Transcripts For BLOOMBERG On The Move 20141015

U. S. Lly fizzles in the cautious when it comes to i am going to bore you to death. Embracing that view the market has currently. Energy is in a bear market. The first is the current account deficit. This is just beginning to look it is important and maybe even like a bit of a heavier day more important than some make it out to be. Higher rates are needed to around the marketplace. Two technicians, there are a finance the current account deficit. Couple of markets where nearly it mightd reason why 50 of stocks are oversold. Dax, youre also seeing be a little bit are cautious is the housing market. More than 50 of some of the big as the ratio of wages, labor they are being oversold. Costs to house prices is less oversold are the u. K. Markets and the ftse. Declining in the u. K. , which u. K. To seeto the suggest there is a gradual buildup of leverage in the system. , if theg no rate hike them turning that stuff into the ground. It is called iron ore. Bank of england were to do that, that could exacerbate some of the risk to Financial Stability. The market is still deciding. Chilcote will take you are we going to get a rate hike do you keep suggesting through what he did. We are going to get a rate hike he delivered 11 return for but the never deliver on one . Shareholders. He produced more barrels of oil they could use rhetoric to for a combined energy group. Soften some of the impacts we have seen on markets recently. This Pharma Industry is under u. K. Fallsn the our spectrum. They are reconsidering their sharply in the Fourth Quarter or in q1, the current account terms of their bid. Deficit will not be as much of an issue. There is not as much of a pressing need to promise to they are meeting to reconsider raise rates. If growtht happens, the bid. Shirer firm is in the u. K. Outperforms its Major Trading partners, there pharmaceuticals was strong. Would be a reason to keep some hope of a rate hike in their, at least verbally. Them to look through talk about potential slowdown those. Of growth in the u. K. , i look to buy a company in europe, drop the eurozone. Yourself into ireland, and take the situation in the eurozone your tax rate down. Is important because the two economies feed off one another. The u. K. Chipmaker pioneered i do not think it is too crazy bluetooth. They have had a bid from to say that stronger growth in the u. K. Has impacted the eurozone positively and weaker qualcomm. Pence. S in at 900 growth in the eurozone has impacted the u. K. Negatively. Recoveryalso has the it is 1. 5 6 billion pounds. In part because of what the ecb did in 2012 by promising to do whatever it takes to save the euro. The couple of deals this year so you can really trace the origins far in chips. Of the strongest point of the u. K. Recovery from that speech Louis Vuitton down. 44 . That mario draghi gave in 2012. There is an important feedback loop between the two economies. Ist you have got there kohls. Out about fashion. Fashion definitely missed estimates. A couple of months ago, the markets didnt do too badly, but that is not enough to offset the bigger trend, which is china discussion i wouldve been having with many strategists beginning to slow down, asia beginning to slow down. It seems to feel how low we can i will leave it there. Go. To getnt talk enough what should i be looking at . These stocks open, but i know think to go back to what i you will have that. A chart is quite remarkable. You see over 80 to date. Said a minute or so ago, the current account deficit needs more attention. The share price was about 38 the current account deficit is pounds. An issue for at least one or two you see a move to over 51 pounds. Reasons. 10 to 20 e calls of the first reasons are earnings on investments abroad. Lower when that share gets in a post crisis world, the traded. We will bring you that. Return on those investments are it is a busy morning. In certain and we have seen the the ecb president mario draghi impact of that on the current account. This is one of the most is set to begin speaking in frankfurt. We will bring that for you. Important reasons why it is a we will get the latest u. K. Mediumterm negative factor for unemployment data. Sterling. I cannot think of the last a certain man speaks this time it was discussed. Evening at 6 p. M. You are right. Look out for that. A brave man, given some of the it is something policymakers want to shy away from. Get out some of what we it is not considered always a of the eurozone. The ftse 100 down by a 10th of 1 . Pressing issue. Plenty to discuss. A pressing issue seems to be lets get some insight. Wage growth. Us for 25 years as cpi is at a fiveyear low. Are we going to get that turned around . I think the labor market city manager. Dynamic in many developed some of the bull markets have been these tax in version economies is something policymakers have been trying to get their heads around and to work through. Stories. They will continue to do so. Them start to the reason why wage pressures reverse. Would you agree . Are not higher, there are but there has been a lot of multiple reasons for that. There has you are right to point out the issue with wage pressure because been a lot of pressure to close these loopholes. It is going to hurt the health two months ago, one reason why care sector. The bank of england might not need to move so quickly. Is of the big opportunities in combination with weak wage pressure, we are starting to see the Health Care Sector is up 15 employment growth start to globally. Falter, this could be a reason cyclical is down 7 . For sterling to fall. Opportunitya great we are expected to move back to unemployment to 6. 1 . In trade for investors. We have that in the u. S. Right thisu called a correction now. Officials of the fed are talking about a participation rate. Year, 10 percent correction. Are we going to get that now . There hasnt been a year in selfemployment is narrate record high is near a record the last 40 years when we havent had one, so the high. I think you need to look at probability is on your side of a 10 correction. Other factors. I think we will get a 10 you need to look beyond the correction. You have to average into markets rather than to be brave. Surface of a significant pickup in gdp growth in 2014. The composition of growth is important. I talked earlier about the ratio i will tell you what is being of wages to house prices. Taken out. It is the share price. Down 28 . In the u. K. , it is declining. That is the biggest fall since you have seen what you have seen february 28, 2002. Over the last quarter, banks are starting to withdraw or tighten a big move in this market. Credit standards. This is indicative of a buildup astrazeneca is down untouched. Of leverage in the system. Scheier is really taking some even though there are signs that pain this morning. The recovery is broadbased, certain attention must be given equity markets are taking some pain. To housing and consumption. Been remarkable in the impact in a u. S. Post crisis world, there are reasons to worry about an the Federal Reserve president account deficit in the range of conducted a meeting and uttered five to 10 of gdp. The words, more qe is needed. Exports are weaker. Is qe4 such a joke . Total inflows in the economy are what is next on the agenda if weaker. We have to go down this route . In a post crisis world, a lot more uncertainty. Is there a plan b . It may be more difficult to it is the only plan they have finance current account deficits. Got. I think it probably is the only option they have had. In 2014. Ng growth the middle of next year they will consider that. When you move away the curtains, qe4 is the only option they underneath the surface, what do have. What option does germany have . Heres a look at two stocks. You see . When you do that for the u. K. , re getting hammered. Underneath the surface plenty to discuss. Stay with us. I asked Governor Carney we are back after this short whether we were getting too break. Points. With a 25 basis he said it was me getting too obsessed. What is probably more important is expectations Going Forward for the number of rate hikes as opposed to the first one. Can make thers transition to a more normal policysetting on the monetary side smoother, they will attempt to do that with a combination of frederick rhetoric and statements. Going back to underneath the surface, looking underneath the service, what is important for the bank is that as long as the u. K. Has moderate growth, they need to make sure the market does not get too ahead of itself with pricing rate hikes out completely. That could create Financial Stability risks and the economy, which would be a big issue for the bank of england. We spent the last five or six minutes talking about the u. K. I will get hate mail if i dont ask you about the rest of the g 10. This isking at mainly on the oil price story. You can see similar adjustments in dollar canada, mainly as a result of the oil prices. You do not want to be long the Canadian Dollar unless we get a break. What is happening now is the movement in the oil price is changing the macro outlook for a couple of currencies, in particular. Most notably, norway, and the Canadian Dollar. A few weeks ago, we were looking at how much canada might outperform because of his close links to the u. S. Thank you very much. As we head to the break, lets check in on some of the movers. One of them were watching is the chipmaker missed the quarter profit estimates, but sees a strong start to 2015. Csr, a move of over 30 . Welcome back. We will talk tech, next. We stream on everything you know. , apple tv, and amazon. It is time to talk about germany. Cio of wealththe management. We are going to talk about the german economy. You know the phrase. Never sell bonds. Prices have risen. Yields have collapsed. Record low bond yields. Yesterday the German Government their growth. I will get you calls on term in government bonds in a minute. His. 2 optimistic still . Are looking for in europe. Cross qe3 the forecast is deceleration to break even really. How are we doing this . We have the german tenure at a record low. At a policyoking response. The policy lag is so long. The sooner we get in with some in termsolicy response of Monetary Policy and fiscal policy, there are a lot of people looking on it to be easier for france. A core foundation. Europe has to get its house in order. Who blinks first . You have a battle in france and italy. We seem to have the monetary side of things with the draghi. Nk versus mario who does blink first . I think the germans will blink first. They have a strong policy on this, but merkel is not somebody who likes conflict. France the conflict with is something they will back down from. I think germany will blink first. It is the right thing to do. It is not a stretch to say france will break the rules. To gety they are going it. Some people say that is optimistic. Giving france more room, is that going to make a difference . Welcome back. I think it gives them a were live from the city of chance to do for making the london. Were watching a xml, the dutch tough decisions. We know that is what politics is all about. It is about avoiding making company that makes chipmaking decisions in the city reacting. Machines. I ask about how to invest they made less money than around germany. Yield thise 10 year analysts estimated. They will have a strong start in morning. 2015. The dax continues to be under pressure. These guys make the machines in june and july we were told to go short the euro. That make the chips. How does this play out from it is not so much about how they here . We are starting to see if did in the last quarter. I looked over the next eight to it is about the picture Going Forward. 12 months, we are going to see they think the first half of decent returns come back into next year is going to be strong. The markets. Step in front to why . They think there will be a lot of memory sales out there. Of the negative momentum. They confirmed their fullyear i think there will be very few of a change. Guidance. They say they have a big backlog that is what you have to be of orders, which is always careful about getting into the helpful when you make forecasts. Markets. There are signs of starting to the other thing they updated on recover. The aqr wille is the technology they have got, which is called extreme andely be a nonevent, ultraviolet. I know a lot about it. I will spare the audience the credit growth will start to pick details. Up a bit. It is a question of starting to get real value. It looks like they are getting closer to a product that their itself,e will present customers would be comfortable and in some cases it is already using. They will deliver six of these there. It is cherry picking and not being too bold. The German Market is taking heat from three sides. It is not just the in a weak systems in the middle of next year. The systems can go for more than euro zone. Well. China and russia as 100 million a pop. We are talking about real money. What has been most important to you . I think china is in pretty progress. Good shape. Help me out here. It is steady. I dont think there is any real everybody was telling me the chipmaker sector was under question of a demand problem in germany. Pressure a couple of months ago. Intel did very well. The russian issue we have got gass coming up regarding they are the largest chipmaker in the world. Price in november. It is very fluid. They have their chips in four out of five computers around the globe. Tc sales are up pc sales are fall ingenerally the the euro will be one of the to improve the up. Laptop sales are up 21 . Situation. There was a scare last week with what is your timeline . When should it start to make a a Company Called micro trip difference . Technology microchip i think it will start to make a difference as we move inventories for next year. Technology that missed forecasts what is done this year is basically done. The fixed earnings season is. We have seen the big selloff in the tech sector. Already over. Underperforming stocks in you are looking at a reordering general. Year,coming into the new we were going to call this wreck. T chip potentially into the chinese new year. Probably we are seeing orders start to pick up for chinese new , andve had two days year. Big call for 10 several bad days. Correction. What is your next call for the talk germany. Next 12 months . Germany is upping the ante on someam starting to see google. Returns to equity markets. Algorithms in a continuing battle with the u. S. Tech giant. The question is to try to time eric schmidt heard about it properly, and that is germanys new plans. Difficult. Hans nichols joins us. I think it is turning out to be quite an interesting time. Who won the debate . In markets more Monetary Policy, it certainly wasnt google. Morense, and essentially credit growth. The u. S. Is in good shape. I siemens. Companies or think it is important not to throw out the baby with the what this was last night was bathwater and not to get less of a debate in more of a panicked too much. Venue, a form for germans to are normal. Ons vent a forum for germans to thank you very much for joining us this morning. Dont panic is the message. Vent. Let me show you a stock that is he made this point that it takes panicking right now. Down as much as 28 after half a day to read through some of these disclosure clauses when you click through on the they are rethinking the 55 internet. Billion dollar acquisition plan. What they want the eu to impose on the other hand csr shares are is a recognizable seal that isging 33 on news qualcomm indicates that your data will not be will be scrubbed from snapping up the company. That site. We will have news on both of those stories in a moment. If there does turn out to be equity markets are lower in some eu seal, this is the basis london. The ftse 100 is down by 41 of that. Points. The dax keeping their head above we will see whether the eu follows up. Water. Lets talk about the socalled double irish. The move higher three points. Oil is firmly in a bear market. This was the best part of the debate. Plenty of news on the stoxx. He saved his opponent and said, statoil an is on the no, the double irish is to be blamed for the eu. He used the german word for stupidity and said it was eus move. We are on the move as well, and we will be back in two. Fault and google was just taking advantage of it. Interesting moment in the debate last night. Thank you very much. This is the big story in the u. K. Right now. Shares of shyer down by over 20 shares of shire down by over 26 . That is where we were before they turn down the initial. Pproach fro 55 billion acquisition that was. Look at the move. We will be back in two. Stay with us. Welcome back to on the mov. These are some companies on the move. Thirdquarter sales eat babyates and demand for food. A prediction of a return to profitable growth in the second half. Formula and baby food sales gained 19 . That is the first quarterly increase in more than a year. Rio tinto says profit growth. Says it rejected a merger welcome back. Offer from glencore, which would have created the Worlds Largest guy, shire, what a story. Mining company. Qualcomm has agreed to by the u. K. Chipmaker csr. What a tax write off. Csr pioneered bluetooth technology. The deal is valued at one point completely written off this deal. The big question, other deals, 5 billion pounds. Csr shares are surging more than off the table . 30 on the back of that deal. The u. K. Construction Company Astrazeneca down pretty hard on the back of this news. Chiefmed leo quinn as the the tailwind just ripped executive. Quinn was the ceo of the away. Scientific Research Company connectix. Balfour shares up 10 on the news. I think a lot of people saw other companies we are through that at the time. Jobs data out at 9 30 a. M. For looking at. One of them is statoil. Is Norwegian Company ceo the u. K. Expected to lead bg group. We will break down the numbers fromhile some pressure on that. We will talk about germany. There seems to be this assumption that germany will plummeting oil prices. Down about 2 . Start to lose loosen up the some moves in oil prices. Purse strings. I am not convinced about that. Bit of an entity for 10 years. Airline stocks are big gainers. The head of marketing is now the Lower Oil Prices compensating acting ceo. Before that. O for the ebola. We will talk chocolate coated he is no stranger to the rice crackers. Company. I look forward to that. He has been there 34 years. They are looking for a new ceo. Lower treasury yields. Itsome people are comparing he is good at finding and to a massive qe for the global releasing oil. He took his company from one economy. Million barrels a day, doubling move. Is it for on the it to close to 2 Million Barrels norway ined mostly in if you want to talk markets, you the north sea to all the way around the world. Know where i am. They increased fivefold. Guy johnson will tell you the they are in places like secondbiggest holder and not pennsylvania and north dakota. They are in brazil. Company right now. In that company right now. They have been very good at finding oil. Good at returning stay with us. The pulse is next. Shareholders money. In the last month if you had to choose a time to step down, maybe not a bad one. It is already reflected in the company. They are laying people off. They are cutting costs. That is something he has been good at, running a tight ship. Their share prices are down 13 or 14 in the last 30 days. They are underperforming the oslo stock exchange, where their shares trade. Shareholders appear to be delighted. The search has been going on for five months. This is the third ceo in two years. A little bit of hope on the horizon they may have someone who is going to stick with the company for a while. 3 , which ist over their biggest jump since may. Stability may be coming to bg. You are going to be a busy man as these majors start to come out with earnings. Something we have been discussing is how does this collapse of price really hurt these guys. The higher oil price, how does that impact the government . It is for a interesting. We have seen this fall from well over 100 to 85 at the moment. What people seem to think is opec is not going to cut production. Saudi arabia is not going to cut reduction. They have been selling discounted oil. So have the iraqis. So have a rainy and. They dont ask the iranians. Expect a production cut. What we might see as we get which is 80 a barrel, where some people put the , you see theel level where all of a sudden production falls in the united states. Again, oil becomes a bit scarce, and the price goes up. Lets talk about lines in the sand. There are conspiracy theories as to why the saudis are maintaining output, why they are reducing their prices for asia. We wont get into conspiracy theories. Lets just talk about russia. What is the bottom line . Looking at brent around 90 a barrel. They need at least 90. Some would say 100. They need the price of oil to go up. They needed to go up quickly. Not just for the budget, because they have got a lot of reserves. They could go a while without budget deficit and also for growth. They are tinkering on the edge of recession. In addition, they have got these sanctions to deal with. Lets quickly check in on sterling. At its lowest is level in five years. We will get you a read on u. K. Unemployment in the next hour. The pound is one dollar 59. Couple months. A we talk about all these things next. We are back in two. Here is a picture of the equities markets. We open lower. A tax write off. We keep going lower. Water. Keeping above abbvie rethinks its bid for some pressure on the likes of astrazeneca here in the u. K. As we start to consider those shire. Deals. If you want to talk markets, i crude crushed, Oil Continues to am on twitter. In two. Move is back fall. Airline stocks rallying today on the oil news. The Prime Minister of italy strikes 8 billion euros in deals. We will bring you the feed as it comes in. Welcome back to on the move. 30 minutes into the trading day. Eurozone isthe pretty much dead flat. You get the data out of the u. K. In about an hour. The wage growth we need, still below the level of inflation even with cpi at a fiveyear low. Lets get to an edwards for the stocks anna edwards for the stocks to watch. Irish u. K. Drugs business. Reconsider whether to go ahead with that bid as a result of the changes in u. S. Legislation that were announced september 22. Is next page in the diary october 20. The Market Making its own mind up in the interim. Business,hipmaking that is up by 32. 6 . This has been the subject of activity from qualcomm. During the summer, we heard about other activities. The pioneer of bluechip technology. Microchipted a bid by technology in the summer. Ffer brady also moving Balfour Beatty moving up this 12. 9 . , up by is building industry, it britains largest building business. It has been struggling since the great depression. It has been without a chief executive since may. But they announced today that lee oquinn will be joining leo quinn. The market loves that move. Slump to 31tended a consecutive months. If the 1. 8 in september. Consumer prices rose 1. 6 . It remains well below the governments target of 3. 5 . Italy and china have signed trade deals with a billion euros. 8 billion euros. He is currently on a weeklong visit in europe. It is reconsidering a recommendation for shareholders to back the drugmakers plant for 65 billion acquisition of shire