tv On the Move Bloomberg April 15, 2015 3:00am-4:01am EDT
face charges for violating antitrust laws. no change of policy is expected. a one trillion euro bond buying plan. mario draghi is expected to be asked. blame the imf or that. we will go to the market open with caroline. caroline: it is pretty much flat today and we have it flat as a pancake for the moment. looking over at china with the 7% number coming in. it was in-line with where the government wants that. if you dig deeper, the industrial production looks particularly weak and it is all about rebalancing and refocusing on the sumer and trained.
there is a bit of a slowdown. we have mario draghi facing questions on quantitative easing. can you believe it? people were wondering when it might end. we have questions of structural reforms. what are they doing? you have it easy to spend and come by. let's take a look at the market and the drag on the australian dollar. it is a big area of commodities and they supply china and show a little bit of a wobble economy. that will head foreign currencies. chief and i on this. let's have a look at the commodities. oil is up in the united states
because iran is the second member to come out this month. they say, maybe we should cut production in oil and the supply is hitting to us and driving down the oil price for a year now and urges a cut. we see a's fight in oil. ahead of the rate decision, we expect nothing for interest rates. we are seeing the euro trading down. interesting for the bond market. a lot of talk of the lack of liquidity in the bond market. the fed is starting to increase interest rates and german borrowing doesn't look appetizing anymore. it could be absolute a us because of the exchange trader funds.
adding liquidity to the bond market. the underlying bonds below are not as with it. a quick look at the stocks to keep an eye on. it is moving up and it is down. no cash is coming in at it is foul -- it is valued more than the market cap. people are saying, i am only getting a third of the company and that is not enough. the premium was only 7%. two thirds of the overall company will be based in finland. meanwhile, down. this is a chip maker and they are not looking so pretty. meanwhile, up 2.5% and looking good with a it of a weakness. the numbers for the fourth quarter or better than estimated
and up 9%. >> think you very much and let's take it straight back to china. gdp did match the forecast coming in and every other day to point was below estimates, including for drunk water growth. i guess the first question is, where is the trend and the weakness? >> we are feeling weakness in the industrial side of rings. caroline just mentioned that gdp was coming in on target and in-line with what economists were expecting and what the premier has been targeting. as you mentioned, it is the slowest growth 2009 and again,
surprising data coming out with indicators all their. particularly industrial output. that was coming in at 5.6% and was the lowest since november 2008. economists were expecting 7% growth. the year to date comes in at 13.5% and estimates are coming at 13.9%. of course, there is retail's tales and they are coming in at 10.2%. the nine-year low is there. the government needs to do something to step it up with easing, if they need to continue and they want to continue with the 7% growth targets. we are talking about first order so for -- so far.
jonathan: gone are the days of it going higher and higher. any talk of rebalancing for talks of developments? >> there were really was signed that there was progress and we have the chinese economy shifting away from industry and more into services and can assumption. the service sector is seeing relatively rope rust -- relatively robust growth. that is a positive and it is more labor-intensive. again, the service sector accounts for more than 51% of gdp and more than manufacturing. jonathan: thank you for joining us out of hong kong. let's keep it on china after the
disappointing points. joining me now is the emerging markets economist. great to have you with us. top what did we expect? it is a command economy and they can deliver 7%. the bloomberg tracker tracks things like electricity railroads, and this is running in the mid-single digits. is this the most gdp figures could show us right now? >> china is a bigger economy with people and they get the data out before the u.s. does. there are accuracy issues. it is not that the chinese are making it up as they go. the studies compare to other indicators. although they give different
estimates, they move slightly and the trend is accurate. >> if you want to stimulate the economy, the property market slows and i get that there is a downshift. cap backs has been held back. what can they do to stimulate the economy? >> they have options and they do not want to take them at a moment. they have the backups and they are worried about it on angel bubble and they do not want to reinflate those. they are trying to get economy to be balance. >> talking about the composites over the last year with 94%. is that the elephants in the room? >> that is the concern.
it is 20% and it is a sentiment driven by the index and any bad news is good news. so for the authorities whatever they put in place, it is not enough for the market. >> thank you very much. stick with us. mario draghi is auditing the mexican government and century. i will tell you what i mean by that. then, the eu tells googles it is in the crosshairs. more later hour.
>> he has to give a message that it is under control. it is ironic that everyone was asking when you are going to do qe and add more stimulus. the worst question anyone can think of is, what happens when things go right and you achieve your objective? that is a long way away. they want to give the message that the program has succeeded in the first month and the economy is doing fine. we are going to continue with the pattern and see what happens. jonathan: you see the yield and the four year yield and it is below the negative mark. are they looking at that thinking, this has gone pretty far and pretty quick? >> we have not heard yet with
the acknowledgment of the distortions of the program. they started and it is an indication of the ecb managing what they can do for the bond market. the need to look at the technical details. jon: real privilege to have you on the show. joining us live from frankfurt. it drags down bond yields. we see record after earth's of
low yields and we are looking to cash in with mexico issuing -- with mexico issuing a yield of 4.2%. it has now locked in the rate and it is desperate enough to buy. richard is the chief investment officer and he oversees 30 billion pounds in assets. does the ecb have to start thinking about financials the ability when it sees that hunger for yield? that is a push. >> you look at the central bank and is injecting cash and distorting markets. it is causing a ms. pricing of assets. it is fine the way volatility
forcing down yield. in the future, there will be greater instability and a cost of the policy. there will be a cost and, when the cause of ms. pricing of assets, it will be disruptive. jon: you used to assume risk and get compensated or that. it does not seem like that is the case anymore and that is implications down the road. >> it is a ms. allocation of assets and capital and it will be to a bubble or their down the line. jon: how do you define the bubble?
>> it is a bubble down the line. we have negative yields in bond markets and we could see that problem extent. this has been inflated by the huge amounts of liquidity. there is qe in europe and japan. jon: if that is a bubble and it is a problem, it is so interlinked on. where'd you go? >> you go short-term. you may have to suffer a low yield and that is safer with capital losses. also, i think you are looking for inflation in the world economy.
we're looking at a negative if nation rate further out and evil want to -- people want to protect themselves. or, you can go into equity. >> i see property markets doing well and there is a risk of a popping bubble. they say they have complete security. jon: we all questioned it and people have rationalized it. are they comfortable with the equity yield? >> people are paying for safety.
we had that before people took negative yields out of deposits. the question is, are they overpaying for the safety? >> you get around the economy and does it really tell me anything? >> a good question. you have the yields at these levels and it is a lot lower, in terms of seeing meaningful investment. jon: do you think inflation is around the corner? if we get the upside, we could see a vicious move in the
european market. the ecb will be there every single month and it will eat the lid on this. >> there are deflationary forces. and there are deflationary forces in asian economies. you look at low inflation rate and it is a result of trends and if you look at u.k. and zero inflation, if we split it is things larger going on. service prices are better reflections of a development in the economy and are rising and are not coming down. they are stuck above the government inflation target.
we have to be wary about how we interpret the numbers. >> there is the speech in june and someone came out and give us a bit of a shock. >> the chief economist said that an it was more active dennis. i was not really expecting a shock. i think it would be risky. >> we can't get around without talking about greece. alcatel lucent is down by 9.6%.
i just messed up the number. caroline hyde has details. caroline: this is the number. 15.6 billion euros is what is being valued and it is a share deal: away and the options are not what is expected. we just heard michelle take to the stage and say this is the right combination at the right time and he wants to build the european champion for telecoms equipment with shares capping at less than expected. already, they sound effusive about the deal and are keeping personnel and. they go as far as setting up a
startup fund to get the internet of rains in france. the company is going to be called no kia m based in finland. this is why they are acquiring it. it is not just doing a share. it is acquiring and you can see that it is oprah sing and on finland and remember this will leapfrog the mobile network equipment and the number one player when it comes to mobile. it is not just europe and the united states. this is all of the innovation and this is what they want to create. this is about the internet of
jon: welcome back. i am jonathan and at bloomberg's european head quarters and this is how the things are shaping up. this is a picture of things. the dax is north another 35 and gains almost entirely across the board. greek yields, obviously not a good thing. yield is up another 30 aces points. the number to the left is 23.7%. if you take it out a few months, you see it at the highest point
since they took over. bloomberg tv sat down with stan, who has one of the test track record in investing. for a quarter century, his fund was returning 13% annually. christ you think greece is leaving the eurozone? >> probably. >> to you care? >> as an investor? the banks do not own greek debt. draghi has qe at his disposal. my guess there will -- my guess is that there will not be contagion. i do not give this theory about how greece flushes themselves down the toilet and the spanish
and a tie-in say, -- and the italians say, "let's do that." i would prefer greece stay in for a lot of economic market reasons and humanitarian reasons. as a market participant, it is overanalyze and overrated. -- overanalyze and overrated. -- overanalyzed and overrated. jon: let's get another take. where are we? we have the crowd working out. where you think we are? >> they are clearly in a bad place and gdp is very weak. the economy is in a hiatus. if you took a step back, you
might say it would be better for greece to be out side the euro system. it needs a bailout within the system. it would be better from underneath the umbrella and it could get on with life again. the problem is them getting from where they are to where they need to be. that is problematic and the economy is under enormous pressure. it would be better for greece to be outside this is to him. i do not think the risk of contagion is particularly great. clearly, it will cause disruption and nervousness. i do not think it will last long and it will be better for them to be out side the system. it is the and with in the euro
that causes the problems. -- within -- it is being wi thin the euro the cause the problems. they need a major international investor come in and national bodies to come in. it may be the ecb that does the lending to greece outside the system. it is in european interest to have stability with greece. the question is, it is this good for greece at the moment? jon: it will be costly for the imf. >> it could be costly. what you want is the greek economy growing again and able to start to repay some of the debt. maybe small amounts of the at. it is very difficult to see a way through for greece inside
the system. it is the wrong monetary umbrella for greece. jon: when you restructure the debt, the all is to do it once and never again. clearly, the restructuring several years ago was not a good enough. >> you have to go way back and say, was it sensible to combined economies and put them under a single monetary umbrella? what we saw it is a massive debt inch because of the monetary policy determined in northern europe. that is not going to change. it is not going to change. for greece to remain in the euro, it is a long-term problem. jon: do you anticipate grexit?
do you think that will happen? >> it is a greater possibility the many realize and in the end rather than going through this and expanding the huge amount of intellectual effort to resolve the crisis for a small economy in europe, would nick he better to talk more positive ridley about the future and about what is good for greece? jon: you have securities yielding 23% and you have a judgment call. they sorted out and they leave. you probably lose all of the. does you probably lose all of it. -- you probably lose all of it. >> it is binary. it is not between debt being
were something and not eating were something. you are trying to make judgments for information and, it is a binary risk. you could make a lot of money out of it and you kaluz easily. -- you could lose easily. jon: thank you for coming on the program. it could be google versus the eu. we have a pending challenge and we will do that after the break.
jon: good morning. welcome back. we are coming up to 40 minutes into the trading session. the euro is lower against the dollar and there are sizable stock stories. caroline hyde is all over them. caroline: the right combination at the right time. michelle says that the share price is going down today. yesterday, it was up 16%. now, they are being offered per share and many feel that is the equivalent to 4.5 euros.
the analysts and investors say that they will be an innovation leader in the first half of 2016 and played to the french government in a big way saying they will set up a startup and commit to the employees they already committed to in france. one of the analysts out there says the ratio seems reasonable and no chia is rallying this morning. coming off of a high at one point. the luxury maker seems to be doing better and we are seeing the fourth quarter numbers coming in ahead of expectations. retail sales are up 9%. hong kong still has weeks guess.
they say they are doing better. let's look at the luxurious for you. this is on the back of the numbers and seems to be rebounding in the second in all key regions, especially china. china is the area of concern and it seems they are back with sales and beating estimates. it is up 2.4%. jon:4 thank you and let's get you to tech. the antitrust laws and the implications of decisions could be severe and requirements for
changes to google's online search engine. let's get to the developments in the story. how much are we talking about? >> the potential is 6.6 billion. google has had 66 billion in annual revenue last year. the issue is the altering of the search engine and changing their formula. they get about one third of their revenues from europe and there is no question that google is the dominant market player. compare that with the states and that is what triggered the charges. it has been a four or five year investigation. they came close to the old
commission and we are expecting, potentially, formal charges today. there is ways for google to pick it up in the highest court in the land and right now, it does not look like they will be faced with a hefty fine. he said that this is disappointing news and we have a strong case with good arguments for users and increased competition. the worst for google is that it what's the appetite of other -- whets the appetite of other regulators and they may go after them. they are fine. they have 64 billion in cash and cash like reserves.
jon: regulators are aware of that and the question is how much of this is about protection. jon: you look at what they are saying and the charge of digital competition for the european union here is what he said. he said the online businesses are dependent on a few non-eu players worldwide. this must not be the costs -- this is about the larger landscape of what competition means. we have not gone anywhere with neutrality debates. there are so many difficult decisions to come. what do you do with each
economists and if google has a car that wants to drive autonomously in europe? a lot of questions in brussels. jon: when do the regulators learn they cannot regulate the competition to the extent that they want to. the markets sort that out from regulators in the end. >> you can make the case that the markets sort it out and very few of us use internet explorer. microsoft play -- paid 2.4 billion euros in fines. the market will sorted out and the company still has a deal with a very real fine 2.4
billion euros. we'll see if google has to pay the same. can you regulate something as fast-moving as tech? i don't think anyone has the answer. these are questions we do not have time to discuss. jon: if this is what it is all about is it raising money to compensate rather than actually change the picture? >> taken the right to be forgotten case. you and i put our names into google and i suspect that, if you take surveys, you get different answers and different cultures.
with germany, there is a greater preponderance and a feeling that there should be greater protections in germany than california. you get policy formulations and i do not claim to have the right answer to things. these are tough questions that democracies and courts have to work through. technology always moves a little faster. that is the challenge. how do you stay in front of change? jon: thank you very much. that is the hans nichols way of doing things. we are almost 50 minutes into the session. i go straight to my bloomberg terminal and confirms the all-time high. equities are pushing higher.
will drop cuba from a list of state sponsors of terrorism. it marks a shift towards restoring relations between the countries. congress now has 45 days to respond. the slow down is deepening and the output slumped. gdp matched analyst estimates and initial estimates came in weaker. this bite the disappointing data, stan that's the chinese economy will improve. the legendary investor made billions of that's against currencies and he sat down with bloomberg to weigh in on the market. >> the market is up 140% in six months after being in a
downtrend and is doing so with a record volume. if it is any other stock market i would tell you there is a 90 of percent chance they will be in a cyclical boomer. because it is china we do not know the nature of what we are dealing with, relative to relative mature markets. i would downgrade the assessment. >> you do not trust the data? " i am watching the markets. i see the market explode with record volume and move. 6-12 months down the road you are in a full-blown recovery and the reason it happens is because there is enough of that greater
and think about how differently the world thinks about that. the fed has it in minutes and a area of concern is the chinese economy with christine lagarde on the financial times. as someone who is trying to think about what prices might look like, i am intrigued with the possibility of a chinese economic recovery and how different we might be thinking if it unfolds later in the year. jon: we are joined by francine. china is in there. francine: we have a store you can find on the terminal. commodity prices came back
terrifying. i will have a one-year look at growth, compared to seven years ago. the growth is not bad. consumption is not doing badly. jon: terrified is a big word. the government is terrified of m &a. francine: the french avenue that -- the french have companies they want under control. this is part of the negotiation and we have a great story saying they are not playing nice. they sold dailymotion to a chinese company. jon: the other big story is
wednesday with the ecb. francine: the markets are freaked out. what is going on? there is a hierarchy and a market presence. we have a great story that says the five questions he will be asked. what would you ask him? jon: does the imf to president over the ecb. that is my question. we will talk about politics and the lib dems. we're showing you via footie markets and that is short of the territory. the market is near a session low .
francine: china's slowdown. the economy grows at its weakest pace in years. duration doubts. no change in policy expected on the ecb, but president draghi will be questions about an early exit. europe takes on google. the tech giant told it will face charges for using its dominant position. the french government stays out of the way.