tv On the Move Bloomberg August 13, 2015 3:00am-4:01am EDT
-- two two dave reichert day route. caroline: a quarter of a trillion in excess, in excess of that was wiped out of the stoxx 600 yesterday. we saw the biggest move since october, today, a rebound. the laggards today, we have monster companies going ex dividend. everyone is factoring in the value for these companies. , we will keep an eye on some of these companies. nestle is one of them. will the auto's rebound? amazing statements coming out of the chinese central banks.
the market, fear the market, follow the market, that is living to -- deputy governor of the bank said today. do we fear the market, or trust it? let's have a look at how we are seeing the rebound affect commodities. up goes copper. we are also seeing oil on the rise. u.s. supplies and it down for the third straight week. up to $43 ais barrel. i want to focus in on currencies, we are seeing when dollar bounce back -- yesterday the market in europe was lower, but the u.s. is actually having a come back. were re-factoring potentially when we might see hike.aid hike -- fed rate
to movehe dollar starts a little bit higher. the euro lower, having been up for them a percentage point yesterday. bonds -- we are seeing risk appetites. u.s. similarly, yields are on the rise. money going into italy, money going into spanish debt as well. let's have a look at some of the stocks hardest hit by china. weekend,inese yen has has so has the consumer spending power. turnaround, owner of hit,des, diamond felt they they rebound so. -- though. burberry is on the rise.
company beat analysts expectations. we will see freight companies feeling the pain. , the ceo sayson is a good thing. more experts -- exports will be going from china to the rest of the world. nestle is up. europe is starting to drive demand. thyssenkrupp is also up. up by 1.6%, itax is in rebound from november 2011. all of this sparked by the news in china. let's get to zeb.
zeb: a bit of a relief rally across targets in the asia-pacific today as investors take a moment to interpret comments out of the people's bank. let's take a look at the , fixing was 1.1%. 6.4155 right now. you are seeing currencies rebounding. the singapore dollar is coming off of the biggest drop since 2011. we had the bank of korea out with its decision to the china risk as they held rates at a record low. across theks asia-pacific are closely watching this move as they go forward. let's not forget the federal reserve in washington, how that will impact it. on equities rallied today,
extended merging -- emerging markets. you are seeing gains, a nice healthy move, building on its gains. the in hong kong, here are key movers, technology is the key focus. at a time when their rival, alibaba is under pressure, 10 sent is powering ahead. the travel and leisure stock are under. --ssure lenovo missed out lenovo missed out on investor concern that it's growth strategy is not moving fast enough. jonathan: let's recap, the people's bank of china dropped
its reference rate for the for -- third day, lowering by 1.1%. the central bank came out swinging against allegations of competitive devaluation. where nick beijing is standing by. another day of cutting the reference rate come are we out of the woods? has devaluation hit the lower limits? question thes the last couple of days, how low would you want to go. they seem to to have made that clear. of the trading session, suddenly it swing back it came backow -- after being low. they came back today saying a 10% evaluation would be nonsense. it looks like this 3% area is what they want.
they are sticking to the claim that they had said they you on was out of wack with market forces. this was a one off adjustment. u.s., there the , are youn delaware focusing on the yuan instead of the japanese yen? nick: when you look at export numbers from the weekend, the exports to japan were down 10%. exports to europe, down 2.5%. the big issue here is we are getting a sense for what the pboc means. the last few days we have questioned their intentions, now it does appear they will say, we will give the market a role, but when the market behaves like thep, which is what
governor said today, we will intervene to bring it back. we are starting to understand what the pboc had in mind with the depreciation. we have had other news, tragic news from tianjin, an explosion in a chemical storage site that has caused multiple fatalities. can you give us an update? nick: we now know that 44 people were killed. the death toll rose from 17. this shows you have seen the ,evelopment of the tianjin port it has expanded, this will highlight safety concerns. it is now the 10th biggest port. it is a city few people have heard of. 15 million people. it has become a gateway for northern china. commodities,ther
we are seeing some of the explosive --that pardon the pun, explosive growth. jonathan: we will keep you updated throughout the morning on bloomberg tv. let's go back to the markets. we are joined now by james bevan, he helps oversee $10 billion in assets. brutal, as adax, cio how busy have even? what one wants to do is see what real changes have been fundamental. the big question is what is going on with china? are we seeing bad news or good news? , it is aews is competitive devaluation. you cannot generate real reform
in the trade system. , i do not see the right that currencies may have. within the regional context, we should expect to see the singapore dollar falling in, because that devaluation to maintain trade is required. i think it is important to see what else china will do to generate growth. we know what -- we need to know what that agenda is. good quality companies can justify high pricing. there is plenty of potential, think about what has happened to the average u.s. household. there are spending less than they were last year on motoring costs.
we are questioning whether that economy will benefit. the u.s. economy is beginning to move forward, other than the hydro problem. jonathan: we have been waiting for that fray while. -- for a while. to bring it back to the last two days, a loss of purchasing power, if you believe this is about competitive devaluation, you are worried about a real slowdown in the chinese economy. not so much this morning, but as far as you are concerned, if this is the trend, does it ring -- mean a prolonged risk off face -- phase? james: i think we will have slow growth. run quality companies decent margins, strong earnings revenue, those are the the company's that will see a significant shift up and
pricing. to layn: are we about the duke -- deflation trade a q1? james: i believe the deflation risk should take one back to the bond market. i do feel that downtrends our progress. we will see central banks led by the u.s.. i do not think the u.s. will tighten rates until next year. in that environment, i think it is way too late to support bond markets. they are sticking with team september for the first rate hike, they say the china impact will not move it. goldman sachs is now saying the people's bank are going out in front of the federal reserve, do you give any weight to that argument? james: i do not think the factors are connected. i think they recognize
devaluation was on the cusp. the timing is surprising. anticipated to resolve its foreign debt. the hong kongom authority earlier this week that said it has been carrying on. the ripple effect, we will take a look at the battered mining sector. greece'sigs in, biggest bailout as a payment deadline looms. nestle tops estimates, but will china jeopardize long-term growth's. 1.5%.x is up good morning. ♪
jonathan: good morning and welcome back to bloomberg tv. let's bring you up to speed with top stories. nestle sales growth beat grewsts estimates, revenue by 4.5%. sluggish sales and china have led analysts to believe they will miss their long-term goals. there was an explosion in tianjin last night.
--ay the blast killed 44 they say the blast killed 44. dropped itsral bank reference rate for the third day. they lowered the rate by 1.1%. the people's bank of china said that the moves represent a genuine reformist agenda to give the market a greater role in setting the exchange rate. the move has been controversial. here is what some of the guests have had to say. depreciation, devaluation, whatever you want , is a necessary step to maintaining the health of china as unwelcome as the timing is, especially in light of the weakness in emerging market. >> this is probably the beginning of a new era where
to allowpotentially full market forces to determine a factor of rates. we may not be there yet, this is clearly the most important step in that direction. jonathan: so possibly a new era for china. bad week for some stock sectors, we have seen a little bit of a but from commodity to luxury, nothing has been spared. china's slowdown has had a big impact on the biggest luxury companies dependent on sales. let's get to elliott. elliott: as you say, very few sectors were spared. those particularly hit were luxury goods. let's start with luxury goods, we're talking about burberry, hugo boss for example.
today,e seeing a rebound not enough to make up for the losses, but certainly something investors will appreciate. so interesting thing is not much, yes, they are luxury goods , and these are two of the luxury goods companies or whom as the smallest portion of sales. is problem noted by analysts that it is not so much chinese and china will be consuming fewer luxury goods, but the fact that most of the luxury goods purchased by china is actually done overseas. less inare spending europe, they are spending less. the euro has been weakening. perhaps it is worse news for the
u.s. if they were as reliant on chinese consumers as europe. its lowest level since the initial public offering. the big problem for the commodity exporters is not so much the devaluation, they were already feeling a pension as a result of a slowdown, the big concern there is the slowdown will continue. , when you havet commodities going through these cycles, we are seeing a bounce back in oil, copper, and iron ore, you talk about commodities going down to a 13 year low, some people might be inclined to think that perhaps we're at the bottom. jonathan: thank you. an ugly few days for many mining stocks. let's bring in paul to talk about it. he is a mining research analyst.
paul, i was reading your latest research, you look at the dividend yield, higher, higher. it tells me that these guys will cut their dividends, or the stocks are too cheap? paul: i think it depends on the quality of the balance sheet. if you look at the highest quality names, probably rio tinto, the reaffirm to their dividend last week. they have plenty of headroom, they are generating organic cash flow, it looks secure. it looks cheap. perhaps bhp, and then you start walking down the deck, one of the problems with glencore, it is the highest gear in mining, but it is also financially. we see glencore underperform when they come under pressure.
jonathan: james, when we talk about extraction we talk about energy, when we talk about --miners, we talk about who can manage iron ore. absolutely think those companies have the quality to test this out. i think there is a difference for investors between the base metal players and the integer sector -- energy sector. it worries me that we will get a carbon tax to deal with climate change agenda. we are also having increasing competition from energy storage. i think the outlook is gloomy. i think the long-term outlook for metal is excellent. i am fascinated by glencore.
i am looking at the terminal, you are the most bullish analyst on glencore stock. that thereyou think will be numbers coming out of glencore next week that justify the price market. paul: we are looking at a tricky market. we have metals close to the bottom of the cycle. what happens with the base metal prices recover? at the moment we are not close to recovery. the demand growth will continue, the depletion rates will too. it is an equilibrium position. as soon as we get a recovery in demand, we will see the leverage to that in the base metal prices. , we willike glencore see that sort of response. immediately it looks tough.
jonathan: talk to me about the trading business. it is meant to be up to weather the storm. the analysts are not expecting decent numbers. what do you expect, paul? you know what to put into analysis to get an output in terms of earnings. in the trading business, it is harder to do that. put concernsially into the glencore numbers. we are looking at the bottom range. we are actually below the bottom range in terms of our numbers. the concern is that they will disappoint that. that is certainly being factored into the prices.
i do not think we will get relief immediately. the question is, what is the fundamental value? i think it is somewhere north of one pound 80. jonathan: does the situation concern you? james: there is an interesting trade-off about the upside potential. if you want to make a lot of money, you have to buy the riskier stocks. for me, i am much less risky. it is clear however, those who --t to make a lot of money not explosively. jonathan: paul, months ago we would talk about rio tinto eating taken over by glencore, we now looking at the reverse? paul: i do not think so. i think that possibility is
remote, to say the least. who knows where the cycle will lead us? it is a reflection of how the relative commodity moves. jonathan: are the in a position to lead -- is rio in the position to lead? paul: if you were to take copper and say that would be the place to increase exposure, that would speak to further consolidation. however, the track record is not great. fore is a reluctance investors to see rio tinto use their sheets in that manner. jonathan: thank you very much. coming up, german lawmakers drag their heels and withhold greek bailout support. will greek -- recent have to
jonathan: good morning and welcome back to "on the move." let's get you up to speed on stocks. the 5100 rebounding, we are up 8/10 of 1%. europe, a solid rally, the dax is up 1.5% after the biggest today route since november 2011. let's lift the lid on the stoxx 600. caroline: let's look at one of the biggest winners, it is none tui.r than to a --
it is a europe's number 12 or one two or number operator. they are being more profitable because they are making holidays. aerall, second quarter saw uptick in profits. growth laterto see this year. they are managing to beat expectations. is driving upky 7.5%. we spoke to the chief executive, he has been realistically thing at china, he says this is a positive. he says overall this will mean more experts coming from china to the rest of europe, that is
more profitable for the bottom line. overall he feels this is a positive step. off and wets were know the reason why, overcapacity. they are seeing dampening on freight as we see trade wayne off. overall they are managing to beat which were pretty poor expectations. they also had the $1 billion buyback. --thhile, this in group up 37%.pp is this is a company having to rayna back spending to boost their bottom line. no longer a steelmaker, they also make elevators. jonathan: thank you. let's get to politics. greece and their parliament is
set to vote on the bailout today. the deal hits turmoil in germany. there are reporting resistance. us, what for joining are we expecting from the vote? >> that is about it. in the voteting today, or maybe tomorrow, the pro european parties have already pled -- pledged their support. we are on the lookout for how many lawmakers will oppose. 25-30 lawmakers are in the cards. some say the number could go up to 40 or 50. we are basically looking to see how the prime minister had in
mind. we are pretty much closed to the end of the series as we know it. jonathan: as far as you're concerned, there is another debate, the end of the syriza party as we know it. a lot of pressure coming from berlin, even more him a dragging their heels, some might say. do you think we will get the german resistance that does push back a potential deal? >> i do not think so. it is a matter of saving political space in germany. i understand germany and their case,ns, i think in this greece has succumbed to the pressure. i do not think the rest of the european nations will fall desk will feel comfortable with germany pushing back on the deal.
next week and we will have to see how things unfold. jonathan: final question, i like to look at the data, one of the pm eyes it was the ugliest --pmi's of the ugliest i have seen, i am looking at figures, what is that looking like? keep a close eye , the international aid program is based on certain calculations. if you have large deviations on the actual numbers, then maybe the creators will have to visit some of the measures agreed, and maybe alter, especially the measures that greece needs to undertake. let's hope for the best. we do not have anything really bad coming up.
that gives leeway to greece to and probably today have the worst behind us. much.an: thank you very it is always a pleasure to have you on the show. we are back with a chief , james, one ofer the biggest red hearings, democracy, the risk to the whole of europe, is that true for the rest of the year? james: i still worry about the greek change. there is still no talk about long-term debt graduation. that i still think there is a 30% probability that we have a grexit. jonathan: the risk was this would energize spain.
that result will look different. was stale data when they try to categorize what is going on in europe. when i look at italy and the reform agenda, i am impressed. i'm surprised italy has stepped up, it will be ultimately beneficial to shareholders. jonathan: what can you tell me about data? james: i worry about the micro data in the company results. i think we will see better results in the italian banks, technology companies, and the carmakers. calm come and, collected. will to come, nestle separate from europe.
tianjin had an explosion last night. an official said the blast killed 44 people. they say the largest of the blast equaled a 2.9 magnitude timber. lawmakers will work on a package of reforms for a bailout. germany's government works on , they say a bridge loan might be an option. the eurogroup is set to meet in brussels tomorrow. 41 minutes past the hour here in london, let's get up to lead -- let's get up to speed on earnings. nestle had an upswing in demand from europe. elliott: water and nutrition are
doing well. their soup business is also showing promising signs of life. their organic sales growth is beating estimates. the company is reiterating its outlook for the full year. we have seen the shares rising. it puts them up overall for the year. before this morning they were down by .5%. they were certainly underperforming arrest of the industry. -- under port forming -- underperforming the rest of the industry. what is the noodle front? elliott: maggi noodles is an iconic brand of noodles.
nestle was forced to recall them couple of months ago after accusations by the food standards agency that they had seven times the amount of permissible led -- lead. today the court overturned that decision, today nestle will have to present nine different varieties to a lab and submit reports. -- this has been hampering nestle. another bit of good news for nestle. they want to get their noodles back on indian plates. jonathan: good news on the noodle front. second quarter net income beat estimates. we spoke to kneels anderson in his first interview this morning. the chief executive told us the
devaluation of the chinese currency could help. >> i think it is a statement from the chinese government that , it will beof china a pillar of the economy going forward. i do not think you should overestimate the impact, all of the things being equal, this can only be good for trade from asia to the higher cost countries. it is good for us. jonathan: that was kneels andersen.-nils that?ve on a stock like volatile.ny stock is look at the value of an molnar's. share of
you get a 7% move, that is a lot of money. he says the balance sheet is strong. they are cutting costs the moment, that is why the bottom line looks good. the stock has taken a hit as of late. today, big bounce back. a timen: when you have like the last 48 hours, it is easy to pick out losers. he flagged his company is a winner -- as a winner. guy: you could see his point. the chinese economy is good at exporting. the chinese is domestic consumer would start to be more of a consumer and pull in goods from around the world.
that would mean that the container ships were full going in and out. are coming down, there is a negative and positive to that. ship like the one we're looking at here is easy to move around. i think the move is incredible. jonathan: guy johnson, thank you. reported first-half earnings. caroline hyde joins us. caroline: they are upgrading their full-year, remember the --zalando.the lando they fueled the birth of many a copycat. they raise their full-year --enue forecast, 28%-30 1%
31%. this is why you are seeing an uptick in share prices, up 9%. strong spring, summer season. analysts seemed to be not as optimistic as they should have been about a second quarter. they were feeling the company missed the guidance. the second quarter earnings they did fall slightly. jonathan: a lot of profit warnings. specifically, does this come as a bit of a relief? kerley girl exactly -- -- fell: profits failed because they are sacrificing profit to boost sales in the long-term.
in july they warned the investor base there would be a problem. they would see increasing costs. why? because they have to security buying in of germany and switzerland. the germans and swiss do not buy as much as we do. they do not like using their credit cards online. how therefore do you pay online? invoicing. you have to be trusted. german customers pay after they get their goods. this is a bet companies make on consumers. it is more risky. they have to stomach higher risks. they have to the money after receiving a parcel. they are having to educate the germans, austrians, and swiss, that you can be secure.
whether or not they are educating or orientating, this might see -- might be the way german companies continue to buy. as they get more secure, maybe will see costs come down. jonathan: thank you very much. stock up almost 10% this morning. a record high. stay with bloomberg tv at 10:00 a.m. u.k. time. we will speak to ruben ritter in an exclusive interview. up next, we will tell you what is coming up throughout the morning and afternoon. the data, and big events to watch for the rest of the day. we are back after this short break. ♪
>> the exposure to china more elevatedis business then our components business. chinasee developments and overall we are positive about growth and promising opportunities for us. jonathan: some of the sound we had from the executive speaking to bloomberg tv this morning about the situation in china. up next is "the pulse." manus, what do you have?
lambs deflation ice age -- looms. the debate -- jonathan: another debate. manus: we will dig into the nestle numbers a little bit. drink industry could be the next activists land place. we will talk to john cox. we will talk about energy in europe, it is going through a transformation post nuclear closed. where are the prices? we have the cfo. lando --zalando is upping their target.
we will talk about the china move. we will try to put some context behind it. behold china story -- the whole off oftory, let the dogs the leash, whistle, one of them comes back. jonathan: a remarkable 48 hours. manus: is it? jonathan: for a day. it is not sustainable, where will the real floor come? i got the goldman sachs note. jonathan: if the market pushes it lower, you cut the reference rate. manus: they would like to see a slow drift. they sort of yankton into sixth gear and ripped up the highway.
jonathan: soothing words from the people's bank of china. manus, thank you very much. these are the numbers that matter. gdp. a.m. u.k. time, greek 12:30.ting minutes at , the --ail sales economist have not been proved yet with a number that shows a real improvement. that number comes that 1:30 p.m. u.k. time. a two day route that touched almost everything, equities rebounding here in europe. the 5100 is up three quarters of 1%. we come back, we are up by 160
francine: defending the devaluation. the people's bank of china tries to calm nerves about the yuan. manus: scores of people are killed as two blasts rock a chemical storage site -- at chinese. bailout blues. greek mp's vote on a third bailout today. germany says the plan is incomplete and refuses to back it. all this as we wait for what are expected to be depressing greek growth figures at 10:00 a.m.