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tv   Countdown  Bloomberg  May 11, 2015 1:00am-3:01am EDT

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mark: china cuts, stop rise. the people's bank of china lowers rates for the third time in six months to support its flagging economy. manus: greece rose way down on the euro. the one-week low against the dollar as european finance ministers are due to meet ahead of tomorrow's 750 million euro imf payment. mark: cameron has his next challenge. as has he built his next cabinet. his victory means he is likely to face an internal party battle over europe. manus: trouble at toshiba.
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shares at the company tanks as it scraps forecast pending and accounting pro. -- and accounting probe. mark: welcome to countdown. also coming up today russian reunion. angela merkel and vladimir putin meet for the first time since february to commemorate victims of world war ii. tensions remain high over ukraine. the people's bank of china opens the stimulus cap again cutting interest rates for the third time in six months. challenging the country's 7% growth target. christine hah is on the story from beijing. good morning christine. what's is expected? christine: it was expected. a few economists had predicted
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the right path. over the weekend, we also had consumer price growth most important, the shanghai market has tempered the rise over the last two weeks. a lot of space for the central bank to cut rates at this point. cutting rates at this moment is more of a stabilizing -- a step -- a stabilization to the economy than a stimulus. debt levels are ready so high in china. we have seen three rate cuts since december, and real interest rate have been rising so liquidity has remained high the entire time. we are watching to see what is the next step. mark: what is the next step? what are economists expecting next from the people's bank of china?
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christine: we -- goldman sachs top forecasters on china. the senior china economists from goldman sachs is expecting a rrr in the quarter. a rate cut in the third quarter if current economic trends continue. we are looking for a 50 basis points by the end of the year. fiscal stimulus also being talked about right now. there will be no quantitative easing as far as the central bank has told them. that does not mean that the recommended fiscal stimulus. the first thing to work through is a massive local government debt that we have here. first order of work is to refinance all of that debt. after that any fiscal injection
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will be done through some of the policy banks here rather than any direct program. mark: thank you for joining us christine. manus: there has been some big falls in prominent japanese stocks. toshiba. caroline hyde have the latest. little bit of investigation into accounting. caroline: that is the case when it comes to toshiba. the electronic laptops printers, tvs. this is an industrial conglomerate. this is a nuclear company. a company that is now having to withdraw its earnings forecast for last year 2014. not only is the rub pulled from beneath investors -- the rug pulled from beneath investors feet hurt a goes all the way back to 2013. that is the concern. about a billion dollars of profit in 2014, and now we do not know what they will have to post. they canceled dividends also.
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we understand that it will not be until at least june that we get any tangible numbers coming from toshiba. why? why the sudden selloff of chairs. why all of these troubles? it is all down to investigating improper accounting. we can dig into the reasons now because it seems that analysts are worrying about the infrastructure projects. accounting and infrastructure projects. big data, big projects. nuclear, hydroelectric, wind power. these are hard to tangibly measure. improper project accounting. several projects have been understated in terms of costs. according to one of the spokespeople of the company. they have a third-party committee being formed. it was back on april the third that a company was coming in to
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investigate these accounting problems. investors sold off on the stock. 17%. the biggest move since -- he cannot work out the earnings that underlie the market -- the value of the company. we can also dig in to sharp as well. another key company. one that provides displays for apple products. overall, we are getting a reconsideration of capital. this is a company that for three out of four years, was expecting to be posting a loss and they are suddenly trying to figure out how they save themselves. shares are slumping by more than 30% at one point today because they are cutting capital by 99%. this is a company that is cutting their capital by 99%.
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to ¥100 million. they desperately want to cut their tax burden. they become a small to medium-sized enterprise. this will allow them to eliminate the year -- their accumulated losses. they are considering drastic reforms. debt to equity swap is what is going on. mitsubishi is agreeing in principle to write off some of that debt in return for equity. if you own shares in sharp, suddenly, the value is down. manus: thank you, caroline. mark: euro area finance ministers are convening in brussels. the euro sliding. imf debt payment is due. angela faces scrutiny from her home party to give up on greece.
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tom mackenzie is in brussels ahead of the meeting. tom let us start with you. what can we expect today? tom: if you were looking for some positive outcome from today's meeting, you would be disappointed. there is more acrimony in the air then there is any sign of compromise. alexis tsipras is still holding a meeting over the weekend. an eight hour talk session saying they are going to take a harder line with their creditors. on the flipside, you have the head of the eurogroup saying that greece needs to do more and it is unlikely that there will be a solution or a positive outcome. the italian finance minister said that time is running out for greece. it is. greece is running on empty. they have this 750 million euro
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payment to the imf tomorrow. most people say they will make that payment and then, what then? key sticking points are labor reforms pensions -- those issues including private's asian has held up these discussions for four months. they are trying to unlock the 7.2 billion euro portion of eight. what the creditors are agreeing to is that they need more detail on the policy. greece says it needs acknowledgment that it has made some achievements. they are taking a tougher line. it does not bode well. behind all of this is the ecb's role. it is propping up the greek banks almost single-handedly. if there is not a positive statement and a tone of intent later this evening, that the ecb may make it more difficult for greek banks to access that emergency the quiddity facility that they have been relying on.
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mark: let's get to athens. tom mentioned this imf payment. is greece going to be able to make this payment or not? >> guest: at the moment, it is a matter of being able to rather than being willing to. during the weekend, the greek government is thinking about not making the imf payment tomorrow if there is no it knowledge meant today from the eurogroup meeting that indeed there has been progress on the negotiation talks. this will be a tactic from the greek side. it is the ecb review on wednesday that is the key point. if greece does not get any acknowledgment of sound progress, what will the ecb decide? it is a political decision to cut off and restrict the greek
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access to the liquidity. mark: thank you. thank you tom. manus: a surprise election victory. david cameron's conservative party now has the majority in the house of commons. it is not a very big one. that could be problematic especially when it comes to the age-old problem, europe. anna edwards is in downing street. cameron backbenchers, are they in a strong position? is 15 a reflection of what happened back in the early 1990's with john major. anna: back in 1992, john major had a bigger majority then will
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be enjoyed by this parliament and david cameron. cameron's majority is just 15. we have to wait and see about the appointment of a speaker and a deputy speaker. many people now are suggesting that the relationship between david cameron and his back enters -- backbenchers could be crucial. how will he keep them on his side so that his policies are push through parliament. the uk's delegation to brussels as the uk's sets about renegotiating its relationship with europe at a time that europe is preoccupied with greek questions and immigration crisis on its southern border. the business community amongst all of that is saying what it wants to see. the cbi wants to continue to
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campaign for a reformed relationship between the u.k. and europe. what the reforms look like -- we will have to wait and see. manus: the big question is who will walks up and gets through the door of number 10. we know that osborne is back running the number 11 position. who else will make up this new cabinet that cameron will announce? anna: the only person we have seen arriving has been larry. he was making an early position for a cabinet position. but seriously, we are not sure who would be in the cabinet. some potential candidates have been named. george osborne has been reappointed as chancellor. we also have michael fallon.
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we will see who the government decides to a point. we will keep an eye on that. manus: i was watching some of the sunday politics programs. he did a great job of avoiding answering the question of whether he would run. it is all about introspection and resurrection --introspection for the party. who will take over at labor? anna: william hale. he was speaking out over the weekend although not suggesting that he had made up his mind about whether he would stand for literature. -- for leadership. he thinks labor does best and has a broad appeal. >> we often had a message which spoke to people who are struggling.
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it was right that we tackled that. middle income voters, there wasn't enough of the aspiration among them. anna: many of those who are now considered as likely to run for leadership in the labour party have been talking about how the labour party needs to make a broader offer. we have blair right, in the center talking about where ed miliband went wrong. tristan says he is thinking about running. liz kendall is thinking about running. andy burnham was at the health spokesman and he is a possible contender. david miliband says he will speak out in your later with his thoughts. the brother of the x leader of the labour party decides if he wants to make another running for the top job. manus: thank you, anna.
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mark: the top stories on bloomberg. interest rates announcement later today. the monetary policy committee is expected to keep its key, qe at 75 million pounds. it would have coincided with election day. poland is running into a tight runoff election with the president play -- facing an uphill battle. after a shock defeat in the first round. the president's support has melted from three months ago. it is down to 32 percent. the opposition candidates got 34.5%. the u.s. justice department is pressing to reach currency rigging settlements on wednesday that would include guilty pleas from five banks.
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ubs, and the four other ones, jp morgan, and barclays, will plead guilty. to antitrust charges. manus: euro area finance ministers meet in brussels today. you guessed it, we will talk greece what else do you start a show with on a monday morning? we will get the ambassador's take on the latest. straight after the break.
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mark: euro area finance ministers meet in brussels today. greece is finally -- greece is trying to persuade the central bank to keep their emergency funds going. when you were here last time you were rating greece and the creditors for their sleepwalking style. are they still approaching this with their eyes closed? as we approach another crucial week? >> guest: and you see that showing up in the german politics where you have the party of mrs. merkel splitting away into -- should we continue to support greece where is the greek effort not enough.
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many are listening to the news coming out of greece and degrees is saying, we have done a lot and we need to be recognized for that work. on the other hand stance the position where they are looking into the budget numbers the surplus of 3% has gone down into a deficit of 1.5%. normal gdp is imploding. it goes in the opposite direction. i think that the two positions really have to redefine themselves to generate a mutual understanding. there is the possibility that they reach an agreement. the sleepwalking possibility is still there. misunderstanding on both sides. you have capital controls by accident. an exit i accident. manus: the rising -- an exit by
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accident. manus: rising discontent in angela merkel's party. what you think about that? >> guest: to understand the merkel policy. when you look back over the past 10 years, you see very often that the populist aspect in that policy. you could see that in the defense policy and in the nuclear policy. when the public opinion turns around, so does mrs. merkel. the question is, public opinion in germany. some within her own party no that public opinion is turning around. mark: let's talk elections. the u.k. variety. it took many by surprise. the pound had its biggest daily gain. volatility falling on friday.
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44% drop. hence, what does this mean as we approach the next big event? the eu referendum. whether it is one year or two years away. have: -->> guest: when you look into movements in currencies over a. of one or two months, i it is dominated by money markets. this applies especially in the case of sterling. the flows are moving in the right direction. it has been week for several quarters. guild flows have been weaker. the money market is holding up sterling. the money market depends on
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consumption in the country. that does not look too bad. when you look at what is now happening in the housing market, or what is now going to happen in the business indicator whether this relief affect will come through economic policies. will it stay more business friendly. it will create a lift in indicators. a lift in money market indicators. that means that sterling, in particular, against the euro could move lower. manus: with that in mind, we get the inflation report from the bank of england tomorrow. there is a debate between growth and the u.k. continuing and an upward trajectory and fiscal austerity, which this government has promised to execute. where is the balance of risks? is the market too cautious? >> guest: the bank of england
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does need to see clear information of what fiscal policy is going to be. that means we have to wait for the announcement. you will have the bank of england reacting to that. we are not there yet. to assume that the bank of england is going to make a decision without any more information about where fiscal policy is heading to, that is too ambitious. what they are going to look at is priced development. we have seen negative inflation rate. will we see the bank of england that -- says that the bank of england -- that we are going to recover from deflation. that could make people bring forward the expectations of the first rate hike. we shouldn't forget that carney a few weeks ago was saying that
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the money market kurds have been too flat. that provoked at the time cable to move to 125. the bank of england is looking into this direction. is it the direction of normalization? mark: if the deflation word is no longer the buzz word. the replay should word seems to be the indications for the dollar? >> guest: it depends on what type of relflation. that is generally super positive for risk capital. if if economic activity is staying relatively flat but cost indications are picking up, that is causing the central bank and the united states to move into
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rate hikes. we expect that to come in december. mark: thank you, hans. ♪
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manus: welcome back. how is the market looking, at risk. the dollar reacts and has a big revision in march. it restarted. 9521 is where we are on the dollar index. up 4/10 of 1%. the trading community are cutting best is cutting their -- is cutting their long position. are we seeing a reflation trend?
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those were the laggards of 2014. they are the vanguard of 2015. the betting is this -- from morgan stanley. december will be rate hike month. the betting from the market is that it is dropping. the percentage probability of a rate hike in december from the feds false from .62% to .5%. the dollar is up and trading this morning. i love what hands -- hans said about sterling this morning. pretty much flat. big moves on euro-sterling and dollar-sterling. a motivated rallies are typically short-lived. the flow data is that the long-term flow is dissipating in sterling. the bank of england announcement today and the inflation report running through tomorrow. that is a much more relevant piece of information.
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in terms of euro, euro-dollar, it is trading at 111. we are at a one-week low. we of the finance ministers meeting today. the wall street journal says the imf is preparing for a default. our reporters in greece are saying that greece is preparing possibly not to take the imf as a protest unless they see language that says they have made progress. in terms of the overall momentum, you can see that we are building. mark: top stories on bloomberg this hour. the bank of england is set to make its first post in the general -- first post general election interest rate announcement later today. it is expected to keep its key rate at a record low of .5% iq week at 375 million pounds. poland is heading into a tight runoff election with the country's president facing an
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uphill battle to save his position after a shock defeat in the first round. the president -- the president support melted from three months ago to 32.6% in sunday's vote slipping behind the opposition candidate who got 34.5%. u.s. justice department is pressing to reach currency rating settlement on wednesday that would include guilty pleas from five thanks. -- five thanks. the fifth bank is ubs. the other banks citigroup, berkeley, and the royal bank of scotland will plead guilty. to antitrust charges. manus: russia's military might was on full display over the weekend during the 2015 victory parade. the most talked about innovation was the battle tank described as a new generation fighting machine to replace soviet era
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tanks. let's take a look. >> the russian military has suffered over the last 25 years with the depletion of the soviet union. it left a large legacy of fighting vehicles from the cold war. a new system is needed. this is russia's new generation of a battle tank. it features an unmanned main or it. -- current -- turret. evident from the imagery is the introduction of a hard to kill. the tank will cost $5 million.
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the latest abraham tank will be in the region of 7.5 million u.s. dollars. research and development costs for the last five years and the contract -- the value of the contract. we expect it to be produced in small numbers at this point. mark: the tank made its debut this weekend. also making an appearance was angela merkel. she paid tribute to russian victims of nazi aggression. her visit raised questions about her commitment to economic sanctions against russia as war rages on in eastern ukraine. ryan chilcote joins us. did merkel's visit to moscow suggest an easing? ryan: she made a point of showing up on the 10th and laying a wreath at the memorial
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to soviet soldiers as opposed to showing up on victory day which is a way of saying, we recognize that we have a responsibility to remember what happened during world war ii, germany's role and how russia suffered as a result of it, but i will not be celebrating the militarization of russia and i will not be appearing in front of thousands of russian troops. the chinese leader did on the ninth. it has been three months -- it had been three months since she had been to moscow prior to that. angela merkel: the criminal and illegal annexation of crimea and the military conflict in eastern ukraine has led to a serious setback for this cooperation between russia and germany. serious because we see this as a violation of the fundamental european peace framework.
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ryan: calling something that another leader does as illegal and criminal in front of his domestic audience is pretty serious talk. she did not mince words. it gives you a sense that there's a lot of things to talk about. it gives you a sense of the challenges that merkel has, such as greece. russia and the conflict in the ukraine which is not gone anywhere. it is frozen. this is the conundrum she finds her celfin. manus: -- that she finds herself in. manus: are you in the market for a new tank? ryan: i would love to get a new tank. yesterday, we saw the tank for the first time in a major way. at this -- on the nights on
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saturday. this is going to be the main battle tank of the russian military. they will cycle it in over the next few years. it replaces the t-90. it is the first real tank that the russians have produced in a decade. they will have 2300 of these as part of a $400 billion armament program. for $8 million it sounds like a lot of money. for russian technology in particular, it is usually much cheaper than western technology. if the russians are to be believed, it will give the abrams tank a run for its money. there, just three days before the parade, that took place on saturday, that is a rehearsal. one of the t-14's broke down. they are all scratching their heads about what to do. the jury's still out.
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none of them broke down on saturday. it is important, not just for the russian military and what it has in terms of the russian economy, it is important in the export market. the indians produce a t-90 right now. strategically, it is a first new tank to appear in a very long time. manus: five russian soldiers getting out and pushing. ryan: the engine -- a cap -- the poor soldier driving it. you can imagine the stress he was experiencing during this rehearsal. he put up a red flag. the commentator, providing running commentary for the audience said this was part of the drill. to which the audience had a good chuckle. manus: thank you very much.
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air forces across europe, grounded flights. the move follows the fatal crash of one of the military transport plane near seville, spain. the cause of the crash is still unknown. andrea rothman joins us. do we know anything more in terms of the detail of what happened? andrea: we have the basic framework. it went off about 12:45 p.m. the maiden flight of this aircraft. serial number manufacturing 23. this particular aircraft was meant to go to turkey. they were running a couple of test flights before it was to be handed over. this was the first time it had been flown. something went very wrong, very quickly. according to eyewitness reports it hit a power line. it went down. the fuselage was completely burned. four people died and two others
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are still in serious condition. beyond that, we don't have a lot more detail. manus: it is too early to say but give us a sense of where this plane fits into the airbus lineup. how big a product is it for them? they were about to roll it out to a number of other buyers. andrea: airbus has generally been a maker of super airliners. they make half of the world's civil aircraft and boeing makes the other half. a number of years ago they decided to take on a military project. this is a large air transport. it can be used for both humanitarian support purposes and for refueling and for flying large number of troops or materials into war scenes. it has four large turboprop engines. the biggest engines ever built.
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it is an unusual product. there were only 174 of them ordered. they were ordered by seven european governments as well as malaysia. outside of the initial clients they had one export by malaysia, and they had hoped to find many more export clients including possibly the u.s. manus: thank you very much for giving us that update. join mark and i and the whole thing here on bloomberg on twitter. the crew that matters today. i am a bit more gracious than that. and it is at downing street. -- anna is at downing street. we will give her another day. join us both i am -- i @manuscranny and mark
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@markbartontv. mark: we look at the threat looming over europe. greek has his best has its ims payment. and david cameron begins -- greece has its ims payment and david cameron begins his next government. ♪
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manus: these are top stories on bloomberg at this hour. to sheba -- toshiba plunged by
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its daily limit in tokyo trading. this came after the company pulled its earnings forecast and put a probe on its infrastructure at county. shares fell 17% at one state -- at one stage in tray. the bank of england is a scheduled to make its first announcement. it is expected to keep its key rate. quantitative easing is not going to change. it was postponed last thursday as it would've coincided with polling day. the u.s. justice department is trying to reach an agreement on wednesday which would include guilty pleas from five banks. the fifth bank is insert based ubs. -- is a work based ubs. -- is zurcich based ubs.
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cameron built cabinet. the closest political ally, george osborne in terms of renegotiating uk's european membership. great to have you with us. let's get to it. is this a good scenario that he has a majority of 15 or is he channeling john major from 1992. >> guest: it is very much 1992 all over again. the majority is not quite as big as it was. while there may have been a bit more spirit of rebellion because they were coming down from a bigger majority to a smaller one, rather than actually going
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from a coalition to a majority. i still think many of the same problems are there. as luck would have it, down the road is europe again. mark: they were helped in the early 90's -- in the early 1990's by the disaster. the eu referendum is looming. how will david cameron tiptoe around his eurosceptic mps. how will he sell it to them and the country? >> guest: it is going to be very difficult for him. he will have to do a term offensive among european leaders. we saw that he began that already over the weekend. that is going to be the first thing. he has to convince the european leaders that he can renegotiate. and they can do it in a reasonably quick time frame and they can get a vote a new relationship and a new treaty perhaps.
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then he can campaign and u.k.. manus: i watched him yesterday morning. he alluded to a luxembourg agreement. it is not a veto but the ability to restate control and power in the houses of westminster. the ability to challenge legislature. is that what he needs to achieve rather than a new treaty? david: that is probably what he will look at in an ideal situation. i don't think cameron wants to leave. he knows that his party generally most of the people, do want to leave. he is wary of playing too much to his own party because as he looks across to the other side of the house of commons, he sees what happens when you do that. mark: will he give his party
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freedom to vote as they wish? could the referendum happen before two years? david: i think he probably will. he will not stop anyone anyway. the safer option. if you are not going to convince right wing eurosceptic mps, to vote in favor of remaining and u.k., there is no point in saying that you should. manus: will he want to just get it out of the way? david: it depends on the progress he is made in the conversations with europe. for the british political system it would be much better to get it at the way. manus: we got to fresh on a monday. who will be in charge of labor now? don jarvis has stepped aside. take a punt.
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david: this is a tough situation for labor given how desperate the crowd is and they have a lot of outstanding candidates. my suspicion is that they will go with eddie burnham. manus: he is not on the list of favorites. i am joshing with you. mendelson was on the tape yesterday. he said they went with the wrong message. they need to go to the center. that seems to be the consensus. david: he has tried within the labour party to be pretty much all things to all people, so far. there is a sense that he probably will edge towards the center. as he gets closer to leadership. i think that an old hand like
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burnham will be a lot more appealing to the membership in the campaign. mark: scotland -- cameron said all of the right things. how much will he give to scotland? he says he will give with the smith commission recommended. they want a bit more. what will be a natural compromise that suits both sides? david: it is difficult to say because it is really possible for cameron to be seen to give scotland anything that they want. and for scotland to take what it wants from cameron. anything above the smith commission will be difficult for both sides. manus: do you think osborne will go for a budget this year? he said he locked himself into a tax lock in the first 100 days. will there be a full budget before the end of the year? david: a full budget i don't know but a fairly sizable proper budget.
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the campaign -- the day the campaign was launched he said he expects a second budget from the conservatives if they win. mark: on wednesday we said what is the most likely shop -- shock, and this is what you said. this was not your number one scenario. you did say that the shock would be a tory majority. you got it right. well done. david: i mentioned it. manus: well done. that gives you points on this program. david lee, senior europe analyst. mark: coming up, our favorite stories on bloomberg. an inside look at the lucrative life of ben bernanke. remember him? ♪
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manus: time for our favorite picks. what you do when you leave the federal reserve? you go to sin city. ben bernanke, come on down. he is appearing in sin city for sky bridge. 1800 hedges will see him. he is expected to make about $200,000 a pop. his pimco advisor role. can he emulate clinton? mark: good figures.
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countdown continues. what is coming up next. more on greece. european finance ministers meeting on greece. stay with us. ♪
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mark: china cuts, stocks rise. equities climb as the people's bank of china lowers rates for the first time in six months. manus: greece down on the euro. the single currency hits a one-week low against the dollar as european finance ministers are due to meet ahead of tomorrow's 750 million euro imf payment. mark: cameron's next challenge. as the u.k. prime minister builds his conservative cabinet, his election victory means he is likely to face an internal party battle over europe. manus: trouble at toshiba. shares and the japanese company
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tank as it scraps forecasts pending and accounting probe. mark: welcome to "countdown." i mark barton. manus: and i manus cranny. mark: german chancellor angela merkel and russian president putin meet in moscow for the first time in february. tensions remain high over ukraine. does it suggest a reproach? manus: the people's bank of china open the stimulus tab again, cutting interest rates for a third time in six months. we economic data is challenging the 7% growth target. christine hah is on the story from beijing. we saw the reserve requirement lowered a couple of times recently. this is the pboc at their best.
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was it completely unexpected? christine: no. quite a few economists predicted this rate cut after those lower than numbers on friday. there were concerns about the manufacturing sector. over the weekend, we had data come out. producer prices stayed in deflationary territory. we saw the saying i stock market -- the shanghai stock market coming together to make a good timing, giving the central bank plenty of incentive to move. we have seen three rate cuts since november of last year. in reality, real interest rates have kept rising throughout. they only shifted down a little since january. these rate cuts have+++
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isn't going to get banks to start falling dramatically. debt levels are already so high. it is a chance for companies to refinance and de-leverage. that keeps the economy somewhat on course for the 7% target. manus: i suppose the question is, now that we've had this rate cut, the reserve requirement reduction in place, on the fiscal side, what is the thinking from the economist community? will there be fiscal stimulus as well? mark: -- christine: many say that monetary policy can only go so far. this is a little tricky. china does want eventually to inject enough liquidity into the economy to get growth going again. it doesn't want to create a credit bubble. market news international say the central bank has ruled out a quantitative easing package. bloomberg has spoken to them and
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it suggests that any kind of fiscal injection the government may do will be for policy. the first business will be to clean up government debt. after that, goldman sachs among others say china is likely to step up the issuance of local government bonds. remember as well, china is still very much a top-down policy driven economy. the government can still push banks to take on debt. manus: christine thanks for the roundup. mark: caroline is here with the latest on what sparked a selloff. good morning. caroline: good morning. let's kick into toshiba. this is a conglomerate. this is a company that also makes nuclear power, railway lines, and infrastructure player.
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it seems they've got their math a little bit long. it is all down to issues to do with their earnings. look at the initial catalyst. the earnings forecast for their previous fiscal year 2014. it gets worse than that. they can be having to recalibrate the numbers from 2013, 2012. they actually have to look back to statements from previous years. they've also canceled the dividend, the key concern for investors, and they won't report earnings for fiscal 2014 until next month. the reason for all of these announcements today, is investigations into improper accounting of infrastructure projects. there are several projects they say they may not fund the costs on. things like nuclear hydroelectric, air traffic these are things they've got the
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math wrong on. it is a difficulty. clearly, it is concerning investors this morning. they are investigating the accounting problems with a third-party. a committee has been formed. as of april 3, they said they were looking into these problems. today, we've seen a massive move in the share price. they plunged more than the daily limit, down 17% at one point. we haven't seen such moves since that earthquake that hit and the soon army that followed -- the tsunami that followed. investors are trying to figure out where to price these things. mark: and concerns about toshiba, about accounting. another one, sharp struggling even more. it is seeking to cut capital. caroline: phenomenal story hitting sharp today. it produces displays for apple phones. it is a brand we know well.
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they are considering cutting capital by 99%. when a company goes into bankruptcy, they cut capital by about 100%. the reason sharp is doing this is because they are posting a loss. shares were down 31% today. they now seem to be off by 24%. they are reclassifying themselves. they are trying to shore up their balance sheet and extricate themselves from accumulated losses by reclassifying as a small to medium-size enterprise. it means they are less on the hook for such big tax bills. it would cut their tax rate overall. they are also doing a debt-to-equity swap. their two key lenders are in on this. mitsubishi and mizuho have agreed in principle to swap ¥200 billion of debt for preferred equity.
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what if you already hold the equity? suddenly, you are being diluted areas no wonder those shares suddenly fell off by some 30%. may 14 is when we get the full announcement. manus: euro area finance ministers convene in brussels today for further talks on a greek deal. that as pressure mounts on several fronts. the euro is sliding as the imf debt payment linens. -- payment looms. angela merkel faces pressure to give up on greece. tom mackenzie is in greece. marcus bensasson joins us from athens. it is all about the report card that the greeks want to see coming from that meeting. tom: absolutely. the tone of any statement released today and leading into this meeting, the mood has really soured on both sides. both sides entrenching their positions. greek prime minister alexis
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tsipras taking all his lieutenants into a meeting over sunday and coming out, saying they are going to take a tougher line with creditors. on the flipside, you've got the likes of german by sublime saying that greece -- jeronen dijsselbloem saying that greece hasn't done enough. you got wolfgang schaeuble saying that greece could accidentally default. that was a warning from him. the italian finance minister saying that time is running out. disagreements over the policies and reforms the greek government needs to agree on with their creditors in order to get this final tranche of their bailout by the end of june. details around tax, around pensions, around labor market reforms. both sides have their red lines drawn in the sand. as you say manus, the key to this is any statement that comes
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out and the tone of it. if the tone seems positive maybe the ecb will give the banks a bit more breathing space. if there is no movement, the ecb could tighten the screws further on greece and reduce the access to the liquidity facility that the greek banks have been relying on. manus: what is next for greece? we are going to go down to athens in a moment. from your perspective, in terms of brussels, a new negotiating team in place. what next? tom: you are right. the new team appears to have some positivity. he will still be here in brussels alongside the deputy foreign minister. they've got these payments to the imf tomorrow. most people think they will make that payment. on the 15th of may, they've got a 1.4 billion euro reappraisal
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of their t-bill. they've got a one billion euro payment of the imf again in june. july and august, they've got a 6 billion euro payment to the ecb. they have some big numbers to meet and they are running very short of cash. can they come to a deal on this short-term deal for 7.2 billion by the end of june? it is looking tough. down the line, they have to get into discussions about another bailout. both sides of the debate becoming very entrenched. merkel under pressure from her partners, and tsipras, if he did do a deal, if he did cross some of his red lines, he would have to put it up to referendum. manus: that's certainly so synced and to the point. we will talk to you through the morning. let's turn our attention to athens.
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marcus is standing by. is it about getting a good report card? is that fair? marcus: it is fair at this point. it is a big come down if you prepare -- compare it with previous meetings. we have all these deadlines that have been missed. expectations have been pared back so much. they are not talking about this as a deadline. in the past week we feel since we did that reshuffle of the negotiating, there's been a lot of noise in terms of the process. greece is saying, the government, we are not just coming together in terms of process. big steps forward have been made on the substance. the greek side is saying they've made big concessions in terms of their red lines. if you look close at those red lines, they talk about pension
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cuts and labor. they talk less about sales for example. they feel that they are trying to go that extra mile and they need some kind of recognition of that. so they can go that final yard. manus: what do you make of the pressure? talking to your colleagues earlier, the greeks may deliver really avoid paying the imf tomorrow to exert pressure to receive a better report. there's irony and then there's that. marcus: well, the government saying, we will pay tomorrow -- this is the official line. you can read all kinds of responses from european countries maybe the schaeuble
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comments for example, if greece is saying we can default, then go ahead, make my day -- a lot can be read in that. greece has the money to pay tomorrow, but it has been the case for a very long time -- a month ago, we were having this conversation after remarks made by the interior minister. he did create a bit of a fuzz when he said, if it comes to a choice between paying pensions and wages or the imf, we should pay pensions and wages. the longer this goes, the more strength in the hands of the faction within the government that does advocate saying, if we don't have any prospect of an honorable deal here then what
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is the point? manus: marcus, you are right. we will see what the point is in the next 24 hours. mark: david cameron's conservative party has a majority in the house of commons. not a very big one. that could be problematic, especially when it comes to europe. anna edwards is at downing street. good morning to you. how strong a position are cameron's backbenchers in? anna: good morning. the tories have a majority. that was the surprise on thursday evening and into friday. the size of the majority is only 15. that could change depending on the appointments of speaker and deputy speakers. that is a smaller majority than john major had in 1992. his party was torn apart by internal fighting over the question of europe.
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that put the backbenchers to the four. it means that david cameron has to work hard to satisfy the demands of the backbenchers if he wants to keep his policies being passed through parliament. in the meantime, he is going to be meeting today. he is going to address the backbenchers. backbenchers typically want to keep the benefits of being members of the single market for goods and services in europe, but they don't want the political and judicial bindings that go together with being part of the eu. george osborne has been put in charge of managing negotiations between the u.k. and europe. this takes place at a time when europe has plenty of other things on its agenda. meanwhile, the business community is setting out what they want to see from these negotiations. cbi says it will continue to campaign for a renewed
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relationship between the u.k. and europe but it does want the u.k. to stay in europe. mark: what about the cabinet? what is the latest on who has which position? anna: we are keeping an eye on the door behind me as members of the conservative party will be going in and coming out. there will be plenty of speculation about who gets there he is top jobs. george osborne is going to remain on as chance there. iain duncan smith is going to be in charge of pensions. the welfare reform that has been so controversial that is going to be under his watch. the chief wit is going to be justice secretary. we don't know who is going to be business secretary yet. various papers were speculating over who might take that role. one used to be an investment banker.
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he's also had experience at culture as well. a diverse range of experience. look out for a number of women being appointed to the cabinet as well. david cameron has made no secret of the fact that he wants to see around one third of his appointments in the cabinet being women. we will see if he has anything that advances that course. mark: and of course after ed miliband stepped down, labor is looking for a new leader. run us through some of the names in the frame. anna: chakra mono was speaking on the bbc, suggesting not telling us whether he wants to stand right now, but suggesting that he does think labor does better when it has a very broad offer. let's have a listen. >> i think in many respects, we often have a message which spoke to people who work struggling on zero hours contracts.
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but for middle income voters there wasn't enough aspiration. anna: over the weekend, the media was full of those of the right of the labour party telling everybody what they thought went wrong with ed miliband's campaign. we haven't really heard from the more left side of the labour party just yet. those on the right side suggesting that perhaps there needs to be something more towards the middle, a broad offer something that wasn't just about zero hours contracts and the disadvantaged, something that appeals to the aspirational. in terms of the individuals to watch for, we've mentioned chuka umunna, liz kendall is somebody who's put herself forward.
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keep an eye on david miliband the brother of the former leader. david miliband living in new york now. he said he's going to speak later today. we will see whether he wants to talk about labour party leadership. he is not an mp and that would make things tricky, but we will see what he has to say. back to you. mark: thanks a lot. manus: as anna, has been saying -- [indiscernible] we will get an investor's take on what it means for the markets. ♪
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manus: david cameron's conservatives saw a shock victory on friday. house builders went ahead. energy companies gained. let's get more perspective on this. the fts at management head of
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research daniel merry. hans whitaker this morning was here. he said these kinds of surges and rallies in the markets are usually short-lived. no doubt about it this is a whole new set of questions for britain. >> clearly, one of the key conservative election mandates was the eu referendum. it moved from this sense of euphoria and certainty into this two-year period when we have to be dealing with issues around the eu referendum. mark: might it be less than two years? we've had one guest who suggested it is in the conservatives' interest, if they can strike a deal, to have the referendum even earlier. daniel: i think that would be quite difficult for the conservatives to arrange. clearly, they need to make progress with regard to negotiating different deals with
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the rest of europe. manus: what do you make of the reports that osborne will go for some kind of a mini budget statement? they've promised no income tax hikes. some pretty sturdy promises to the electorate. daniel: if you look through the manifesto that they set before the election, there was a lot of talk and a lot of detail. they fleshed out some of the detail regarding how they will raise a billion sterling how they intend to cut welfare. mark: do you worry about the figures? there were some properties which weren't accounted for. can osborne give and achieve the deficit reduction plan within four years? daniel: i think there's always ways of playing with the data. there's always ways of doing it. clearly, it is a challenge.
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one of the interesting points about the election was it was in the choice between fiscal generosity and fiscal austerity. we know there's enormous pressure to see ongoing fiscal consolidation. it will be a challenge to find extra ink. manus: mark carney. he's going to deliver the inflation reports tomorrow. where are we in the debate on u.k. rates? is the market underestimating the ability to raise rates this year? daniel: with a conservative government, because the fiscal position is likely to be more extreme in terms of consolidation, that probably pushes out the data on the first curve. in the currency environment we still face a lot of uncertainty. first-quarter gdp was less than we hoped for. i think there's still lots of
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uncertainty and that will push out the case for a rate hike. manus: daniel, stay with us. we are going to talk more about china. daniel merry, stay with us. ♪
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[beeping] ooo come on everybody, i think this is my grandson. [lip syncing] ♪little girl you look so lonesome oh my goodness. ♪i see you are feeling blue ♪come on over to my place ♪hey girl ♪we're having a party happy birthday, grandma! ♪we'll be swinging ♪dancing and singing ♪baby come on over tonight
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manus: welcome back to "countdown." time to check in on the foreign exchange markets. it is the euro which is just going a little lower, down by 0.3%. that shift in bunds european government bonds, that selloff, whether that continues to erode the demand for the euro. we are at a one-week low for the dollar. good greece default on their payment to the imf?
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in terms of merkel, is she facing internal rankings of support for her position on keeping greece within the euro? sterling also off by 0.25%. all that glitters is not gold as the euphoria fades. this is dollar-sterling. they are still up over 2%. the bank of inflation -- bank of england inflation report out tomorrow. no change expected there. the debate is whether mark carney will have latitude to do as he wishes on the back of the data of fiscal austerity, which is expected to come from the new government. hans redeker saying this morning that politically motivated rallies like this are typically short-lived. the flow of sterling has been short-lived. the longer-term flow has been dissipating over the past number of months.
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dollar-sterling down at the moment. mark, back to you. mark: thanks, manus. daniel is here. finance ministers in europe meet today. daniel, our man in athens was saying that as long as greece get some sort of tacit acknowledgment from finance ministers that progress is being made at least they will be happy on their side. he was suggesting that greece might not want to pay the imf. is progress being made or not? hard to know who to believe. daniel: i think we forget how much progress has been made. they moved from a very large fiscal deficit to a position of primary surplus. there is quite a lot of pain and suffering that has been endured by the greeks with gdp having gone down by over 20%, the unemployment rate over 25%.
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enormous improvement from the current-account. there has been a degree of progress. i don't think it would be a stretch to imagine the other european ministers acknowledge the progress greece has made. regards to the imf, i find it unlikely that they will diverge money. they will meet this payment. the imf is really the line that they don't want to disappoint. if they do, it cuts them off from any future progress. it is not in their interest to default on that payment. manus: moved to a broader context. we are about to open trading for the week. it is expected on the bond market -- is it over? is it the beginning of a reevaluating of your position in the bond markets because reflation is coming? daniel: i think we know that
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real interest rates are still very low. we still know that negative nominal interest rates is not the position for a prolonged period of time. it was rational for the markets to back up. part of what the markets are telling us is that ironically, rates will stay lower for longer , and therefore it is more inflationary over the long-term. i think, looking at the steepness of the curve, that there's not a lot more to do. manus: that would be good news for the fed. that would be good news for the bank of england. the market at the longer end of the yield curve, that suits everybody really. it is what they all want. daniel: we saw yellen last week talking about that when she was referring to the yield and the
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potential distortions that monetary policy has on the market. i don't think we will see massive pushback from central bankers. mark: we are back to 200,000 plus gains for the month from the previous month revised lower. what is the takeaway when it comes to fed policy? daniel: what we forget about last month's report, and it was week to some extent, the april report -- [indiscernible] there's different dimensions at work here. one is the mortgage count which suggests it is moving rapidly towards 5%. that suggests the labor market is stretching tight. on the hawkish cap, what they point to is the fact that labor participation is still very low and there are only limited signs
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of wage inflation. i think this report that we saw last week is really key. that was the highest in five years. perhaps the hawks are making progress. manus: daniel, always great to get your perspective. let's shift gears a little bit now. one of the corporate stories -- just to bring you a quick indication, this is on a stock indicated to open 5% lower this morning forces the close of business on friday night. all to do with the fact that air forces across europe have grounded flights of the airbus a 400. the move follows the fatal crash of one of the military's transport planes over the weekend. the cause of the crash is still unknown. andrea joins us now. is there any more detail at all on the a-400?
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andrea: from airbus no, but there is a report in "der spiegel" from germany, citing one of the survivors of the crash as having said that there were multiple engine failures. on this plane, there are four large engines. they are built by a consortium of european companies. when the plane was designed european governments insisted that it be a european maker of engines. they had them build the engines. beyond that, we don't know. it looks like if this report is accurate, they are going to be looking at the engines. manus: and -- what about the reports -- one of the reports that you have put out is that we've got two flight recorders and a spanish judge will decide early today on where they should be sent for analysis.
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that is according to airbus. andrea: that's right. because of the way things work in spain, they are under the control of a judge. he has to decide fairly quickly where to send it so they can get an analysis asap. they could possibly stay in spain, though it seems likely they will end up in france, the u.k., or germany, because they have strong technical teams in these countries for analyzing accidents. as soon as we hear the voice recording and they look at the flight data, they will quickly come to a conclusion about what initially triggered this accident. manus: and we know that the air force in the united kingdom along with the german air force are reviewing their position. this is significant. this is a project which is already over budget and late. andrea: frankly, i don't know
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how much it is going to influence the customers now. there's only 12 planes out there right now. the u.k. has two and germany has one. there's six in france. most likely unless it turns out to be some kind of design flaw there may have been some design problem particular to this plane, and most likely, they will continue to manufacture on schedule unless they find some problem that extends across the program. i think it will take a couple days or weeks until we find out. for now, they are continuing the flight test program. tuesday, they are going to have another flight test. they haven't stopped manufacturing the plane. it is difficult to say how much this will impact the program overall. manus: andrea thank you very much. andrea rothman on the airbus story. mark: we are going to stick with aviation. we have an exclusive interview
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with the chief executive of heathrow on what the u.k. election outcome means for the air force future. ♪
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mark: time for today's bart chart. our investors worried about a brexit. after the election gave david cameron and unexpected majority the focus turns to the u.k.'s relationship with the eu. in case you missed it, one week implied volatility sank 42% on friday as the media -- implied volatility is a way of measuring that anticipated impact on the exchange rate. let's look at one month euro-pound implied volatility which also sank on friday. 22%. the most since september, when the scottish referendum took place. it rebounded a little earlier
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this morning. it is still close to that march 10 low. 25% below the almost four-year high reached last tuesday. that is the yellow circle. well below those highs. one-year volatility, the middle chart, also dropped on friday by 6%. it is also well below the level reached on february 11 21%, to be exact when anticipated price wings rose to the highest in 40 months. that is the level right there. is it possible the eu referendum could take place within a year as some reports are suggesting? if so, this is the chart to keep an eye on. the most likely time horizon for the eu referendum is two years out. the bottom chart, pound volatility over two years. this is fascinating. david cameron has promised a
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referendum by the end of 201 7. this measures the next two years. like the above chart, it dropped on friday the most in january. it is 20% below the three-year high reached on march 11. right now concern about a brexit is yet to be reflected in these charts. but this is to be expected. investors have only had one week to digest the events of the election which send the conservatives back into government with a majority. from here, now that the election is out of the way, the big uncertainty is the upcoming eu referendum. if you want to see how it is reflected in the markets, keep an eye on these three charts in the coming month and the coming year. are investors worried about a
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brexit? manus: the u.k. election is done. for heathrow and gatwick that means finding out if either gets a third runway. joining us now for an exclusive interview is the heathrow ceo. john, great to have you with us. tories in power, the report is due in eight weeks. how do you feel? john: i think we are in a good place. we demonstrated over the last couple of years what we've been going through. heathrow is not only the best driving over 200 billion pounds of economic value 180,000 jobs also, members of the cbi over 30 chambers of commerce of and down the country, political support, local support -- we have generated -- demonstrated that heathrow expansion is best
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for britain. manus: those are all laudable messages. let's talk about the air force commission. they are now going to have a new consultation on air quality. this is something where your challengers would say that you failed all around. how concerned are you about this reopening of the public conversation into air quality? maybe you can defend yourself against the comments that the issue is fundamental and you do not stand up well in that zone. john: the best judge of this is the airports commission themselves. they have confirmed what we always said which is that we can expand heathrow, get the economic benefit, while meeting environmental standards. we can sit within the government's carbon targets. we can deliver it with fewer people impacted, and we can deliver it within the eu's
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quality limits. we can deliver not just the right economic solutions, but also the right sustainable solutions. manus: what are you prepared to give up? there was this article last week, on another airport's website, that you would consider giving up some of those early morning redeye starts to do a deal, to encourage the commission to choose you? will you give up some early morning slots to get that deal done? john: what we've said is there will be no more night flights with heathrow expansion. it is currently between 16 and 18 flights that take off -- that land in the early morning period. there won't be any more of those with expansion. what we have offered is one of the most competitive noise insulation schemes in the world, meeting the eu standard for
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noise insulation. that is similar to what has been done in frankfurt, and in paris. we've made that offer for insulation not just the people who will be newly affected by noise, but the people in the existing flightpath. there's a real benefit to all people who currently live around the airport. manus: the current intake at westminster all the voices that cause a ceo like you to throw your head in your hands. you got boris johnson. he is a vociferous voice against you. zac goldsmith, just of the southwest of london, he is not for you. this is a cabal of anti-heathrow voices. are you concerned about the complexion of the tories that are in power? john: not actually. we always said that we would need cross party support
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whatever the decision. this is a question of national importance. we need to see it in that context. what heathrow expansion can offer is keeping britain at the heart of the global trading network. britain has been one of the great trading powers for centuries. that position is put at risk by not expanding heathrow. we can see already, we are missing out on trade with asia and south america by not expanding. we are forcing british exporters to have -- manus: but if this is the case, why have the last coalition not got this point? you keep making this point about trade, not being a hub airport. why have you failed to get your message so demonstrably across? john: we are getting that message across. there's much better understanding now, just how britain benefits by having one of the world's leading hub
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airports close to its largest city. it is not just about people. more than one quarter of business exports go through heathrow. that is a key part of our trading network. some of our trading groups are at capacity today. flights to china for cargo are pretty much full. if we want to have an export economy, we need to expand our biggest hub. that is what heathrow can offer because we are a hub airport. that is why we do have support up and down the country. we have increasing support locally. we have local mp 's coming out wanting heathrow expansion. we've got the majority of local people wanting heathrow expansion. they can see the benefits they get. new jobs, apprenticeships. that is something they can get behind and that is something which i think will appeal to some of the local mp's.
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manus: just on that note, i understand that boris johnson would be prepared to stand in front of the bulldozers if they tried to build a third runway. you've raised 850 million pounds in funding. can we expect you to raise more money? money is cheap. john: we have been raising money. we are fully funded for the next two years. we don't need to raise money until 2017. we are taking advantage of the good market we have at the moment. this shows what a great investment heathrow is. we have a wonderful funding platform. and of course investors want more of a good thing. that's why there is so much interest in investing in an expanded heathrow. now we just need to get on with it. manus: john holland-kaye we wish you well. terminal 2 is lovely.
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i spent a lot of time in terminal 2. mark: let's get a view from the city. alastair mckay joins us. good morning. you had the bounce on friday. ftse 250, record high. 2% gain for the ftse 100. it seems it is not going to last long. >> no. overnight, we heard out of china the decision to cut interest rates for the third time in the last six months. it is not the encouragement that global markets would look for. i guess we are going to see a softer start on monday morning. we are going to get a bounce on the back of what was a pretty surprising result. a bit more pro-business. there's a number of sectors we will be keeping a close eye on over the coming weeks and months. we should see some sort of encouraging signs with the lack
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of regulatory oversight increases the labour party were seeking to implement. the financials too. another area which should benefit from the conservatives coming to power. mark: a lot has been said about the pollsters, how they got it so wrong. what about the betting market? what about yourself? did any punter predict the result, or was it easy winning for yourself? alastair: it is never easy, you know that. we have been looking for a very long time. the most likely outcome that was around 35%, was going to be a labor minority government. that being said, all through the run-up to the election, we had the conservatives with maybe a 20-25 advantage. they were penciled in as the
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most popular party all along. the strength of that popularity took many by surprise. prices were driven by client trading as much as anything else. nonetheless, we were indicating toward the conservatives being the strongest party. mark: the other thing was the jobs report, the u.s. jobs report. have you tweaked your forecast as to when you believe the fed will now raise rates? markets did a little bit. they suggested there would be a 60% chance of a rate hike in december. now it is down to about 50%. is that in line with your thinking? alastair: all the economic data coming out has been slowly but surely pushing that start date down the road. what it has done is put the final nail in the coffin of any early rate rises. i think we can say that is unlikely. throw into the mix the fact that the chinese feel the need to cut
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interest rates and it is a global backdrop which would see the u.s. flying in the opposite direction of everybody else. it just seems less and less likely. i think we've got the bank of england coming out with interest rate decisions today. i'm going to let you in on a secret. i don't think they are going to change their policy. it seems highly unlikely. it is going to be the minutes from this meeting that are more important. mark: and carney speaks to the inflation report. what message is he going to want to give after this surprising election victory with the markets pricing in a rate hike into 2016? alastair: i think he's obviously had to abide his time over the last six weeks because of the run-up to the election. that has left the markets second-guessing.
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in reality, there hasn't been much to digest. he's going to want to try to get the markets back into the positive mindset. mark: thanks. good to see you. we will see you tomorrow. manus: 6:00 a.m., yeah. ♪ .
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jonathan: good morning and welcome to "on the move." i am jonathan ferro. moments away from the start of european trading. a huge day friday. the best day for european stocks. straight to your morning break. china cuts raise. benchmark interest rates for the third time in six months. the people banks of china. greece fights. ministers had to brussels to discuss financing and 24 hours until they are scheduled to pay 750 million euros to the imf. the bank of england to size. every economist expects a rate
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to remain at an all time low. three of the things i am watching i had of the open. futures pretty much dead flat. dax it down. looking at cac 40 a little higher. a lot of stocks. let's get to manus cranny. manus: equity markets a little bit flat. will greece get a good report card from the finance ministers meeting today? when you talk to our colleagues that seems to be the complexion. airbus is one of the big decliners on this market to this morning. andrea we will talk to them later. they had the accident on saturday over spain. the plane is grounded. the u.k. and german air force have those aircraft.


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