Transcripts For BLOOMBERG On The Move 20140131 : vimarsana.c

Actually had a profit. 274 million last year. Down 39 million and the market punish them. There is concern that Revenue Growth just is not fast enough. Thanks so much. We have plenty of Corporate News to talk about. And caroline, finally, microsoft, we think we may have a name for the new ceo. Five months they have been searching and it is likely to be the insider, Satya Nadella. He is gentlemanly, interesting, engaging. But he is not going to get on stage like Steve Ballmer and start shouting and sweating profusely. He is a little bit more range and then that. He knows the business and he is spearheading the growth of the business. Gates be leaving as chairman . That is what we are now hearing. He could be replaced by john thompson, who has been leading the search for the ceo. A lot going on at microsoft. Chiefave only had two executives. Satya nadella would be a third. What else are we watching . Abouthave talked emergingmarket routes. Now we have the numbers. Out of Exchange Traded funds in the month of january. That is the single biggest month of exodus of money from etfs since 2005. Mobius says that the ride will and and people will return. Employment andn chicago purchasing managers, we will have you we will have that for you later today. That in mind, we look to see whether the equity markets in europe can get any kind of reprieve from the battering they have had. And they have. The heart of europe is rising. Things are looking a little bit better. I want to frame the month for you. It makes for interesting reading. U. K. Lost over three percent of its value. Paris lost just under three percent. A record high and decline by nearly two percent. In the month of january, it was down in the periphery in italy and in spain. Banks were the best performers. Where did they perform the best . Down here. Italy and spain. Spain took the prize the most. Record low issuance in bond yields. That makes the whole temperature better for the Balance Sheets within the spanish equation. The under. Some tortured souls out there. Sab miller, randy cointreau remy cointreau. Bang, we are back on form. Of their core business, fashion and leather. Asia doing quite nicely. The transition to nonstamped lvmh bags has begun. It is playing through. Bt signed over 2. 5 million sports customers, trying for the sky. Say things will be grand in the United States of america. Europe will grow. But they missed their numbers because europe is low. Trough it is down by 23 . That is the state of play as we go into friday. This is the dollar index. It has been the best january since 2010. Westpac has a group of surprise index is a look at. Indexes they look at. Growth, earnings, and profit. Will that trunk taper and the fiscal debate in the United States of america . Right now, the market says yes. Lex manus cranny with the latest on the markets. Our next guest favors developed Market Equities in the u. S. And japan. For more, lets welcome the head of the London Investment office at julians. I want to get your take on the emerging markets. We had an interview with the Indian Central Bank governor and he says there is a danger of central bank down central breakdown. There is a danger of some breakdown. What you have seen in the last two weeks has been quite a while in the making. Bit of a catalyst to get investors to focus on the issues. A central banker points at something structural tells you that this is not something that is going to go away in another week or two. Just a month ago, when you and asked what is your main concern, they said emerging markets, it is going to be bumpy, but it will go ahead. Are there Investment Opportunities in some countries . One has to be careful. You look at vulnerabilities and avoid those. Good countries and currencies. The ones with weaker currencies tend to have the worst positions on their balances. Domestic countries tend to have been overinflated by two low cost of capital. Low cost of capital. Go for the regions where the balances are safe. North asia might be better than last time or emerging europe. Is this the right time to invest or are you waiting a little bit . We are waiting. It depends on your risk appetite. Which is why you still like the developed equities, especially in the u. S. Quite right. And you are buying particularly the Industry Groups . Seen somewhat away from the areas that have become expensive. The ones they give you a direct exposure to growth. Anything europe . Probably the same. It is a little bit behind in terms of where we see the growth coming at the macro level. Months, as much as that. In terms of execution, we have spoke about the banks. Again, a bit of caution. As the growth comes through, the same thing should apply. Generatorsive income to a more especially if it continues as we are seeing now. If the growth keeps coming through, you should see the headline growth topline. If it starts coming through, that is your signal. He stays with us and we will talk with him more about specific Industry Groups next. Here is a look at what s at what else is coming up on on the move. At microsoft. It may be close to naming a new ceo. Details next. Welcome back. I am Francine Lacqua here in london. This is on the move. On the the stock that is move. It is lvmh and it is gaining some six percent. This is the Worlds Largest luxury goods maker. Fashion wasth in apparent in the fourth quarter. Fromt boost of optimism investors who were worried about luxury brands. You can see the stock benefiting from that, gaining 6 . Earnings beatrter estimates as more customers signed up for broadband. Jonathan ferro has the latest. Have still gotten pay for the broadband, but some punchy numbers from bt this morning. Earnings betterthanexpected, revenue as well. And a big one, you cannot talk aboutbt without talking sports. The Customer Base has now passed 2. 5 billion 2. 5 million. This company has massive conditions in this phase. The question is, what next . For a lot of people, what matters is an event that could happen at some point in the next year. The next round of merely auctions. Ierof are merely prem league auctions. Since 1992, we have gone from 38 560ion pounds a season to million. The big question is how far these two companies will go to get that golden ticket. What is sky doing to counter bts push to sports . The sports side is making all the noise. Bt is pushing into sky territory. Sky is pushing back into theirs. Theyre getting customers to sign up to broadband, telephone, and mobile. Guess who they are comfy with . Vodafone. They are offering contracts with sky sports, possibly free on your mobile. The question is, could this tie up the a little more formal . Dumping a lot of people are talking about, a bit of a buzz. So much. You it is certainly one of the big Success Stories that we are expecting for 2014. Still with us is head of the London Investment Investment Office at julius baer. What is your take . We had a lot of earnings today. It seems a lot of them are surprising to the upside. Margins are under pressure. You are just not in the right niche and it is a tough world out there. That is right. There are two things for this year. One is the cross correlations between stock starting to come down, trade starting to does new to dilute. Into 2014, headline growth of expansion of sales could be more important than eps. Companies could find themselves cheaper. Other Balance Sheet exercises. Headline earnings were a bit on the modest side. You saw the market rerate without earnings come through. This year, we want to see the numbers. This is why you could start to see Companies Meet the numbers from a price point of you. Amazon was an example of that. The figuresok at and earnings, certain investors say, i want to pay a premium. These companies have potential to grow. Saying, by the companies or the Industry Groups that are laggards in 2013. Where do you stand . The laggards are fairly valued and some are quite cheap. They have to demonstrate that they have the ability to deliver. Luxury were some examples of those. You have to make up your mind whether you pay for the certainty or bank on growth. At some point before the summer, we will have a better sense of where that inflection is. Right now, i would suggest to stick with quality for a while but look to do a rotation later. Are you concerned that quality stocks are so linked to emerging markets . That is all the ceos have been talking about. I am going to be big in asia and these growing markets. Now the disaster is hitting. Some of them have very big exposure to these markets. I think it is a little bit premature to get pessimistic about your ability to ask for into some of the asian markets. Perhaps not nearly as volatile as some other ones. It does bear watching, especially where some of the valuations are. You like japanese stocks. How much can they fight the fed . The japanese have got their own fed. They are printing with an effort to move the policy towards a growthfriendly outlook and to weaken the currency. The market printing that is happening is undermining the yen. That has had a big impact on earnings in 2013. You need a reversal before 2014 becomes any less optimistic. Perhaps not that gung ho, but there is still some momentum. Give me your best headline for 2014. Is it the year where japan is going to make it or china is going to struggle . The chinese story is one of longerterm restructure. They become less of an issue in the sense that people are going to have to adjust lower their expectations for china. Nothing dramatic, but it has to come lower. Japan, our view is that they will break the cycle of deflation. Slightly more gradually. To not expect plus 45 that we saw last year, but i think it becomes more sustainable as a result of the policy changes taking effect. Thank you very much. Up next, we are talking tech. Amazon sales rise 20 . So did operating costs. Is the Worlds Largest Internet Retailer worth its high valuation . That is a question we will be asking next. And microsofts ceo search may be over. Satya nadella is said to edge out the competition. Details next. Welcome back to on the move. I am Francine Lacqua here in london. Here are some companies on the move could the family that controls peugeot is said to them greeted sell shares to dongfang. Support of the plan is crucial because they control more than 25 of the companys capital. Goldman sachs boosted chief findsive lance blank bonus for his work last year. His bonus and salary adds up to dream Million Dollars more than jpmorgan paid its ceo, jamie dimon. He was the highestpaid bank chief for 2012. And yahoo reports a security incident. Effortntly identified an to break into some users yahoo mail accounts. And passwordsmes was likely taken from thirdparty database and there is no evidence that data was actually stolen. Amazon poststech, a 20 gain in sales, but it is the slowest quarter and growth since 2009. At the moment, the Worlds Largest Internet Retailer is valued at 90 90 times more than the s p 500 average. Hans nichols has more. It is a pretty frothy valuation. That is what investors saw last night when they finally saw you know, Revenue Growth was at 20 . Income was up. The first time they turned a profit in three quarters. The first full year they have had a prophet in quite some time. Yet investors punished it. The stock was down 13 in afterhours trading. Then it ended up down about five percent. Here is the issue. Yes, income is up and they are turning a profit. Their growth model does not seem to be as explosive as it had been in the past. That is giving investors a little bit of pause on this stock. They also have a question on the delivery model. 2day prime, 79, you get delivery no matter what. They had all of the problems with ups over the holiday season. Some christmas packages arrived after the holiday. They are thinking about upping amazon prime as high as 40 more , may be a 50 increase. They are struggling with some of the other problems that retailers have been struggling with for some time, cost, shipping cost, and fuel costs. Where their margins are and just how wide they are, if their growth comes back down to earth, it is unclear for investors. It is very unclear. What about the currency impact . We have talked a lot about how currency affect these companies. How did it affect amazon . Amazon was heard again on currency. They had some 278 million loss on that. They thought it would be in the mid 100 million range. Their growth in europe is not as good as the state. If they are overly reliant on the states, they are going to get hammered by currency. It is another aspect of the story that we have been talking about now for a couple of months. How do you hedge against currency fluctuations . It will be a bigger story if the taper continues to add volatility. Thank you so much. On par with hedging, you have to make sure that you hedge in the right way. Hans nichols with the latest on amazon. Microsofts search for a chief executive may soon be over. The board is said to be preparing to make Satya Nadella the new ceo. Here with more is caroline hyde. You met him last december, great interview. What was he like . He was a gentleman. He was engaging. He was interested and interesting. He is quite different than Steve Ballmer. He will not be leaving up on stage, streaming with sweat developing across his brow. He is slightly more calm when it comes to pr. Internally, he is highlyrespected. He will be the third ever chief executive in the whole of the microsoft dynasty. They have been operating since 1975, founded by bill gates. There moreas been than half the time, since 1992. It is Cloud Services which is a beacon of growth. Driver ofit to be a growth as it tries to renegotiate where it lives within the new technology world. Pcs are falling. We are seeing new growth in terms of cloud computing. He has doubled sales their last quarter. He says microsoft is a really inspiring place to work. Microsoft is an exciting place to be right now. If you look broadly at what they and what we are doing in the cloud computing, it is an amazing spot to be in, both innovating and taking to market and having broad impact across society at large. Innovating, showing an a where sale doubled in and since 2011, he has managed to drive sales up 22 . If we finally get a name, it would be a relief for everyone. Bill gates has not been ceo since 2000, but he has been chairman. Now there is rumor that he may step down. Really is the man who part of the institution, the very backbone of microsoft. Is focused on philanthropy as well. He told us just this month when he had an interview with betty liu and Michael Bloomberg that he is focused on philanthropy. My fulltime work will be the foundation for the rest of my life. I enjoy that and i get to do it in depth. I am not going to change that. I will help out parttime. This would be big news if he steps down as chairman. The person who might be taking over, it is john thompson. He is on the board and has been spearheading the search for the new chief executive. What is interesting to investors is this guy does not hold his tongue. He has a reputation and has driven sales at a company he two 6 billion. That was called symantec. He also has experience in asking hard questions. He asked Steve Ballmer to step down in august to find a new executive. Interesting. Something that we have to keep on top of. After the break, Andrew Wilson of Goldman Sachs joins us to discuss china, emerging markets, and bernanke. Welcome back to on the move. I am Francine Lacqua have Bloomberg European headquarters in london. We are 30 minutes into the trading day. Lets see how things are shaping up. This is the picture for the markets. We are seeing a small reversal. Overall, these indices are pretty much unchanged. The dax is slightly lower. Equities overall are heading for the worst start to the year since 2010. We did have a strong rally last year, but nothing to worry about. Investors also waiting for reports on euro Area Unemployment and u. S. Consumer sentiment a little bit later on. This is the talk on the currencies. Eurodollar is probably the one where we want to watch out for. The dollar heading for its best january since 2000 and. Since 2010. This is ahead of the data forecasted to show that americans increased spending. Watch out for the emerging markets. Theill continue conversation very shortly about what the emerging markets can do from here and what it means for currencies. These are the top headlines. Japans inflation accelerated in december, bringing the rate closer to the Central Banks 2 target. That was higher than the median estimate surveyed by bloomberg. Probably inflation remained below half of the ecbs target in january. Economists estimate that the isual rate rose 2. 9 , which straight reading below one percent. This adds the case for policymakers to cut rates during next weeks ecb meeting. Indias Central Bank Governor is warning of a breakdown in Global Policy coordination. He made those comments in an interview with bloomberg tv india. International monetary cooperation has roque and down. Industrial countries have to play a part in restoring that and they cannot wash their hands we need we will do what to, you do the adjustment. The Indian Central Bank raised Interest Rates this week