tv On the Move Bloomberg July 29, 2014 3:00am-4:01am EDT
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disclaimer they made. warning investors about their relationship with russia's biggest oil company. over to you. >> we will be looking at renault and what their sales are doing. there are up across europe and down in a russia. they expect to be down some 10% for the year. they were down 13% in june. we will look at other carmakers exposure in russia. over to manus cranny. >> thank you. ubs delivered the numbers. traders, not trading as much. of credit suisse. the inflow into wealth management and we will talk about it. >> thanks. manus cranny. the fx market. futures pointing higher across the board. andhad earnings on one side
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potential for sanctions on the other. you have to have it out in the open. for more on that, caroline hyde. >> earnings galore. they are across the board. majority, 60 5% of companies have beaten sales. more than half, 70 separate send have beaten in terms of profit. 77% have beaten in terms of profit. why so much green when you have concerns about sanctions? we know obama got together in a videoconference with david cameron in the u.k. and french and germany and italy. devil in the details. sanctions will be leveled at russia, so far we are holding on 100 trading higher.
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clearly, the volatility is still significantly low in europe. what if? where do we put the money? and trading very low. oil not moving. brent is is where trading. money going into the dollar. so many banks this week. we have a flurry of the u.s. a data coming out. consumer confidence today and for the second% quarter. that comes out on wednesday. and the federal reserve rate decision on thursday. and will continue to trade higher on the dollar, starting to push the lower -- the euro lower. will we seedraghi, exports lower? a look at the british pound.
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lower against the dollar on the 30 day period. trading today, the pound is basically flat. remember, the best-performing currency on that year. we'll get more later today. are we seeing a cooling in markets? the imf weighing in saying the u.k. should keep an eye on the housing market and if he gets too hot to handle, rein in mortgage requirements once again. make it tougher to get mortgages and ensure those out there can afford to borrow at the rate in the u.k. to get into the housing market. target,its sales outperforming online. it now has bigger profits and market valuation. bp up 0.75%. a little bit of a caveat.
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they are seeing, if our relation with rusher detail -- with rusher deteriorates, it could have -- with russia deteriorates, it could affect. renault is down. we saw profits rising. the third biggest in europe. an improvement in europe of 8%. a decline in of volumes in a russia. back to you. >> thanks. a load of earnings. for me, bp. .4% jump more importantly, the oil giant has an investment in russia. and a man who knows it well is ryan chilcote. also joining us from a perspective is a portfolio manager with sturgeon capital. welcome to the show. ryan, always a pleasure. line?ugh
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>> they made more money than last year and beat expectations. it is almost a boring set of results. the only thing in there that is slightly interesting is, i guess debt is down a little bit and cash flow is good. the only interesting thing is the bite sized little disclaimer that they do have a relationship and they own 20% of russia's largest oil company and an oil company that is had access restricted and the ceo was a sanctioned. there may be more action against the company today. if you are a fundamentalist or, what do you do with that? the metrics look pretty good. it is --ly a lot of [indiscernible] it is only 2% of cash flows. of cash locked into russia right now. >> when you look at the werement and if they
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imposed, it could have a material adverse effect not only on the relationship that investment in roads net. what sanctions? what would end with that? hadf you listen, rosenet billions of debt and much of it in the loan market. sure they can roll this to get going forward. not relying on it to fund itself, but china to increase. >> what we were talking about theier, a meeting over video conference with a renzi, cameron, merkel, and obama. what were they talking about? what does it mean? >> we got very little. they said they all agreed that russia has not lived up to their
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expectations of de-escalate the conflict. this is a video conference. it took a lot of planning to get five heads of states. it is interesting they included the italians. we have the eu meeting. will we get sanctions? get apectation is we will more sanctions against russia. i would not exclude it will take longer than people expected. sometimes that is how it goes in brussels. i was wondering if they were talking about broader than what the eu does. the fact in you have the european has of states, he has the big guys, it's suggest they are working on a plan b. what if they do not get a anonymity within the eu and maybe they can agree on something among themselves to act against russia. i am sure we will see something to today. >> thank you. yannick maud. renault's earnings.
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more europeans. things are tight. we sought evidence in renault's results. 's we saw evidence in renault results. hans nichols has a more. hans, what will growth look like? for grim.look 10% for the year. more immediate, the stock is down from 2.5% this morning. they had a good quarter and a good first half of the year, largely based on third down market cars, budget brands throughout europe on it is in russia where they see challenges. 13% sales decrease in the month of june. the previous 10 months, it was down 8%. they are expecting 10% for the year. look at the brand. they have such a strong
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footprint in russia. they have 30% of the market. it is not just all renault. au have companies like volkswagen that has a pretty big market share. it will be interesting to see if it is a report effect through the other auto companies. when you look at the brand, some are down 5000 for the year. in 2013.ld a quick thought for you. luxury is not been hit adjusted yet. numbers.ercedes' the first six months, they are up almost 20% in russia. audi is basically flat. bmw is flat. we'll see if there's a split in the auto market. if there's a difference between budget brands and they'll luxury vehicles. our luxury vehicles, even the sanctions will keep growing. i do not see you as a renault man. i am a lotta-- >>
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man. >> we will leave it there. for more perspective, yannick maud. numbers coming through. saying they expect a 10% decline in the russian market. i ask myself, when i -- when am i going to start to see not only geopolitics abutted the affect on the economy play out on earnings? of a strong euro will have a stronger impact than what we see in terms of her russia. one of the reasons why the stock because of theis exposure to russia. debt, look at the sale of the energy is doing very well. europe.et share in
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what's the stock market doing? any indication that people notice european companies are very exposed to russian market. >> that does not in the index. i'm looking at the index right now. i have asked this question for most of the year, are investors being complacent? you can point to the earnings and say no. in your mind, are they being complacent? >> you have to keep in mind that the policy of the fed is working against the foreign policy of the u.s. government. loose, you need to reach for a yield. therefore, you will invest in order to get a return. at russia,f we look
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they were able to get the bonds back in june. most likely to be interfered with sanctions today. $1 billion.sue less than 3.5% growth. critics the market -- >> the markets once sanctions to go through because the fed is to lose? >> no. people are inclined to be free investors. we have seen in europe and the united states when we go to punish russia, the risk is the other way around. yet.do not see the impact >> let us talk about the word "sanction." there is an interest in a defense. when we talk about sanctions,
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what kind of sanctions are we actually going to see from these countries? which ones was set off alarms in your head? >> in terms of exporting military goods. i do not think there would be an immediate impact. gas ornt for shell drilling. it will have an impact. [indiscernible] for europe, not a lot of impact. the main impact would be the banks. be very hurtful for russia. relyings and companies on foreign debt. the bull market. or the debt market. a very big impact.
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>> welcome to "on the move." let us bring you up to speed with companies on the move. airbus agreed to drop in order from japan was dubbed as according to people familiar. k cannot afford it. it was a blow to airbus trying to attract a new customer. a spiken air is facing in cancellations after its second disaster in 4 months. cancellations are climbing over 20%. the airline said it would refund fares. that is including nonrefundable ones. deutsche bank, profits are down. missing the average million dollars.
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they cited concerns about sanctions in russia. -- it has done pretty well is a ubs. with cranny is in zürich the details and an interview with the ceo. tell us more. yeah, i think we look at the top line numbers, they are up. that is great. and i caught up with chris wheeler. they decide to step back. equity markets and the debt are doing well. equities are the low. also balance, trading down.
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the gross margin on the climb coming in asai has dropped. isically, aging clients where they are seeing the big drop in activity. they go on to say this bank is becoming more dependent on asia. that is where more business came in, 90% of a business. those are the numbers when it comes to the issue, it has done that with the germans. they start wrangling with the french. it waslready mentioned not a fair bill. no relationship whatsoever with the matter in the discussions. we have been in discussions. advanced discussions about double digit. it makes noee why sense. it makes no sense to talk about was is related to germany which
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is a much bigger business. and also when you make the will uphill, we this decision. we do not think it is fair. >> we have inflation in terms of fines. bas.illion for pari the size of the fines are rising. can you see that europeans are going the same way, a real acceleration? >> i could see to some extent we are already there. we have been one of the first to recognize the challenge at times for banks. we have not been in denial. we have been addressing proactively. but on the other end we will protect where we feel is necessary. it is satisfactory. and we have to
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recognize that some things went wrong. say, he is taking cost out of the business. missed on theent pretax level. there is money going out. do with the timing for american clients and their own issues. if you look at what is happening versus credit suisse, a mirror image in business and activity from the ultra-high net worth. the doors are still open for doing this is in russia. of the program and implications and ramifications of sanctions, additionally ratcheting up by the european union. sergio was pretty clear that one does not discriminate in terms of arrays. the doors are open to doing business with russia -- for now.
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back to year. >> a great work. still with us is yannick maud of sturgeon. what are your top picks? picks.orward top >> it is quite good. 18% coming from private banking. and retail banking. ratio, iof capital is 3.5%.ay, it a very strong profile. exposed to every kind of litigation in any market. so far, that been dealing with it a bit better. we may get in a few days the fact that it is not doing as well as expected. for ubs -- that is what they are
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good at. >> deutsche bank on the other side. significant headwinds. this year. crushed down 19%. more to come? >> they have expectations that are very high. it is trading. if you believe that they will be able to go through results with more capital, it is the cheapest bank in europe. i think that needed to raise capital for exposure in any of capitalterms base, every investor will have a very drastic call. is a bearish on georgia. -- on deutsche bank. ump.prophet ju -- profit j
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>> welcome back to "on the move ." 30 minutes into your trading day. let us look at how things are shaping up. two opposing forces. geopolitics on one side and earnings on the other. the equity market has gone higher. european business correspondent. three stocks to watch. >> some of the biggest movers was on top of the charts is gkn. toy provide parts streamliner and airbus. the british pound has been hurt in sales. income is lower year on year.
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the profitability is improving. it was pretty brilliant about the the year ahead. on stoxxthe charge 600. not far behind is the u.k. retailer was out more profitable and with a bigger value. still the second big as a retailer in terms of sales and in the u.k. driving higher. it comes toior when online. it is a company that has its businesses.alog it knows how to ship your garments quickly. it is still in, terms of brick and mortar. it feels like you needed the multi channels and being able to walk into a shop and click on line. the biggest faller today is esp irito fell more than 5%. arebank said there
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interested buyers and it karen more capital. will we see a share sale? if it needed to boost its capital. that is what is driving it lower. would be a last resort. back to you. >> thanks. these are the top headlines. lloyd'sney has said rate manipulation was incomprehensible. to actions may amount criminal conduct on part of the individuals involved. lloyd's agreed to pay 26 million into liborettle u.s. rating. if you are seen the transcript, check it out. worth a view. ubs posted a 50 percent of boast. the ceo prioritized cost-cutting. in an interview with the bloomberg, and discussed whether
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events with russia is affecting. >> our guideline from authorities about the actions taking on this individuals or institutions and for us, it is business as usual. we are committed. >> the u.s. and eu may move as soon as today for tougher sanchez a desert russia. a will be aimed at key sectors. move as.s. and eu may soon as today for tougher sanctions on russia. on that.ay for more details on the possible sanctions we are joined by ryan chilcote. i keep hearing the word sanction. are we likely to see any at this time? categories. two one is blacklist. we know the eu representatives they arelast night and
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working on a new blacklist. it is the so-called cronies a list and for as a family list. the ideal would be to target people that are politically close to the russian president to dissuade him from his current course in ukraine. and wet get that today might get it tomorrow. the eu never does things completely according to schedule. category are the so-called sectoral sanctions you alluded to. effectively, the eu to restrict access of russian companies and specifically state-controlled banks, the capital markets. we saw this in the united states with a handful of companies. some outside of the defensive sector. we think the eu may do the same thing. capital markets are a bit broader. maybe another bank which would have a greater consequences for the russian economy because that would have more trouble and it will be more
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problem for them to raise capital. that is what we are looking for. and maybe a weapons embargo which is a misconception. you have been talking about the warship sails through the russian indicating they are prepared to forgo parts of that cell. -- sale. we'll have to watch it that. the russians sell replay 5 billion pounds of euros -- sell 3.5 billion pounds of euros to europe. many people do not know that. that is another thing to watch. and lastly, there might be a thatiction on technology would be used for something to develop things like oil, arctic oil. another interesting space basically is what the eu wants to do is exact maximum punishment all russia with a minimal impact on its own economy. 200 50 way to do that is
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million euros worth of technology goes into russia. russia really needs to get a from they euro -- from europe. that is what we are looking for today. >> you cannot separate the two. the top story is bp. bp posted a second-quarter profit that rose 34%. they have a 20% stake in rosenet. the second -- the biggest foreign investor in russia. to go over the results is jeffrey and jason. let us talk about the numbers. they are up 34%. these are solid numbers. tricks they are solid. .he upstream is on production the gulf of mexico turnaround is the big story for bp. there is evidence.
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>> here is the problem. greater numbers and nobody is talking about them. a statement that was issued on rosenet and said if new sanctions are imposed on russia it could have a material impact on our relationship with rosenet and our investment. then i asked myself, what kind of sanction? what kind? >> that is exactly right. i do not think the eu is in any position to put sanctions on the export gas. rosenet is primarily an oil producer. rosenet will find its way into the marketplace one way or another. maybe less profitably but it will be there. the potential for blocking access to markets may have implications for rosenet. i do not think it is out of business. >> the take away. it is right or wrong. i think i have the answer.
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russia, you are bearish on that and the companies in russia and rosenet. you should probably be bears o.b.p. as well. those three do not add up, do they? >> i do not think so. as bp is not restricted from holding equities in a russian entity. you have negative implications it may be headlands that move lower. the value of rosenet is thus far not been significantly compromised. >> if we look at some of the european majors of the u.s. majors. europe.e of 2% of paint me a picture of what is happening. >> the big macro factor is we saw a big uptick in north american crude on the quarter. the tightening of the margin helps the u.s. the other thing is generally isaking, european refinery
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very weak business right now. margins are very low. refining but the u.s. the gulf coast and continent is strong. the different contributions you see. chris when looking at the earnings, what is happening in russia as an isolated issue and probably will not hurt the underlying issues. what is the risk in your mind, jason? comes down to specific things like if equity positions are not able to be comesthat is where bp under real pressure. i do not think that the refinancing issues and exports sanctions are really going to have an impact. those whereg, significant impacts. >> finally, a line in the statement not only by investment but relationships with renault
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-- rosenet. point when ite a bp has to look at the relationship and say we probably need to get out of this? >> it is a serious consideration. it does not have a lot of liquidity. direve to be in a situation before you consider divesting except over long term. bp has been consistent. they are in russia for the long haul. fairly significant with the politics and even more after today and may change their mind. >> is is still a good investment with a 20% stake? >> it has been the best possible outcome. if you look at the potential time, isng period of the largest oil producer in the world. it is huge growth potential. >> jason, we will leave it there. jason gammil.
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>> israel intensifies its attacks against gaza after prime minister benjamin netanyahu told his country to brace for extended campaign. 1000 palestinians and 50 israelis have been killed so far. charlie rose sat down with the leader of hamas. >> the key for the solution is -- and we are in a means. we are enemies. witholution starts olition to say to israel to stop. they ought to compel israel. and we had a number of negotiations that were failing. >> u.k. here that full interview
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with the leader of hamas tonight on "charlie rose" at 10:00 p.m. on bloomberg tv. for the latest on the situation. let us head out to tel aviv and bring in elliott gotkine. netanyahu is a warning of the war could drag on. is that something we have to prepare for? chris and that is what he is saying. away and another leader of hamas in the gaza strip and his house was one of the targets hit since late last night along with a building station.amas' tv they will round up the campaign, a longer campaign. what seems to be happening, netanyahu warning they may have to brace for a long campaign and bracing himself for further diplomatic or sure to carry out a cease-fire. and also preparing himself for
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more international -- from countries decrying israel for carrying it out. to the iranian leader described israel as a bunch of "ray bit -- a rabid dogs and wolves. demilitarization seems to be the prime objective. netanyahu saying the destruction of the tunnels which hamas uses to infiltrate israel is in the first of several steps perhaps towards getting a demilitarization of gaza strip. >> elliott, it has an impact on the economy and all business. at gaza's economy was already struggling before the escalation. are we starting to see it. -- are werael
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starting to see it filter through israel? >> the bank of israel governor %,t interest rates by 0.25 bying the mini economists surprise. she said looking at previous conflicts like this and unfortunately there are precedents, this is another outbreak in six years. with interest rate so low, goldman sachs is saying that the next move will be more unconventional measures and perhaps setting a floor for the israel shackel which has been hurting exporters. the israeli shekel at more than a 10 year high against the euro. the number one export destination for israel. u.s. dollar,he close to a three-year high. the strength of the currency is helping israeli business. much more so than the conflict
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going on in gaza right now. >> thanks, elliott. "the pulse" is coming up. guy johnson with a look ahead. >> sanctions is the theme. , we couldondon time see the announcement senate. we are going to tell a story. -- at 11:00 london time, we could see the sanctions. bp is the big story. we have a press conference in london. ryan chilcote will be covering that. we have a couple of guests. trying to figure out what it will mean for rosenet and the relationship. we will talk to one of europe's largest suppliers. the automotive industry. it is partly owned by -- it has a big business in russia. it is exposed on a number of fronts.
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that is going to be an impact. and exposure to business in russia. we would tell the russian story through the companies it will affect an economy it will affect. >> if i look at the comments from bp, it is a comment on rosenet and you start thinking about it. they are talking about sanctions and how it could affect their relationship with rosenet. our goal sanctions will ever to see -- are they insatiable what ever seen? >> we will see them today. a number of reasons for that. it will be hard for rosenet to gund. -- fund. is going to be potentially shorted. equipment for maybe the ofources it will pump out the ground. there are a number of ways in which it will affect rosenet.
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yeah, i think it is a significant and material threat. particularly at these numbers as well seen are so boosted by the relationship by rosenet. >> bp. up. 10:30, it can get interesting. stay with guy. other companies on the move. investigated been by regulators in china. china recently excluded windows eight from a government order and stepping up on u.s. companies after u.s. indicted five chinese employees. friend's largest phone company orange is stepping up and earnings. orange is trying to get 300 million euros in savings. there was a previous target of 450 million.
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>> welcome to "on the move." i am jonathan ferro. the latest celebrity chefs to try his luck far away from home. manus cranny had the chance to sit down with him before he opens the door of his hong kong restaurant. >> for hong kong and china, they have a history of very cheap and good. i fit in the middle. also, if you look at the general population of how they are earning and working, this is a logical, realistic thing to do. know, is the target market the tourist or business man? what do you think is going to
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work? it is a great a brand. you are global. people know who you are. get extra love. tourism always works really well. our main focus will be on the locals. i think, the culture we have and we have obviously multiple sites. the culture is not the only thing we have. there is only one of me. really tapping into neighborhoods. a reliable neighborhood place to eat. also with the way we structure. it is very affordable. when you walk in, fresh bread and made every day and do good to those values. i think that challenge will always be the locals. >> where do we go -- if i tell you this is hong kong which has its own very individual, it is a first footprint on a bigger china venture.
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a is it another step in expansion? headache. massive choosing the right partner and growing organically under the right pace is really important. there arefor myself, no points for rolling out 10 crappy restaurants. we get one and we do it right. course, partners, of they have their mind on other cities in china. it is totally their decision. getll get the location and it approved from the u.k. point of view. i think it's about trusting them. and the biggest appetite here. chris and that is it. we are one hour into the equity trading session. they are marginally higher.
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b >>p >> bp gets a boost from rosner. -- rosneft. and the standoff with moscow could lead to a spiral of the sanctions. ubs says it remains committed to russia. and the fighting in gaza intensifies. the leader of hamas says the conflict will not end until the world stands up to israel. ♪ >> good morning, everybody. you are watching "the pulse."
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