tv On the Move Bloomberg February 21, 2014 3:00am-4:01am EST
-- we get the strategic review in this week. it is not exactly a bank saying they're going to go on a hiring spree. we knew this would happen. >> this hasn't been confirmed yet. they have 120,000 people in the investment bank. over the next four years, they would cut. >> it looks like they would only caught global staff by 25%. it has not been confirmed but we get the strategic review along with earnings next week. the earnings are not going to set the world on fire either. >> thank you so much, we will keep an eye on rbs when it opens. watching,ock we are rbs gaining some 1% on the back of that is. luxuryhave the stable of which topline comes in and line but that you go into the brand -- ug has under delivered. sales rose in the fourth quarter -- it is the first
worst fourth quarter since 2009. it is about changing the product. that is where the underwhelming side of these numbers comes in. the other two key names in the stable -- absolutely storming ahead. it is a company in transition. they are getting rid of the retail part of the business. we saw the numbers from the sports business yesterday. >> they have been trying to restructure that for years. that is also a company that has to transform. >> the numbers can turn it around. you are looking at sales numbers with a rise of around 19%. there is no doubt about it. the market will focus on the gucci. ultimately, the leave upon turns around more quickly. you have to try to position yourself. kering, the company formerly known as ppr down.
david, what is the latest in ukraine? >> the presidency has said that it will sign an agreement around two hours time which will put this crisis to an end. there is a little bit of confusion out there. the french foreign minister, also the polish foreign minister both saying that talks will continue. don't take any agreement until it is absolutely being signed. we have also had a downgrade of s&p already&p. looking through to the possibility of another government being able to handle crisis money. they are still buried there could be a potential default. i will be back later with more details. >> thank you so much, david tweed. i am looking forward to the update. this is something we have to keep a very close eye on. manus, what else are we watching? >> we have some retail sales in
the united kingdom at 9:30. we also get the federal reserve later on. 20, whose fault is it that we have and emerging-market currency route? certainly not janet yellen. we will listen to voices from the g 20. we have discovered on bloomberg right across the weekend. in equity markets, you're seeing a bounce in these markets. we have had the initial communique from the g 20. it is about growth and understanding that there is going to be a turn back from the quantitative easing. also, ukraine. looks as if we are seeing some progress toward a peace deal. that is something that is going to play into the psyche of the market as well. as francine mentioned, we have u.k. retail sales. we expect those to fall by 1.2%. vodafone, this is the first day when vodafone will see the completion of their at&t deal. you're going to see an adjustment there. rbs up 1.6%.
they are considering adjusting over the next four years by about a quarter. you're looking at potentially 30,000 jobs. axa profits rose. up by 10%. that was a mess, the dividend came in at $.81. that was in line. that was pretty much expected. 19.3 is where we are at kering. gucci which underwhelmed, sales rose by 0.2%. markets were looking at a rise of eight point -- 0.8%. picture as a couple of different things. you can see we are down about a quarter of one percent. this is the worst week so far in 2014 in almost a year for the british pound against the
dollar. keep an eye on the yen. dollar/yen, this is dollar/yen over the case of the week. the new show you what is happening over the day. dollar/yen, 102.49. back to you. manus, thank you. manus cranny with the latest on what we can expect from the g 20. a draft g 20 communique is said to urge clear communication and coordination of global monetary policy. inbal finance chiefs meeting sydney this weekend will try to settle a spat between the u.s. and emerging markets over tapering of the federal reserve stimulus. joining us for his thoughts is the global head of equity trading strategy at citigroup. the g 20 are getting a lot of flak.
this is about policy talking. at least you kind of have a consensus. there needs to be more coordinated policy. extent, the fed has communicated pretty clearly what they were going to do. yes, you need more communication but at the same time the fed has been pretty communicative to a large extent. a lot of what we have seen are the symptoms of tapering. some companies need to fund themselves. you are still getting more dollars in the system until october/november when qe finally ends and tapering will be all done. the way we think about it is that these countries need something. it is probably too much of a jump. these countries are interesting from an equity point of view. the domestic stocks in these
economies will get hurt. rates go up, gdp will go down and so on. these international companies can do really well because they are becoming more competitive. they should do better. >> what is your favorite country or play in a country? >> within emerging markets? -- i think turkey and south africa seem to have done more work. there is a clearer path to what a recovery could be. if you look at countries like brazil, it is a lot less clear. some are better placed than others. >> thank you so much for now. this is what else is coming up on "on the move."
stocks on the move. this is gaining some 10%. -- the shares are now trading the highest since 1998. earnings beat estimates. margins are very strong. deutsche bank says the company showed strong organic growth and operating margins in the second half of the year. rbs is planning to cut 30,000 jobs according to the wall street journal -- according to the financial times. the job cuts come as rbs shuts down riskier investment banking sectors. jonathan ferro joins us with the details. >> the top line is quite simple. rbs is planning to withdraw from any of their investment banking activities. they could cut 25% of the 120,000 strong staff. the spokeswoman declined to comment on this but potentially huge deep cuts could be overseen by the ceo. this is not a big surprise. perhaps the numbers will
dominate the headlines. just listen to ross speaking over the last couple of weeks. >> can i just tell you, my aspiration is not to run the world's largest bank. it is not my aspiration. my aspiration is to run the best bank in the u k -- in the u.k. >> he is not exactly flagging a hiring spree. we were not expecting a big expansion. >> rbs is the latest lender to scale back on investment banking. how big of a trend is this for the industry? >> i think barclays showed us to some extent they are cutting back. ubss banks, particularly are retreating back to their core business. this bank particular, is government owned. it is focused on being a bank, corporate customers business lending. where does this news leave the biggest stakeholder, the
government? >> the politics of this is absolutely fascinating. you have the biggest bank bailout and the country's history. you have an 80% stake and the government still hasn't been able to shift. it is a 45.5 billion pound bailout. right now, 361, we are way off. there is so much uncertainty around this bank. what does all of this mean? you have osborne and cameron facing an election next year. they want to show progress in getting this bank off the books. we are expecting to post losses next week. >> thank you so much, jonathan ferro with the latest on rbs. us, the global head of equity strategy at citigroup. vodafone is one of your main focuses for the next two to
three weeks. talk to me about industry groups. do you like financials? >> yes. we think that the sector went ,rom a huge capital deficit back to zero, back to growth. -- theat does change is earnings were meant to be on the banks. you could get capital returns. in this world where we look for yields, that is something which is resonating strongly with investors. on top of that, the flows have made it that the underweight was monstrous. we have seen a huge amount of buying coming from institutional accounts following that. one interesting development recently has been the strength of the spanish banks at the beginning of the year. italy kind of followed. spain was the leader. -- we saw a switch of sentiment refocusing on
italian banks. >> would you wait for the asset quality review or do you want to get in there ahead of time? >> i think you get in there ahead of time. you are not getting the capital increases which were expected. a lot of the underweight was predicated on these capital increases. they are not coming. i think the aqr will be interesting. it is also pretty slow. we are not going to hear about it for a while. in the meantime, the neutral positioning of the bank is creating -- from a benchmark point of view. >> talk to me about vodafone. biggest corporate event in u.k. history. -- $110 billion in cash are going to be paid out.
it is going to vodafone shareholders. some of them are u.s.-based. more importantly, many of them are u.k.-based. the money is going to have to return back into the ftse. we are talking about very significant numbers. on a purely tactical relay of the ftse, we expect to billion of demand on tonight's close. we expect another 5 billion by tuesday night. vodafone -- whether you're active or passive, it is still kind of a passive state because it was so big. once you have the active flows towell, it adds $12 billion $26 billion. to 35. call it 17 the average volume of the ftse is about a alien. 8 abase eight -- about
billion. it is an interesting story. back inso going to go the high-yielding names. you can expect the performance of the hsbc as well. >> is there any more value being made? we go on to the congress next year -- next week. it seems that a lot of the carriers, there is going to be a lot of money involved in terms of and they. at the same time it is going to be a struggle for these mobile carriers to make money through tech like they used to. vodafone is an angle to the story. -- [indiscernible] softbank has been mentioned.
as soon as we go towards -- the value is just too interesting to miss out. i think vodafone is a stock we have liked for a while. ftse is a story we like as an aside. >> because of growth here? >> growth, evaluation. we are turning a lot more lish on minors which are 30% of the ftse. the stars are aligning and it is all going in the same direction. if you look at the market right now, you have the earnings which are -- in the u.s. [indiscernible] this is something which is -- >> for the u.k., is there political risk? do you factor that in or wait until the end of the year when we have elections that will give
us an indication where the u.k. will vote? i am more on the trading strategy side. for now it is ok. we have seen ongoing inflows. ago with theeks selloff, the inflows continued. you can't really go down and remain bullish. >> interesting, thank you so much for that. says itp, kering approaches 2014 with confidence. investors may not feel the same way. we will break down the earnings report, coming up next. ♪
>> welcome back to "on the move ." here are some companies on the move. toll is selling gas stations the tall group -- vitol group. they are paying about $2.6 billion. a chinese group is considering buying south african platinum after their value was depressed. -- in reviewing a decision to hold off purchasing the assets.
retailerne appliances -- could offer shares in its in aal public offering range from 235 to 285 pence. ao announced earlier this month that it would sit on the london stock exchange. showedian fashion house off its fall collection at the milan fashion show yesterday. the audience may have been distracted by the drones flying above their heads. angus bennett reports. >> can see the gadgets? don't worry. the whole show was shot on drones. italian fashion house fendi teamed up with a french company to stream this season's oh live online. has always been an innovator. a traditional brand with a strong component of innovation. >> a noble commitment but as with all new tech, it can be
teasing problems. this is what people actually saw when they tuned into the show. it didn't take the sheen off the glamour of the event. >> i have never seen anything quite like it before. it feels like fashion going into the future. i think it is great. it gets different angles of the clothes. it gave spiegel a real feeling of being there. >> it goes to show. one thing tech is a replacing anytime soon, the models. >> now from italian fashion to french, kering reported an earnings drop in 2014. our markets editor manus cranny joins us to break down the numbers. if you look at the composition, this is basically a large company with lots of little companies and then gucci making about 40% of sales. >> gucci is struggling. we know that gucci is trying to
change itself, revamped the stores, change the product line, premiumize. . they're just trying to get rid of that historical issue that they have in terms of fakes, in terms of branding. there are two keywords in this, divergence. you are leaning on the smaller brands to supplement your underperformance within the gucci brand itself. there is also a divergence. the ceo has been on conference call. he is saying what is happening is u.s. and japan are bolstering the situation. there was also less tourism coming through europe. those are underlying issues within the brand. gucci, the weakest sales since 2009. >> this is like very high end luxury. no logos. as you say, no logo on it.
i don't know when the last thing was that you bought specifically with a logo. louisbly what you got to a stores, the moniker is there but not the logos. >> manus, thanks so much. tollg up, as the death rises and international pressure builds, what is next for ukraine? we will have the latest on that. also, we go through the main market movers. this is what we are looking at today. will go through what the g 20 can say and do. european stocks are climbing. tracking global equities higher. valeo is gaining some 9.6%. this is a french auto-parts maker. watch out for axa as well. that stock is moving after europe's second-largest insurer posted profits that missed
>> welcome back to "on the move ." i am francine lacqua at bloomberg's european headquarters in london. let's see how things are shaping up. this is a picture for the markets overall. a lot of these indices are climbing. higher, global equities the stoxx europe 600 heading for its third consecutive weekly advance. some of the stocks we are watching, valeo may be active after the french auto-parts maker posted six-month earnings that beat analyst estimates. watch for anything that comes out of sydney this weekend as we
have the g 20. in terms of what that means for the fx markets, the dollar is set for a gain against most of its major counterparts. this is on bets that the federal reserve will press on with reducing stimulus. the g 20 is talking about that very same thing. the dollar heading for its biggest weekly advance. also against the japanese yen. these are the bloomberg top headlines. rbs is planning to retreat from its investment banking business and cut 30,000 jobs. that is according to the financial times. lender's largest owned -- government owned lender. a spokeswoman from the bank declined to comment on the report. and poor says ukraine is at risk of default after the political crisis deteriorated substantially. , eight ukraine to ccc
levels below investment grade and kept its outlook negative. governments-- proposed sanctions on ukraine after a deadly day of protest; a. -- protests in the capital. the unrest relates to a broader issue with russia. comments were made in an interview with charlie rose. >> the issue goes beyond ukraine. it goes to the heart of the issue, what will russia become over the next decade or so? right now, putin is embarking russia on some sort of nostalgic , i think a rational, imperial restoration. the eurasian union he wants to create, of course centered in moscow, would really be a restoration of the soviet union minus some european portions. and of course the russian empire. >> you can catch the full
interview with president jimmy carter's former national security advisor on charlie rose at 10:00 p.m. u.k. time tonight. joining us now is managing editor for eastern europe, great to have you on the program. what is the situation on the ground right now is to mark -- right now? >> the news this morning has been, after intense negotiations all night between ninkovich the oych, the -- yanuk president and the polish foreign minister that you ninkovich will vych will signo some sort of document that will pave the way for the end of violence. >> world leaders have urged ukraine to pull back from the brink. a lot of people are concerned about civil war. what are the chances that this will actually stop? how sure are we that this is exactly what president you
ninkovich will sign? >> that is the main question at the moment. i think that is the reason for skepticism that this will indeed be the breakthrough. the french prime minister was in kiev yesterday but then left late last night. he said early this morning it is too early to say that some sort of accord has been reached. and europe needs to stay prudent. it will really depend on the details. what demonstrators have demanded is yanukovych will have to leave. i think before they see a credible path to that -- there will be no end to the violence. >> is there still a danger of the president sending in the military or are we now past that because of this talking?
>> at the moment, the situation seems quiet. we had no reports of any fighting. , a truce has been called wednesday night. 12 hours later, more than 50 people had been killed. be pretty have to careful with expecting too much at the moment. sense -- of course we understand s&p saying a default of ukraine will be likely as this political crisis is deepening. are people also thinking about the economic impact or is it really just a fear of safety? >> i think the main concern is safety. it really has been the deadliest day in ukraine's history
post-soviet union. said, 50 people were killed within a matter of hours. people are concerned about the immediate safety right now. concerns long-term about the economic well-being but i think people want not only economic freedom, they also one political freedom. >> all right, thank you so much for all of that. keep safe. for more on ukraine, let's also get to our europe editor, david tweed in berlin. what else can you tell us? >> i have been keeping an eye on the financial side of what it happening here. you mentioned that standard & poor's has downgraded ukraine. i have also just seen that interfax is reporting and citing the irish stock exchange that has scrapped a $2
billion bond sale. that is pretty vital because ukraine is fast running out of money. this is central to what the standard and poorly or today had to say. let me just run through it. they point out that the national bank of the ukraine, the central bank and the state-owned gas around $13 combined, billion worth of foreign currency debt service payments to make in 2014. international reserves of the ukraine only stand around $18 billion. they probably need money to help them pay that off. the money coming from russia, $15 billion promised vladimir putin, only $3 billion of that has been disbursed. we are not sure whether they will get any more money coming from there. it looks as though that money is tied to yanukovych remaining in power. one central concern to leave you opposition do get an
forming a new government, the difficulty is, would that government be able to comply with the likely conditions that would be imposed on any aid coming from the eu, the u.s. and the imf? that is why standard & poor's is concerned about the possibility of a default. >> thank you so much, david tweed. sydney hosts the gathering of finance ministers and central bankers this meeting -- this began for the g 20 meeting. jonathan ferro has a preview. we are understanding the premise is the draft. >> if you look at the draft statement, you get an idea of what one of the top lines is. they back withdrawal of accommodative monetary stimulus. this is the talking point. how to with draw stimulus. whose currency takes an absolute beating. their message is simple. more communication. the india economic secretary is
on the wires right now. they want guidance on fed tapering. good luck to them. their message is simple. don't ignore us, that would be a mistake. i would say that is not entirely certain. your next guest can probably elaborate on that. some say the u.s. is becoming increasingly self-sufficient. the fed's mandate is a domestic one. that is what we will be focusing on. they don't see this feeding into the u.s. economy right now. to the fomc, the tale does not wag the dog. >> what else is on the agenda? >> growth. we have seen an improvement, but how many people are convinced by it? the issue going forward is that we have seen broad-based tightening and emerging-market economies. central banks are raising interest rates. how does that feed into global growth?
outside of p.m., the data has hardly been inspiring. there is a lot of concern about what is going on in china. are fivem line is, we years since the financial crisis began. monetary policy is still center stage. you so much, jonathan ferro with the latest on the g 20. joining me now for his views on is the head of emerging markets cross asset strategy at ubs. great to have you on the program. we will get to ukraine very quickly but i want to get your take on the g 20. first of all, the g 20 also comes under a lot of pressure. it is still important to meet and talk face to face. we knew what the fed was doing. it was very clear. they couldn't have signposted it any better. >> i think it is especially
strange that central bankers across emerging markets are getting ready -- getting worried about finance. just two years back, many of them were speaking about currency bars. they were complaining about loose monetary policy and now they complain about monetary policy tightening at the margin. 2011 that if in emerging markets want to on anchor from the fed, please be our guest. yellen is asking emerging markets to solve their own problems. ,s your colleague said before the fed's mandate is a domestic one. it is very unlikely that the fed is going to change their mandate or alter their monetary policy because the bond market in south africa is in trouble or because the turkish lira is blowing up. ofthat is a kind philosophical question, they
have stanley fischer coming in and that could give more of an emerging markets perspective. >> i don't think the fed has been inconsiderate. the fed is not the central banker to the world. choice.ia's the fed has always said that. we are going to make monetary policy for minnesota, not for sichuan. at this point, as much as it comes back to the developed world, the u.s. will care about it. i think that is not south africa, not turkey, only china. if china goes through trouble which we think is unlikely, we don't think fed monetary policy will care that much about what is happening in some of these fragile economies. >> we will come back to china very shortly and talk talk about the possible credit crunch. ukraine is a pure emerging-market story. this is almost a battlefield
with russia trying to play puppeteer from afar. this also has big financial implications. apart from security concerns and the human tragedy, talk to me about what it means financially for ukraine. >> it is a bad advertisement for emerging markets at the wrong time. ukraine is not a big enough economy. big enough to cause a systemic problem for emerging markets. this is right about the time when many global investors in emerging markets, many of them battered investors, are thinking about whether they want to be in emerging markets or the u.s. some of these folks may find themselves going back to developed markets and leaving emerging markets precisely at the time that emerging markets need the cash. precisely at the time when the u.s. is beginning to go up so the price of money is rising and servings -- savings in emerging markets aren't that high.
ukraine has a problem, venezuela has a problem. none of these economies are big enough to create systemic crises. this comes at the wrong time for emerging markets. the only one which can become systemic is turkey. they have similar issues. turkey's fundamentals today are not to do -- are not too dissimlilar from thailand in 1997. thailand was badly mismanaged and turkey was going down that road. we still have a very long hard time ahead of us. >> go back to ukraine. does it make you see differently some of the other countries around there? eastern europe in general, belarus, certain countries that are a proxy for russia or have interference from russia. does that make you nervous? >> i think the baltics -- it does make me nervous. the point is that it is not just
the economic language which is worrisome. it is the financial linkage which is worrisome. the financial linkage may channel through the u.s. because you have asset manager sitting there with ukraine corporate bonds who would be suffering from this exposure. there are other exposure is in central europe and asia and that is the challenge. itself is not big enough to create a systemic crisis. this is not the right time for emerging markets to be going under pressure. many people are bearish on emerging markets. people are still long emerging questions have been asked about the corporate or. -- corporate credit space. >> thank you so much. bhanu baweja stays with us. we will be talking more about china and turkey next. up, is it enough to
>> welcome back. i am francine lacqua in london. this is "on the move" on bloomberg television and streaming live on bloomberg.com. still with us is bhanu baweja, head of emerging market cross exit strategy at ubs. thank you for sticking around. ,e were talking about china some of the systemically important emerging markets. you mentioned turkey as being one of them, ukraine not one of them. as you said, it may burn investors and make them more risk-averse. talk to me about turkey. >> turkey has the classic symptoms of the 1980's and 1990's em, a fair amount of dollar debt. they have levered up massively. savings rates are extremely low. current account deficit is extremely high. inot of this money has come from turkish bonds.
not necessarily in foreign direct investment or equity markets. as the rate begins to go up, some of this money is questioning what should the turkish real rate be? that is why this money is looking to get out. for the longest time, the central bank of turkey had not been hiking rates and had been intervening in the financial markets, making the same mistake as bank of thailand in the 1990's. now they have push rates higher but not by enough i think. they should probably do more. given the fact that they have started down the right path, we think that this probably doesn't end in a complete and utter meltdown. it needs to be managed very carefully. the central bank of turkey is still quite reluctant. under market pressure, they have done the right thing. >> talk about these adjustments. how is south africa doing? arguably, turkey and south africa have suffered the most in the last couple of months. >> the difference is that south africa doesn't have the external
debt that saturday -- that turkey has. it is not as immediate as turkey's credit binge. they are not levered the same. the central bank in south africa is much more proactive. the central bank will hike rates quicker. they don't care that much about the currency. the currency can depreciate a long way in south africa without creating a systemic problem for the country. that is not true for turkey. they create systemic problems for the country's corporate sector and the banking sector. in south africa, if the pressure on emerging markets continues, there the currency continues to go. the central bank will continue to let it depreciate. they don't have the resources to intervene aggressively. they will hike interest rates only as much as inflation is going up. different way.y
in south africa you will see continued depreciation. >> thank you so much for all of that, bhanu baweja head of emerging market cross asset strategy at ubs. hp profits beat analyst estimates but the pc maker still has plenty of challenges. hans nichols reports now from berlin. >> it is probably the prophet only declining by 1%. analysts were expecting a 4% decline. it is a sign that corporate id departments may be starting to spend. you saw an increase around 3.6% in overall business symptoms -- systems pcs. that includes printing systems as well. we are seeing a double down on the tech strategy. this could be paying dividends. here is what she had to say about it. this is a big ship to turn around and we need to move faster.
clearly, markets like the report. stocks up all the way to $31. it is up almost 81% in the past 12 months. remarkable turnaround for a company that had been hammered. they still have sluggish pc sales. they have the $8.8 billion write-down of autonomy. it looks like they may be heading in the right direction. as long as companies start buying pcs again. >> where is hp on autonomy? >> you may have more clarity on the legal side of this. what you have is shareholder lawsuits against the board for not doing their due diligence. they are talking. there could be a potential settlement. this could take some of the legal uncertainty away from hp. >> hans, thank you so much. ."ay with "on the move final thoughts are coming up next. ♪
>> welcome back to "on the move ." i am francine lacqua here in london. let's have a look at what the markets are doing. we have quite a lot of news to get through in terms of the corporate movers. the ftse is gaining some 0.4%. the dax and the ibex now saw a reversal. i am not sure it is the third consecutive weekly advance. we may see a drop in some of these indices. valeo, the one to watch out for.
>> a chance for peace. ukraine's president announces a plan to resolve the political crisis, but will it stop the bloodshed? rbs retreats. a report that it will shrink its investment 19 in unit with 30,000 jobs lost. and the cost of free texting following facebook's purchase. how much cash carriers lose out on. one firm puts the figure at $33 billion. welcome to "the pulse,"