Transcripts For BLOOMBERG Countdown 20141107

Welcome to countdown this friday morning. Happy friday, everybody. Also coming up on the program, if you cannot face the morning commute on a crowded train, join me on a trip that puts you in the lap of luxury. No worries about getting a seat on the service. This is coming up later. Should we talk about tax and luxembourg . ToJeanclaude Juncker seems be taking a little bit in the press in terms of what is going on with luxembourg. That is whats, might be the title for someone making phones today. This was an investigation by independent journalist that came up with detail and hundreds accompanies that have allegedly to save tax and luxembourg. We have a collection of news organizations, a Investigative Group and i came up with quite some salacious details about the special rates that individual companies were getting to actually cut taxes and have their own personal tax deal in sign of luxembourg. The question is the nexus and the role that we have from Jeanclaude Juncker because many of these were cut during his time as Prime Minister. He says that he will recuse himself in the case. He will continue to try to harmonize eu tax laws across the entire european union. We have so many stories on the. U front we will see how this shakes out. We will see what the relationship is like between prime canyon and Jeanclaude Juncker. Cameron not lay nice with other Prime Ministers, we will see if he takes the opportunity to take a shot. He referred to himself as being serene. Ets talk about allianz they have had this debacle. And the outflows, what is it, 50 billion euros in the Third Quarter . We finally have a price on bill grosss exit. We will try to price and what youre actually mean to viewers. When you take a look at the overall earnings, their net income came in, their operating profit beat expectations. They were down 5 to 694 Million Euros. They did have a good quarter elsewhere. They made up for it with property insurance. Take a look at the numbers break down operating profit. To get a sense for how much more diversified allianz is. As 690 four per asset, one point four 2 billion. This is operating profit. All this means is that theyre going to increase their dividend net income. Before, it was 40 . Say is what they had to about the departure of bill gross. 49. 2 billion euros which translates into 60 billion. The total return front, the number was two point 27. 5 billion. Net outflows development after the resignation of bill gross is within our expectations. They have confidence in their new team out there at Newport Beach. Job that has worse hours than ours and perhaps even less lori, being an asset manager at Newport Beach. You still have to get up so early. We will have to do the trade off on whether or not it is worth it or not. You do to live in california. A littlen never the bit of sunshine and you bring it to countdown every single day. Thanks for the roundup. Risky business, that is what the title might be at the meeting of the central bankers in paris. Market see this as a thriller, a tragedy, or even a farce . Lets get to the economics correspondent on the ground for us in paris. Brief us on what the ecb did yesterday and what it means in todays meeting. The ecb sets up the meeting really well. A dovish press conference that people were expecting, a commitment from mario draghi to boost its Balance Sheet by a trillion dollars. A hint that there might be a broader amount of bonds thought perhaps as soon as next month and a reinforcement of that the ecb is on a different path from counterparts such as the federal reserve, the bank of england. Message across the board which sets it up nicely for a meeting of central bankers. All of whom are looking in different directors. You have the fed stopping is quantitative easing last week. Might do theg we same and all will be represented today in paris. What is the al before the central bank as they gather in paris . The fed, you start to wonder whether they will raise Interest Rates, we had a bit of a Global Growth scare and october and that kind of rocked forecast. Save for the bank of england, parisarey will be in representing. On the flipside, you have the bank of japan, would corrode up is really ramping up stimulus and draghi. Neither of them looked to raise Interest Rates at all next year. That will be a huge thing for markets next year. Next year will be a real story to the markets. Sonic kennedy live. The largest julie maker just reported their earnings. Our European Business correspondent joins us with the numbers. 908 million. The estimate was for 1. 12. You say there are other numbers. Operating profit is to focus on. Billionslight miss, 1. 3 euros. Than 1 . About 2 overall. They were down four cents. Clearly we are seeing an increase in operating profit. Operating profit was hit by a charge in particular. We are seeing a slight improvement in gross margins. It is bit of a murky water. The takeaway is that the sales are down some 4 in constant currencies. Kong,ecause of hong because of asia. The biggest jewelry maker in the world. They have been hit in particular by the lack of stimulus going on in china and the fact that there cracking down on the gift giving. It is also because of the protests going on in hong kong. As is the big one, the fact if it hit them in october this weekend. The mainland chinese flooded to hong kong and they make the most of the lower taxes. They go splurging on some of the highest and goods. Bans in place and big group tour is going to hong kong. Overall, we are seeing the hit, the effect of the protests in hong kong and as i say, the crackdown in giftgiving. And also hit burberry. That is a one ounce set of incidences for hong kong and whether you looks to that and you look at 2015 will be hard luxury. That puts in a better performance than self luxury. In the previous numbers, this is the most surprising. In september, they came out and said, the first five months of our fiscal year were the worse since 2009. They have flagged this. The ceo, while his coceo has said, look, actually this isnt a longterm issue. We feel that this is a shortterm issue. You are seeing a lower middle class in china, you are seeing bee luxury that will increasing luxury goods. You have sluggish sales there because of the austerity measures are still continuing in italy and the like. Clearly, there is less growth going on in europe. They were looking for the u. S. , the middle east to help overall. Biggest area of sales. 40 of the sales. No wonder october sales are down by 1 . Overall, the takeaway is coming yes, continuation of a theme, asia not looking pretty, sales are down on the previous year, but maybe not quite as bad as had been expected. You think i will get a deal on a watch . I dont think that is allowed. Shocking. I will lend you mine. In anyou want to join in of the conversations on twitter, you can find us on twitter. Tell us what you think about the ecb yesterday, about allianz, about the central bankers gathering in paris. Mario draghi has investors hopes up for stimulus from the ecb. Dovish astrike to town . I put the question to our next guest, the head of research at standard chartered. We are back after the short break. Welcome back. You might have thought that the steam train would have gone the way of the typewriter and the slide rule but there is apparently a market for elegant travel. I went to meet one company that still offers the golden age of steam. Modern travel is all about getting from a to b as quickly as possible. Lets see what traveling is all about. Good morning. . Recognize the name. The Orient Express has a centuriesold reputation for Luxury Travel. Venicein still goes to on day trips around the english countryside. The company would like to build on the trains reputation for service. Ice clunking,f the trains moving. Food,well as gourmet guests, board to travel back in time. This is splendid. Belmont used to be called Orient Express group. Why drop one of the evocative names in history . Were not just a legendary train. Hotels. We are much more and brett in scope than many people realize. The brand is actually owned by the French Railway company which is due to launch its own service. As competition hops up, it seems the golden years of Luxury Travel still has a place in the 21st century. Was raining. You get this glamorous sort of beautiful afternoon. What are they send me . To a bridge in zurich every two months. It looks really really spectacular. They have also owned the lululemon. We have a hard job, everybody. Mario draghis words have ramped up expectation that the ecb is looking for more intense stimulus. We have a lovely graphic of this rock band they are bringing together of all of these central bankers and others at the center of things right now. Is one guy missing, mario draghi. What are they said to discuss without the lead guitarist of the central bank rock group . What will be on the agenda . They should be a divergence we are seeing in the global economy, a lot of strengthen u. S. Economy, certainly weakness in europe. Do, whatcentral bank should they do, what can they do . What should they be asking governments to do . Those are certainly very prominent issues in europe. Draghis message you sent the government man is there. The guy that is jumping everyone is mr. Croda. Do you think that is angst . Certain extent it is. Theres certainly been talks about exporting deflation and competitiveness, currency wars. Extent, we are. Some countries, particularly japan and the ecb, they have made it very explicit that they are perfectly happy to see the currency weaker. That is one way in which it stimulates growth. But of course, one mans currency weakness is another strength. There has to be some tensions. Wasario draghi yesterday saying that his Balance Sheet will continue to expand even while the Balance Sheets of other Central Banks will contract. That is about the fed. Is that openly suggesting that they would be happy for the euro to go down against the dollar . It certainly is. I think it is interesting because the only time that we have seen this kind of talk previously was when the euro was pushing up against 1. 40. Weve seen the euro weakening quite substantially over the past six months. Push itill prepared to down further. Oftentimes a good people talking about the euro drops for the first time in six days, it tells me, try to put some context that it will help earnings by 10 . Where does the euro need to go to an economic model to really generate some growth . That is a very interesting question. I think that it has an impact but just at the margins. Essentially, the euro area is a large economy which is very dependent upon domestic demand. Be axports are going to 10th of. To the extent that you depreciate the country, it is helps, it is helped the margins. It could boost margins for some companies. That is not going to make the big difference for growth. You need to see stronger domestic demand if youre going to get the economy going. More on drugging when we come back. Draghi when we come back. Countdown. Ck to we are back with the head of research at standard chartered. How much do we make of this unanimity at the ecb. They said the statement was unanimous and had been a lot of talk going on about how much he was acting on his own at how much of the other policymakers support he had. I think it was important because there had been clearly some divisions within the ecb Council Summit particularly over be on theult it would qe target. Its a something that draghi had been quite specific about previously. Again, he repeated yesterday that they were moving the Balance Sheet back to the march, 2012 level. The elephant in the room, which is when will they do he was bearish. You set the tone of what he said about growth was a bit bearish. Does that mean locked in, qe. Brave, jump forth. We had been saying that we inect quantitative easing terms of sovereign bond buying in the First Quarter of next year. View, the measures taken are not going to be sufficient really to make a significant difference to inflation and to growth. If we look at what the ecb, even if they are successful in reaching these 3 trillion euro Balance Sheet, it is still a fraction of what the fed and what the bank of england has done. But not an early christmas present. D early market, time with the forecast in december. Lets see what happened to data. Of weve got the fed quarter data next friday. I dont think it will be very encouraging. If the survey start to deteriorate, if we see headline inflation, core inflation moving lower, then it is possible that they could act next month. It is indeed. Thank you so much. The head of research at standard chartered. Coming up, an act that brings beauty and wellbeing treatment to your door. What is the secret of tapping into it . We will tell you after the break. How are the fx traders preparing for one of the biggest events in the market . Day. Unemployment nonfarm payroll. This is the bloomberg dollar index. The biggest weekly gain of 16 months. We are almost at a five and a half year high. The big the biggest weekly gain since june, two thousand 14. The market is expecting an average this year. This is 1990 nine. Is there anything that can stop the dollar. So, the dollar is pumping, the dollar is strong. Time last week, they went for more quantitative easing. Keep an eye on these two currencies. Is tradingorean won 9. 4763. The taiwan dollar is at a sevenyear low. The clearest headwinds are to the korean war and. This is the threat. These are the two currencies that are under real threat from the bank of japan action. Flyttle bit different for day. These are the Bloomberg Top headlines. The euro touched a twoyear low after mario draghi iterated his commitment to stimulus. The European Central Bank President said that they will buy bonds for at least two years. He confirmed the bank is standing by to soak inflation in the euro area when and if it is needed. Momentum, alongside heightened geoPolitical Risk could dampen confidence and in particular private investment. , insufficient progress and Structural Reforms and new countries constitutes a key downward risk and economic outlook. We will look at a snapshot of the health of the american economy. Luxembourg dodge taxes. This follows a new report which reveals the secret details of deals during the tenure at the new European Commission president. Companies have transferred profits to the country using complicated tax rates. Says hech president will not seek reelection if unemployment doesnt declined. He marked the Halfway Point of his fiveyear term with his Television Interview in which he pledged new measures to help capital find new jobs. He said there will be no new taxes among those announced. Letshave had earnings, stay with the luxury seen. Have you ever felt the need for a little bit of beauty . This feels like much more. You can do yourself a disservice. I like a little bit of help in that department. We are joined by the ceo of great to have you with us this morning. Naturally, i turned to her because when i think of this, tell us about it. I think is a beauty and i think it is you are trying to sell it limit, but you are not. We have a platform with different services, obviously we have blow dryers for ladies currently have haircuts for men, we have technicians coming for you, we have massaged, we have fitness instructors. We have a lot of services we are offering already and it will be transferred in november. Everyone will use it. I use it myself wrestling on a weekly basis. It is all about getting help with all of these things in your home. Is this aimed at people that are high net worth, people with quite a lot of money to spend to travel a lot and maybe need some help in airway from home . First of all, all of our pricing is in the medium, see dont pay any more than you pay yourself. It is affordable for absolutely everybody. The things he did have, ill not of people used to have their headdresses coming at home. I can have a blow dryer and not walk out into the rain. That is why you left me with that is what we said in the break. Talk to me about making money because i read through the notes and the hairdresser, they get 80 , you get 20 . Monthtomonth role in terms of revenue and a 44 repeat business which is quite high, and meaning more than 1 out of two is coming back. On a day like today, a nice rain outside in london. Im very happy. What about focus because we spoke to caroline, this is an act that will send the cleaner to your house. The ceo was telling her at first we started out providing lots of your home,hefs in for example but we found it was example that we focus. You started with beauty but you are offering other things. Do you have a different experience . Beauty is a big industry. That your hair, your nails, your haircuts, your fitness, your wellness, that is a big thing. It is only like six or seven products in one product. Weexplain that to me because had the discussion yesterday. What is the difference . The differences when you have huber, you have a car driver and that is all you will have. This will provide you with more. Different services in the same industry. Tell us about your background because you dont come from this industry, your background is in Asset Management. How on earth did you get into this . Least to work on the Stock Exchange first, then i started in basically banking, capital markets. Dot comthrough the period in banking. Scars. You bear the s i started in Asset Management company which was very successful. I think that this sector is definitely the new sector. One you look at the industry and what i saw during the last 30 years. First of all, mobile phones. Then you have the big thing. Then the. Com. How do you pronounce this . It sounds better in french. Thank you for joining us. On monday, bloomberg tv, we have an exclusive. It is an interview and it is with the burberry ceo, Christer Berg bailey on the groups festive campaign, the importance of digital. We will be talking to the cfo of allianz about the companys earnings out this morning. Stay with us. Home depot says 53 billion email addresses were stolen by hackers during a data breach that ended in september. The 56 in addition to million payment cards. They built custom built software onto its checkout term in order to break into the companys network. Earningsed disneys beat estimates. This is the top grossing movie in the u. S. So far this year, raking in 330 Million Dollars in ticket sales which help to offset profit. In the laste quarter, the disney ceo tells bloomberg recent deals with strengthen the business for years to come. Job of has done a great strengthening their relationships with sports leagues and organizations and has extended a number of different deals, the most recent one being with the nba but that hasnt taken until 2016, 2017. But, they have now tied up rights to the most important leagues, Major League Baseball come and be a, multiple College Sports packages. Revealed the title of the seventh film in the star wars franchise. It will be called star wars, the force awakens. Played 4 billion for lucasfilms. Hostilities on the rise again as the region slides into open war. We have kiev and the rebels accusing one another of major offenses in the east of the country. What is most important here is not that there are major offenses, there may are may not be, we cant confirm that. The problem is that these two sides accusing one another of it looks like the blame game has begun. The books like the pretext for military action. We have the russian saying they see no point in more talks on. Kraine the cranium Prime Minister called for more talks and we heard the russian president say that the civil war in ukraine manyot subsided, which has people wondering whether russian intervention and perhaps even overt russian intervention could be on the cards. We have sanctions on the table. The german chancellor said that they would like to see the list expanded. If we see open hostilities break out, if we see a complete you cann of the truce, expect the sanctions to expand well beyond just individuals. It is almost as if this seems like a boil that seems to have popped. The deescalation, we have been talking about, and here we are talking about a whip around in terms of the news flow. Thing we had was the castile. Ever since then come it has been negative. Starting with that election in the east of the country that western countries said was illegal and russia recognized. It has been one downhill sort of trend and we have seen that reflected in the ruble specifically, it just touched 48 to the dollar half an hour ago which is hard to get your head around. It started the week around at 43, a year ago it was at 32. The ruble has traded between 2832. This is really psychologically devastating for russia. Anecdotalen some evidence of russians actually taking the money out of banks. In the beginning of signs that the russians, not so confident in their currency or their banks. There was a statement couple minutes ago saying that the rubles decline of 30 year to date is a threat to Financial Stability in the country. The question is, where is the central bank . They suggested they would defend the ruble. Well, if they are defending the ruble, they have not done that overtly and it is not showing. We saw a russian stocks fall, particularly late in the day. The countries largest lender down 4 yesterday. Russianlly saw the stock market more or less ok for the last week or two. Now, it is bad on both fronts. Thank you very much. Allianz feet earnings estimates. They have a controlling interest in pimco, which saw outflows of more than 60 billion following the departure of bill gross. Allianz has pledged to pay higher dividends. There, to pay in out higher returns to shareholders. Himing me now is the cfo alive from munich. Great to have you with us this morning. This, itust looking at is a beat on the headline numbers, you are firming your goals, youre promising to raise the pay out, my senses that this is a process of appeasement, i suppose for want of better word, the upset that is happened across the road at pimco. Actually, it is not a form of appeasement, it is something we promised the beginning of the year to our investors that we would reconsider our dividend policy and our Capital Management policy before christmas and that is what we did. I think the company is in great shape. We have revenue and Profit Growth at doubledigit levels isch in this environment pretty strong. I think that we are bullish, how the business continues. That bullishness, im wondering, germany, slowing down, francis flat on his back. We really have that ability to raise premiums to look at the property and casualty business as robust in 2015 . It is not only about raising the price, it is also gaining market share. Or the Insurance Industry is still scattered and fragmented. German take our business, the new business mode, 47 market share, up from 17 are future maybe three or four years ago. There is a fight for quality. Lets look at the problems at pimco. Third quarter, 60 billion went out the door. Bottom of the redemptions . Can you make that call for us . Pimco goes through a insuranceing and companies are taking a longterm view. This we are also manage mean the money for our clients longterm. We have now helped pimco to reposition with the new chief Investment Officer team and we have clarified the longterm strategy and i think that this is very promising Going Forward and we dont get nervous about some shortterm. Would you be a little bit more nervous because bill gross, 70 of what he managed within pimco, was retail money and these headlines are coming hard and fast. Retailard to convince investors. I you happy to cut deals with the institutions to keep the money . How will you stand the bad publicity . This doesnt look good. When you look at our three year performance which is back to 93 . This is up from 89 three months ago, that is what customers are getting. They are delivering performance and worldclass service. That is in the end what counts in the Asset Management industry. The market wouldve accepted the succession planning had happened. That is not what happened. Part of the accusations is you are allowed pimco to be treated in a very different way. To manage themselves. There is an absence of control on your half. I think the succession planning was scheduled, i think for ally have prepared possible outcomes. When bill decided to leave. Then we were very quickly there to look at the people that we hired over the last week. It is actually the first class fixed income manager that really like to join the blend. We all know that pimco is a household name and will always have a big market position in the u. S. Have to leave it there. Lets see how the new team actually performs. Bond fund trailed 53 of its peers and is on track ofunderperform the rivals third year in force. It will be a tough acts to follow. Thank you so much for joining us. Coming up, Standing Firm, london official stick to the world war i tribute deadline, we will explain and discussed where the puppies are going in our newspaper segment. Is welcome back to countdown time for the moment in the day when we look at newspapers. What have you got . Of london,the tower officials are Standing Firm on poppies deadline. Anyone who has been to london cannot escape noticing the huge display of ceramic poppies that have been put there as an art installation. There arent political calls there are political calls to extend the display. From nick been calls clegg and Boris Johnston and the palace has stuck to them saying that they will be going to the people that bought them. Of have a look at this. This is the of their city. The other financial hub. They could be coming for a takeover bid. For could be making the bid songbird. Question might be a yogurt that will help you lose weight. Scientists have discovered a bacteria that fights gaining weight. They gave this back. Two mice, said them a bunch of fat. They failed to put on weight. Got a project. Can we buy the company . They are trying to give the researchers more money to finish this work. We will leave you with your breakfast. The second hour continues after a short break. Stay with us. The worlds Central Banks have gathered for conversations that could move the market. 60,000 question, how much money has been left and redeemed. Asia hitswdown in earnings at the Worlds Largest jewelry maker. A warm welcome this friday morning. It is 7 00 in london. We have been talking about the ecb all morning of course. This is all part of the data that will be watched by the ecb to work out whether they need to extend the Balance Sheet further. The one man who is missing, what is your title for this day . France has the rock stars from around the world, janet yellen, anyway it is the rock band gathering without the niche guitarist. Looking back at what mario dovishsaid, it was quite , more than people had been expecting. She said she was a little surprised about how weighty he was in terms of the daza data and that set up the terms for quantitive easing, proper qe by the end of q1 in 2015 and of course if you have a look at euroyen,dollar and the euro at a two year low. It will be interesting to see where stephen will call it. All of this helps mario draghi. He gave a target that was one trillion euros. That was a target he had given before but they seem to be distancing from that target and he talked about currency awards. Mario draghi said the Balance Sheet will continue to expand while the Balance Sheet of other Central Banks will contract. That takes us to the u. S. And we have the jobs report out later today. That will be the Guiding Force around markets. Interms of jobs, 235,000 october, 248,000 in september. On the terminal i went and searched for jobs in news and one of the first you get is a nice preview of what to expect but you also get a nice quick whichn secular stagnation has come up a few times in conversation. It is really downbeat. It is something that has been coming up with economists as whether this recovery looks different than other recoveries. Im not consigned to the wages but participation rate. Course, the best year of jobs growth in the u. S. Since 1999. That is not a prince song. Ands talk about bill gross his departure from pimco. Euros. Ences, 50 billion beat their estimates for the Third Quarter in terms of their numbers, Hans Nicholas is standing by. I had a conversation with the cfo, this was a man at pains to tell us that everything is fine at pimco and everything is grand and we cannot sign up enough new fund managers. What did you make of it . I listen to your interview and they are backed up by the ambers, 50 billion euros is big number from their 225 billion euros from the total return fund that their numbers tell the story that they are a profitable company. Allianz as a whole are good but it still came in at 694 Million Euros and the numbers were so good that they are in a position to raise their dividends. It will be 60 of net income. In largea good number part because they have these other divisions. Take a look division by division what allianz did for the quarter. At 690profit management four and property and insurance that is at 1. 24 billion euros. Life and Health Insurance another 790 billion euros. Cost forn euros is the the number of outflows that they have had and you put it into dollar terms it would be 60 billion u. S. Dollars. Here is the quote about gross leaving. Net Output Development after the resignation is within our expectations. It is very hard to tell, you know how a lot of these deals are cut between a company like pimco and the Asset Managers at large Pension Funds, but the key question is are they changing the terms with these Pension Funds or do they basically have the same deal . They may be able to turn the page and have a little more confidence that the Leadership Team in Newport Beach is working together and eventually they will start returning and having those blockbuster banner years that they had under bill gross. When it comes down to it, there are certain institutions that can haggle about fees and commissions. Pimco only 30 of the money that bill gross looked after, only 30 of the money with institutional money, 70 was Retail Investors and i leave you with this thought, allianz takes special performance awards to keep tim coco. That is retention of key talent and to be fair you have to keep people in the holding to make the funds returned. They have to keep the money and the people. The whiskey business, that is what the title might be if someone was making a film about the central bankers meeting in paris. The stars will all be there, yellen, carney, corona. Is it a tragedy or perhaps even a farce . Mark, good to see you what is up for debate there among this group of rockstar central bankers . Mentioning, we have all the heavy hitters except for mario draghi but he has other ecbers here. Going inpolicy is Different Directions in different parts of the world, the bank of england is on hold, the bank of japan is going great guns to expand its Balance Sheet and the ecb says it is as well. With the biguation Central Banks going in opposite directions which should mean lots of market volatility and uncertainty. I think that today it is about debate and coordination. How is the ecb how is the handling of stimulus by the ecb how will that be viewed at this meeting . Will they be criticized for not doing fullblown quantitative easing . It is very rare that central bankers central banking is an elite club and they i have very rarely seen them criticize their counterparts. As far as the ecb stimulus is concerned to let anyone who is been following these things, there has been a lot of criticism among economists, analysts and journalists about the ecbs lack of stimulus. We are in a different situation today, the ecb mario draghi came out with a firm statement. The world wants to see the ecb put its money where its mouth is. One of the things they will be walking watching today is yen vitamin. Vitamin first chance to react to what drawdy said today. The next question is what is the react to what drawdy said today to what draghi said today. You can join in any of the conversations you want about the ecb on twitter. Ceoeeted earlier that the of the beauty business says you need to reinvent yourself every 10 years. That means i have a reincarnations on the way. N. Ing up on countdow ruble. Imes for the ruble is declining. Tensions flared in Eastern Ukraine and we will bring you bring you the latest. Welcome back to countdown. Hostilities are on the rise again in ukraine as the east inches back toward war. Substantial movement in this story as the morning goes on. The ruble is all over the place, it went as low as 48. 5 which is dramatic. It was below 48 in the morning and then went to 43. There islike intervention, but youll remember the central bank earlier this week said they would step in to protect the Financial Security of the russian Banking System if they needed to. We have been waiting because the ruble has been falling precipitously. Thear ago it was at 32 to dollar. A 30 drop your today . Year to date . That is right. There is an issue of confidence at this point, capital flight. That is not just oligarchs pulling their money out of russia, but the man on the street russians are focused on the rubledollar rate. It is difficult to get our heads around but there was a time in russia when they quoted prices in dollars and you paid what the Ruble Exchange Rate was and then the government banned that. Everyone thinks in terms of their economic wealth and how much money they have in dollars. The ruble is falling, putin has made it clear that he does not want to defend it forever. He told me he did not want to blindly spend their reserves foreigncurrency reserves have slid 411 straight weeks. Ther ability to defend market now, they are at the lowest end five years. 428 . 6 billion. That is something the market knows and they will attack it. Billion. That is something the market knows and they will attack it. Spent 10. 5they billion dollars of the reserves last week alone. Sure they have 450 billion but with the sanctions there are a lot of people who want into that piggy bank. They could only support that for several months for they would have to abandon that. They have been managing the decline of the ruble carefully and it looks like this week they decided to let it fall to a point. It is not all negative for their budget . It is negative for inflation and confidence. We have seen anecdotal evidence of russians pulling their rubles out of banks. It is politically a bad sign but great for the budget because the russians get almost half of their budget from revenues from oil and gas which they sell in dollars and their cost race does not change. This will help them with their budget gap problem. Mario draghi is in the top billing for the lack of his presence, but yesterday did he raise hopes a little too far . Did the central bankers strike dovish a atone too tone . Welcome back to countdown. Lets get more on the currency markets. Stephen today. Thank you for coming in. Lets start with the euro, how week does it get after yesterday . Would like to start by saying this is a great time to be a currency strategist. There is a lot going on over the past week. To answer your question, what i would look at his policy diversions. This is what we are seeing is a key driver. We saw a relatively hawkish fed last week. A huge surprise from the timing and what they have done and now were seeing mr. Druggie come to the party as well. Draghi come to the party as well. The ecb is being very dovish, they are easing policy potential qe. This is creating significant moves in the Foreign Exchange markets. Trade,that euro dollar your morning note has done there. Very aggressive target on this and moved to 11 h over the next few months. And is that late based on or firstblown qe quarter 2015, what is the news of that target . Call that a very bold we had ahead of mr. Druggies conference. We think december is the lucky time for the start of fullblown ses are in purchases. It is very obvious that the trumps japans movement anything that mario draghi has done so far. Hers reverse some of these movements. So first question, who has the biggest bazooka . Clearly the japanese. The yen will definitely be the weakest major currency. Makenk the point we would is that it is much harder for mr. Draghi to match that. It will be harder for him to match that but he is going in the same direction. What he has done is probably curbed some of the rise but the trend here is at the yen is likely to be the weakest currency. Sheet will balance continue to expand while the Balance Sheets of other banks will continue to contract. And we will expect job data later today. How will the dollar perform. Is it the only currency they are buying . This is the crux of the matter. You picked a very important statement that mario draghi highlighted. Said our Balance Sheet is expanding. He said this before a weaker euro is a positive for the eurozone so he is giving the goahead for a weaker euro. Call, but whog else is hiking and the answer is perspectivefrom our we are calling for make next year. We said we had the euro and the yen on the weak side and the dollar and the pound on the other side. It is these four currencies that will be the key drivers here. We have a gathering of the great and good central bankers. Starsalled them the rock i take no credit, other peoples inspiration. Moment where be a the yen spanners up what mario draghi did yesterday. Is this the germans moment to say hold on a little bit we write the checks around here . It probably is but i dont think it will produce any results. November at that time the germans opposed that idea, but merkel went back to the ecb. What we are seeing in germany defender of the ecbesbank but knowing that holds the cards. This is probably a political pedaling back but really the ecb is moving because lots of columns have risen in recent days about how on the same page all the Government Counsel are at the ecb. Does that matter . There was some speculation that there was a division growing. Mr. Draghi clearly pushed that away. Ecbink the key point is the has to be political because there are so Many National banks to consider but they need to take of you and someone who is strong to drive that through and it does seem that mario draghi is successful in that matter, hence our view that he will get the backing in december. Is concerned about a repeat of 1937 policies and things got better, 22 primary aalers, 20 possibility of policy missed that. Is that just a great article or would you be concerned . What the traders are more worried about is asking about a policy misstep does not invoke confidence. I think it is a very important point here. If you are janet yellen and you are in control of this decision you have a risk. A much greater risk of this happening. , has liftoffrates and the economy falters and she has to go back to the zero balance. That is a terrible situation to be in. Much better to let the party go on longer. Think you very much. Strategy. Head of fx National Grid just reported their first half numbers. You dont what to mid miss what anna has no. Next. Welcome back to countdown. How are the fx traders positioning themselves ahead of the unemployment data . There is the dollar index just coming off a 5 1 2year high. It has had biggest weekly jump in 16 months. 234,000 is what were looking for in october. That would put us on course for the best year of job gains since 1999. We just had a conversation about a couple of things. Janet the party stwace rates for longer keeping lower, dollar yen that is the dollar complex and the dollar yen complex. 1. 25 is achieve nbdl the near term. What happens when your ba do you bigger bazooka is than everybody elses . The korean won heading lower. You can see there the korean won is at the top of the screen. 9. 49. Things could get a lot heavier. Taiwan dollar at a sevenyear low looks like that momentum could continue. The yen beginning to press on these curns. The euro touched a twoyear low after draghi reiterated his commitment to stimulus for the eurozone. The European Central Bank President said the bank will continue to buy bonds for at least two years. The weakening euro has growth momentum. Alongside heightened geoPolitical Risks could dampen confidence and in particular, rivate investment. In addition, insufficient progress and Structural Reforms constitutes a key downward risk in economic outlook. Luxembourg has denied it broke global rules to help hundreds of Multinational Companies dodge taxes. Secret details were revealed under Jeanclaude Juncker. And the french president hollande said he wont seek reelection if unemployment doesnt decline. He marked the Halfway Point of his fiveyear term in which he pledged new measures to help young people find jobs and said there would be no new taxes in france beyond those already announced. Lets move on. National grids earnings have been released this morning. First half profits were 1. 6 billion euros. Joining us now is the c. E. O. Steve holiday. Welcome to the program. Thank you very much for joining us. Congratulations on the numbers that seemed to beat estimates. I wonder if you can give us your thoughts on the global economy. You clearly operate on both sides of the atlantic. A lot of debate on how strong these economies are. I wonder if you can give us your position. Just a touch on the rulls anna. We invested 1. 6 billion pounds in the u. K. And the u. S. Earnings are up 16 . Our business is a network business. Energy delivery systems. Our own business is relatively inexposed to the economy as such. What i can tell you is how people feel about their bills. No question, particularly here in the u. K. , energy bills are the focus. Our challenge in keeping our costs down to a minimum is very, very important. In the u. S. , the economy is looking healthier and there is a huge requirement to invest a lot in very old infrastructure. As our economy begins to recover in confidence, we would expect our investments to grow in the u. S. Is there a Political Risk about the cost of living and energy bills being a big focus in the u. K. . Is there a Political Risk as we head into the election next year . 2 1 2 years of rigorous scrutiny of our business and the investments that we need to make on behalf of customers for the next eight years. We have a regulatory arrangement for these monopolies that goes ut until 2021. Were just getting on with our job now frankly. There are dreadful term keeps being mentioned, referring to whether the u. K. Might decide to leave the european union. Youre a business that operates in the u. K. And the u. S. Youre linked to the energy markets. Tell us what your opinion would be. What the companys opinion would be if we were to see the u. K. Leave the e. U. . It is very, very clear. Progressively linked with europe more at the moment trying to build euro connectors. Thats how we would make sure we had all the supplies. We would keep the prices down. Well reduce prices in Great Britain by a billion pounds a ear. Talking about blows of energy coming from europe. We have been covering the tension around ukraine for many months now here at bloomberg and a part of that story is the risk around energy supply. I know you said in the past that you dont see a risk to the u. K. As a result of what is your thoughts . We have an agreement between the u. K. , the ukraine and russia. Our own view of supplies were that we have a lot of diverse gas supplies today. I dont think in a supply sense we were at risk. The reality of today is gas prices are actually coming down at the moment. I dont see that as an issue for winter, 20142015. We have been following the oil prices. In terms over the energy markets, where do you see the prices heading, the ones that are relevant to your business . We consume energy opposed to impact it in our business with what is going on. Power prices now look very flat through the winter. Gas price, i suspect if we dont see a cold spell, will continue to be quite weak through the winter. Our key job is to make sure our networks are available and reliable and can transport the energy that people need. There has been a lot of conversation about whether the u. K. Is going to be vulnerable to power cuts over the winter. Is that something youre prepared for or do you think it is just not going to happen . The reality is 11,000 megawatts of Power Capacity is shut down in the u. K. The last two years. The margin as tight as it was back in 2005. We have already taken some action to ensure we have a slightly larger buffer of available supplies over what is in reality the peak halfhour demand that we might see on the coldest, darkest, wettest day. Im very confident we have the tools an capacity to make sure that we can manage through that. You have made us all feel chilly now. Better go put the heating on. Thank you very much for joining us. Back to one of our top stories. French president Francois Hollande mentaled he will be a oneterm president if he cant ring down inflation. This time, i mean, does he mean it . Will he not run again in two years . He said to the voters, be patient. He said this before. He has always said that if unemployment has not gone down, that was main focus of his presidency. It sf it has not gone down, he will not run again. Were getting closer and closer to him having to make some sort of decision. His line was i was elected to bring down Unemployment Rate. It is just kind of a statement of fact. If you have run defeated your predecessor on a promise bring down employment and you have not done it and you have extremely low popularity, obviously you just dont have a chance to run again. If he doesnt, who would run against him . Where are we with sarkozy . Do you think he will ever make a comeback . Where is your money . It all depensd on the Unemployment Rate. It is hard to imagine that it is going to keep picking up for 2 1 2 years. Lets say it does, though. There is a battle within the socialist party between Prime Minister who wants to call it a pro business, more liberal conomic line and the mayor who stands for a traditional party. Thats the battle that is being layed out. The Prime Minister takes obviously more flak. Whether he can hold on to that popularity for the next 2 1 2 years is another question. Ok. Well leave it there. Live from paris on hollandes half term. E. U. Commission president accused of turning luxembourg into a tax haven. Im anna ed warsd in london. Time for todays company news. Home depot says 53 million email addresses were stolen in addition to payment card information. A space outlaw and a talking raccoon helped disneys earnings beat estimates. Guardians of the galaxy is the top grossing movie in the u. S. So far this year raking in 330 million in ticket sales. At espn, costs rose in the last quarter. Disneys c. E. O. Said new deals are strengthen espns business for years to come. Espn has done a great job of strengthening their relationships with sports leagues and organizations and has extended a number of different deals, the most recent one being with the nba, but that doesnt kick in until 2016, 2017. But they have now tied up rights to the most important leagues, Major League Baseball, the nba, nfl, multiple College Sports packages through the next decade. And disney has revealed the title of the seventh film in the star wars franchise. It will be called star wars the force awakens. It is due for release not too ar away, in december 2015. That brings back a few memories doesnt it . R 2 d 2. inquiry. Jeanclaude juncker, may have cut some those taxes when he was Prime Minister of luxembourg. Hans . What do you make of this . Juncker is battling all of this away. They are hyping it up here in the u. K. Press, arent they . I can the u. K. Press had a field day with this. I remember reading certain comments in the u. K. Press. Juncker would have a tumbler of cognacs for breakfast. There is no love loss between the government. There are two ways to look at this. One is that this will make it nearly impossible for Jeanclaude Juncker to go on and have a hands on role. What they are doing in terms of cutting separate deals. The other way to look at it is that he would be forced to act and for once the e. U. Commission will need to have enforce those rules and take it like that. Take a look at some of the companies that are involved. We have amazon, fiat, starbucks, netherlands. Peps co, ikea group. Fedex. This all came about because an International Group of journalists got these documents that show just exactly how these companies negotiated a low tax rate with luxembourg. More will come out. Luxembourg itself is saying they have not done anything illegal. People are saying this was the policy of the government and juncker, he has been described as you mentioned by his officials as being serene. He did cancel an event, though. Manus . Lets see what the day brings. Hans nichols for us there in berlin. All things european. Markets open at the top of the hour. Michael houston could think of no better way to start his friday than here on countdown. He is laughing. 7 48 here in london. Where are these markets heading . Looks like were getting another bit of a leg up. All thanks to draghi. Is it . He didnt really say anything that i didnt expect him to do. People were saying it was quite dovish. He said they was going to that anyway. I think there was a concern about the divisions of the European Central bank. He smoothed them over but hasnt really said anything that he hasnt already said before. Poohpoohd him. He talks about unanimity. It is already out there. You cant go around and turn around and say it is back in. Ok. You said it now. It is out there now. Well go along with it. Well see when he speaks today. This could be his opportunity to b. N. P. Paribas were here earlier. He is doing a fine job. That is punchy. Draghi doing a fine job given the circumstances and the political hurdles he has to overcome. Q. E. , ive said it before and ill say it again. The political obstacles are do you think hell get back to one trillion exhangs in the Balance Sheet . He was talking about Corporate Bonds earlier on. Earlier this month. Thats where i would disagree with you. Everybody that has been in here said it is not as liquid as it used to be. Corporate bonds. Corporate bonds. Hello. What did we have in 2008 . C. D. S. Squared. Which central bank wants to take on uncredited or low grade credit . To get market working, you need to go down the credit change. You need to credit chain. You need to fix the Banking System. They have not done that. On a more serious note, does that move things forward . It does move things forward. There is an awful lot of work to be done. How are you going to resolve the banking problems in italy . They have not done that yet. To my mind, i think you would be mad to invest in given the fact that italy is continuing to contract and there doesnt seem to be any sign of recovery there. Gathering in france, it is going to be very interesting. Then there is nonfarm payroll out later. What do you expect this to tell about the u. S. Economy . Are we going to see this year as the strongest growth in the labor market since 1999 . I think so. Todays numbers could be quite punchy. The i. F. M. s this week, the jobless claims, we could see 275. Im relieved that we found something youre optimistic on. Im not being very fair, am i . Has the dollar really run its stretch . In terms of strength . I think it can go to 120 euro dollar. Im concerned that the fed might be uncomfortable with it below that. Will the fed be as hawkish Going Forward . When you have draghi saying things yesterday, we quoted this so many times that the e. C. B. s Balance Sheet will continue to expand while other Balance Sheet also contract. They are not going contract, are they . They are not going to be selling it is just going to stay the home. Same as the bank of england. He doesnt know how the fed might react too. Of course you the bank of japan as well. You have the peoples bank of china. There is an awful lot of weakness out there. We have seen a strong rally over the past three to four weeks. Dow jones up. S p up. I would suggest we can probably see a little bit more upside but how much more upside is there . You speak to a lot of clients. You walk around where are the clients . Are they in this rally . They are. Not so much in the equity rally. I think they are very distrustful of that. They are selling into strength. With the dollar, they are very bullish on the dollar. Were looking for 1 tony 20, dollar yen. You dont see this full blown q. E. At all . No. You know whats going to happen now. Listen. If im wrong, im wrong. What about the u. K. . Mark carney. Is that debate . Why are you all squabbling over a quarter of a percentage point rise . Get on with it. It is going to happen. Is it . I dont think it will happen before the election. Were starting to slow the down. Inflation is starting to come. Look at oil prices. Brentz prices have dropped to 52 pounds a barrel. That is going ease the cost of living crisis so it is going to bring inflation down. The bank of england, why would they raise rates . They didnt raise rates when inflation was 5 so why would they when it is 1 . A bit of a trend. August, september and october. Are we near the end of that down trend on table . We could we could have 152 but i would expect a bounce from 1. 5720. It ou timed the election is an independent central bank. If you look at the opinion polls and the fact that there is probably a a hung parliament. I look to the election of the strength of the pound. Peaked in december. Dropped from 165 to 140 between december and may. I think there is a good chance we could get one last rally. Back to 162 and then we could go back to 150 as we head into may. What do you make saying britains Industry Needs to start to get out there and said we need foreign labor and foreign people. I agree. Immigrants to come to this country and business is not behind, it is just staying too quiet and there is potentially a rerun of the Scottish Election debacle. I think there is an element of truth in that. Immigration is good for the u. K. Economy. m not a little englander. I would agree with you. Industry needs to get out there. Well leave on it that note. Thank you very much. Watch those Luxury Companies at the start of trading today. Move move is up next. Another day. Another record. What will the u. S. Equity markets make of the jobs report . John ferro has on the move next. Welcome to on the move. Im jonathan ferro. Just moments away from the start of european trade. Happy friday. Stocks are set to open higher this morning. A busy friday morning for you. Central bankers convene in paris. Janet yellen, kuroda and carney. Well be there to bring you the headlines that matter. U. S. Stocks make fresh record highs ahead of todays u. S. Employment report. 235,000 is the number of the day. Thats how many jobs economists think were added to the u. S. Economy last month. The Unemployment Rate is expected to stick at 5. 9 . Were looking at the russian ruble. It hit a fresh record low this morning against the dollar. As you crane lurches back toward pro russian rebels step up the blame game. So much to discuss. Ftse higher. Dax futures up by 36 points. We may well be getting a higher open. A good day to you. The question is draghis voice yesterday sounded convincing. Was convincing. He has put a price tag on it. Does he have the germans onboard . This is the dollar. This is the trade as you said, jon, 235 is around the consensus estimate under this year. A 5 yoif year high. 5