argued that if one looks at the euro or cpi numbers, assuming Commodity Prices trade sideways, i would have thought there was a high probability of the euro cpi as we going to october will be close to 2 . That is a little that the bank of england will be very comfortable. Manus it is an enviable position for a lot of other Central Banks but the rest of the population did not necessarily vote for structural fundamental change. The curve is the flattest and eight years. Aboveget that kicker inflation, what would that do to our gilt market . Therelt market is saying is virtually no growth for the next decade in the u. K. Two observations. This is an observation which is relevant to a lot of markets which are being hit by qe at the moment. Quantitive easing is driving yields into negative territory. If cpis at 2 , we have 10 yearguild at 8 . Gilt with the impact of qe, with the expectation that the base rate could be cut to zero sooner rather than later, i think it is inevitable at least that 10ne or two years year yields stay at 2 or lower. Manus Corporate Bond buying. Theres a . When you think about the bank of over the six years, the ecb is inexorably higher. This is the policy where you may see a bigger force to come. The just to quantify it, impact of the ecb Corporate Bond buying program is reflected in spreads and investment for Corporate Bonds in euros are close to 60 basis points. That is near a record low for the euro Corporate Bond market. Theously the size of Corporate Market in sterling. It is less liquid and catching firepower from the bank of england. Corporate spreads tighter. Do they need to do more . Practically they could not do more because the paper is there to buy. Manus stay with me. We have a little bit more to get through. Up next on countdown, talking trump. The day would not go by without it, would it . Is it time for the candidate to move on from the negativity . The results hit the tape at 7 00 a. M. I have a conversation with the ceo. Have in the afternoon, we an interview with bhp billiton ceo. Another manus glorious day at the sydney opera house. Manus there you go. If every day was like that here, how wonderful life would be. The extra raiders dont care. Dont care. Ders we have a new edition of. Aybreak available on bloomberg lets take a look at the front page. What is making the headlines. It is the cover story. It is all about the reality what post brexit spirit of is happening with inflation in this country. Data all set to drop at 9 30 this morning. That is the First Official since ourselves out of the european union. That data will hit at 9 30. We are waiting for billys numbers. 8 15will, between 7 15 and paris time. Expect the mining giant to post its fullyear loss since 2001. Can the momentum in iron ore really hold it up . Not according to my guess, bob parker. Had the run ony iron ore. Andrew mackenzie joins the team a little bit later on bloomberg go. Finally, a debate in a very real debate. Suggested the u. S. Central bank should consider raising or abandoning its 2 inflation target. Japanese stocks are lower this morning. The yen is surging to a threemonth high. We are so close. Appetizing we close to ¥100. Weakness ineing japanese and chinese stocks. The index overall pretty much unchanged want to show you emerging markets assets first. They are hedging for the longest winning streak since april 2015. A nice day of gains, heading for its highest level since july 2015. That means valuations are at their highest in 15 months. They are in overboard territory. It makes the question, how much further does this rally have to go . If you get into it now, are you too late for the party . Currencies in part driven by a higher oil price, even though we have seen it come down a little. Wti above 40 a barrel today. A little bit weaker today. It is above its 200day moving average for the first time in a year. 18 though this has climbed from a january low. It is still down 40 from last years peak. That said, the large share china high cap etf is also down. You mentioned the yen, manus. I have it here. Dollaryen. The yen approaching 100 per dollar. This after we have seen a third day of dollar weakness looking at the bloomberg dollar index on the lower expectations of the fed rate hike. Those expectations keep coming down and down. Ofre is an 89 probability 100 per dollar in the coming months. That is according to calculations by bloomberg. We are seen yen strength, dollar weakness today and with that weakness we have seen gold move higher for a second day. Gold in general has been performing well in this low Interest Rate environment. Manus thank you very much. Perfect explanation in terms of the market. Oil is holding above 45 per barrel. Lets put this in context. Ofhave yusef, the anchor Bloomberg Markets middle east. Everyarket moves on nuance in regards to what is coming up, this opec offsite meeting you will be covering. Sift throughp you the diplomatic lingo we have been getting over the last 72 hours. We had the saudi comments. Stocks are going to stabilize the market. You had recently in the last few hours, comments from russia saying that they are also open to talks. Told thehing is they saudiowned newspaper that they see the talks happening as well because the markets are unlikely to balance until next year. A are seeing told the saudiowned newspaper that addie there. I put out this chart for you. This showed Russian Oil Production and saudi oil production. What this shows you is it really has all the hallmarks of a dog fight for being the biggest oil producer, for defending the share, and arguably to get additional leverage as we get into print mode for the meeting prep mode for the meeting. Russia, as a nonopec member, that is a heavyweight spokesperson for the group. There are comments from the twitter. Minister on if they can achieve 7070 of 77 of engagement at this meeting, there could be an impact. 70 ,verall consensus, but we might see something. Even though he does not see it likely, he is fairly optimistic. Manus we will take a little bit oilptimism from the ceo companies. Well done, yousef. Bob parker, Senior Advisor at credit squeeze. From his terminal two hours. Pumping uphe russian Million Barrels. Do we need a freeze . Bob in addition to the increase of production by russia and saudi arabia, lets not forget iran is increasing production probably by the end of this year by an additional Million Barrels per day. Iraq is clearly increasing production. What is very interesting is the recount data coming out of the states on the shale industry. What we are seeing, and this is an important point in oil dynamics, is that the breakeven points for the american shale industry are improving as innovation drives their cost of production lower. Three or four years ago the there is divergence around us, but the average cost of production for the american shale industry was probably 70. Now we are probably below 50. We could easily get a breakeven point of 40. Manus changing that quickly . Bob absolutely. This is a fundamental constraint or ceiling on upside in the oil price. If we do get some sort of deal between russia and saudi arabia, which i would be skeptical about, but if we do, market psychology may temporarily push but i wouldh 50 regard that as a great selling opportunity. I stick to my view that we are stuck for the foreseeable future in the range of 40 50. I think the recount and what is happening in the states in the shale industry is much more critical than what the russians and saudis may or may not agree with. Manus transferring all of that. 50 seems to be your psychological cap. The momentum in oil is pushing things along. A record high last night. The pe is lower. Do those kind of things give you food for thought . Bob every time i come on bloomberg in the last 20 years, favored. En the russian market is the cheapest in the year. I think the next 20 years i come on bloomberg, i will say the russian market is the chiefest market in the year. I like the russian market. I think it is going higher. We have a number of positives at the moment. Russia is coming out of recession. Inflation is coming down. Interest rates are coming down. Wont behose sanctions removed, but they could be eased over the next year, and the market is cheap and it will remain she. Manus the next 20 years. Bob, stay with me. Lets take a turn to the u. S. President ial race. Economicump, Senior Adviser tom barrick has been speaking to bloomberg. He responded to reports of turmoil in his campaign by attacking the media. We were told that trump will try to strike a more positive tone. Lets move on from the negative and find the degrees that we can move as a group. I think everyone is ready to do that, including us. That is what we are advising donald to do. He will do it. He is better than all the is out there. T that is the message we are trying to give to him. Manus Vice President joe biden was out on the campaign trail alongside Hillary Clinton. He was speaking in a rally in of important state pennsylvania. Biden said he could not trust trump with the nuclear arsenal. Manus he speaks cavalierly weapons as if nuclear war is some trivial affair. He is not qualified to know the code. Manus we have a long, long road to travel. Bob parker is the Senior Adviser at credit squeeze. This is heating up, isnt it, in terms of battle . Bob the first observation you can make is this is one of the ugliest american president ial elections we have seen. Probablyhe rhetoric gets worse. What does this mean . For the American Economy i think mean for the American Economy . I think the concern is there is clear weakness. Despite fed policy, investment spending contracted and investment spending has been contracting for the last two quarters. One has to ask the question, is Political Uncertainty going to one a negative Impact Investment spending and will that constrain the growth in the u. S. Economy . Whereas i like the u. S. Consumers sector and the data on trend in the Consumer Sector remains strong and consumption in the states could grow by 2 plus, but if one looks at the headline gdp numbers for the second half of this year, low capacity use, negative investment spending. They will all be a constraint on growth and the American Economy with growth probably coming out less than 2 . Nastyve to say all this rhetoric that we are seeing in the u. S. President ial election, what is the economic deep red Economic Impact . Manus you mentioned the fed and we are never far away. I have seen dollaryen. I think it is more of a dollar story. Wayans ofned to john san francisco, he is moving to raise the inflation target or abandon it. That is quite a strong statement. Bob absolutely. It is fair to say there is a big debate among central bankers at the moment. Is Monetary Policy starting to look exhausted . Clearly the british dont think so because the bank of england took dramatic action over the last month and cutting Interest Rates and reintroducing wanted easing. In japan, and i think there is a strong case for saying that when you have an aging population, where the demographics are negative, negative Interest Rates actually curb consumption and boost saving. Central bankers are saying perhaps we should put the focus on fiscal policy has we have done as much as we can do on Monetary Policy. Just to quantify coming back to the fed, the fed Balance Sheet is actually stable at 4. 5 trillion u. S. Dollars. Per the Lehman Brothers, the Balance Sheet is 8 million. Since Lehman Brothers went bus, we are seeing a fed Balance Sheet that has expanded by 3. 7 trillion. That is against a background of lation being struck which inflation being sluggish. Growth is struggling to come above 2 for the rest of the year. Manus thank you for being with us. Theng up on countdown, worlds biggest miner is expected to post its biggest loss since 2001. We post the numbers at 7 15 u. K. Time. A likely weighed on the first half numbers. We speak to the ceo. Postbrexit of key info. This is bloomberg. \ palace in material tokyo. It is not that bright and sunny here. Dollaryen careening towards 100. We have not seen the dollaryen break 100 since the brexit blues. Its get your business flash. Haidi lun. She is going to get us up to date. Bob thanks, thanks, manus. The combination of the two companies would clear the supplier of industrial gases. Targetedanley is being by belly capital management. He stake is holding according to a person familiar with the matter, the hedge Funds Investment is valued at 1. 25 billion. Noble group has been downgraded two levels by moody investment service. The rating firm said the singapore commodity and Trading House could come under further pressure in the next 12 months and have weaker than expected profitability. Hasaire investor taken his profits from a major investment in gold after buying a stake in miner barrick gold. Regulatory founding showed he cut his holding in precious Metal Holding by 94 in the second corner. They have recently slipped from the threemonth high last month. That is your Bloomberg Business flash. Manus thank you very much. Lets talk about bhp billiton. It could have the worst result ever. Certainly since the merger went through in 2001. The forecasted estimate is the mining giant will post a 6 billion net loss for the year. Joining usid swear from melbourne. Is this all the result of lower Commodity Prices . Iron ores a beast within billiton, isnt it . David iron ore, that is the top earner for bhp billiton. We have seen the price of iron absolutely collapsed since 2011. Expecting in the next 30 minutes is to see the result of that collapse in commodities prices over the next year, 18 months. Underlying profit. That is forecast to default to its lowest since 2001. On a net basis, we are expecting the first ever net loss to be recorded by bhp since the 2001 merger. That is forecasted about 6 billion. That is driven not only by lower Commodity Prices, but also writedowns and charges. They improve writedowns to the u. S. Shale business. Also provisions of remedial costs that led to the deadly dam spill in brazil. It is going to be a pretty sobering result to bhp. The one consolation they can probably take is this should be as bad as it gets. That profitsare will begin to rise again. Manus a lot of this will be inextricably linked where you think that rally in iron ore can go. Inis all about the guidance terms of what the market thinks it can earn as we go forward and in terms of what they say to us for the current financial year, isnt it . Saw bhp downgraded its expectations on chinas Steel Production peak. That is key to bhp because it feeds into the bottom line for iron ore also. People will be looking to see what the ceo says about the outlook in china. If it is like rio tinto earlier month,ri it will noto be so encouraging. Says they remain incredibly wary on chinese demand. Major mining companies, they are not relying on the repeat boom for china the last decade. There is growth on the horizon from places like india and indonesia. That could lift profits. It is not going to be on the same scale. Is continuing to reduce costs and hoping that combined with stable prices can feed through to the bottom line. Luck when the release drops. David stringer, or commodities reporter in over. Jonathan, thank you for coming in. There has been this sort of little bit of a reprieve for the mining companies. Iron ore has had a bit of a bounce. Commodities have bounced in the past three months. It is going to take more than that the worst has passed. Jonathan they bounced a bit, but 2011, 180 Iron Ore Price back down to 60. The problem you have got for these miners is that they over invested in boom toes to increase capacity meet demand, and suddenly they find they have over supplies, price week and profits collapse. What we have with php not only underlying earnings, but all these exceptional costs they are putting in. The good news is that they have capex. K they are focusing on reducing costs so they can get their productivity up and efficiency. It is interesting that this year they had to boost from china not being as weak as everyone anticipated. That has given them a bit of a boost. Manus there is a great story on commodities today. Blocks and shortages, steel and metal for the last two years. If you look at sink, nickel, and 10, they have ripped out zinc, nickel, and tin, they have ripped out the competition compared to copper. Look at this versus copper. An anemic adjustment there of 1. 2 . There is a great deal of rebalancing to go through in some of these core markets. Jonathan we are going to have results from anteater gaster as well. Will they say about the Copper Market . It is certainly an issue. Is our fee, rv, relative value function. You expect a dividend of 3. 49 on billings. Anglos does not rate. Those kinds of dividends, the you think those are more sustainable . Jonathan the problem with all High Dividend Companies is are they sustainable . The advantage would bhp billiton is they took the cuts. Having had a progressive dividend policy, they said it is far more sensible to pay out 50 of the underlying and attributable profit. That is becoming a realistic deal. At the moment, that has led to a big collapse. Looking forward, that should be more realistic. Rio, it is a high payout ratio. With so many income stocks in the u. K. Market you have to be concerned about that. Manus the other thing is we are such a global market. Jonathan, stay with me. Jonathan bell stays with us. Coming up in the next hour, we are going to dig a little bit deeper. Results arriving and we will speak to the ceo. What doesera got up make of the Copper Market . Break them. , i will numbers, and do stay with us for that. We shift into go later in the day. Billiton ceobhp andrew mckenzie. Make a 6ected to billion loss. That would be the biggest since 2001, the merger. Posteduity futures are at the mode. It is a beautiful day. You quiet u. K. Equity futures are down in eighth of 1 . Avtk0 whole. Miners and a weak cover prices made way on aghast that results. We bring you the numbers and we speak to the ceo in just a moment. Rba explains itself. Rates cut interest were live in sydney. Postbrexit economy. Todays inflation figure will be the first part u. K. Data since the referendum. Manus you are welcome to countdown. I am manus cranny. 1. 45 billion. That is the revenue. Cent. Nue of 1. 3 these are numbers. Capital expenditures, 385 million. Going to deal with the cover price with the ceo very shortly and delve into this top level report. A copper mix of 83 of antofagastas goal. Copper. Uch in in terms of production, this is what the company is saying. They see fullyear production at the lower end of the guidance. 740 710,000 to 740,000. They see production for the year weighing down, going into the second half. In terms of the overall position, we want to have an update in terms of some of those acquisitions that they have done. In terms of the acquisitions they have done it will get that conversation shortly. Onto for gusto at the for with lets check in gmm. I am going to switch that over. 100. S careering toward traded 100. 4. The new zealand 50 is down over 170. Fair, it is the european open. W futures indicated down. Auction t is the the option trying to get the bank the bank of england trying to get their hand on more guild today. Lets talk about the risk radar. The oil, gold. Msci asiapacific, you got dollar index down by. 33 percent. Msci is index down. 139. 7. Youre seeing slippage from the one your high. 45. 46. Rude, we are holding about the 45 level. Rallied near 10 in the last three sessions. Russia, they are ready to talk freeze. Gold up. 6 at 1348. This is day to and the rally in gold investors. The dollar is lower, that is what driving that is what is driving the market. The bond markets stand ready for an inflection point. Mr. Williams says the fed should up its inflation target or abandon it. 1. 54. That is a dipping year. The s p 500 climbed forecast straight session in a row. It is a bear capitulation. Lets get out to haidi lun. She joins me for the bloomberg first word. You. Od day to the meetings from the rba where they cut Interest Rates for the second time were released today. They said the cut would boost would boost inflation. San franciscos offense president is calling for a new approach to central banking. John williams argues that the level of Interest Rates will the either stimulates fed policy of targeting lowinflation will no longer make sense. Russian equities closed at their highest level on record after rebounding oil prices lowered investors to the cheaper stocks. The countrys Largest Oil Producers were among the biggest gainers on the benchmark 50 index. The European Headquarters in london will start the will start the process of moving jobs of u. K. Within weeks. That is faster. That is according to people briefed on the plans being drawn up by four of the biggest firms. Planning for the Worst Cell Service is really around the eu. Donald trump has laid out his prevent defeat i. S. And terrorist attacks terrorist attacks on america. He would halt immigration from countries with a history of exporting terrorism and implement an ideological Screening Test. The time is overdue to develop a new Screening Test for the threats we face today. Vetting. Extreme our country has enough problems. We dont need more. These are problems like we have never had before. Joe biden has called donald troops. Threat to campaigning with Hillary Clinton in pennsylvania, the Vice President also sharply criticized trump suggestion that russia wants Cyber Attacks on america. This guys shame has no limits. Has gone so far as to add to ask and russia to conduct Cyber Attacks against the United States of america. Even if he is joking, which he outrageous thing to say. Global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Im haidi lun. Manus. Manus lets check in on Commodity Markets. Lets check it on the markets. We got Juliette Saly standing by. We got dollar yen. These Commodity Markets oil up 45. It is all about dollar yen. That is more of a dollar story than a yen story. Juliette it is and we do have the yen holding any onemonth high and have a look at the impact that his hat on the nikkei. It is closed down 1. 5 . Japanese stocks at their lowest level in a week. A lot of weakness coming through. Gains. Rd straight day of it is a story of dollar weakness as investors start to trim their bets that the fed will increase rates by the end of this year. Dollar weakness yen strength. I want to show you what we have been seeing on the shanghai asian market. Yesterday was a solid day in china it we are seeing the shanghai composite at a relative strength index of 70. He thinks im china the hang saying a lot of analysts perhaps this china story is a little bit over wrought at the moment. We are seeing weakness coming through into these markets that have had an impact on the overall regional index. The australian shepherd also turning negative on the close, down by 1 . Worth noting the positivity in some of these emerging markets. Indexes, that korean won strengthening. Just having a look at some of the big movers in the region. Noble Group Getting that downgrade from ratings agency, moodys. China bank a still and focus on this story. Ga education a big slump in australia. Slump. Education, a big manus widgets at the numbers we just hada the numbers from antofagasta. Thank you so much for joining me, ivan. When i get into these numbers, you stay closed you say clearly the shortterm market volatility is going to continue. In the face of what has been a tough market, are you seeing the light at the end of the copper tunnel . Ivan i think we are. Prices have been down for quite a while. We have been making a very significant improvement in terms of rebasing our cost and focusing on profitable we are seeing some of that now reflected in the numbers that we just released. We have a good set of numbers for the first half of the year. Our numbers at 571 million are up a few Percentage Points over last year. Prices down 20 . That is the result of the fight against result of the cost fight. Manus that is the lower end of production. This is the lowest in terms of guidance. Where is that loring coming from . We are guiding toward the lower end of production. The reason for that is we are focusing on profitable we are very keen on ensuring every as a positive cash contribution and we are being selective in ensuring that happens. We expect more production in the second half. The reason being that one of our operations will get higher grades. We are ramping up a new operation and therefore expect high operation. Manus can expect you to head toward 740 than 710 . Ivan we are guiding toward the lower end. Net manus manus lets talk about your debt levels. You are one of the most leverage plays in the Copper Market. You are saying your debt level is 1. 04. What inroads can you make . Ivan we have one of the strongest Balance Sheets in the Copper Market. We are the ones that have the lowest level of debt to one point billion. Strongest Balance Sheets in the industry. That makes us stand out among manus i meant to say you are one of the lowest. My apologies. The market wants to see you make inroads on that. Ivan the focus is protecting the markets and not increasing protecting the margins and not increasing debt. It is unchanged. Therefore we think we are keeping the fortress of our Balance Sheet and that is an important principle that we will continue to hold dearly. Manus the whole world wants to know whether copper will be balanced. We were talking about this rally. Every thing else that you dont produce. Copper has only managed gain 1. 2 . D. C. Rebalancing coming into the doper market next year you see rebalancing coming into the Copper Market next year . Ivan we have seen a starter demand in the first half in china which represents about 50 of copper demand. Will stayk for copper favorable in the mediumterm. More production coming to the market. It is going to be similar to what we have seen recently. Mediumterm, we see that the market would get tighter and prices will start to increase. Manus stay where you are. There is another one of your come padres that is, with the numbers. Php. Billiton comes in with a profit of 1. 2 billion. The estimate was for 1. 4 billion. Underlying profit of 1. 21 billion. The estimate was for 1. 04 billion. This is where the market was ridding itself since 2001 and since the merger. Youre seeing a full year net dollars 8 billion 6. 385 billion. The headline net loss comes in at 6. 385 billion. Theres a dividend of . 14. They have a debt level which is at broadly unchanged. The cu mckenzie will be on bloomberg later in the day. Lets return to my guest and countdown, ivan r a god of ivan ari got a we got a flow of these numbers. It is a tough time in mining. More m a to come. You say manus i put in a lot of set of numbers. I know this third pillar of your strategy, it is m a. What is on the cards . What can we expect . Are there more of their copper assets . Ivan what we have seen in the Copper Market is good assets tend to be held dearly by their owners and therefore if you have come out in the market. We think we have purchased the best ones that have been available. We purchase a year ago and now it is fully integrated into our operations and cricketing to our results. Were pleased with our purchase. We think it is going be difficult for other assets to come into the market unless rices collapse of us rices collapse in the future. Ofus you expect some sort rebalancing in the market next year. We go into the balance in 2017, are you beginning to see people hold back from pulling assets out of their own markets . Ivan i think that is right. Assets are rightly priced. Some companies have higher levels of debt in the Balance Sheet, and therefore their ability to withstand a lower po we are of crisis getting ready for a time where prices can increase. Manus i am looking at your numbers. China was 23 of your revenue. Whatgoing to give me do you see in the reality of growth in china. As for chinas concerned, the rate of growth appears to have stabilized. Would you share that sentiment . Ivan we do. We saw a very good first half in terms of china demand. There was on the back of stimulus. The extent to which that is sustainable is something we are very vigilant about people we have seen better performance in terms of what we had expected for growth in china in the first half. Manus when you see the warning flags go up, is that caution on china . You e the red flex for the red flags for you . The thing we look closely is what is happening with the logical grid, network with the electrical grid. When that is not growing enough, that is an alarm for us. There are other factors. On the supply side, what we have that helps the supply and demand balance. We have seen the mine production in china has come down. That is a component. When you put that can better thats when you put that together, we are seeing the market for copper which globally is almost balanced but not very significant in terms of the challenge. That is why we think the condition will remain for a few years until it gets a tighter after that until he gets tighter after that. In your words, it could be the debt levels of your peers. Do you expect anybody heavy past the point where we see companies go bust in your space . Ivan we have seen companies enable to whether a tough Market Conditions with high debt levels for the last couple of years. If prices dont change significantly, that will continue. If prices do go down because there is some unbalance which cannot be corrected, then well see companies under stress. It is probably more probable that we will see companies whether through this downturn. Being able to get through. Manus there was a line from the boring. Where he said it is the new acceptable. Youour world, is that what hope for the back up . I would just want to get through. I want to be 710,000 in production and i want to be fairly whirling fairly boring. Ivan we want to be exciting. Is quiteon pocketable on profitable is quite exciting. Theres space for innovation to be introduced in our process which would make us more efficient. Manus ceos come in and chat about innovation and technology. Give me a tangible example of where technology could transfer to the bottom line for you. Example, leaching which is a process that we havent copper. To the extent that technology can allow us to do leaching of some kind of or which is not done today, we could make a breakthrough. There are obvious things about this today digitization, automation. There are minds which are run operated by trucks all of that is something we are keen on exploiting that innovation and making our process more efficient. Manus can you give me some updates . Youve got santella centinela. He just given me the top line. In terms of the ramp up in the progress, give me an update. Ivan in terms of centinela, the bottleneck we have bottlenecked the plans. We are working now on a piece of equivalent which we are finalizing. We expect to have that ready by the end of the year and then only able to run at full capacity. And then a new facility, we are working through the ramp up. We started up in september of last year. We expect be running by the end of this year. Manus sir, thank you for joining us. Gada. Van arria great conversation. We are going to stick with the miners. Up with theught other corporate stories that are making the agenda. Juliette saly. Juliette manus, thank you. Has removed its ceo sing the role has become so complex that judicial management profile was no longer adequate. Statements from the banks chairman says he will be replaced with immediate shares have fallen 22 since he took over as ceo in march last year. That is according to people familiar. The carbonation of the two companies would create the Worlds Largest supplier of industrial gases. Warren Buffetts Berkshire hathaway boosted investor investment in apple when the stock slipped. According to a ventilatory filing according to a regulatory filing that is your Bloomberg Business flash. Manus. Manus thank you. There has been a raft of postbrexit data. It all kicks off today with the cpi. Cio. Han bell, he is the today is the beginning of the truth serum in terms of what brexit means. The pound is down 12 postbrexit. Is inflation such a bad thing in the u. K. . Jonathan what Central Banks want is to get some inflation. The bank of england is expecting that inflation will pick up around 2. 5 before settling back to 2 . Certainly, a bit of inflation is a good thing. If we could have inflation at 2 in most countries in the west, they would be quite comfortable. I dont see that as a problem. I think i am less concerned about the u. K. Economy than a lot of other people. Manus in terms of the gilt market operation, hopefully it will not be deja vu today. Of the kickback from gilts. They have been one of the bestperforming bond markets from the global perspective. It does that momentum continued . The gilt curve is the flattest since 2008. Jonathan this is an extra ordinary situation. Manus lets have a look. This is the flattest since 2008. This is before the option auction today. Jonathan qe has succeeded in bringing it down across the curve. I am in the other position. What you would like to see is rates fall at the short end and pick up at the longer and because people said short rates lead to a recovery. Nowadays, we are just predicting a deflationary style environment. And equitys p roars markets on this charge. There is a wonderful line in the story this morning that it is a capitulating moment. The bears are capitulating in the u. S. Next line capitulating in the u. S. How bullish are you . Jonathan this run is based on the bond market. It is because of bond yields are so low that people are looking elsewhere in saying im getting such low returns on bonds, lets look at equities. We are in a low return aonment, but with the earnings yield of 5 . That is commensurate with 3 real return from equities going forward. 3 real return from equities is pretty dull, but when youre comparing it with cash and bonds manus it looks tantalizingly good. Circling back to the inflation discussion, in the u. S. Market, you are seeing treasury outperform bonds. Bond markets are at 5. 5 . Beginning to take a little bit higher at i wonder is the market ready for a kickback and bonds when it comes . Jonathan i dont think it is. I think there is a real issue that at some point we make it back to a normal environment. The bond market is really at risk. That is not priced in at all. Manus if that is not priced in, in terms of yield. Jonathan this is something that is a longterm move it we get a 35 year bull market. We are going to have a 30 year bear market. It starts in the next six months or so. It goes on for some time. Manus john, thank you so much. Jonathan bell, chief investment forcer that is it countdown. Withe move is up next Caroline Hyde and guy johnson. Text futures dax futures is down 55 points. This is bloomberg. Guy welcome. Move. Watching on the if 8 30 in berlin. Im guy johnson alongside Caroline Hyde over in germany. The mining meltdown. Bhps fullyear profit tumbles more than 80 with its first loss since 2001 have we had rockbottom . Get the first hard numbers out of the u. K. Today since brexit. Find enough to sell us this time