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tv   On the Move  Bloomberg  June 24, 2015 3:00am-4:01am EDT

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stry's biggest merger in almost 10 years. that is what we are watching today. european markets just opening. will it be five consecutive games in a row? futures look mixed. let's check in with caroline. caroline: there is a little more caution in the air after the euphoria of the past couple of days. will we finally get a deal? a week to go before we get the bail out for greece. finance ministers are gathering once again and alexis tsipras is flying over to see the european commission had. -- commission head. they are seeing each other more than their own families at the moment. the stock market is a little bit higher if you are looking at the ftse 100. not any caution but not money piling into the riskier assets the equities that we have seen in the past few days. we had about 340 billion
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euros added to the stoxx 600 in the past two days' rally. maybe trying to take more of a backseat and digest what is happening in greece. hurdles still remain. everyone trying to focus on will they be able to pay the imf, if they will get an agreement if there is one struck through the germans, the greek parliament. economists are saying enough progress has been made the the finishing line. the finishing line is becoming visible over the next year or so. euro-dollar back on its upward trending streak. saw it as a lot of value in the last day. we are starting to focus on what the fundamentals mean. get greece out of the way. quantitative easing is back on the agenda when it comes to europe and rate hikes on the agenda is a u.s. starting to ease out of
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investors' mindsets. the euro is up, dollar down. up .2%. let's have a look at what is going on this morning. there is a search for safe havens, but not quite the hunger for the riskier assets. germany has a little bit of money in there, up by one basis point. is contagion to the investors mindset. we have seen a big pull in the greece foreign bond in the last few days that is that 10.5%. we were at 12% at the end of last week. money getting back into greece. a deal will be done. everyone is starting to wonder where the euro will go in the future after it moved significantly yesterday. back up against most of its trading partners today. iliad is down 5%. why?
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a deal looks like it may be scuttled. third-biggest telecom player in france. that is from the owner of sfr the second biggest one in france. that deal for 10 billion euros? they don't want to do it. the board said no. iliad got assets from weak telecom. that deal off the agenda. down goes the stock. what is on the agenda is a merger of equals, mark. when you have been taking 61% taking the ceo role, and when they are overseeing the company being called ahold, i think it is an acquisition. investors are liking this deal. fincantieri boats and mixed
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ships. richard branson looking to buy three ships from fincantieri. mark: the first thing i learned at bloomberg -- there is no such thing as a merging of equals. the nikkei closing at a high last seen in 1996. david: the bursting of the dot com bubble. it is four minutes after 3:00 p.m. here. markets have been close for about an hour. that's the closing level, 20,868. that brings us back to december of 1996 the next stop if you look at these charts, the high of that year, 1996 was in june. 20,000 -- 22,500, rather was
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the high. if you look at the 30-year chart, the summer of 1996 was almost its last full breath of the decay 225 -- nikkei 225. in any case, we are here right now. let me get you to the charts. it is hard to imagine when shinzo abe took power, we had minister kuroda the index was below 9000. it has been quite a run. but look at what analysts are saying and that the next moving up will support corporate earnings. we get there because it will be up to debate whether we get a next leg a significant leg up for the nikkei 225. that is the two-year chart. that is the big dip we saw last week and now a correction. it is one of those days again. wild, wild gyration. from this point, that is about a
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2.2% drop towards the close. the last hour and a half. that is a 3% rally to close out the session. second street day -- straight day we have seen gains of 2.5% or more. we will end quickly by looking at the up -- optimism in asia. it is a good day. back to you, mark. mark: let's get over to what is happening in greece. area ministers meeting for the third time this week. they are trying to find an agreement with less than a week to go before the debt bailout expires. let's get the latest from guy johnson. on's nichols is in -- hans nichols is in brussels. what are the remaining hurdles? hans: a little thing called democracy.
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we need to see two clear votes in athens and the bundestag in berlin. they want to see in affirmative vote from the greeks before they release any more funds. the term you will here in brussels is prior action. this is an affirmative list. something clear greece will do to show good faith that they will actually implement these programs. here is a quote for you. "we would like these prior actions to be spelled out in a complete list of deliverables." that is from the european commission, a commission that felt burned from greece in the past. they have gotten close to a deal in private but publicly they back away. this is why these foes are so important. madame lagarde is sounding more optimistic. she expects the 1.5 billion euro payment to get made. that almost conflicts what she says publicly, where she says
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there is an enormous amount of work done. she is ugly sounding confident to her own -- she is at least sounding confident to her own corporate the prime minister of spain has been a doom guy in the past. he said, "i am confident that in a few days an agreement well be read. in a few hours, mr. tsipras will be here and it will kick off. mark: how tight is the timeline here? guy: it is incredibly tight. assuming we get a deal done tonight for the eurogroup, two quick questions dominate things. the situation here in athens. one, can we have a parliamentary majority that will back the deal?
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we spoke to the energy minister yesterday. he is the leader of the left platform. he has around 40 votes that will follow him. he said he is incredibly critical of what the institutions have done, the ecb, the imf, and the european commission. he needs to be convinced about this deal. we will wait and see if we can get parliamentary approval the second question is can the imf be paid at midnight on the 30th? we got inside the finance ministry and spoke to the general secretary there. he said we have the money to pay the imf and we also have money to pay pensioners and civil servants. listen to what he said. >> i just want to say yes. we are ready to pay civil servants pensions, and most likely imf.
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he is responsible for making the payments. as far as i know we are ready. guy: there is a serious conversation happening in athens whether the ecb will allow more bills from the government. that may be bridging the gap to make sure the imf gets paid. mark: paul, let's get to you in frankfurt. what has the ecb's reaction been? we had rises yesterday. what happened today? paul: another increase in emergency liquidity today. cb is dealing with those on a daily basis. if the banks remain solvent, which the ecb says they are, that will be replaced with emergency liquidity from the greek central bank the the other issue is the t-bill ceiling.
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the key one is how much the ecb supervisory arm is allowing banks to hold. that is correctly 9 billion euros. if that should be brought up in front of draghi it may be a short ship because mario draghi has said in order to see the increase, he needs to seen incredible perspective of this bailout program, implying a disbursement of funds and he said we are not there yet. that funding may have to wait. mark: thanks a lot. paul gordon, on's nichols, and guy johnson -- hans nichols, and guy johnson. let's bring in adam cole, head of global fx strategy. he joins us from the rbc offices in london. a very good morning to you. thanks for joining us. adam: good morning. mark: can you explain to me the
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euro's performance yesterday? 1.5% drop against the dollar biggest drop in three months. what was going on yesterday? adam: what you see is essentially euro-dollar has come back to be dominated by general dollar ratio. the market came to the conclusion yesterday that the greek issue has been dealt with although we will get any amount of headline noise over the next two or three days. over the weekend, i think markets have come squarely to the conclusion that the issue has, for the short term been dealt with. we are looking at general dollar direction as the driver of the euro. mark: do you share the opinion that the dollar believes that greek is sorted out? is that premature or is that now taken as a given? adam: i think that is probably
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the right conclusion. there are stumbling blocks. today's meeting, tomorrow's summit, greek parliament, debate over the weekend, the vote on sunday and monday. i think the right assumption is all those hurdles will be cleared and we can move on, as they say, at least in the short term to look for new direction. that is basically going back to watching the u.s. data, payroll numbers next week in particular debate whether or not the fed rate is in line with who hikes -- with two hikes. mark: the fed governor saying it is a 50-e chance -- 50-50 chance of a rate hike with another in the end of the year. are you in that camp? adam: we are. we think the fed starts on this gradual road towards normalization at this meeting and a steady rise in rates from their onward.
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that is significantly similar before and it leaves us with an overarching theme of the bullish dollar trend that dominated the second half of last year can resume in the second half of this year. mark: but how much further can the dollar rally given that we have had fed officials state that the dollar's strength is not exactly beneficial to the u.s. economy. how much further does it have in the tank, the dollar rally? adam: for me, the official concern on the dollar is more about pace and absolute level. if we look at the main five ua should metrics for the dollar, it has risen but from deeply, deeply undervalued levels. it is still somewhat undervalued in terms of the u.s.'s competitive position with the rest of the world. i think it is not a major concern. we see more concern if the dollar is moving at a pace
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that is threatening stability. a steady gradual appreciation from here. i see few constraints on that. mark: that brings me to the end today with the nikkei at its highest since 1996. how high could the dollar go against the yen given the constraints put in play by the boj governor? i think we have actually lost our guest apologies for that's slight technical glitch. bullish on the dollar. let's move on. coming up, the rates for formula one and the u.s.. investors reported to be teaming up or the $8 billion bid for the sport. boeing made dennis mueller berg as new ceo. grexit, followed by a frexit.
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marine le pen outlines her vision of the future of europe. we will bring that exclusive interview. do way and on all of today's stories. alexis tsipras heads to brussels today to meet with creditors. finance ministers are meeting tonight. are we going to get a great deal in the next 24 or 48 hours? i would love to hear your thoughts. you can find me right here. ♪
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mark: i am mark barton in london. this is "on the move." . it could revise profits without being taken over. the paris-based conglomerate said the vote to turn down the offer was unanimous. the cable unit valued the business at around 10 billion euros. the greek prime minister will meet with the heads of the ecb, imf, and the european commission president in brussels today. that is ahead of a separate gathering of area finance ministers in the belgian capital. they discuss differences over a greek aid package. french president francois
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hollande has called an emergency meeting after wikileaks reports the u.s. spied on him. according to the leaks, the nsa listened in on greek listening the euro area. let's bring in weight hours -- wayne bowers. are we near the end game on greece or not? wayne: i think we are closer towards the end game. this week is going to feel mighty important and it will feel quite crucial. the folk that needs to occur from a greek perspective and the phone to start vote as well will be key. i think we will be driving liquidity for the next few days. mark: what is the next chapter? how long does it last? wayne: putting it into context,
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and it is a significant risk pace that the market has to worry about. we certainly can't ignore it. we saw this with the european sovereign crisis as well. it is important to understand and strip out the company risk as well. you can see a lot of negative positioning and sentiment in the short-term, which can mask some of the longer-term recovery we are seeing in the eurozone, not just from a company perspective, but from a broader economy point of view as well. you could find some of the reactions we have seen in risk assets in the last couple of days that the immediate snap backs, when people realize that if greece is contained and work through, you are on a back on a path for slow recovery. from our perspective, greases economically tiny from a european growth perspective. very important in terms of how
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it is dealt with from a structural port of you -- point of view. the point of view, if it was kicking the can down the road, we would not expect a make a solution to be voted on in the next seven days. i know that they are continually used to this longevity that european politics produces. mark: it has been a case of by risk assets ahead of the deal. once we get some sort of deal maybe in the next week, has the buying been a case of frontrunning or will there be further gains to be had? wayne: no. i think there is from a longer-term strategic investor's perspective there is still got you to be had in risk assets. we see u.s. equities as being underweight. u.s. investors seem to have that position. if you talk about what you know to investors white you have
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that feel, one is based on the potential for further dollars strength. the underlying asset class does well, but actually loses that you from a currency depreciation perspective. the qe program we have need eurozone, the qe program we have in japan, we have seen that weakness. unless you are willing to hedge out that current, the valuation you have on eyeing those assets can be diluted. that is one aspect. we want to see a continuation of dollars strength potentially, especially as we go towards the end of the summer with fed rate rises. from a positioning standpoint, greece is a worry. the markets' expectation is that it will be contained and sorted in the short term. the caveat is the greek political vote situation. you could see longer-term flow look moving to more developed u.s. tech markets and in europe. not just core but peripheral as
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well. it has taken a lot of pain through austerity, but we do see a fair amount of pent-up demand for gaining and increasing exposure into europe, especially on the lack of infrastructure cyber mark: not just core -- infrastructure side. mark: not just core, but noncorporate correction territory in the last couple of days. it is the biggest rally and over three years. his germany a buy or not? wayne: it is a difficult want to save it is a buyer. if you look at the growth numbers, especially pmi numbers and anecdotal survey numbers, europe has been growing because of itself, not because of exports. even in the face of a lower euro. that is a question mark for us. is that a continuation of the trend? this that provides some of the almighty national -- the big german multinationals to get the
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euro through the rest of the year as well? you need to look at that carefully and look at how much on german multinationals are making from the eurozone itself versus their reliance on exports. i think the key there is china. with the slowdown we have seen in china, it is a managed soft landing in china. it has taken the steam out of german multinationals that have been selling into that market and the broader euro asian marketplace as well. we are in a steady-state from the dax perspective. you have some reason to buy but also cautionary concerns as well, especially based on china. mark: what state are you in when it comes to the nikkei? it has 20,000 for the first time since 1996. the record was in 1989. where does japan fit into your thinking? wayne: the market is out on whether economics will work or
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not. what we are seeing is evidence that the leaders are being pushed, the aeros are being shot, and they are creating the right direction rum an inflation and growth perspective. confidence levels tend to be smaller companies that seem to be suffering. the larger companies seem to be doing ok. that makes sense, especially if you look at the yen. the yen has fallen. it actually hurts the smaller companies that rely on imports of goods and services and raw materials. it is more expensive for them. we know that bank of japan are all in. what we do look for is the risk that economics brings. they want to encourage that in japan it is fully taken on board not just by the business community but in households for. consumerspending and investment that we expect to see.
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when you get that, you have more growth potential. mark: good to chat with you. coming right up, we have -- rev your engine. we will talk formula one. ♪
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perks are nice. but the best thing you can give your business is comcast business. comcast business. built for business. mark: i am mark barton in london. this is "on the move." let's see how things are shaping up so far. here is a picture of the market today. five days of gains for the stoxx 600. the dax in the last couple of days, the biggest two days of gains in years. let's get to our top stories. caroline, what are you watching? caroline: i am focusing on one of the top climbers today and julius baer. clarity. it may come to a u.s. investigation as to whether the
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swiss third-biggest money manager was helping americans of a -- evade taxes. they will put in a provision of $350 million. it is a lot of money, but maybe a relief that we are getting an amount of tax the likes of which could weigh on julius baer. it seems we are getting closer to a deal with investigators about potential that they helped americans evade tax. no timetable on the exact decision. people are liking the fact that they set aside some money. on the down side of things, we are looking at m&a. this is the second biggest player in french keller -- french telecoms space. they wanted to team it together with the number three player in france. they do not want action. they do not want in on the game.
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shares dropped by almost 11%. all of the french telecoms are falling this morning. down too's iliad. aching that we would see easing in the prices, not on the table if the deal does not get through. we had a rally earlier on the week in anticipation of a deal. elementis plc is a chemical company in the u.k. down 12.85%. this is a company that has chemicals into your oil, gas nail polish. the current estimate is not likely to be met. they say they have poor conditions in their oil fields but also in china and latin america. in china you have less demand for cooking additives. mark: let's turn our attention
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to sport. the owner of the miami dolphins and investors have reportedly teamed up to bid for a major stake in formula one. ryan is here. ryan: stephen ross is the man of the moment. he is 75 years old. he owns the miami dolphins, as you said. he is sort of like a real-life monopoly man. the guy was on the other side of the board when you played monopoly and had all of the real estate. this guy has 50,000 residential units, which contribute $5 billion to his net worth by our count. all the papers are reporting this. it would the important if he teams up with qatar. they're concerned about their fifa bid. they look at sports as a commodity that people cannot get away from. they see it as an attractive
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long-term investment. the idea is that if all goes according to plan, in a few weeks we would perhaps see a formal bid. if they bid, cvc may be interested in hearing it. they turned down an offer last year from liberty global. liberty global was the leading bidder in a consortium last year. that did not go anywhere. they have done fantastically with the investment they made in the late to thousands in formula one. -- 200's0's in formula. many are calling it the best private equity deal. it has been fantastic for them. they have put into billion dollars. they have already gotten out about a lien dollars between the remaining value in formula one and the question is, where does it go from here? one thing they have been doing is bringing it to the united states. you bring on the owner of in
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american football team with a bigger love for sport and maybe some other investors and you might be in business with qatar along for the ride. mark: bernie ecclestone. what does that mean for him? ryan: he gets a little more money. bernie has a 4% stake. he would sell his shares as well but that does not mean that he would walk away. people familiar with the deal said they would like to keep him on. he has not been able to crack the united states. he has been able to build his empire across the night states -- around the world. he knows how the business works. i personally spent a good half a day with bernie in a rain -- ba hrain./ the race would not happen if it was not there. he walks around. he is the emperor. he has two aides on either side of him. two attractive ladies.
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he goes around and everyone tries to get face time with the man to discuss the deals he needs to do. guess what? it does not happen if he does not take negotiating in a. i had to call him to let me in. mark: the man who runs the formula e theory which is taking place in london this week, which is electric-powered cars. he knows bernie well and i asked him, what did you learn from bernie? he had the ability to walk away from a deal. if he does not like the deal, he walks away. apparently that is real genius. ryan: we have seen effort made before. the teams were talking about buying formula. bernie dismissed that. they did not have enough money to run the team, let alone the whole shebang. at one point they were going to bring in paul walsh. mark: bernie lazy
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on =-- bernie has had some rough times recently. ryan: is going to turn 84 in october. does he need to keep that 5%? he will be around, in a diminished, but still present role. mark: they have a veto about other grand prixs in the middle east. if qatar takes formula one, does that bring forward and went to qatar? ryan: there is such a thing as a gatekeeper. bernie limited the number of venues to 20 to keep it kind of an exclusive bank. there are a lot of countries -- exclusive thing. there are a lot of countries that want to host a formula one race. someone will lose out at one point. whether it is a well-established formula one city or another one, it will get tricky going forward.
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mark: thank you, ryan. boeing gets their new ceo next week. let's get more on the story from benedict hammel. how smooth is the transition to the new chief executive looking? benedict: they try to orchestrate a smooth transition and it looks like they succeeded. they announced last night that derek muilenburg will replace the ceo. there are no surprises. he is 51. he has arisen through the ranks. he started as an intern in the 1980's. he has crowned his career with this company. mark: what are some of the challenges he is facing?
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benedict: he will have to take a hard look at the civil portfolio and probably make hard decisions, particularly the 747 jumbo jet, the iconic plane that everyone likes to see but few people actually like to buy these days. they have had a hard time selling that plane and muilenburg will have to find do we continue building this plane at a slow rate or do we kill it and fund something else? the other program we will have to look at is what boeing called the mom plane, the middle of the market plane. it seats maybe 220 people, can do u.s. transcontinental voyages and do transatlantic trips and boeing does not really have a play in that market place right now. he is pushing aggressive the into the market.
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he will have to ask himself, how can i protect that flank? how can i build a plane that will address that market? it will cost them a lot of money if he goes ahead. it will be a $10 million investment. does he have the stomach for this? they came out of the 787 program with a lot of headaches. it was massive he delayed and over budget. not through yet with the new 777 they are coming out with. for him, the question will be, can we muster the resources to come up with a 757 replacement? mark: thanks for chatting with us about boeing. let's check in on greek markets. you have the open? >> we are seeing greek stocks going lower today. dropping as much as 2.3%. going against the trend for european socks in general, but that is not surprising given that they make up 6% of the
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stoxx 600. i have the charts here so far. we had a rally of 6% yesterday, a rally of 9% the day before. you can see that drop off of more than 2% here today. if i dig into have a look, you would be able to see this, but i can tell you the biggest losers today are greek banks. these have been the biggest gainers over the past two days. alpha bank down 6.5%. national bank of greece down 5.8%. the big question is whether we are going to get any sort of a deal on greece today. alexis tsipras flying to brussels to me creditors. they are going to try to hash something out. eu leaders can address something at the end of the week, but there are stumbling blocks. what ever is decided has to be approved by german and greek parliaments. perhaps that is what is causing concern. harvard university professor ken
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robles said a deal on greece is unlikely to lead to an economic upswing in the country. i wonder if that is impacting this sentiment today as well. i will finish looking at greek borrowing costs. look at the 10-year cost for borrowing costs. we saw some big drops in the 10-year yield right about here over the past few days. much less of a drop today although you are still looking at 10.5% on that yield compared to 13% just a few days ago. back to you. mark: still to come on this program, we will hear exclusively from french national front leader and candidate marine le pen. find out why she thinks the eurozone breakup is on the cards at this time. you can weigh in on all the stories on twitter. are we close to a reach deal? what do you think?
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24 hours a day. ♪
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mark: what are the chances of a grexit should the greek voters choose to leave? what about a frexit? caroline connan joins us.
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she had an interview with marine le pen. what did she have to say? caroline: she thinks that france will be next to exit the euro. she even called herself madame frexit for the first time. is helping to support her argument. on one hand, you have the greek crisis. she says we are at the end of the logic at the greek crisis. on the u.k.,, the referendum in the u.k. is helping her. she says that is adding a lot of pressure on the eu. she is making her point for the frexit. she does not only want friends to exit the euro, she once the construction of the eurozone. have a listen. ms. le pen: if we organize the
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destruction of the eurozone, we will solve the problem. tomorrow it is the grtexit, and the day after it will be the frexit. everyone wants one thing -- escape from it. or engage in battle with the european commission. that is what mr. cameron is doing. predicting a referendum and u.k. is putting such a pressure on the european union that the eu will will see the demands to the u.k.. caroline: there is a 20% devaluation of the currency. many economists said that would create a vicious circle of inflation, lots of purchasing power and imbalances of international trade. marine le pen says she has no doubt that the german chancellor angela merkel will sit down with her if she is elected in order to discuss this breakup of the
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eurozone. mark: you also talked about immigration. what did she have to say on that subject? caroline: of course she is very anti-immigration. her party's anti-immigration. she wants to bring down the number of migrants from 200,002 10,000. i asked her to explain what she would do with the bolts of migrants. ms. le pen: instead of bringing them back to ports of departure we bring them to the shores of your. we are in effect the accomplices of the traffickers. we help the traffickers by providing safety for the migrants. we must rescue the people so they don't i, but we must bring them back to their port of departure. once we have done that several weeks in a row, no one any
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longer will pay to risk their life crossing the mediterranean. caroline: despite these very anti-european union, anti-immigration views, marine the print -- marine le pen is credited with a lot of votes. last year she got 25% of the votes in the european election. several polls in france are predicting she could leave the first-round of the 2017 presidential elections in france. however, no polls at the moment are saying that she would actually win the presidential race. mark: thank you. caroline connan in paris today. grosses are holding and broyles is continuing with its deal to merge the telecom unit. caroline: let's look at whether it is really a merger. we all learned that they say it
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is a merger of equals, but you get into the nitty-gritty and you see one is taking control over the other. it finally looks like the deal has been done. 9.3 billion dollars deal. that is what ahiold is paying. they're taking 61% of delhaize. there will be equal seats on the management board and the supervisory board. the company will be listed in amsterdam and in brussels. no more share buybacks for the shareholders of ahold but they will be given one billion euros. why does it make so much sense? they are both big players in the united states. yes, they are big in there home countries in brussels in
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amsterdam, but they will combine to make the fifth biggest u.s. supermarket chain. they were finding there was more competition in the u.s. they combined their ahold and stocks and shops. food lion is owned by delhaize. bring them together and you make a better competitor. they will see cost savings. 500 million euros will be saved per year by the third year. you will get the odd cost, but you will also be aiming the dividends of the shareholders to 40%-50% of adjusted profits. his is a giant deal that takes form and overall it is ahold taking the reins. it is a purchase rather than a merger. mark: that is the deal which is on. which is off? caroline: it is about telecoms. we are seeing the negative
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effect on the stock market today. telemarketers in france are falling. they said thanks, but no thanks. we do not want to a sector 10 billion euro offer. the second-biggest player in french telecom space wanted to buy out the number three. they wanted to pay up for it. 14 times earnings. 10 billion euros was offered by iliad last time last year. the board unanimously a process -- unanimously oppose the offer. the french government has been weighing in. he says it is not good for the economy investment, the jobs. why? why was this not advertising for the likes? of them? only 13% of its revenue is telecoms. 13 billion euros is how much
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they hold as a conglomerate. 13 billion euros and selling up 10 billion euros, the telecom bit? it is the bulk of the business. growth is about to happen and there are execution risks. they say, bear with us. we will be sub profit. mark: thanks, carolyn. before we go to the break, the stoxx 600 is up for the fifth consecutive day. we will delve into the details. the stoxx 600 is now lower. the rally has come to an end. ♪
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mark: the greek stock market opened lower this morning. there has been a relief rally. caroline: for those who said what happens in greece what does not that greece doesn't matter outside of recent this tells the story. you can see this jump here. this is a jump of the most since 2012, 5.8%. a little more subdued today on the euro stoxx 50. credit suisse says he'll exposure slowly because -- build exposure slowly. this could put the benchmark up
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by 10% on the. mark: thank you very much. that is it for "on the move." "the pulse." its next. have a good day. ♪
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>> the euro zone finance ministers meet and tsipras faces concerns over giving away too much ground. in an exclusive interview marine le pen says the exit from europe is inevitable and, if it is not -- if it is up to her france is not far behind. >> we can organize calmly and coolly. today, it is the grexit. tomorrow, the brexit.

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