2010 low. We drop below 1100 an ounce. The big trade to watch in the currency market is sterling. A stronger pound up by 1 10 of 1 . Looking ahead to bank of england minutes and 90 minutes time. Mark carney talking about moving closer to a rate hike. All nine of the mpc members, and did one say it is time to move . Given the timing of the last meeting, that would have been a brave call to make. Here is the market open in europe. The ftse 100 troubles lower by 0. 8 . Trouble in tech has been a headline thing at the earnings from the u. S. And the big western for the markets here in europe, is the tech rally unraveling . The stoxx 600 index up 14 this year before todays open. The stock 600 tech index up by 8 10 of 1 . Holdings traveling lower down by 3. 5 percent and sterling revenue missing estimates. A Big Conversation with the ceo and 50 minutes time. Apple earnings and focus for europe and asia as well. But it started. You said tech trouble and that is what we saw in asia as well. We see the asian region fall on those disappointing iphone thirdQuarter Sales. You can see a little bit of a mixed picture and the shanghai composite doing it once again looking like it will close higher. We certainly see a lot of weight coming through elsewhere. Those tech stocks really laying on the Australian Share market. Also those faulty commodity rises really impacting australia as well. I want to get to some of those motors movers labor later on. Apart from the selloff in most of the region in particular tech stocks and consumer stocks new zealand did really well today up by almost 1 . Hitting a record high at the overall sharemarket. As you said there was a lot of focus on the tech stock and if we look at the overall benchmark it index which fell today in line with the weakness we saw coming through tech stocks were the worst performers down by 1. 3 and if we look inside the index we saw that 39 of the 45 tech stocks listed did not do very well in asia. But some of those movers you mentioned there is a lot of focus on apple suppliers and they are based in asia. If we look at some of the big movers, samsung is actually the biggest stock early contributing to that downturn we saw and south korea. Samsung sdi down by 6. 1 . Lg was an interesting stock to watch because it actually rallied in the early trade at one point up by 8 . That selloff in tech stocks did actually see it close down by 1. 3 . That by moving higher on the fact that lg is arrival to apple. In japan in tokyo we had the printing to the touchscreens that rose by half a percent. In taiwan, pegatron is a major supplier to apple and did not do very well. Certainly that concern about Technology Stocks and that bubble burst playing through into the asian markets as well. The original benchmark index closing by 1 today. Jon that is the asian market wrapped and no surprise that one of the biggest falling Industry Groups this morning is tech. It is certainly not easy being the worlds Biggest Company with apple shares tumbling inexpensive trading. Caroline hyde has been looking over the numbers, not just from apple but from some of the other tech giants. Caroline we saw shares selloff more than 8. 8 at one point. That is equivalent to 66 billion. That is three times the size. That is exactly the same size as bmw and 10 times the size as another apple supplier. Try to put that into perspective etsy get into what we are seeing overall. What was the real issue . It will be iphone sales being slower than expected. Fourth Quarter Sales also missed forecasts. Not only do you have iphone sales not hitting expectations it is up 35 . Investors say they wanted to see more but they also wanted to see more than 50 billion in sales next quarter. 50 billion in sales is less than one percentage point gain. Usually we see more than 10 gained quarter on quarter, not less than 1 . Is it china . Tim cook said the china turmoil is creating nearterm speed bumps. We saw the chinese weakness, a 21 overall quarter on quarter drop. But the iphone is still the cash cow. Those sales fall short and that makes everyone sent a shiver down the back of their spine. But they are slumping in terms of their sales and of the watch did not sell as many as they hoped. That is apple. Lets get on to microsoft. Apple is the number one stock. The most valuable in the world. What is number two . This one. Microsoft saw an 8. 4 billion writedown. They are laying off more than 11,000 people and that will hurt. We saw significant writedowns and a net loss overall. The largest ever quarterly loss for microsoft. The nokia deal weighing heavily. Read member we are buying less pcs. They are seeing windows struggle a little. There is hope for windows 10 launching july 29 to speaking very upbeat about what it will do for sales. Cloud as in other areas of growth. Cloud revenues like we anticipate with amazon and sap yesterday, we saw Cloud Infrastructure jumping 86 . This is an area of growth but overall there is concern when it comes to sales overall and another one and another tech giant where we saw sales disappoint and we saw shares fall after hours. Sales missed forecasts to this quarter they are anticipating this quarter to be worse than expected. They will see sales reduce compared to this time last year. Even though we are seeing them try to rejuvenate this company and invest in mobile and social media, it is working a little bit. We are seeing these new businesses up 60 in terms of revenue. Still, people want more. They are also expecting this has to hefty spinoff. And alibaba is set for the fourth quarter. Overall it is doom and gloom. Jon for more on tech we are joined by paul sweeney. James bevan is the chief Investment Officer at ccl a investment management. Not your first rodeo. If i told you that accompany would report record thirdquarter profits with a search and their best product with sales up 35 , would you expect it to be down in extended trading . Guest the stock had been up about 20 year to date and expectations probably got a little bit ahead of themselves. One of the concerns is that this remains a phone story. Whenever you have the shipments come in less than what street looks for, that is a concern. Sue put those two together and given what the stock had done earlier, it is set up for a little bit of a fall. This remains an iphone story and investors are looking for that next category. There is no data to suggest the watch will be it but it is very early in the story of the apple watch. It remains a phone story. Jon in terms of tech google whispered the words raining in costs. Apple make people nervous by missing iphone estimates. You get these hughes desk huge outsized moves in apple. It is crazy. What do you make of these huge outsized moves . Guest when you say quite small moves what we are seeing is a material shift. So the next revenues will be 49 to 51. That is quite a mark down that suggests future growth will be less than anticipated. I concur in the iphone only story they are now consigned to what is genuinely driving sales. That said, it is abundantly clear that there is every possibility that the current equity market begins to push higher and then apple will do well. Jon you see them saying it is an iphone story and it has been an iphone story for 10 years. Why is yesterdays report any different to the earnings reports that have gone before and do we face the same questions we were asked that in a few quarters we will be proved wrong again and they can sell this stuff in huge volume. Tim cook went out of his way to say and some of the major markets in western europe and china, the iphone is selling very well. From apples perspective their services are selling very well around the world. It is simply a function of expectations versus the street. The street was looking for upwards of 50 Million Units which is a huge number. They missed the missed a little bit and then the guidance it is unusual for apple to put guidance out there. You put that together and given what the stock has done over the past several years, relative to the market you are set up for this pullback. Jon the rally in the last couple of weeks, the adjusted earnings protections coming into the last month. The question this morning is the analysts are the guys who got this wrong as opposed to the company changing trajectory. When i tie up these earnings together and look at the likes of ibm and microsoft accentuated by the stronger dollar and you see that in the apple numbers will that be the scene in this quarter . U. S. Earnings have surprised positively on revenues and disappointingly on earnings. There is a big focus on cost control and revenue growth. The big challenge is not just the iphone which everyone recognizes, but also china. Investors are clearly quite concerned that china is experiencing not just turbulence but a huge bubble. It could lead to much Slower Growth and consumer demand and have an impact on apples projected revenues. Against that backstop people are saying we made a lot of money, lets take some chips off the table. Jon recognized the situation in china with what will happen with the nasdaq. Is this the beginning of the unraveling of the tech rally . I dont think so. For longterm investors this is a great buying opportunity. I would be using weakness in samsung and others to buy positions and not selloff. If we can get into companies with solid credentials, that is a great entry point. You must not just chase shares you have to think about longterm fundamentals and by when prices are depressed. There is so much else to choose from. If you would say, where globally would i buy tech, i would be looking at arm holdings and would certainly buy samsung. And another great asian commodity is extremely wellplaced. Jon i will be speaking with the ceo after the break. He is waiting to box my ears. Jon when people say the nasdaq is at an alltime high they throw around the word bubble. When you look at the earnings from the big tech majors, they have disappointed. Is that going to reinforce the idea that nasdaq should not be where it is . When you think about technology in the u. S. It starts in Silicon Valley and the private market valuations are extraordinary. Some of these Companies Like over and others, the private market, they are putting extraordinary evaluations before they go public. It supports the multiples here. When you see Companies Like Facebook Page 21 billion dollars for whatsapp and uber valued at 50 billion, there is arguably a bubble all over the place. On the Public Markets these earnings prevent it suggests we will have a step back that i would suggest as well that it is probably shortterm. Jon lets wrap it up but on that point. Pouncey that just in tech. I dont see that just in tech. They said we will have trouble getting financing but guess what the private sector stepped in and help them out. What is going on . One of the planks of global. Equities. If you said how what i rationalize the valuation, i would say the premium of participating equities is well over five. Therefore, if you said that Interest Rates will stay low and bond yields will stay low, i would say that we need to go up 15 . Actually bull markets typically and in a speculative frenzy. That means we could send a 40 upside. Jon we are not there yet. Thank you very much for joining us. Coming up. Iphone sales disappoint investors. After the break we speak with the chief of one of the biggest chip providers. Armand ceo simon cedars. Then looking for lift off at the bank of england. Less than 90 minutes away. The helping hand for Prime Minister tsipras. He reaches across the house for a second wave of reforms. It is all about the iphone. In the near term it is going to be about the iphone. What is going on with the iphone the growth is almost three times the market. If you look at it on a more narrow regional level, under 49 million iphone sales could suggest slowing momentum. I still think that you have to look at the big picture. This company is beautifully positioned for the longterm. There may be a shortterm blip but there is nothing to worry about. Jon those are some of the views we have been hearing on apple. The company otherwise known as iphone inc. One company watching those numbers is arm. This morning the british tech giant reported sales that missed estimates as the market for semiconductors cooled a little bit. We are joined by ceo simon segars. We saw this quote and it stood out to all of us. Royalty revenue can grow faster than the overall industry due to share gains beyond mobile. While the analysts lick their wounds on iphone sales and samsung. They are a little bit concerned about their own sales. You guys can shake that off. When we look at the results of the whole there is very strong for arm. We have premuch nailed that. Within the royalty growth we are very strong. When we think about performance we think about how more and more chips being built in the world are using technology. There is the possibility formal to pull arm technologies in the chips and devices and that is what led to that performance in the industry for so many years. Caroline you just signed 54 processors. This is forwardlooking. How many are in mobile and other devices . The internet of things going into the automotive. What many want to see is that you are not completely hook line and sinker pegged to where we see mobile sales going. That was with 31 Different Companies and we have over 400 licensees looking at all sorts of markets. We expect 20 of our licenses to be mobile licenses and they are adding more and more functionality. People are looking at building small micro controllers controlling lives in controlling things in your car. Through mobile devices, the threat is enormous. Caroline so we shouldnt worry about iphone sales . The shares will do what they do. Many of the licenses they get this quarter were for products they havent actually named yet. Our licenses are signing very early on the design process. Theyre focused on the future and what is happening next. Jon a lot of people would talk about china. Can we talk about china a little bit . Everyone is saying that is where they will go for growth. This Massive Equity market selloff and a lot of people saying where this would dampen consumption. Guest there is always something going on in the world. In the moment there is a lot going on in europe and china. These things happen but we are thinking about the long term. We are adopting mobile technology. We are thinking about how these markets develop and designing the right technologies and features. To ask us to access what we do you. Jon the back half. Confident . Guest as i said there is a lot going on in the world. Consumer spending habits and if that changes there is nothing we can do about that. Caroline you have just hired what hundred 27 people. Give us a breakdown of where you see it right now . Guest fairly well spread across the world. There are 200 people in china now and engineers and people working to support our customers. In q3 we typically higher a lot of graduates. People coming out of universities that we will help develop. And through this year so far we have hired 250 people. Caroline is china a growth area for you because of the smartphones . How much should apple and samsung be worried . Guest china is a growth area for us generally. The government is investing a lot and we are seeing a wide range of growth being developed their. There are big efforts around Internet Things and smart cities. Very cool. Jon we have to leave it there. The ceo of arm, thank you for joining us. Coming up the bank of england. Jon good morning and welcome back to bloomberg tv. Lets see how things are shaping up. The ftse 100 pulling back a little bit. The european stoxx 600 snapped a nineday winning streak yesterday. The dax down by 6 6 10 of 1 . The Eurodollar Bank of england minutes and 60 minutes time. Gold trading at a march 2010 low south of 1100 and outs and a bloomberg Commodity Index those are the moves in the commodity market, the fx market and the stock 600. Lets lift the lid and go to a caroline hyde. Caroline i want to dig into these tech stocks. The only apple but the key players. The s p 500 also coming in disappointing. Stuck 600 tech spots this morning. When you drill it into the supply chain you can do that when the bloomberg functionality here is at 78 of its revenue coming from apple. No wonder this is feeling the pain at the moment. The sales in terms of weather. Iphones are selling and in terms of that forecast for next year everyone warning if youre going to bring in 50 billion that is a huge amount of revenue. The slowdown in growth is what is bringing in every investor. Up 4 , easyjet. This one had numbers as well. Pulling out the bank once again and thirdQuarter Sales were down once again for the third quarter. Air Traffic Control stakes strikes were an issue of timing but now they are set for a rebound. They are recovering in the spring. Pretax profit for the fullyear set to increase i as much as 14 . Jon the markets will all be focusing at 9 30 u. K. Time when the bank of england will publish the minutes from its meeting. They, as governor mark carney has been pouring fuel on the debate and lighting a match by suggesting that a hike not be far off. Once Monetary Policy normalization begins, Interest Rates would proceed slowly and rise to a level in the mediumterm that is about half as high as his story averages. In my view the decision to start such a process will likely come into sharper relief around the turn of this year. Jon at an event last night in london, governor mark carney signal that curdles do still remain. The path of rates is much more important than the timing of the first move because there are still headwinds to growth. They pretty much say the same thing. Lets cut to the noise. Great to have you with us. Governor mark carney, last week, sitting at the bloomberg terminal and this big red sticky comes out. It felt like 2014 in the summer. What is happening with the bank of england . Guest everyone thinks rates will go up and then in january you are bullish and the u. S. Will raise rates and the bank of england will lower at seven years later we are still talking about. What has actually happened is yellen made the comments on a friday opening the way for thinking about u. S. Rates. We are able to actually listen. The testimony by carney and miles they come out and talk about higher rates and then boom i was thinking about where is the u. K. Going to go. You can to that cable has gone with it. Nothing better to do than thinking rates are going up. Do you subscribe to the aprilmay forecast . Guest sometime next year people say what happens if the bank of england goes before the fed . I say what happens of the bank of england go and the fed dont. We have to let the fed go first i still think it is not the timing of rates. Once they have gone, the whole debate will fall on when will the u. K. Go and the two are sandwiched in between. Jon lets talk about the whole train. They want to hike rates, can they . In the back half of this year not only did a copy each other with this shallow path in the distance. The forecast has been terrible it but trust us on this one. The Commodity Markets are not telling us that now. Guest when you look at the Inflation Report they have been saying it would hit 2 in two years time forever. Jon they have got to say that. Guest it is the same with the fed would you look at the dots the markets is that is interesting but i dont believe them. Its this idea that is about timing. Once we have timing in the bank we will worry about cost. So i think it is hawkish but after that it is a fish. Dovish. Once the first one is underweight than we think of path. Path is dovish, timing is hawkish. Jon you and i sat here in march and we bring up a longterm shot of the dollar index and your called was that the bull market is over and the beginning of the end. We never hit that peak after that. Going forward i look at your store cast for sterling beat bearish. Guest we are in the throes of a dollar bull market. I am not saying it is over. The big meat of the move is over. Can the dollar still get to 1. 05. We are in the death throes of the dollar bull market. People will say the fed is raising rates and everyone is cutting rates. And then you get an overshoot. Our forecast has a bit of an overshoot on the dollar but it is the death throes of the dollar bull run. Jon daytraders are sitting at home and they look to you and say what on earth do i do. Now we look to the bond market and the difference in yields. Guest go local. The global story we see every day and we wait for a big story and nothing happens. Historic volatilities are low. But tomorrow is a big no. You want to trade aussiekiwi, that is what you trade. Think of at the process and career yen. Stop thinking about the big events that will shape this world. They dont happen that often. We had a move and the dollar and that is done. Q we is down 35 . We are seeing the big moves in these currencies as over. Is it possible they could intervene . Lets look at some of these local factors. Stop going the fed will raise rates. Lets wait for the fed in september or december. Jon you and i talk euro stocks after the break. Coming up, many of our own mps will be voting against him today. Alexis tsipras will have to turn to opposition politicians to prompt his bailout deal. Stay with us. Jon good morning and welcome back. Lets bring you uptodate on where equities are trading this morning. The ftse 100 down by 9 10 of 1 in the dax lower by 4 10 of 1 . It is the second day of losses. We are onto a losing streak now. Switch out the board and lets check in with fx. A stronger euro just cabled a dollar 66 i stronger pound up by 4 10 of 1 . Did anyone on that ninemember team put their hands up for the rate hike . Gold trading lower again this morning. 0. 6 weaker. They are the market moves so lets get to some of the top stories at bloomberg. Easyjet says that sales are recovering from a dip in the spring. More than three quarters of second half seats are already booked. Sales forecasts came in below estimates. Microsoft shares also took a tumble in late trading after the Company Posted its largest ever quarterly loss. Apple posted its best fiscal quarter profit ever with shares falling as much as 8. 8 . The tech giant also missed revenue forecast for the current period. The greek Prime Minister Alexis Tsipras will return to Parliament Later today looking for support from opposition politicians to help him pass a second vote. They will be discussing more emergency liquidity for the banks. Lets get more from the Bloomberg Team. Then his life and athens and paul gordon in frankfurt. What can we expect from Parliament Today . It is going to be a stormy debate in parliament. The syriza lawmakers are very unhappy about the bailout deal which tsipras has signed up to and he faced significant revolt when the first packager reforms went to Parliament July 15. There is a broad consensus among the Opposition Party that this is a deal which greece has to sign up to. There is no one forecasting any problems as to whether the bill will pass. The issue is what is the scale of the rebellion among tsiprass own aside and where does that leave him in terms of his political future . Jon when you look at the political events, what does that mean for the ecb . Initially it will be here we go again. They will be picking up the phones later today to have that phone call and decide whether the greek banks should get more emergency liquidity. The last week i only got 900 million with a pledge to review that in a week but you can imagine they will be asking for more and it is reasonable to assume they will be willing to grant more as long as the political process continues. We should see a little bit more money on the table. Jon that is the breakdown of what to expect. The Bloomberg Team thank you very much. Lets get final thoughts from david bloom, the global head of fx research. The eurodollar. The three weekends ruined before, waiting for it to go lower and it filled the gap what do we trade on looking at that cross . Do you have to strip out all things greece . Guest as we saw they look grex hausted, like the rest of us. Canada cutting rates or dollarcanada going up. We mentioned a bit on sweden. We are not going global, lets look at things one at a time and look at what happened the other day. We are trading and we see the qe move. We look at individuals and idiosyncratic offense that dominate everything and that is where we should be going. Jon arguably, with the eurodollar strip out greece and look at treasuries and the german tenure and you do pretty well. Does that not just continue . Guest it is possible but i think it is unlikely. The euro has been incredibly resilient. You about stocks doing fantastically well and in bonds the euro was doing well. Until we get used to synchronizing markets again, it was this location where you have these huge global events but i think we will come back to sensibility. We are in the last hurrah of the death throes which increases volatility and then the euro will drop back up in a couple years for now we will be back up. Jon lets move away from the eurodollar. Lets go to the euro stock. I look local in sweden and i see a housing buff and robust gdp growth despite low inflation. Guest it is deflation that will cripple the economy. Jon gdp at guest they are running at two. Jon it is still robust gdp growth. Guest Central Banks do not have gdp targets. Jon they dont but a lot of people are asking the question what is the rish bank doing what it doesnt have the same economy to fight. The problem they are trying to weaken their currency against the currency that is weakening. That is no easy task. So they have gone deeply negative and they have done qe. They will cut rates by more. They may as well get in there and intervene like the danes cut rates more viciously get inflation up and win the battle. Being a central Bank Including changes their that drive euro stocks higher. Jon lets not talk about whether they should or should not do that. What what they will do. They say there is no flaw for Interest Rates. Tell me what the flock could be and how far they can go south with Interest Rates. Hans we have seen guest we have seen in denmark that came under pressure everyone attacked it and they went deeply negative. They held it. They have done two phases. They have done negative rates and they can go as negative as they want. Then intervene on top of that and they will drive euro stocks up. That currency will be higher and as that happens they will be winning the currency war. Jon final question for you, how soon before the next act how quickly is it before we go through 10 . Guest we just changed the forecast because we were on your side that we have given that up because the central bank is absolutely determined. When they did qe and did not cut rates the currency hardly moved. Cant stop now going negative rates and going to intervene as well and drive currency higher. The last problem they were worried about the raised rates. Jon i have to get to a break. David bloom will join us after the break with manus cranny running you through everything that you need to know for the rest of the day. Some of the big earnings and will break it all down for you into trouble. Jon good morning and welcome back to bloomberg tv. And 30 minutes time we will get minutes from the bank of england and later today the Greek Parliament releases the second wave of measures. Embers from boeing and american express. Joining us to break it all down manus cranny is still with us. With the year and target of 980, the vote. 30 minutes time. Do we sustain . You order zero but given what carney and others have said you know it is sweaty palm time and we are all nervous. Could the other two fuld in . You can see the nervousness of the market. Way too early for rate rises but the rhetoric is changing. Jon one company that once stock is apple. Remarkable moves considered record thirdquarter profit. When you slip underneath this is what happens. Manus when you see the numbers, they missed on the iphones but they sold more i watches in the first nine weeks than when they launched the ipad. The question is this you believe that china is the saving grace for apple . If you just look at their numbers it is surreal. The china review almost doubled to 13 billion. He said if apple is a country you like the cash reserves . If apple was a country you would not be upset with 200 billion in Foreign Exchange reserves. Jon the hedge fund seems to love the stock and the analysts love the stock looking at 40 buys and you bring up the target price of 1. 50 almost and you look at the we could see 50 billion in market cap at the open. Manus they have a huge position but how many more are going to actively by how many have not upgraded and do not have the new iphone i am not one of them. I have an iphone 6. Jon they said to me before that they made the ipad too well. Thank you very much for joining us. Manus cranny coming up with francine lacqua. She is back on the pulse. You want to talk about these markets, i am on twitter. Equity markets pulling back in the ftse 100 down i almost a full percentage point. Francine apple crumbles. Shares in the worlds most valuable company plunge in afterhours trading as disappointing iphone sales overshadow profits. Manus the greek Prime Minister will be relying on help from the opposition to get a second package of reform measures through parliament. Francine and looking for left off. Mark carney intensified speculation over when the bank of england will raise rates
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