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tv   Countdown  Bloomberg  April 29, 2015 1:00am-3:01am EDT

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mark: #fail. twitter stock crashes after an early leak of disappointing numbers. manus: sony shakeup. consolidating power. caroline: deal free. to tell cfo tells bloomberg that pigs are still too expensive. mark: flash crash case. playing a part in the 2010 market slump is back in court after failing to raise 5 million pounds bail.
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hello and welcome to "countdown." manus: also coming up barclays reports whether the ceo will cut costs. how will the investment bank performed? what will the return on equity be? and vw releases its earnings this week. the family feud at the top ending with the departure of the chairman. we break the numbers and introduce you to new driverless cars. mark: twitter shares plummeted last night. caroline, you have more. caroline: twitter tanked. it was trending for all the wrong reason. -- reasons. down 18%.
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we saw that eradicate $6 billion of its market capitalization. that was at the end of trading 3:00 p.m. u.s. time. the reasoning is that the numbers got leaked early and they were not in line with estimates. $6 billion wiped off. they still grew some 74% but if we dig into the numbers, you can see that first-quarter sales did miss the estimation. meanwhile, second-quarter forecast -- they too missed out on estimates. they are expected now to rise 55% were analysts wanted to see 72%. they say they will grow some 60%. previously they said they could
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rise as much as 67% in the year. the reaction was brutal on the back of these realigned forecasts. the key question is -- this company doesn't make a profit. what you have to bet on his revenue on growth, and we are not getting that. when you look into the u.s. the user growth you are seeing in twitter is not matching what people want to see. new user growth slowed even though they have been trying new features and new management changes. they are still not managing to attract the new users. growth decelerated. we saw 302 million users overall, less than a fifth of what facebook has. facebook has 1.40 4 billion users -- 1.44 billion users. they wanted to be up 20%.
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this was a figure that used to double each time, and now they say -- april was a slow start. all of this was taking away the credibility. dick costolo has been desperate to try and involve with the base, build credibility, to say that the company is turning itself around. that second seven hour call they had -- attracting new users -- instead he is left is appointed. -- left disappointed. it was slated to come in after the bell. instead it comes out at 3:00 p.m., all down to celerity, a company that allows you to use information from the web. they managed to find on twitter's own website it's leaked report.
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mark: you can see an interview with dick costolo at 8:15 p.m. u.k. time today. don't miss it. manus: shakeup in saudi. king solomon names a new crown prince in a reshuffle at a crucial time. his nephew will be the first grandson of the kingdom's founder to be put to the throne. let's get to elliott gotkine. elliott, this is just one of a host of changes. a second shakeup that the king has enacted since he came to power. elliott: that's right. when any new person comes in to lead a company or country, they will want -- we had some of that back in january and now we have another reshuffle.
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you mentioned the big move -- and these are massive changes. he has replaced his brother, the crown prince, with his nephew. not only is he the first grandson of the founder to be put next in line, he is also better known as the counterterrorism. that is the importance that saudi arabia lends to the fight against terrorism. he also named his own son who has been named deputy crown prince. other major moves -- we saw the foreign minister. he has been foreign minister since the year i was born 1975. he is by some accounts the world's longest serving foreign minister. he is also being replaced by the current ambassador to the united states. he will take over as foreign
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minister. one final note -- we saw the long-standing oil minister being replaced as chairman of the states oil company. the replacement is already a foreign minister and health minister dashboard member and health minister. manus: in terms of context, i am reading a whole variety of sources. in terms of some of the news i am putting this down as a political earthquake of the greatest magnitude. do you think that is a fair reflection. this is a crisis, even in terms of going through cash reserves and oil prices are really under pressure. elliott: all of those are very big challenges for saudi arabia and some of them will inform the
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decision. broadly speaking, what he has done is brought a new generation of printers, giving them more power. also consolidating his line, the deputy crown prince is now his own son. he would eventually be expected to succeed to the throne. more specifically if you look at the change in the foreign ministry although the prince has been foreign minister for four decades, he has been expected to step up to the plate a little more in terms of what's going on in yemen. that role has really been taken up by the ambassador to the united states, who will now become foreign minister. that it itself is also significant because it shows that saudi arabia is very keen to make sure it stays as close as possible to his greatest ally, the united states.
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the ambassador to the u.s. is someone the americans know very well. he plays a very important role and they will be scrutinized intensely inside the kingdom. in terms of policy vis-a-vis yemen and oil prices don't expect any great changes. manus: thanks for putting that in context. caroline: let's return to tack. -- to tech. samsung's remaining optimistic saying earnings will recover next year. that confident prediction flows a 40% decline in profits. we are in hong kong looking at the numbers -- realistic, eve yvonne? yvonne: it is tough to call. we talked about what is going on today in the market. investors are betting on a brighter outlook.
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you can see shares up 1.4% right now, a rebound from the significant loss we saw. in the last four days, they dropped 2%. take a look at the stock overall. they have been up 4% and if you compare it that has gone up more than 11% for the year. compared to other companies samsung is not doing as well. when you compare it to that benchmark. what is going to be driving that demand is going to be these increased sales of the s6, the saving grace. the company says the demand exceeded expectations and for the most part will be the strong lift to the mobile business for the second quarter. but they also face some challenges. there is that limited supply of those curved wrap screens that is restricting sales.
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samsung says they are going to be improving the supply conditions. they are sent to be ramping up production. so can it come down to -- can samsung keep up with demand? can they beat the iphone 6? that will be the question for the second quarter, but for the first quarter it was a mess. operating profit in the mobile unit slumped to $2.6 billion, less than half of what they posted a year ago. caroline: we have seen all the tech giants affected by the dollar's strength -- what a samsung say? yvonne: they set the currency moves have definitely made a big impact on their earnings. the south korean won made it more expensive. if you look at how the currency hairs with its peers, it strengthened against the yen as
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well as the euro in the past three months. samsung says it has cuts earnings by 48 million dollars, but samsung remains optimistic for the future. if you take a look at samsung overall, it is no longer the number one asian tech company. it has been superseded by 10 sent. -- tencent. for samsung, $189 billion. caroline: thank you very much. mark: a big week for oil giants. bp with a beat in earnings. they beat estimates. ryan chilcote caught up with the cfo in an exclusive interview. what did he have to say? ryan: the big elephant in the room is will shell's $70 billion takeover trigger a wave of consolidation and m&a?
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as far as they are concerned, not just yet. they are still waiting for the bargains -- have a listen. >> honestly, if we have to look at this transaction, the price of it was quite high. we see also that all potential target brought to us by bankers in terms of prices they are still expensive companies. they price their share price not just to the oil price. ryan: so maybe if prices drop -- >> we never say never. ryan: oil prices are down 40% but up 11% this year. the trend has been for oil to go up. he doesn't actually forecast that oil will be here at the end
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of the year, which is an interesting view, but they do talk about what they think will determine the price. we discussed a few geopolitical things, including the shell resolution. what he thinks is that the fact that the rig count where it is right now, the least number of rigs we have seen in war and a half years, the u.s. is out of the equation in terms of determining future price. what matters is what happens with iran, whether it around returns to the market, and what saudi arabia does. >> that is a big question, what will saudi arabia do when it ran is back on the market? -- when iran is back on the market? it seems that the number will make productions, stabilizing.
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although you may have a market with some other supply it all depends, in my view, on iran coming back, and on saudi arabia making a decision. ryan: talk about thinking to moves ahead. after our interview, we had the non-incident involving iran. in addition, since we sat down yesterday, we have had the change of leadership the new crown prince being announced. no immediate effects to the oil policy, but watch that space because saudi arabia's oil policy will be determined by one group of people for the last couple decades. if they were to change their minds and stop boosting record
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amounts of oil, that could have massive consequences. manus: these are bloomberg's top stories at this hour. a traitor arrested last week for his alleged role in the flash crash. he has been in custody since april 21 and will remain there until a 5 million pounds bail is paid. the ceo of sainsbury's has been sentenced to two years in jail in egypt. it is related to an egyptian business investment. the paper claims sainsbury's was not aware of the hearings and will contest the claims. u.s. gdp data is in today and
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good news is not expected. it will be released ahead of the second day of the fomc meeting. that might put the brakes on any raising of rates. economist estimates a 1% rise in gdp compared to 2.2% in the fourth quarter. australia recorded its ambassador to indonesia after foreigners were executed. tony abbott called the killings "cruel and unnecessary," and they followed more than 50 appeals for clemency. you can get more on that story if you go to bloomberg.com. caroline: you can join the conversation on twitter. let us know what you think of the show. what is trending in your life? twitter itself is trending on twitter, surprising given it's rather torturous earnings season.
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twitter strikes a google ad deal. clearly they are trying to focus. do follow us. mark: more info on each trending subject. caroline: fomc that is also trending. coming up we turn our attention stateside with that gdp data. the fomc meeting for a second day. we will get any hint of a rate rise. ♪
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mark: let's turn our attention to the other side of the atlantic. u.s. gdp data is out today. economists seem to be bracing for disappointing news. the latest fomc meeting enters its second day. the chief economist and principal global investors joins us now to talk all things stateside. hi bob. you surveyed 59 economists and 73% say the fed will raise rates in september. will the fed today give us a clue that june is no longer an option, but september is the most likely destination? bob: i don't think they will say much today.
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i think they might acknowledge that the economy has not performed as well as they thought, but i don't think they will give too much hint about where they are. we thought it was june until we saw some slow down in the first quarter but we think they will raise rates at least from zero to 25 in september, then we think they will continue to be slow. caroline: what do you have in terms of outlook or the dollar? it is near a two-month low because of this recalibration. do you think the dollar will become resurgent again once people realize they will raise rates? bob: no, i think what we saw last fall and early this year is a very strong move due in part to other currencies and not so much -- the dollar was strong, but because other currencies were week.
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the euro was coming down. the dollar was on the strong side, but not getting resurgent again, not going down but staying flat. the u.s. economy is still, we think, in pretty good shape and should end the year at 3%. we are beginning to have doubts about that. we think the u.s. economy is still strong in the dollar will recognize that. manus: this economic surprise -- we are hitting 2.5 year lows. jobs low. i know you will say -- americans are saving money, not spending. savings is up, the highest level in two years. that is not a cocktail for robust room. bob: no i think that is right. what's left over from the severe financial crisis -- we call it post crisis relapse disorder. manus: pcrd?
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[laughter] caroline: we like an acronym. bob: you wake up every morning thinking you are in a recession. the financial crisis was so bad it affect your interest in spending and your caution. you become very cautious. and i think that consumer is still there. we believe consumer spending will rise at a 3% rate but the consumer is not going to borrow and take out home equity like it did in the 1990's. mark: how can the fed raise rates, bob, when the preferred measure of inflation is at .3%? how can it raise rates with inflation so low? bob: it certainly has been there, below what they want to see. but it has been rising a little bit. it has been sneaking up if you look at a sizable piece that goes into the pce deflator.
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i think the fed is looking through that. they are looking at some of the indicators of wage growth. they think wage growth is just about to pick up, or at least pick up a little bit. i think the fed wants to get off zero. they understand this is an extraordinary policy. it may be causing some distortion and i think they would like to add those distortions. caroline: we have the global poll out today -- for the first time since 2010, the u.s. is not at the top of where to put your money. 35% of respondent think the eurozone is the number one place. do you agree? bob: it is certainly where you have wanted to have your money so far this year. it has had one of the biggest rallies in europe of the last decade. we liked europe starting last october/november. we still like europe and we think there are positive things about it. the decline in oil prices is
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much more helpful for europe and the united states. we think the decline in the euro is also very helpful. it's more important, if you look at the credit mechanism which is what draghi has been talking about we think that has finally opened up in small business will not be quite so starved. you had all three of those things together and we think that is a very potent cocktail. we think we could see 2%-2.5% growth. manus: briefly, the u.k. growth cooled yesterday. are you worried or is this just a wobble? bob: it could be. we did see some of the purchasing manager get down slightly. i think there is always some noise, so i am not too worried yet. we have to admit, in the united states, we are starting to get worried. we didn't have as much of a
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bounceback and the numbers as we thought we might. mark: good to see you. the chief global economist at principal global investments. ♪
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manus: welcome back to "countdown." foreign exchange markets has a little bit of volatility to get your trading day. the australian is seeing a little bit of momentum. we rallied over 2% yesterday. i have an article on the bloomberg terminal this morning -- the australian aaa might go. there are only 12 left in the world -- does it matter? you you say? goldman sachs says it would.
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this is all predicated on the view that they may have more of a deficit than anticipated. you could see the australian dollar-dollar trade all the way down to $.67 in 12 months. that would be down from an original target of .7994. that is what goldman sachs the aaa disappearing would actually mean for the australian dollar. one-way traffic all the way down. keep an eye on the australian dollar. today is also rates day. not rates day. the fed is unlikely to do anything, statistically, until november. but this is the swedish krona against the dollar. the euro-swedish krona is worth a little more interest. let's make sure we have that -- you begin to see, again, some more momentum.
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let me show you the slightly longer term trade here today. nine out of 20 -- that is the swiss franc. it is not behaving itself. nine out of 20 predict a deeper cut today where we are at the moment. more quantitive easing to come through the end of the year. keep an eye on the dollar index. it is not so much that the fed will do anything but it will affect the language in the intonation that comes through from the fed. it is coming down by 7/10 of 1% consumer confidence numbers weaker. april is a pretty terrible time for the dollar. a rough april for almost five years. gdp data is expected at 1% and analysts say 96.13, virtually
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flat. if you look at the month -- last month -- you can see it is down 1.19%. mark. mark: the top stories on bloomberg this hour -- saudi arabia's king named his nephew to be the first in line to his throne, and his son will take over the role of deputy crown prince. hethe longest-serving foreign minister will also be replaced by the current ambassador to the united states. this comes at a critical time when the world's biggest oil producer is dealing with falling oil prices and the bombing campaign in yemen. samsung expects earnings to recover in the second quarter as the s6 lewis back smartphone users. samsung predicted the revival of a 40% drop in earnings.
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barclays reported third-quarter earnings. its investment bank is expected to be in focus following cost cuts and improved market conditions. shares are up over 7% this year and hsbc says it will have the best cost reduction story of all u.k. banks. we will bring you those results at 11:00 p.m. caroline: there will be even more earnings later today -- look out for volkswagen. when the departure of the chairman, the automaker may turn the conversation to performance. let's get over to hans nichols for a preview. what can we expect from the numbers? hans: the key number we will be looking for his profitability at the volkswagen group because that is where they have had a lot of these cost cuttings and they want to see that number coming up. you saw mercedes report yesterday having 41% profit increases so we will see to
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what extent this is industrywide and what extent it is based on a weaker euro and stronger dollar. you look at the complaint, and part of the complaint against the ceo is that he didn't have a big enough presence in the united states. you look at what has happened in the recovery in the united states, it has been a remarkable story. they are all the way up to 16.5 million units. that was 2014. the expectation is for 3.1 6 billion, that is earnings before interest and tax. they will still print money one way or the other through a lot of research, and we will see how reliant they are on porsche and audi. much like your own weekend habit, caroline only expensive luxury brands for you. caroline: i will have to stick with that. you have been dabbling in other luxurious things, as well. you headed down to audi, didn't
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you? hans: they are putting a lot of money into autonomous driving. i was in the driver's seat and my feet were off the pedals my hands were off the wheels. another day on the audubon but is this the future of commuting? will it look like this? ♪ so much of the talk of autonomous driving is about the safety aspect, and it is true that i am driving without my hands. but there is an efficiency argument to be made -- the tiny save on your morning commute. the typical american worker spends about 28 minutes a day commuting. the average is 38. that translates to almost 150 hours per year, almost 19 workdays before you even step foot into the office.
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>> your morning commute is the least enjoyable, according to your a princeton study, so you may as well make it more fun. a chance to take care of personal hygiene. more time to prepare your kids lunch. pilot a driving isn't scheduled for the public until 2022, that the technology is road ready. >> we have a camera here on the windscreen two laser scanners -- one in the front and one in the back. we have four additional ones in each corner of the vehicle. this is a 360 degree view. hans: and the safety concerns are real -- more than 20% of
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german and french drivers report texting behind the wheel. theneven if or when autonomous driving becomes a reality, the driver won't do. i got the green light to mix and evening martini. top speed was 80 miles per hour. 130 kilometers per hour. if the goal is to have this ready by 2022, here is what they need -- they needed to be able to go without you for 10 seconds. if there is a dangerous situation, you have 10 seconds to stop making your lunch stop shaving, stop reading the paper -- take control of the car.
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i felt very safe. i felt like i was in safe hands talking to camera throughout -- two cameras throughout. caroline: making martinis and mayonnaise sandwiches. hans, you live the dream. [laughter] manus: join us on twitter if you want to know how good of a martini hands cans can make. the treasury market is also potentially in a bubble. mark: coming up, saudi arabia's king puts his son second in line to the throne. we take a look at what it means to the oil exporters outlook after the break. ♪
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let'slet's check in on your top stories. the stock fell 18% fueled by the early release of the results. a new class is joining goldman sachs -- or leaving it. 22 partners left the firm. jim cadman $66 billion in
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sales is among the partners who left. the most recent class joined 78 back in november. u.s. gdp data is due today and economists are expecting less than good news. first quarter data will be released ahead of the second day of the fomc meeting and might put the brakes on any raising of the rates. economists estimate that 1% rate rise compared to 2.2% back in the fourth quarter. mark: saudi arabia's king named his nephew to be the first in line to the throne. his son will take over the role of deputy crown prince. one of the longest-serving arab foreign ministers will also be replaced. the current ambassador to the united states. the reshuffle comes at a critical time for the world's biggest oil producer with a
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fall in crude prices. let's get more on saudi arabia and the region, with the chief economist. good morning. what is the significance of this court reshuffle in saudi arabia? >> major significance. it else up momentum that continues in saudi arabia since the arrival looking someone -- arrival of king saulolmon. it is the rising role of saudi arabia in the region specifically as a counterbalance to iran. obviously the yemen offensive is connected to all that. what we are continuing to see is that saudi arabia is further changing with the king's vision. interesting, not just to these key portfolios, but also to the
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health ministry. the ceo is now minister of health. also, the ministry of economy and planning has been given to the fairly dynamic private sector minister who used to be minister of labor. this just continues what we have been seeing in saudi arabia, a policy shift toward a more dynamic. it is a little bit surprising in that it is more rapid than the manner in which changes take place in saudi arabia that it is not so surprising given what we have seen. caroline: are you changing your outlook for growth in the kingdom? if you are a company investing in saudi arabia, looking to invest in the oil sector how do
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you navigate this changing situation? florence: you navigated by interpreting what's happening as a change toward a more dynamic economy. your decisions are being made more rapidly. it is true that some might worry changes are made excessively rapidly but nothing seems terribly illogical. for example, the opening of the chinese market is still slated to take place this quarter, in june. all of these are positive for investors. manus: the foreign minister had been in power since 1975. now we are going to see the former ambassador to the united states of america take over that role. this is critically important. this is one of those gear shifts in terms of how it will be
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perceived on the international stage and foreign policy. is that their take? florence: absolutely. it is a very fair take. it is in line with the younger generation, who have proven themselves. he has been ambassador for quite a while. he was brought on by king abdullah so that is interesting that he was retained by the current king and played a key role in situating saudi arabia's position on yemen. that obviously -- they yemen offensive has become a very big deal for saudi arabia. obviously that is in line with saudi arabia's role. mark: they continue to carry out airstrikes even after announcing they would scale back operations. has it achieved its political objective or not?
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florence: i believe the saudi's have already achieved their objective in yemen and that they have taken out the most threatening. i think the saudi's are not naive about what it is going to take in order to stabilize yemen. neutralizing influences one thing. yesterday, and they bombed a tarmac in order to make it more difficult for iranian planes to land. all of that -- solving yemen is a different kettle of fish. the gulf states had objected to the previous one. it is about leveling the playing field and having that conversation across all sections. caroline: solving yemen would
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put less pressure on oil prices because there has been concerned about what the instability could do to the industry, to oil as a commodity. what about the more dynamic economy we are starting to see in saudi arabia? ryan was saying that total will be trying to re-acces -- to reassess. will that become more liberal? florence: i think they are already quite liberal. the opening of total is a signal for what's to come, and it is positive. what is interesting about development over the past 24 hours is that they have shown us , in connection with the ship that was sequestered temporarily in the gulf, is that geopolitical risk has not gone away. for a while they were saying geopolitical risk has been so well factored, the conflict
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is not going to affect prices. but we have seen a spike -- and i think it is a temporary spike -- however, it is reassuring i think, if you are a producer in the gulf, to see that prices can rise again rapidly on the back of that risk. they are also rising on the back of supply demand. manus: they are staying in charge of the oil portfolio. from that point of view, does that shift at all? they are still pumping that oil out of the ground. do you think that this new court could influence? florence: i think that had to the new court wanted a persistent oil policy they would already have it to go. i think the fact that he is there means that the court is
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happy with the policy of saudi arabia. the capacity to survive a temporary period of low prices. mark: finally, a question on a iran. will a nuclear deal, a conference of nuclear deal, be signed by the june 30 deadline? florence: what is my crystal ball? the chances are higher than ever, but you have heard about the proposed amendment, and you have seen this event in the irgc yesterday. there is going to be quite a lot of grandstanding but i think the chances are higher than ever. manus: always great to have you with us. coming up, we will be looking at
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our favorite stories from bloomberg's digital output. stepping up to take on apple in the smart watch wars. ♪
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manus: time for digital selection. twitter was down after an 18% closing -- what did we say? twitter tank.
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mark is going into anaphylactic shock. it's a bad day if you are a cofounder. $750 million. that is evan williams -- #badday. i shouldn't be so harsh should i? i love twitter. caroline: he doesn't seem too worried. they have got a lot of things -- other startups. manus: jack dorsey has another big startup. caroline: i'm looking at technology, the fight against apple watch. there is a new company coming in with a new smart watch, a cool $1000 cheaper.
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this'll be the biggest competitor, trying to bring in a luxury factor and it will go on sale october or november. they are trying to extoll the virtues of the battery power. mark: "avengers: age of all dultron" is released -- or rather it has been released around the world. it has raised over $200 million. it is cha-chinging all the way to the cash register already. that was the first policy -- release it outside the u.s. the u.s. accounts for 1/3 of international revenue. in the old days the u.s. was the biggest box office, but now it is the international --
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they could open $200 million this weekend. caroline: "countdown" continues in the next hour. ♪
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mark: hash taking fail. twitter stock crashes after disappointing numbers that slash forecast and fall short of estimates. >> caroline: deal freeze. in an exclusive interview, total tells bloomberg that takeovers are too expensive. mark: accused of playing a part in the 2010 market flood back in court after failing to raise 5 million pound bail.
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mark: welcome to "countdown". i'm mark barton. caroline: caroline hyde. manus: i'm manus cranny. we are waiting for barclays numbers. will jenkins deliver? a little bit of an expectation out there on the market is everybody else had a good first quarter, citigroup, deutsche bank morgan stanley. they are all in there. here we go. the we have the first quarter results. let's give it to you. in term turnovers first quarter results, we have got -- yeah. actually you know what? caroline is trying to help me there with her page. let me just do it this way. we have a pretax profit of 1.337 billion. that is below the estimate.
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the pretax profit was 1.81 billion. operating expenses have fallen by 7% and the buffers up capital is rising. 10.6%. the pretax profit at 1.85 billion. the estimate was 1.8. my apoll gees, that is a beat. the callback. don't forget barclays has created a bad bank. p.p.i.. payment protection insurance. another 150 billion pounds for payment protection at barclays. the top line number actually beat. 1.85 billion pounds. capital, that is up at 10.6%.
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rempling ratio. you'll hear a lot of people talking about that. that stands at 3.7%. that is something deutsche and a number of the banks have referred to. provisions for litigation and investigation. this is the big number. this is 2.05 billion pounds. so p.p.i. what people are going write about. the pretax profit. the buffers of capital are rising. p.p.i. payment protection, 150 billion pounds. the u.k. press will be all over that like a rash. in terms of the rest of these headlines, core income up by some 2%. just need to wait and see how the investment bank actually does. the investment bank or the securities unit constitutes 25% of the profit at barclays rather
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than the 75% that it was back in 2010. provisions for investigations and litigation will be 2.17 billion pounds. what you have to consider is in the united kingdom. it would be somewhere up around 20 billion pounds. we're talking about libor, foreign exchange. assets, p.p.i. all of those investigations that various banks have participanted in is probably one of the new costs of doing banking along with the u.k. levy. all of the political parties have subscribed to that. investment bank. i have it in the first quarter investment bank. if you wait long enough on "countdown," they do -- first quarter. profit before tax at the investment bank. it is going to be interesting to see. of course they have lost market share since -- and they have
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dropped by about 15% in terms of market share. the investment bank is rising by 37%. that is up there with the stellar performances by the rest of wall street and some of, you know we had credit suisse last week. i leave it there. it is time to break into a little bit more news mark: let's talk about the shakeup in saudi arabia. king salmon naming a new crowned king. he will be the first grandson to be put next in line to the throne. elliott, good morning. this is just one of a number of changes. isn't it? >> that's right. we had this flurry of early decrees. they were not expected from king salman.
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you just mentioned the appointment of prince mohammed as the new crown prince. he is replaysing the king's brother. the first time that the grandson of the founder of saudi arabia has been up in line next to the throne. king salman naming his own son as deputy crown peninsula. the other major change is the face of saudi arabia's foreign minister. this is a change that hasn't happened for 40 years. since 1975, mark the year i was born. he is going to be replaced as foreign minister by the current
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ambassador to the united states. just one other change you might want to note. a long standing oil minister of saudi arabia is being replaced as chairman of the saudi oil company. his role as oil minister remains intact but he has been replaced as the chairman of the state oil company. >> what is the significance of these moves? >> look, he is elevateing a younger generation of princes to positions of power. he is consolidating his own power and also consolidating his own line with a move to -- to the point of his own son as the deputy crown prince, specifically when it comes to the foreign ministry officially the prince is stepping down for health reasons. some are suggesting that perhaps he could have stepped up to the plate a bit more.
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been the face of the current campaign going on in neighboring yemen where saudi planes have been bombing rebels who have been taking over large parts of the country there. he is being replaced by the current ambassador to the united states. clearly a man the u.s. knows very well and how to do business with. and the importance that saudi arabia throneds the relationship with its great ally and protector, the united states. really a change in interpret s of the players in terms of foreign policy and oil policy and what's going on in neighboring yemen next door. don't expect any major changes any time soon. mark: thank you. twitter saw shares plummet last night after sales disappointed. caroline hyde has everything you need to know on the twitter rap. hashtag, off you go.
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caroline: it tanks manus. this was a fail as you say. it was trending for all the wrong reasons. look at that sudden dive in the share price that happened yesterday as we had the earnings leaked actually before they were meant to be put out after the trading bell had closed trade. this company i might remind you, has never made a profit, is suddenly no longer showing the growth that is necessary. when you a company with a evaluation in excess of $20 billion you need to prove this company is growing when it is not boasting a profit. the growth is not living up to expectations. third quarter sales missed. it is still big, though. 74% higher. they wanted to see a double. 82% in terms of estimated growth. it fails in terms of first quarter sales.
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second quarter forecast also missed analyst estimates. they say we're going to grow about 55%. analysts wanted 72% growth. numbers bigger than the 485 million that they are looking to bring in. meanwhile, the full-year forecast was reigned back by twitter. they will see growth at 60%. meanwhile this is add og to -- hitting the credibility of the chief executive, dick costello, who spent seven hours on the phone to analysts and investors telling them about all the innovations they are making and all the changes they are going to make in terms of new features the fact that you can get while you were away feature where you get your most popular tweets. it is not attracting users o advertise rs. new user growth decelerating. we're seeing an 18% uptick in people becoming members of twitter. they wanted a 20% uptick. april, that is a slow start as
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well. suddenly that fear is creeping in. if you're not giving us profit what are you giving us? you have to give us growth. this is all down to a company called solarity. they are an event detection program. looking for numbers they can put out and inform bankers and hedge funds. very small little known company suddenly manages to get twitter's numbers ahead of time. how? it seems to be nasdaq's fault. they had them ahead of time. suddenly they are leaked at 3:00 in the u.s. trading time. down go the shares by some 18%. just adding that salt to the wound. also a little salt to wound of those that actually founded twitter. evan williams, jack dorsey. now 3/4 of a billion lighter. back to you.
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mark: you can see an interview with the twitter c.e.o. right here on bloomberg, 8:15 p.m. this evening. london time. mark: we saw b.p. with a beat in earnings yesterday. total beating estimates as well. ryan chilcote caught one the total chief executive in an exclusive interview. everyone is talking about the falling nice crude oil. what did total say? ryan: while oil is below its june high, it grew as the price roads by 20% in april. where is it going to go? total doesn't have a forecast. they don't say we think it is going to be here by the end of the year. they certainly are a break even price which they have been public about, which is $70 a
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barrel. i would be concerned right now . in terms of the big geopolitical players in this space, you have iran. you have saudi arabia, the biggest producer in the world now and the shale revolution to keep an eye on. if you're looking at the short-term view in derps of the shale revolution and what's going to go on with the oil price today then you care about the inventory numbers that we're going to get at 3:30 p.m. eastern time. analysts think we have more oil than we know what to do with and that could push the price down. if you take the long view and total is definitely a company that takes a long view what the c.f.o. had to say, look at the number of rigs in united states now at a 4 1/2-year low. that number of rigs suggests that production is at least going to stabilize. so the u.s. gets reflude the picture and now in terms of determining the oil price, it is basically all about the middle
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east. have a listen. >> it is a big question. what would do -- saudi arabia. when iran is back on the market. it seems that the member of -- on the u.s. soil make projections to go down or stabilizing at the moment. you you a market with some other supply as we see today. iran coming back or not. and on saudi arabia making any decision or not. ryan: talk about taking two moves ahead. pretty interesting. we were all trying to get our heads around whether the sanctions against iran will end and whether we're going to get a
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deal at the end of jaund they are already thinking at total about what happens if and when iran does return to the market. after our interview, iran surfaced in the news for that incident in the straight of hormuse and saudi arabia of course as well you know, making the news again with the king there announcing a new crown prins. no one at least thinks that is going to have a change on the oil market. of course the question everyone is asking is shell's acquisition of b.p. going to trigger m&a and his answer was well, at least as far as total is concerned, not just yet because the bargains have yet to come. have a listen. >> honestly, if we have a look to this transaction, the price of it was quite high. in our view.
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we see also that all potential targets bring to it -- in terms of prices. they are still expensive companies. their price, their share price has not adjusted to the new oil prices. ryan: maybe going forward prices drop then total -- >> i will never say never. rine: let's not forget we're in the middle of earnings. we have shell coming out tomorrow. today, just heard from eni. another beat. the c.e.o. said he is not planning any acquisitions. watch that tape. it is not just the shells of the world that get involved. manus: time for the top stories at this hour. the trader arrested last week for his alleged role in the flash crash will be in court
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around 10:00 a.m. for a hearing related to his bail. he has been in custody since april 21 and will remain there until a 5 million pound bail is paid. an egyptian court sentenced the sainsbury c.e.o. to two years in jail. u.s. g.d.p. is due today and economists are expecting less than good news. the first quarter data will be released ahead of the second day of the fomc meeting and might put the brakes on any raising of rates. economists estimate a 1% rise in g.d.p.. australia recalled its bostons
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in indonesia after seven foreigners including two australians were executed. the killings were called cruel and unnecessary. you want more on any of the stories, bloomberg.com. caroline: you can follow us on twitter as well. do follow our website new and improved european bloomberg.com business. do follow ounce twitter. twitter sitz trending today after those brutal set of earnings. mark: don't forget apple lost $12 billion in market value yesterday. after the break, we're going to be talking about the fed and treasury. many think we're in a bubble or
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close to one. ♪
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mark: europe has topped the u.s. as the best place to invest for the first time since twine. more than 3/4 said they believe internet social netting sites are in a bubble. joining us is the c.i.o. for global equities at pimco. thank you very much for joining us today. there is a huge disparity. everyone seems to have died. is it too late to make that leap into europe? >> well rg i think it depends on what kind of products you're running. while we have been very overweight europe for quite a while now. i would say in this environment
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you have to go back to the stocks and see which area. it is interesting to see the earnings that we have had in the u.s. and europe. we have had strong beats in the u.s. for example, on the earnings side but disappointment on the sales side. in europe, it is a bit early because we only had 1/3 of companies reporting but you can see how important the currency has been. if you look at the tech sector frks, curn hay has really favored some of the european companies while, you know, the u.s. has been hurt by the strong dollar. you see that in several sectors. going back to your question i think it depends what you have in your portfolio. and what your time horizon is. if you look at financials they are up i think 118% since the draghi announcement. all that said there are still interesting financials in the sector. you have to be really careful how you pick the stocks. caroline: does it worry you.
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we had apple losing probably a few percent but down goes the market by $12 billion given its value. they said it is going to hurt us further going forward. does it put yufe u.s. stocks becausor to currency issue or is that just a short-term issue and it is not really the businesses being hit? >> i think you could see that way back, 18 months ago coming through and the impact on the currencies. now we're having it. so you to look at what's happening going depaurd. do you think dollar's strength right now, right now dollar is in a -- do you see the dollar strength continuing in the normalizeation trade of -- for policy in the u.s. and the q.e. in europe. that is probably right. however, not at the same pace. when you go back to the start, you have to think about how much is anticipated. and what else is going on in the company? so you know, you can have earnings supplies on costs on
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taxes and restructuring. interestingly, if you go back to the earnings that we were discussing stable in-- stable earnings even after this round, about 1.4% for fwiff. doctor 2015. -- 2016. you a strong acceleration at this point that isn't -- in europe, you're seeing the highest number of upgraced versus japan and the u.s. but growth is still around 6%. so you do have the difference of where you are in the point and i think people now a little bit more negative on the u.s. versus where they were maybe 12 months ago . in my view, there might be some interesting companies to look at with this in mind. i still have some tech -- i still like some tech.
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i think consumers are also very interesting. if you think that we have an improving -- slowly improving labor market. you still have parts of the population that may not have been in the early gainers, who are not feeling a little bit more comfortable and that is a long-term trend where people go spend money on their house and buy a car and you know, all of this is still in my view to be played out. the numbers on thursday, with the e.c.i. are going to be quite interesting to see. mark: thank you for coming in. >> thank you. mark: c.i.o. at pimco. global equities at pimco. stay with us. we are roughly 34 minutes away from the start of today's european equities session. ♪
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manus: welcome back to "countdown." 7:30 in london. swedish kronor flat at the moment. 8.5114 is where we are. nine out of 20 economists that we polled said you are going to see a deeper cut. a more negative rate on the kronor interest rate. what size, maybe additional quantitative easing to keep the
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pace with the european central bank. that is going to be the question of the day. that is going to be the zarter of the day. the dollar is undecided at the moment against the swedish kronor. numbers were not that strong. the fomc has a two-day meeting. overbly we know june is most likely off the cards. september is the new prediction for a rate hike. april has never been kind to the dollar. not for five years. have a look over the past 30 days. this will be the fifth year in a row where you have a negative dollar. bad weather last year. g.d.p. also due today in the united states of america. that is expected to come in at 1%. sterling -- i think i heard caroline say -- when she came on this morning i wonder what he tweeted about today.
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g.d.p. sterling was up for the sixth day in a row. longest rinning streak in 2015. services data a little bit questionable. the marks, high. however the market is looking through the election and it is saying that actually when you go through the election, things are going improve and sterling will resume and it has actually more or less resumed its uptrend in the back half of this month. mark, caroline. mark: the top stories on bloomberg at this hour. barclays has reported a strong first quarter adjusting pretax profit which was just ahead of estimates. its investment bank doing better than expected. reporting a pretax profit of 6.75 million. the e.c.b. holds its weekly review of the e.l.a. program with the greek banks today. with the blackout talks
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stalling. the review comes a day just after greece reshe feeled its blackout negotiation team. the greek finance minister has been given another rough ride. he and his wife were harassed by anarchists at an athens restaurant. he added he wasn't injured avenue and had a discussion with his harassers after the incident. a rise in first quarter revenue driven by -- to china. sales jumped 30.7 billion euros ahead of an estimate of 30.5 million. peugeot has worked hard on emerging market sanctions amidst a slowdown in europe. caroline: a little earlier today, software a.e.g. reported
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their numbers. joining us to dig in to this is their chief executive. thank you very much for joining us for your first interview of the day. talk us through the numbers. we have seen sales decline and earnings decline but your margin is improving. when are we going to start to see sales improve as well? >> good morning. the transformation the market is in, the business model that we create together with our customers -- it may be necessary that we are fully focusing on the digital business, which is based on the -- portfolio anyway. with the integration the big data an litics. this is a very -- the heavy demand. we are in the middle of a sweet
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spot of this market that we are digitizing. you know, in this transformation we made a decision that profit and growth is our target. because the in market, you would have all excuses to spend all the money just for growth. but we said, you know we are value focused and we look -- this is now what we already have shown and ademeaved the last three-quarters. caroline: profitable growth, your margin improved. was the growth in interpret s of sales? >> the growth in terms of sales you will see as we go forward that is why we haves a confirmed our full-year guidance what we have defined at the beginning of the year. this clearly says that we will have strong growth in our digital and this growth is between 6% and 12% for 2015.
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caroline: what about your 2018 target? interestingly, you have given clarity on 2020 targets. they have earnings per share of three euros in 2018. >> 2018 is in the midst from 15-20. this is just an immediate step. we have defined for the next five years what we would like to achieve and this is crystal clear. we are consciously focusing on the value creation. revenue is strongly growing. that is maintenance as well as software service revenues. that we are very prude in investments and the marketing side. that we increase the efficiency and last but not least that we also focus on our investors with
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respect to the did as well as by -- shares. caroline: this is about being prudent and efficiencies. talk to me about acquisitions though, as well. have you been sizing up any other companies? can you give us a look at how big any acquisitions could be? >> i mean, with the acquisitions, we have -- an excellent track record, as you know. we have made almost 20 acquisitions during the last 2010 years and we have made two very big ones. and we have made a number of so-called tech logical -- where we complimented our portfolio. however it is not only a question of what we decide or what we want. the software market, you know the acquisition market has been sold out to a large extent. thousands of acquisitions have
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been made in the last 10 years. so it is more of a question on what is the -- at a price that makes sense at a price which -- rather than just making an acquisition to have revenue. caroline: do you think there is a bubble? do you think evaluations are too high? >> yeah, it depends, you know? this is a question with where you will get different opinions when you ask different people. some say a evaluation of 10 types revenue for a cloud software company which makes low profit is right. the others say look, this is just another bubble. you will never get the money back. we are where swr in the middle and say whatever we make in acquisitions we have to be able to calculate the value for our shareholders and for us. otherwise we don't make the decision. that is our principle.
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caroline: what area would make the most sense now? would it be cloud? which area do you want to be in? >> we achieved that portfolio ourselves. we have made huge profits the last 18 months of a product -- market leading an alitic product. we launched hybrid cloud integrations for our e.s.p. during the next 18 months, we would have the entire portfolio software -- will be cloud. we do not have the lead that we buy now a cloud company. we already have. because we are not an application company. we are a software infrastructure company. we are building individual solutions for the commerce based on our portfolio.
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so i don't think that we will buy, you know, a very expensive, very big cloud company because we are well underway in nabling our portfolio to the cloud where ever our customer is required. caroline: wonderful speaking to you. thank you very much indeed. the software chief executive of a.g. mark: the chairman walks away after a board room tussle at volkswagen. that is a beat. we have a beat on the sales as well. analysts estimating 50.5 billion. it has made a good start to the year as well. 2015 revenue up to 4% depending
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on conditions. it is forecast to gain 4%. disease dependable on conditions and earnings speak. up next, it is bart chart time. that is next. ♪
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mark: time for today's bart chart. the dollar doesn't like april. it is true. the bloomberg indecks which tracks the -- dollar. over the last eight years, it has fallen in april. tuesday the gains fell to a february 25 low. dropped for the fifth straight day. the longest loseing stretch since july 1 last year.
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that is as u.s. economic data continues to disappoint ahead of today's g.d.p. report and the fomc policy announcement later. this month it dropped 2.4%. biggest monthly fall since october 2011 bringing an end to a sequence of nine straight months of gains which is encapsulated in this chart which goes back a year. in that period since july 1, the red circle at the bottom left of your screen, the bloomberg dollar spot index has risen by 17%. its record here, going back to twife, since the series first began, the trough to peak gain was 22%. from there to there now, we have fallen by 4%. still, since july 1 back to the bottom left of your screen last year, the bloomberg dollar spot index has risen against all 31 of its major piers. the only currencies which have
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risen by more than 1% against the dollar in that period are a, the schilling, it is up by 30%. b, the cost of -- up by 2%. three or c, the mall deeve -- up by 1%. since its peak on march 13, right there, the dollar has dropped against 27 of 31 leading peers. 111 since then, have risen against the dollar. the top performers, russian ruble up 21%. the peso up 11%. the real up 11%. the dollar doesn't like april. over to you, janet yellen and the fed. caroline: i'm sure she is listening. mark, thank you. meanwhile let's have a quick peek at what london is looking
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like now. not quite as beautifully sunny as we were yesterday. more excitable when you're looking at the future. up .4% in the united kingdom. euro stoxx, 52. we'll be talking about which earnings are going to be driving trade later just after this quick break. ♪
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caroline: we just had earnings from the car maker volings wag en, v.w. give us a sense, are we now focusing on the numbers rather than the management changes we're seeing? hans: there is no question who is going to lead the volkswagen supervisory board. what we see here is a clear beat. they came in at 3.3 billion
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euros. earnings before interest and taxes. last year it was 2.86. quite an increase. it was better than the 3.16 that had been expect. i want to drill down into the profitability. for the audi brand, profitability was 9.7%. that is a profit margin of 9.7%. for porsche, all the way up at 15.1%. the revenue, profit for porsche, 765 million youros. -- euros. about 1/4 of the overall profit that came in. they continue to print money. same with audi. we saw great numbers out of mercedes yesterday. we'll be digging down a little bit more. they want to bring the profitability up to 6%. it has been hovering around 3%. they have reiterated their old
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guidance switches for the entire suite of brands they offer 5.5 to 6.5 profitability. overall good numbers. maybe not quite as good as mercedes yesterday but an im-- impressive beat. caroline? caroline: all about the luxury. thank you very much indeed. mark: the other shares we're watching today include barclays. let's take a look. stephen morris is joining us to look through today's figures. the investment banks. what was the takeaway? >> pretax profit was 37%. which is a good resulted. this is being overshadowed by the fact they are taking an extra 800 million pounds in settlementment charges for the foreign exchange rate scandal. they have yet to conclude. also 150 million opponents in p.p.i.
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that will be located in the retail bank. i think that is going to be what people are focused on this morning. kind of overshadowing the good results. charli: shares off on the back of those provisions. are they getting close to the end? the fact they have whacked it up another 800 million pounds? >> it seems they are getting more clarity in terms of the scale that they may face here. i'm sure shareholders want to see an actual figure. mark: as we were waiting, i opened the s&p report from yesterday. 42 billion pounds at the end of 2014 across u.k. banks. that is four major banks. another 19 billion pounds is to come. that is the s&p report from yesterday. provisions are going to develop out the rest of the story. when you look at the other
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backdrop, what jenkins has promised to do whatever it takes. return on equity is how we judge the investment banks. return on equity at barclays investment bank comes in quite nicely at 9%. that is way off from last year. is there anything that would stop jenkins from downsizing the investment bank? >> certainly the first quarter results. that does help their case. they will be able to look at the new chairman who has come in and pledged to reallocate capital to the more profitable aspects of the business. they are cutting costs. in terms of revenue, they have actually underperformed their peers such as deutsche. they are not out of the woods. mark: they have lost scale, haven't they? the whole point, the holy grail within that, i think in the stories that we have written,
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they are losing market share. they are losing people. you lose people, you lose market share. >> yes. we'll see what happens to them. i'm sure we'll get an update on strategy again at the half year or third quarter. mark: any further details on job cuts? i know jenkins has pledged to cut some 7,000 jobs. >> yes rising to just shy of 20 over the group as a whole. they are progressing through those. there were no more announcements of job cuts today. caroline: what about the riall indication of capital. we have had the chairman vowing to reallocate. give us a sense -- paint the picture of barclays for the future. >> it is clear they are going to be a more u.k. focused bank. r.b.s. and lloyds. they can only take a certain amount of capital out of the investment bank without affecting its ability to compete
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with its peers. manus: the british press will focus on foreign exchange and payment protection insurance and another 150 million pounds and again that continues. people are saying we're very near to the end of that particular story. but 150 pounds is not an inconsiderable amount of money. >> no. it is not to be sniffed at. manus: from my memory they are at 2 billion. mark: how does it stack up? overall, barclays? >> wool really is when the shares open. it looks like better than expected results today. the investment bank is fighting for its life showing that it can improve and cut costs. it remains to be seen where we are at the end of this year. mark: stephen good to see you.
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thanks a lot for joining us today. manus: that is it from the three of us. i think barclays was due to be down 1%. we'll be back again tomorrow morning. join all three of us. ♪
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>> i am in the city of london. let's get straight to the morning break. barclays takes an 800 million pound head. an official provision toward settling allegations. the pressure builds on the ceo. a busy day stateside. first quarter gdp is due to be released at 1:30 u.k. time and then a little later possibly
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the least anticipated fed meeting for quite a while. futures really firming up. back futures up 25 points. could get a higher open. manus cranny will bring you that open. the earnings are pretty good. manus: they are all good. 35% of respondents in our poll favorite the eurozone. for the first time we have come out on top since 2009. the u.s. treasury is in a bubble.

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