Transcripts For BLOOMBERG The Pulse 20150507

2 trillion has been wiped off the market. Guy you are looking at it right now. As you can see there is a lot of red on that screen. Anna bonds continue to retreat today. That is the german and 10 year bonds showing yields. Guy that is what happens when you strip things early. The latest concern comes from the Federal Reserve chair janet yellen. She said that debt markets may exist. Equity market valuations at this point are fairly high. Not so high when you compare the returns on equities to the returns on safe assets like bonds which are also very low. But there are other potential dangers there. Guy that is quite a combo. That brings us to todays twitter question. It is simple and straightforward, is janet yellen right . Anna it is a good place to start our next conversation. We are joined now by luke pick more. Luke hickmore do you think janet yellen is right . Valuations could be problematic. Guest i think she is right at some point but not yet. Fundamentally, the lows are too low. That will keep them therefore potentially another couple years. We do not think we are in an environment where the yields are going higher and higher. Where we all know, it starts with what we think is reasonable value. Anna why has the bundesbank yield done what it did . Guest it is possibly all to do with the oil price. We saw this big drop off last year and people think inflation will go away and the Oil Prices Climb up once again. Underlying all of that, we will probably get 1 inflation in europe. We will continue to get 60 billion from the ecb every single month. They may look back and say 65 was a good level to get in. Guy it took four years for alan greenspan, will it take four years for janet yellen . Guest maybe less. We need to normalize at some point. You have a rising Interest Rate environment but it will be slow. Slow to 2 and 5 . And the glide path to a higher rate environment slow enough that yields can stay pretty contained. That doesnt feel like it needs to be four years. Anna will markets keep their heads when rates go up . Six years of near zero rates and she is suggesting we could see a shark sharp jump. Will they keep their heads or overreact . Guest they are not very good at keeping our heads. Volatility is something we will live with all through this period. We get asked of these stimulative assets. It is an environment we have not seen before. The market causes volatility. We may end up getting used to that kind of volatility. Guy we need to talk about some of the other things going on in the market as well. Lets talk about greece. The greek price is adding pressure to the bond market across europe or in this is the greek government and its creditors still working on a deal. They spoke to the greek finance minister after a meeting with the italian counterpart. We had a very fruitful and intense discussion. The purpose of which was to change views on the best way in which the eurogroup of next monday, the 11th, could be turned into a platform for annexing the kind of agreement between greece and our partners which is not only going to resolve the current negotiation but also leads to a period after june that will allow the Greek Economy to recover and grow again. Anna lets get to athens. Marcus joins us from there. What is the mood like with regards to the talk in greece . Marcus pretty optimistic. We have been here before and had a lot of optimistic signals but it has been an optimistic week. Talking but the progress made and getting closer at converting all week the kind of noises we just heard from the italians italian finance minister. So tuesday evening when we had this strange statement from the greek government when they really blamed creditors for the deadlock, and then since then there has been almost near silence on this as if it never happened. It was a joint statement from the creditors saying they were united on this and that was really the only kind of response on the record. Everyone else carried on with the poor resume message. Mario draghi and frankfurt. The ecb yes they discussed the issue of emergency liquidity and on top of that, more importantly as well, raising the haircut with collateral use. They made it very clear that this was contingent. They were looking on the political development. They also had a call between tsipras and Jeanclaude Juncker with an issue to join statements when they talk about Pension Reforms and the labor market to very notable red lines on the greek side. They talked about modernizing the pension system. Guy how shall i read the fact that the greeks are hiring back loads of journalist and their cleaners. It does seem as if some of the structure reforms that were so critical to the troika seems to be reversed. Guest a lot of the rehirings, they said they are not going to hire additional people, in a sense what was already budgeted by the previous government, we will hire back people that we think were unfairly dismissed. The critical points of big pensions and labor, in particular on pensions there seems to be signs of a convergence on this point in particular and that is more important than the cleaners. Guy cleaners are pretty important, but thank you very much indeed. Anna there is a disruption in the bond market across europe and globally. 2 trillion have been wiped off the bond and equity markets, so we are back with luke hickmore. Lets talk about the greek situation. You said that only a grexit really moves the dial is that where we are. Guest we all of that europe only has one time on its clock, a 59 59. 11 59 58. Anna you mean europe always goes to the wire . Guest it doesnt feel like next week either. Every minute it is getting closer. We safely said our core view is to get through this one, but it is getting tougher and tougher to have the trust that greece will do what it needs to do and the politics in europe will continue to support them, and that is the difficult thing. So long as there is political will the solution will be found. For the market, the greek exit is only the the only thing that really shakes it up. It seems obvious to me that the Movement Inco terms of yields have very little to do with greece. It is important but becomes very digital. Guy how do i trade that one . You just cant of do what you have always done and ignore it or do what you have always done and sell . Guest how do you make money out of greece is possibly not the way to think about it. It is how you protect your capital if greece goes the wrong way. There will be some key dates coming up that you think about hedging your portfolio and positions. Guy the thing about all of these crises has been you never understand it. Your in a position where you say , i think that is uncorrelated but it probably is. Anna we are always thinking about the last crisis. Guy so everyone who i am thinking about and trying to understand the relationships between asset classes, is there anyway i can map that out . Guest and make some positive returns . Guy or at least protect myself. Guest that is the point, if you put your hedges in now you are paying for that cost for a long time. At least you can control the cost of the hedges and that is the best way of dealing with it. It is not ideal and it is not great but there is very little in this situation. If greece goes you ask questions about the viability of italy and spain as a whole. That is the obvious place the markets will go if that happens. Protecting against that could leave harm. You have to come back fundamental work on. What do you believe about that . Our call is that they state in stay in. Guy we will talk about oil. What else is on the radar . U. K. Rod been provider broadband provider bts fiscal earnings rose 3 . They have been encouraging customers to sign up for highspeed web access. Anna europes secondbiggest maker of car parts leaves a positive impact on Foreign Exchange if x. Positive change fx. The continental ceo will join us later in this hour for his first interview of the day. Guy we go to the ballot box today to vote in the general election. 650 mps will be voted in. Around 50,000 polling stations open at 7 00 a. M. And will close at 10 00 p. M. U. K. Time. Ed miliband and his wife are casting their votes inco don caster. In doncaster. Anna at 6 00 tomorrow morning we will bring you 12 hours of breaking news, Market Reactions and analysis from westminster and the city tracking the outcome of the u. K. General election. Guy have i mentioned what we will talk about next . We will talk about oil. It has rallied but we will look at the drilling boost versus the supply story. On a girl anna staying with oil we will look at how the price and oil is impacting this companys bottom line. Guy boy will hear from guy we will hear from frank gore and later in the show. A slightly less large haircut is the way to put it. Looking for to that, that is coming up at 9 40 a. M. Anna welcome back to the pulse , we are streaming live on bloomberg. Com and your phone. Guy a record close since january eating a 2015 high of just under 70 per barrel. What will happen next . Our oil watcher is ryan chilcote. Talk us through what we are seeing in terms of the stalling . Ryan yesterday was an interesting day. Yesterday at 10 30 a. M. In washington, d. C. , just as we get it every wednesday from the statistical arm of the department of energy. The expectation was, crude inventories would rise. As they have for the last four months. But we learned that they fell. Or the first time in 17 weeks. You would think that if you have a less supply of oil the law of supply and demand suggests that the price of oil should go up. But it actually fell. It fell by about 2. 5 and is still kind of down. The reason for that and what we should be exploring, is because traders out there are paying attention to other signals they are getting in the United States, including from shale reducers. Anna , how serious will that the . Will that be . Ryan originally we thought of oil got to 60 a barrel, which is roughly where it is in the United States then that would be gloom and doom. But that has been very good for them in the sense that they are now saying 62 oil can be like 100 oil. In other words, maybe we can be rough double even with the oil price where it is now and a lot of the shale producers are starting to say, we heard from Occidental Petroleum that they think they will add double the number of barrels this year to their production that they thought earlier in the year. They think that now is the time to get back producing again. The danger is if the shale producers can now come back in, they start producing and you end up with another glut and that pushes the price down again. Whereas a lot of people are expecting an l recovery or fallout to the oil prices were it plummets and stays low, people like Daniel Juergen are saying, what we should be looking for and this is what you should watch, a lot of volatility and a lot of w light recovery or you have peaks and troughs and chill producers are the swing voters. They produce when the price is right and pull out when the price is wrong. Expect more volatility, but i wouldnt necessarily expect it to continue as it has. Anna sounds like swings and roundabouts to me. Guy alphabet soup. We are back with luke hickmore. This is totally illogical. You have a ceiling and a floor and you will trade in between. I think guest i think ryan hit the nail on the head. Guy it comes in and out. Guest you can shut the rates off ready quickly and inevitably send them back on quickly as well. I think the w shaped recovery is a fair way of looking at it. You use volatility to pick up decent companies. We were buying bonds in than early 80s. There are opportunities around in these volatile markets and you have to take them when you see them. Anna senior asset manager luke pick more luke hickmore. Guy we will look at the numbers and see how they compare with estimates in a couple minutes. Anna as we had to break, check out these pictures of nigel farage, the ukip leader posing for a photo to cast his vote. Guy welcome back, you are watching the pulse. Were live on television, the radio, streaming on your tablet, phone and on announcer bloomberg. Com. Anna europes biggest Engineering Company siemens announced another 4500 job cuts. Lets get to our reporter alex webb in munich. What is behind the miss . Alex premuch everything. They have nine divisions and all of them but two declined to profit. Theyre trying to push into more Energy Distribution extraction equipment and people are not buying that stuff. The reason the ceo had given for why things might be ok is if you are spending more less money buying oil than you might invest in your factories but that hasnt happened either. Guy are people questioning the case a strategy ceos strategy . Alex they agreed to spend 8 billion on a company that makes a lot of equipment for fracking. Theyve gotten out of this fracking industry since Oil Prices Declined so people say why pay crazy multiples for this American Company . Maybe they will get lucky and the European Commission will block the deal. They still say they want it to happen and it should close by the summer. That is the big question mark. Alex there is a call in 10 minutes time where i intend to put the call. 2200 will be in germany. We dont know the divisions affected. Power and gas is a problematic division and they say that they have 15 billion euros worth of revenue which is problematic and probably unprofitable and those are the divisions largely affected. We will have to try to work out where they are. Anna thank you, well have you back in the next hour. Alex webb joining us live from munich. Guy coming up, the chief executive joining us as the Company Boots their sales for the fourth time this year. Anna just a reminder, you can follow us on twitter. Anna welcome back to the pulse. Live from the European Headquarters in london. Guy these are the top headlines. Anna australian employers cut jobs in april. After the investment boom on lines weakened the currency. The number of employees fell from 2900 from the month earlier compared with economists forecasts. Guy Benjamin Netanyahu succeeded in forming a new government. He has a queue of outstanding offers. He struck a laugh lastminute agreement with a jewish party giving him 51 seats. Anna the u. K. Goes to the ballot box today to vote in the general election. 650 mps will be elected as voters get the chance to decide the makeup of the next parliament. Around 50,000 polling stations across britain will be around london around the u. K. A reminder from 6 00 tomorrow. Guy 12 hours of breaking news Market Reaction and analysis from westminster. The city and europe tracking the outcome of the u. K. General election. Anna lets talk about the earnings story. Earlier this morning we got fullyear numbers from bt. They sound up the for future growth. Here is caroline hyde. What were the takeaways . Caroline digging into the numbers before we talk about the mega acquisition without the mobile company it is dying, it is already driving up profits some 3 . They were beating analyst expectations, we see that 121,000 people were added to their Broadband Customer base. It used to be a former telephone monopoly. Now it is the biggest provider on the internet. 120,000 new customers is the equivalent to half of the overall market for new Broadband Customers. Seriously lapping up market share when it comes to the internet. We say we will continue with modest growth. They did take a bit of a hit. When we spoke to people within the company they are saying that growth is being driven by their investment in fiber. Interestingly 40 of their customers are upgraded to the more costly but asked her broadband. Theyre also investing in sport. They are expanding their Global Services business overseas. That is the outsourcing business. By cutting down cost, they are able to boost profitability. Quite a story for the year ahead. Looking at the opportunities largely because of m a. It is about a 12. 5 billion pound investment. They are bringing together the biggest internet pair in the biggest mobile provider. Together it will be the biggest mobile company in the u. K. Offering quad play, as we call it. You have mobile coming from ee and bt providing not only broadband, but television as well. They think that ee alone will and 25 to their profit, but the sport content, bt sport launched in 2013 and they spent billions on it. 320 million per season which is what they are coughing up to all of this makes sense when they feel this is the way we want to buy our content and the way we want these mobile subscriptions. Quad play is the future and that is what the cfo told me earlier. Class know from our Market Research that 80 of people are interested in the area and we feel that we can reach more levels of penetration. I will give you absolute forecast but what i will say is it a driver for growth in the future. Caroline the problem for him is everyone else is in on that particular play as well. They looked at europe and the trends that are going on and the way people want to buy their mobile and communications and tv. Now the competition is rife. They have an in a deals springing up everywhere. Think of the activity going on in the united kingdom. You already have virgin media offering the full key areas that they want. They have been offering quadplay for a while and suddenly vodafone has said they will be offering home phone to build on as well tv services and the internet. Meanwhile sky which offers broadband and tv is offering mobile contracts next year. They have been getting into bed with 02. So much to process. All i can say is the trend for quadplay and consolidation. Tony telling me that as well. Expect more m a this year in the u. K. Regulation is a bit of a challenge for them. Off come starting a Strategic Review into the tnt market. There particularly going to be analyzing the bp role. They have a Company Called open reach which provides internet and fixed line phone access to other companies. Is it too much market power. This is what some of the competitors are saying. Bt responding saying, we will not invest msu allow us to keep open reach and not spin it off. A little bit of teteatete going on there. Lastly, the big challenge is the pension deficit. They promised to pay that down. They have already chucked and quite a lot of money. It seems that the deficit will be difficult to tackle in the years ahead. Anna thank you caroline. Guy bt getting into sport and we are getting into sport now. One of the biggest players and he has been speaking to bloomberg. We sat down with frank warren who managed some of the biggest names in british fighting. Nigel been, ricky hansen, he started by asking, what is it like being a successful boxing promoter . Dont know really. Mark you have been doing it for a number of decades. Four decades. Are there skills that are separate to other is this is . I think there are. You can be entrepreneurial and you have to have knowledge of the sport and it is a strange old sport are you it is so diverse at the moment. Promoters and backgrounds that they come from. I was born and raised on a counselor stage. And bob aaron was a harvard lawyer. He left mark how do you find mixing with them . The bob ahrens and don kings don king and i were partners for a while. You have your ups and downs with everybody. Whatever he says, if he is going to do it that is the way he has always been with me. Obviously there are other people who dont like him or dont like me. But you look at football mark they are at each other. Him and ferguson dont get on. You look at virgin and british airways. Mark do you respect them all . I respect anybody who devotes their time and is passionate about what they do. Because you are close to it, you have to be a bit dispatch and it and step back and look at what you are doing. If you have belief in what you are doing and if you believe in the fighter youre working with you have a good chance of making it work. More importantly, the boxer and most boxers come from humble backgrounds, you have a chance to make a lot of money and a chance to set themselves up and theireverybody is different. In all walks of life, a footballer stops playing football and suddenly has difficulties. Some are good with money and some are bad with money. Mark how difficult is it to be in the public eye . You look at woody harrison. Do you feel sorry for them . Of course you do, but i think they would have that problem whatever they did. Thats how people are. People talk about muhammad ali with parkinsons disease they say it was brought on by boxing. If youre going to get parkinsons disease, you are going to get it. Footballers have had it. Actors have had it. Alzheimers, how many Prime Ministers had . Margaret thatcher had that. If youre going to get things they will happen to you. It doesnt say you will get it because you are a boxer or sportsmen. It just happens to people and it is how they deal with it and the support they get. A lot of boxers do get support but as many as there are successful boxers, there are a lot of not successful. Like all walks of life. You have a top tennis player and the guys scratching around. That is how life is. Mark what did you learn from don king . Don king was fearless in business deals. He would go in there and say i am doing this and sometimes i never thought it out. I would do the job and then he would make it work. Absolutely fearless. He didnt get into the sport until he was in the 40s. He came out of prison. A black guy who grew up when blacks didnt have votes. He came into the sport and totally turned it upside down. Muhammad ali was around, that was brilliant, the most famous sportsmen of all time. Certainly in the last century. He was there and dunking he got it out there to closedcircuit he was out there and don king , he got it out there to closedcircuit tv. Depending on tv revenue and went to cinemas which became paper view. Now it is pay per view. Now it is becoming streaming. Mark is he number one . In boxing promotion . He was a great promoter. He is 84 now. He was a great promoter. Mark arent all promoters could promoters of themselves . I suppose they are. Guy frank warren talking to mark barton. Equity markets under a bit of pressure this morning. That is the picture in europe. Anna bigger losses than we saw in the u. S. Yesterday. The euro stoxx 600 down 1. 3 right now. Guy is yellen right . Are they a little high . Fairly simple. Is she right . A reason whether she is right or wrong would be good as well. We will take a break and see you in a moment. Anna welcome back to the polls. Guy these are the Bloomberg Top headlines. Nintendo has forecast its annual profit doubled, beating analyst estimates. Based on the latest wii model and the entry into the smartphone game market. Anna a Bank Increased its stake in apple, exxon ed johnson johnson. Taking guy the reports of increase in firstquarter earnings as the weaker euro helped sales beat analyst estimates. The bridal know you greet the rival gnocchi a agreed to buy alcatel. Nokia agreed to buy alcatel. Guy bt is unchanged at the moment but if you look for the bottom of that you can see the away team french bond trading at 3. 1 . A touch of 1 in the first time we have been there since december the eighth. Prices continue to fall. Anna after boosting the amount of money the bank can access. Elliott joins us on set. The ecb is getting tough but doesnt want to push greek banks over the edge. It is a dilemma which is a greek word. Doesnt want to push them over the edge and doesnt want to preempt the political process. It is like the finger hovering over this button that will make like life tougher. Also, in the last few minutes it had some headlines from the french finance minister. I suppose the one that caught my eye is that may the 11th is when the eurogroup finance ministers are meeting in brussels and are likely to be a positive day for greece talks which would suggest that perhaps it may not guy the ecb has stopped trying to be political but it is hard to do that. It is part and parcel of the Political Trust us. It is hard to disentangle. Guest it is all part of this process, because by having that threat hanging over them it does concentrate that the greeks know they have so many millions of euros. The banks need the emergency liquidity. The toughening of the conditions associated with them getting it will make things even harder for the greek banks and by virtue the greek government as well. Anna finance ministers meeting on monday. We have the meeting on monday and it is the next day the loan is due and there is a raft of deadlines for repayment over the next few months. We do the music as we said in the french finance minister and indeed from others. It is hinting at more of a warming of the atmosphere in terms of negotiations. The one thing they agree on is that greece finding itself in more trouble. Anna lets it along the positive vibes last. Guy lets move on and talk about what else is coming up. Plenty of coverage of the markets. It seems to be gathering pace. Anna welcome back. Europes second largest tire maker has boosted its Sales Forecast for a third time this year. Joining us for more is the continental cfo, Wolfgang Schaefer who joins us from germany. Can you give us a little bit more . Oil prices in the euro and how confident are you that voting factors will continue to boost your numbers for the rest of the year you year . Guest our forecast includes that basically the weakness of the euro which we have seen now for a while will continue to route the year. Throughout the year. We expect the oil price to recover only a little bit in the fourth quarter. We have a team of development. For most of the year. Guy you say low prices at the end of the year, what will rise to . Guest there are easier forecasts. You see above the line had in the First Quarter. Anna lets talk about the performances. The chinese were pretty cautious, what do you see . Guest i am talking about the car production, we saw an increase which is a little bit below the 11th. We could offer service that the chinese carmakers just a local chinese carmakers are more successful. For us, this does not matter because we have business with all of the carmakers. As long as the market is growing , this is fine for us. Our expectation for 2015 is that it will continue at about that rate. Guy how many meetings have you had about more committee and and a m a . Are you talking about that regularly the moment . Are you looking around the world for targets . Guest we are as we said already before. We went to increase that part of our business which is not delivering only to the carmakers but as well into industry markets. We want to get a quarter of the business up and we are watching the market. By the way, we are looking as well at companies which could give us another boost to our technological competence in the automotive sector. Anna how will you measure success in that diversification . How much of your business do you want to be from the other sources . Guest actually we have a target of 40 of our business in the area. No directive delivery to the automakers. This quota at the moment is 30 . This longterm target is drawing there he fast to increase the quota of the nonautomotive business. That is why we look at m a opportunities. This is a longterm target. Anna thank you, looking shifter , confident Wolfgang Schaefer continental cfo. Guy we will talk about the markets and a bit more on greece. When can you ever have not more ungreased . The bond market more on greece. The bond market selloff is a big subject. More of the pulse after the break. Janet yellens warning. Equity market valuations are quite high. Guy the german engineering giant cuts jobs as a fall in the Oil Price Hits profits. Anna u. K. Voters go to the polls today. Guy good morning to our viewers in europe. Good evening to those in asia. A warm welcome to those waking up in the United States. Anna this is the pulse. Guy the markets are a bit of a story, arent they . The global selloff 2 trillion have been wiped off the global bond markets since the beginning of last week. Anna bonds continue to retreat today. That is the german, the italian and the french 10years all showing deals moving higher. Guy the french is above 1 for the First Time Since december. Janet yellen has warned about high valuations. Janet yellen i would highlight that equity market valuations are quite high. They are not so high when you compare the returns on equitys to the returns on safe assets like bonds which are also very low. There are potential dangers there. Anna that brings us to todays to it or question. Is janet yellen right . Do you think valuations are quite high . What are your thoughts . Thepulse. Guy what is it they say . Never fight the fed. Two greece n to greece now. The greek government and its creditors are still working on a deal. Bloomberg spoke to the greek finance minister after his meeting with his italian counterpart. We had a very fruitful and intense discussion the purpose of which was to exchange views on the best way in which the eurogroup on next monday, the 11th, can be turned into a platform for completing the kind of agreement between greece and our partners, which will resolve the current negotiations and lead to an attitude that will allow the Greek Economy to recover and grow again. Anna lets go to athens now. Are we close to a deal of any kind on monday . I dont think so on monday. What we are looking for his progress some serious convergence on the red lines that we have been talking about for so long. The climate has changed a lot. It is much more positive. Greece is backing down from some of its main red lines. We could have the first serious signs of convergence here. Guy lets talk about some of the stories you have been writing. You are putting out some fantastic stories. One of them really caught my eye about the great banks greek banks curbing asset trading. It is only natural. If you are in greece and you have these negotiations, available credit lines are getting down as the weeks go by. It is only natural for the greek banks to be able to do a very complex derivative transaction. When you go down to the point where you cannot do an fx track it transaction, then things are severe. Thankfully, the system is fine at the moment. The greek banks can accommodate the client needs on a daytoday basis. If we do not see something strong next week and there are signs that the ecb may increase the haircut on the greek banks collateral some of the greek banks will not be able to meet their needs through the greek banking system. Anna thank you so much. Guy what else is on our radar this fun thursday morning . Let me tell you. The biggest u. K. Internet provider has been adding services to encourage customers to sign up for highspeed web access. Anna continental has boosted its forecast for the third time this year. They see a positive impact from Foreign Exchange fx and the low oil price. Guy the u. K. Goes to the ballot box today. 50 mps will be elected. Voters get a chance to decide the makeup of the next parliament. The polling places open at 7 00 a. M. And will close at 5 00 p. M. U. K. Time. Anna join us from bloomberg on at 6 00 tomorrow. We will bring you analysis of the u. K. General elections. Guy it is going to be a long day, but a good day. Our shale producers about to make a comeback . Anna british boxing. We will hear from frank warren. Guy janet yellen. U. S. Jobs data is due tomorrow. Guy welcome back. You are watching the pulse. We are right here in london. Anna oil has stalled. It hit just under 70 per barrel. Ryan chilcote is here. Tell us all about the stall we have seen in the oil prices. Ryan yesterday, you were paying attention to u. S. Inventories. The expectation going into them was that we were going to learn that the Oil Stockpiles in the u. S. Had risen by 1. 5 million barrels. Actually, they fell for the first time in 17 weeks. Supply falls. The price should go up. In fact, we got a price drop. The price fell 2. 5 over the next five hours and continued. It is still down a couple percent from where it settled after people reacting to that. That is because that is not the only thing people are paying attention to when they are buying and selling oil. They are paying attention to this resurgence of activity from the shale producers. Guy they are back. Ryan they are back. We spend a lot of time on all of the shows talking about how 60 per barrel was going to kill them. They spent 10 months costcutting. There was this one guy, this Big Russian Oil executive, who said that the strongest ones will be back. He said this will be the cleanup of dot com. It appears to be that way. We were talking to the outgoing ceo of Occidental Petroleum. He was saying, we are in a much better position now than we anticipated we would be six months ago. Their Production Growth targets were revised yesterday to 14 . There are a whole slew of shale producers ready to get back into the game. The danger is that as they get back into the game they create another glut and the price goes down. Guy the marginal cost of production keeps going down. So they can keep competing. A lower lid on the price. Ryan yes, i think there is something to that. What we have ignored so far is opec or at least saudi arabia, gets a vote and they are pumping away. They are pumping away. They are investing massively. There is much more oil coming online from them. They are not holding back supply. I think at least because of the shale producers, what a lot of people are starting to think is forget this idea of an lshap ed outcome for the oil price. What you should expect is a w. The price goes down the price comes up, the shale producers come back in the game they create a glut, the price goes back down, they exit, and you get this backandforth you always end up with a not very High Oil Price for an extended period of time. It is what exxon has been saying. It is what bob dudley from bp has said. Guy the front and comes up, the back end comes down. He used to look kind of like that. It is now a much shallower story. Ryan the only caveat in this whole conversation no one saw the price of oil going up 40 if you talk about the u. S. Benchmark. In like seven weeks or something in the middle of march. It was really dramatic. Nonetheless, that is only four months. Everything we say, not that we want to belittle ourselves, it may actually turn out to be different. The current thinking is that we are in this range. Anna we are in good company and we just spoke to the ceo of continental out. Ryan one thing you can bank on his volatility. You can trade the volatility. That is one thing that you can be certain you will get plenty of when it comes to oil. Guy that is oil. Lets talk about telecoms. We got earnings from bt. Earnings are rising. The company is sounding upbeat. Lets find out why. Caroline hyde. What is the takeaway. Caroline profit was up 3 for the full year. It was the monopoly, the telephone monopoly, now it is all about rod band. This is the biggest provider of the internet in the united kingdom. This is where they added customers. 121,000 is what they managed to up in the last quarter. 49 of the market, in terms of growth. Clearly, they are managing to lap up the market share. Where is the modest growth coming from for the next year . It is coming from investment in fiber, in broadband. 40 of users have upgraded themselves to superfast broadband. Meanwhile, you are investing in sports. Bt sports 5 million of us are using bt sports in the home. And expansion of Global Services overseas. They got hit by the strength of the pound and that particular unit, but it is still an area of growth in terms of expansion. They are trying to show up in terms of the opportunities they have. The real opportunities are the mega acquisitions they are making. Lets look at the 12. 5 billion pounds they are flashing on ee. They looked at europe. They transported it to the united kingdom. We want all from one provider. You want your broadband, your landline your mobile, and your television. Bt can offer the mobile to its already other triple play, by the purchase of ee. They are already in bed together. They are already offering mobile subscriptions. They have a commercial agreement already. Already, they are offering that. It would increase by 25 when the deal is increased completed. They are going through the regulatory motions as we speak. They are spending big on sports. They have spent billions on bt sport. 320 Million Pounds per year is what they are going to be paying for the premier league per season. They believe in the future of the quadplay. I spoke to the chief Financial Officer of bt earlier and he really did extol the virtues of growth in this area. We know from Market Research that 80 of people are interested in this area and we feel that we can make reasonable levels of penetration, hence the acquisition of ee. Im not going to give an absolute forecast, but it will be a driver of growth for us in the future. Caroline they are not the only one offering quadplay. Everyone has got in on the act. They have also got in on the m a act as well. Sky is teaming up with mobile. You can get your tv and phone opportunities from one provider. Virgin is offering it. You have many areas of ability to get yourself into quadplay. How can they fend off competition . How can they fend off the regulation . There is a new investigation Strategic Review, they are calling it of competition within the Telecoms Market in the united kingdom. An investment issue. Many have thought that bt are taking their eye off the ball when it comes to internet and fixed phone infrastructure. They have a separate part of the business called openreach. Vodafone is saying, they are not investing in us. This is going to be a bit of an issue for them to tackle. They have a pension deficit of 7 billion pounds. They are paying that off, but the cfo could not tell us when they will manage to trim the deficit. Anna thank you very much. Guy coming up, if all in profit leads to another round of job losses in siemens. That story is up next on the pulse. Anna welcome back to the pulse. Guy let me run you through some of the Bloomberg Top stories. Australian employers have cut jobs in april. A resilient currency weekend. The competitiveness of local industries started to fade a little bit. Anna the israeli Prime Minister Benjamin Netanyahu has succeeded in forming a new government and secure a fourth term in office. He struck a lastminute agreement giving him 61 seats in the 120 member parliament. Guy the u. K. Goes to the ballot box today. Voters get a chance to decide the makeup of the next parliament. The pull will be open from 7 00 a. M. Until 10 00 p. M. Anna from 6 00 tomorrow morning, we will be here bringing you 12 hours of breaking news, Market Reaction and analysis from westminster, the city, and throughout europe tracking the outcome. Guy we are excited about that, but that is tomorrow. Today, we are excited about what is happening in the bond market. Let me run you through some of the main 10yearss. The german bond is up by seven basis points. The italian bond is up by. The german bond hit a low a few days ago and we are back up aggressively. Jonathan ferro joins us on set. It kind of softened off a little bit yesterday. Jonathan we will play the bank game in just a moment. When you see the german 10year yield up 18 basis points it is one of those moments where you say, is that right . It shocked us in the last 20 minutes. A move of 18 basis points was really interesting. Germany, france, less so on the periphery. The markets that had the big rally are the ones getting back to it. The timing was perfect. A lot of people thought, bill that is going to be difficult. We can play the blame game, but i think it is really difficult to pin it on something. There is a debate out there. It could be the end of a big bull market or a shortterm correction. There is a hell of a lot of volatility. Isnt oil . A lot of people have different views. Guy what is it that spooked the market . The oil market has come up a little bit, but relative jonathan the swing from one extreme all the way to the other with no clear catalyst. It is having a clear impact on the euro. The euro has moved back toward 1. 14. That interconnectedness between the bond markets, the euro, the equity markets is very much there this morning. Anna we asked luke pitch more hitchmore when she talked about when he talked about janet yellen talking about things looking a bit pricey. They are right at some point in the cycle the central bankers, when they start to warn about something. Guy it is direction risk. Getting it right. Greenspan got it horribly wrong. Four years it took. Jonathan they have shaped the Market Pricing. Guy that is the interesting thing. They are having a much take bigger impact on the Market Pricing this time around. When you get Long Duration, you are getting into more difficult trading environments, i would argue, and they force the Long Duration and you look at where the big selloff sevcon. Selloffs have come. They have been forced into positions and that is where you see the biggest moves. Jonathan a lot of people will be out there saying, remember qe from the u. S. . Some people will be talking about that move. On the day, as an analyst, all you can do is look at prices. Anna we have the jobs number up, but we will talk about that later. Guy is janet yellen right . Tweet us. It use thepulse. We will see you in a moment. Anna welcome back to the pulse. Guy europes biggest Engineering Company siemens announced another 4500 job cuts after the Second Quarter numbers missed estimates. Lets get to alex webb in munich. First, the numbers. Alex it is basically the oil price. It has dragged down profit. The ceo had hoped that the money that had become available from people not spending it on energy costs would be invested in batteries and so forth and that has not happened either. Not a great set of numbers. Anna what are the implications for the ceo of the business . Alex he is coming under increasing heat because of the investment he is making in the oil and gas industry. He has had to really boost of the job cuts. He was saying that a third of the 13,100 job cuts they have announced are purely because of the oil price and the oil price development. He is really cutting jobs and production. It is in a depth of strategy. An adaptive strategy. Guy alex, nice to see you. Thank you. Anna the Bloomberg Top headlines. Japanese videogame giant nintendo forecast its annual profit to double, on the latest wii model and their entry into the smartphone game. Guy Swiss National banks made First Quarter bet on u. S. Equities. U. S. Holdings are now 30 7. 5 billion. Anna alcatel beat analyst estimates. Rival, no nokia offered to buy Alcatel Lucent and the takeover will be completed by next year. Guy one of the biggest players and the british fight game and he has been speaking to bloomberg. Mark barton sat down with frank warren, the boxing promoter who has managed some of the biggest names in british boxing. He started by asking him what does it take to be a successful boxing promoter . Frank i dont know really. I have been doing it for a number of decades. Mark what is the secret . Are there skills that are separate from other businesses . Frank obviously, you have to be entrepreneurial. You have to have knowledge of the sport. It is a strange old sport. It is so diverse at the moment. Who the promoters are and what backgrounds they come from. Most promoters bob aaron was a harvard lawyer, part of the kennedy administration. Mark how do you find doing business with them . Frank don king and i were partners for a while. You have your ups and downs. With bob whatever he says, if he says he will do it, he will do it. Obviously there are other people who dont like him and they dont like me. You look at football. Marinio. Mark they are at each other, arent they . Frank it is how it is. You look at version and british airways. Mark do you respect them all . Frank i respect anybody who devotes their time and is passionate about what they do. Boxing is a tough business. It is tough for the fighters. You have to be a bit dispassionate sometimes and step back and look at what you are doing. If you have belief in what you are doing, if you believe in the fighter you are working with you have a good chance of making it work. More importantly, the boxer, most boxers come from humble backgrounds, have a chance to make a lot of money they have a chance to set themselves up and their families up for a safe future. Mark did you help them all with that . There is one behind your left shoulder. [laughter] frank we had a great relationship. He made some serious money on my promotions, as have i. You cannot get involved and that side. It is better that they have an independent account and advisers to look forward look over that side of their career. Mark who had business acumen . Frank boxers . Mark the ones you have managed and promoted. Frank in their different ways. I dont think he achieved of what he was capable of. Nas should have been the best. He took his eye off the ball. He started getting soft. He started listening to bad advice, in my opinion. He got booed out of the ring in his very last fight. Frank bruno has done very well. He has set himself up. He had some mental problems. He could not do with his retirement. Everybody is different. Footballers have difficulties. Some are good with money, some are bad with money. Mark when these guys have difficulties, it is in the public eye. Do you feel sorry for them . Frank of course. I think they would have the problem whatever they did. That is how people are. It is like people talk about muhammad ali with parkinsons disease. They say it was brought on by boxing. If you are going to get parkinsons disease, you are going to get it. Footballers have had it Prime Ministers have had it, doctors have had it. Margaret thatcher had that. If you are going to get things, they are going to happen. It does not mean because you are a boxer or a sportsman, you are going to get it. It just happens, unfortunately. It has to do with what support they get. A lot of boxers dont get support. As many as there are successful boxers, there are a lot of not successful. Like all walks of life. You have the top tennis players and the guys who are scratching around. That is how life is. Mark what did you learn from don king . Frank john king was fearless in business deals. He would go in there and say, i doing this. Im going to do the deal and then he would make the deal work. Absolutely fearless, but quite a genius. He had come out of prison. Black guy. Grew up poor blacks did not have votes. He came into the sport. He just totally turned it upside down. Muhammad ali was brilliant. He was the most famous sportsmen of all time certainly in the last century. He was there. Don king got it on closedcircuit tv. It then became payperview. Now, it is becoming streaming and you can watch fights on that. He has mark been there all the way. Mark is he number one in boxing promotions . Frank he was a great promoter. He is a great promoter of don king as well. Mark all promoters are good promoters of themselves. Frank i suppose they are. Guy frank warren talking about boxing. Equity markets taking a bit of a ride this morning. Lets take a look at what the numbers look like. We will do that in a few minutes. Our next guest thinks it could be time to break out the champagne on european corporates. Anna as we had to break the u. K. Goes to the ballot box today to vote in the general election. 650 mps will be elected as the registered voters get a chance to decide the makeup of the next parliament. Polling stations will close at 10 00 p. M. U. K. Time. Prime minister David Cameron and his wife cast their votes earlier. Anna welcome back to the pulse. Guy stocks are under pressure this morning. It is the third day we are down. We are down by 1. 6 after reaching session lows yesterday after fed chair janet yellen said equity valuations were quite high. The head of global and European Equity strategies at ubs joins us. Janet yellen says stocks are quite high. Would you agree . In the u. S. That is a fairly full multiple. The earnings are quite extended. You have had six years of economic growth. Corporate profits come through. Yes, in the u. S. I think neutrals are fully valued is a fair expression. Do you think bond yields are incredibly cheap and offering value . Do you think other assets are offering value . Not so sure. Anna she would taunt to compare them to the bond market. Stocks might be expensive. Is that what you are comparing equities do . Nick i think if you look at them against bonds, they do look cheap. There is the opportunity cost. The yields are getting even. You are still only getting 16 17 basis points for holding these bonds. That means the opportunity cost is going to be considerably lower. Companies can borrow. Many companies in europe can borrow below 1 . They can borrow cheaply and buy back shares. Guy we had a brief chat in the break. Inflations are beginning to come back. Breakevens are starting to price a little bit of that in. We are a long way before we need to start worrying about inflation. Nick yes. But we were very worried about deflation. The move has been pricing out the deflation threat. In the eurozone, we saw the headline Inflation Numbers last week at zero. It was not 0. 6 at the beginning of the year. Other commercial prices are up. Bond yields are back up across the world. I think that is telling us that centralbank policy may be will work. Maybe markets are giving the central bankers a bit of credit for what they are trying to do. That will be a reflation trade. Anna what do you attribute these moves we have seen then, what do you attribute them to . Writing off what they did in 2015 in some cases. Is it all about what the inflation takers are telling us . Is it what the inflation central bankers have done . Is it what bill gross said . Nick i think it is a mixture of things. Higher bond yields are generally good. If they move as quickly as they have done in the last two weeks it has been crazy. Some people have lost money, some people have had leverage long positions. Maybe they had a long position in equity or in dax and they have to unwind that. Nearterm trading ramifications have been quite negative for equities. I would argue the reason we are writing is that Inflation Numbers are a bit that are in the first move we saw when the trends started to break is a lot of algorithmic traders had to trade their trends. Guy the euro back up to 1. 14. If that keeps going, are you going to have to revise earning expectations for european stocks . Nick the base effect is still pretty powerful. At the beginning of march, we said look we had been very bullish on the exporters. The companies in europe exporting to the u. S. We returned a bit more constructive on the european domestic story. Without the currency had to have the biggest bond move. I think this will be some sort of range. It is partly also telling you that European Growth is better. Turning around the other way, we saw the urine if we saw the european bond yield crashing through parity, that would not be helpful. Anna thank you very much for joining us. Guy right. A quick update on where we are trading. This rather aggressive move is taking place. Yesterday morning, it started and then fizzled a little bit. Today, we have carried on. We were up 18 basis points and we are up 15 now. We will take a break and see you in a moment. Anna welcome back to the pulse. Guy lets bring the conversation back to greece. We have been discussing what has been going on in the country. A deal remains elusive. The nation and its creditors continue to haggle. According to officials, the european will consider tightening bank access to emergency liquidity if there is not progress made at the meeting on may 11. Lets bring in the former chairman of germanys budget committee. What is your sense . You have your ear to the ground. What is the sense in berlin about how these negotiations are going . The sense for most germans is that the old game no, you are not getting anything, we have to get everything that is gone. We are in a situation where the ecb sees that things are getting tight. Liquidity becomes the question of the game. It is not that much in the focus whether we would be willing in germany to help greece. It is only in focus if the new greek government is able to show something that they have understood they have to do. Does tsipras tell his people, we have done what we could, we could not do any more, we have to do some reforms . Through the next days and the weekend, everyone will look at what is coming out of greece. Anna it is about finding a solution that spins two ways. It spins one way and germany and spins a different way in greece and people do not lose faith in either side. Is that where the politics takes us . Otto it is. If you are in the government and you won the election and you are the new Prime Minister, you will have to find a way of telling a story to the people. The storytelling in greece is at a certain end with this new story. The germans have had the same story through the years. It started when the greek problems evaporated. It showed, we have to do something, we have to help area the idea in germany that there are these ruthless germans the just to make their money and have a lot of advantage for the Euro Exchange rate, that does not work anymore. People do know that they are in a good situation because of the euro. The communication and politics in germany is very difficult. You say, because we did reforms because we did things we did not like 10 years ago, we were the week man of europe and then we tell us we dont have to do the same that is very difficult for politics. I would recommend to the greek government, show something that you communicate that you do something the germans have done too. Guy it was largely about the second program. How much appetite is there for a Third Program . Otto of course, there is not. The communication and politics about a Third Program would be disastrous. It would become a you always promise that will not be a third. It is not easy for a finance minister. It means that people say, what did politics tell us . They said, this will not be accepted. Even though our economy is doing well in germany, this will be a huge debate. The latter one is that we do know that the other european leaders this is the big problem that greece did not understand. Originally, they had friends all over europe when they started with the new government. They were saying, give them a chance. Now all of these countries, all of these governments say, if we let them go, understanding that they are incomparable situations , then we will lose the next election because we will have the same parties in our country. You can see that in spain and in other countries. There are no more friends. Yet, there are no friends on the german side, either. Anna this is all very political. As the ecb managed to remain outside of politics . They are talking about haircut on greek bonds. Are we going to see the ecb dragged further into the politics of it . Otto i think, even though mario draghi is not liked that much because of the hard lines in germany are arguing he is going far beyond his mandate, still, if you compare to how he could have reacted he could have been the big spender, i think he is trying to find a middle way. One thing we have to be clear about mario draghi that is different from other comparable National Banks Mario Draghis job is not only to find growth and stability, but also to keep the euro alive. We are always forgetting that. If there is no euro. That is the question. Guy whatever it takes. Otto i dont know where this whatever is with him but he is trying to find a way to push greece into a position where, at least, they do say they have no choice. What kind of talks to we have between the ecb and greece . Can we borrow more . Can you support our National Bank of little more . Can we buy tbills . This is going underneath. The people who listen to us do know were the problem is. Average joe on the street does not know anything about that. He is trying to find the middle ground. That is a good thing for mario draghi to do. Guy thank you. We apologize for london traffic which is cap to a little busy this morning. Anna join us on bloomberg from 6 00 tomorrow morning. We will be bringing you 12 hours of breaking news on westminster, the city, and europe, tracking the outcome of the u. K. General election. Guy let me bring you out some of the answers that we had to the twitter question. Fairly interesting ones coming in. I totally disagree. Not her place to comment on the financial markets. Dont fight the fed. Never take market tips. Anna that is it for the pulse. Surveillance is next. Announcer this is bloomberg surveillance. The evaluations are quote quite high. The u. K. Voters go to the polls today. And what ohio got right. Good morning, this is bloomberg surveillance from our headquarters in new york. I am brendan greeley, joining me is olivia sterns. Lets get straight to top headlines. Olivia it is a 2 trillion selloff that is how much has been raised. Around the world, has been spiking. Yellen said yesterday that longterm Interest Rates are low , and there could be a sharp rise once the u. S. Starts raising its rates. Low Interest Rates can certainly incense some investors it ca