Production is the highest on record. This adds to the disinflation story. This will be the excuse you will hear. It is part of the reason for the movement in this inflation story. Crude oil is under pressure. Lets have a look at equity markets. Equity markets are lower. We will see what is on the agenda. Other side of the exchange. He says the ecb should hold on. Equities are lower. I am just curious as to whether theoil is on the downside. Credit rating is not that good. That is a little lower. Lets give you a flavor of what is going on. I know you will do that later in the show. Three other companies. Cash generation is great. Up 8 . We know when older people like me think about retiring we are not going to be forced to buy an immunity. They are going up to Companies Like bloomberg. That business is 29 . The coin. Two sides of cash is king. B w down 1. 4 9 . Third quarter numbers beat estimates. Profits and margins beat the forecast for the year. The stock down 1. 4 . Hugo boss, you will get the call. 105. 15. Momentum across the region. There is a store at the end of his road. Their sales are under pressure. Previous singledigit figures because of growth. Hugo boss under a little pressure. I am determined to get the old dollar in. Lets have another look. I think it is all wrapped in. You are almost within a nudge of a fiveyear high on the dollar. If you think of the momentum, i love what one of the analysts said. With nothing else to buy, why would you want anything else . A little bit cheeky this morning. I will bring you the price when that starts trading. I will bring you spanish unemployment data. Unemployment month on month net point 2000. The survey was 73,000. The survey itself wasnt looking good. The numbers looking even worse. There are unemployment claims. Plenty to discuss this morning. Open. Rket ftse down. It is really nothing. Input with thehe global head of Asset Allocation. Welcome to the show. I am going to talk with japan. The nikkei is lingering around 17,000 after the be oj announced a surprise stimulus. I want to kick it off with one of your charts. It looks Like Central BankBalance Sheets. Of hows me a firm grip big this stimulus is by the bank of japan. We are approaching 60 or 70 of gdp. We could talk about reward. On the balancek sheet of japan . The be oj was the standard bearer in terms of renting money. About it, the fed never got above 30 . By the end of next year we are talking about a Balance Sheet close to 80 of gdp. The market likes it, but there is plenty of risks. Economy that has a lot of debt. Often these things dont and very well. Japanesee look at the equity market, it was the reshuffle of the pension . Nvestment land be another 90 billion of japanese stocks. For you when you look at what came out friday and as investors try to digest this news, was the pension fund the bigger news . I think the pension fund is the tip of the iceberg. If you look at the financial Balance Sheet, japan is about 130 up. Japan is significantly underweight equity, overweight cash, overweight fixed income. Thats precisely what you do in an inflationary environment. I think the gpl yes is a signal of what can happen. That can comeline look at theu dollar, can we read into it oil . R versus you can easily imagine why Dollar Strength leads to oil price weakness. I am not surprised by the correlation. I think we are going to see further moves. We are going to talk more about this after the break. Lets look at it. Hugo boss shares. The fashion, german fashion maker taking a hit after lowering its fouryear outlook on the sluggish demand in europe, down by 6 . Mess. Gs are a it was really a onetwo punch taken by hugo boss this morning. We will talk apple, as they may have the biggest Corporate Cash told on the planet. Is is setting aside a biggest Corporate Bond offering. We will talk about that welcome back. I am jonathan cerro, live from the city of london. We are going to talk about apple. For the first time apple will offer bonds in euros. According to a person with direct knowledge, the money will be used for dividends and share buybacks. Of course it will. Apple has raised when the 9 billion since last year from bond yields. The Company Offering the lowest yields in six years relative to dollar dominated debt. The global head of Asset Allocation joins us. Talk aboutobably apple and avoiding repatriation taxes all day. Lets talk about the fact this is a vote for the european bond market. Yields are low. Can they stay this low . I think the story is interesting on two dimensions. You have the european rate of urgent story. Borrowing between rates are the highest we have seen in years. In some cases they are the highest we have ever seen. T isbest guess is is going to continue. It also captures the buyback story, which if you look at the u. S. Stock market, we have seen the highest ratio of Earnings Growth to Revenue Growth ever. This has not been highquality Revenue Growth, but it has been driven by buybacks. When does the penny drop . When do people say this cannot continue . I think there is a strong case to be made that Monetary Policy qe thing has been one of the drivers. Debt cheap relative to stock. It makes a lot of sense to do buyback activity. If we are looking at a fed that is ready to start raising rates by the middle of next year maybe that is a turning point. The buyback in the u. S. , talk about europe and japan. Could that get started . Is low Interest Rates and high earning yields, why not . See that discussion quite a lot in terms of japan. A lot of japanese equity is talking about buyback in the coming months. Maybe the nikkei could go higher. Lets talk about the ecb. In a lesson to european lawmakers mario draghi says the scope for the assets are just program is large and will generate significant volumes. Ofare joined by Paul Gordon Bloomberg news. He failed to give precise targets. That is what we want. A number. It looks very unlikely they are going to get it. The closest they got was in september when draghi said he wanted to see it go to early 2012 levels. He backtracks on that. He is referring to the word sizable over and over. He is saying that about asset backed securities, which have yet to start. There is some debate about how much he can achieve for volume. Our latest survey expects he worth. 200 billion euros close to 5here billion euros already spent on that. Of course the third layer will be to target longerterm refinancing operations, which could be bigger. Altogether it looks like it is going to be short of a trillion euros. That begs the question. Does he go for Something Else . We dont know, and we wont know until the current programs get underway. You have the ecb stepping into a new role today. What is going to change . This is one reason it may be worth waiting a little bit to see what happens to the economy right now. He said this is the biggest integration step in the euro area since the introduction of the euro itself. You can argue he is right. There is still a lot of work to do. The head of the advisory mechanism talked about her priorities. Gapis to plug the capital as identified by the oneyear Balance Sheet review. Bet wont necessarily difficult overall. Italy is very much the focus. She wants to see harmonization of regulation. Veryefinitions of capital across the block. She is urging governments to get together to harmonize. She is using the single supervisor mechanism. This big task has a long way to go. There is no credit constraints anymore. Banks want to get money cheaply and lend it to the economies, they can do that. Its not the supply credit that is the problem. It is the incentive to get businesses to borrow. Great work for bloomberg news. A few final thoughts. The ecb has done their stress test. My colleague says mario draghi faces his own stress test. How does he respond . He can say things like it is going to have a sizable impact on the Balance Sheet, but he doesnt have the room to maneuver like governor corona. I think he should be worried about zero again. It is going up fairly significantly. I think mario draghi is right. There is plenty of scope to buy assets. That scope is buying sovereign debt, which we think they will eventually do. Sense is given the message from the ecb it has to get worse before it gets better. The ecb will eventually step up, but things arent bad enough. Just to finish, sovereign bond yields. You said expect higher volatility. You said to expect lower returns. You also said to expect high yields. Almost everybody said that. It hasnt happened. Fixed incomek at curve it has been a tale of two stories. Yields are going up. The fed is getting closer to raising rates. The long end of the market is clearly acting as one market globally, driven by deflationary fears, weakness in europe. We think the tale of two parts of the curve will continue Going Forward. Big call for the rest of the year . I think the big call is japan is back. It has been a quiet story. Investors havent been interested. They have kicked off the story again. Thanks very much for joining us. As we head to the break, two stocks on the move in the german luxury market. Shares are still often touch. Hugo boss paints a gloomy picture of european demand. More on those stories next. Stay with us. Welcome back. I am live in the city of london. Time to get you up to date. The luxury carmaker toppeduarter profit estimates. The company confirmed their outlook. Joining us is hans nichols. Give me the numbers. We will do the numbers. Lets do brands first. X five did well. Almost 200n at billion north of where the estimate was. Here is the crucial thing to look at. That is profitability, profit margin. We compare profitability. Take a look at profit margin. It came in at nine point 4 . You compare that to audi. We had a pretty good quarter. Daimler is all the way down at 8. 5 . In this question of who is going to be number one, who is going top autothe manufacturer. The margin is slowing just a little bit. Quarter. In the third you compare that to mercedes. Audi was 7. 2 . Here is the issue. Mercedes has some new numbers. Bmw has old models. When does consumer demand taper out, and when do new models want to start getting their eyes on new their hands on new models . Of the story. Side a profit war. I just dropped their. I am going to assume you asked about hugo boss. They had an earnings revenue that missed, and the stock is trading down because of that. I will throw it back to you as we have technical problems here in berlin. Hans nichols, always professional. Lets talk loreal. Says heeal chairman expected to be the weakest year since 2009. That is as the largest cosmetics reported sales that missed estimates. Caroline, take us through the numbers. Like you look at like for growth of sales for loreal, it 2. 3 growth compared to two. 8 in terms of estimates. It is much slower than estimates. What is more worrying is they. Re lowering the forecast they are expecting it to grow by only 3 . That would be the slowest pace since the financial crisis of 2009. That is the second time they are actually lowering the forecast in two months. Originally they are expecting as much as 4 growth. In terms of the consumers unit, loreal is not alone because if you look at one of the big competitors in Consumer Products reportednilever also the slowest pace of sales growth in the Third Quarter they had seen in five years due to a sharp drop in china, and if you look at the lecture a unit you had a slowdown in asia. Now the luxury unit includes brands such as len coleman giorgio armani. It is missing estimates this quarter. I am looking at the share prices. It is down. The question is whether investors should be concerned about the companys future. The shares are down this morning following these numbers. The shares have already lost nearly 6 since the peak in early september. Loreal says they are confident there will be a pick up and growth in the Fourth Quarter, that the slowdown is not a sellout. In a newspaperid interview she expects the market to recover fully next year in 2015, that it could benefit from the weaker euro, up which is helping the competitiveness and they will also benefit from a 2 billion euro capital gain following the buyback of their shares from nestle. They still expect the earnings per share to fall following these numbers in the Third Quarter. Loreal remains very active in terms of deals, in terms of acquisitions. They acquired two brands in the u. S. , one brand last month. Up. Hat is loreal coming we will talk about the u. K. Economy and the Rate Decision with the Goldman Sachs chief economist. The rates mayce be faltering. What does that mean . You know where i am. farrotv. We are back in two. Welcome back to on the move. I am jonathan ferro. Across they sprinted studio to join us. 30 minutes into your trading today up. Ftse is up 100 points. The dax is up. 56 point higher. Look at the u. K. Construction data and i will bring you that later in the hour. The talking to kevin daly about the rates and we will talk to manus cranny. I am always pulling myself together. A swift movement. Quite dashing. [laughter] we are lucky and grateful i am here. I will do 2 stocks to watch. It is all about cash. The ceo and he was very clear which is all part of the business doing well. You have the individual business which is pensions for individuals might be you and i and that change the rules. That actually declined by 61 . Corporate side of their business which is doing well and pensions and they saw the ball up 3. 7. It is a very decent set of isults and the investors keying as far as the ceo is concerned. Hugo boss is down 5 . One of the biggest declines in germany. They see weakness across all regions. Guidance has been lowered. Now 5 7 , a substantial slowdown. It has changed hands in the first trading minutes. Bmw, a good set of numbers. It can beat the estimates. For 2. 03. Was looking suvs. As of five are selling like hot cakes. 5s are selling like hot cakes. Could be the perceptual could be 5. 8 . That is below their core competitors percentage delivery in the Third Quarter. Doing thatrcedes are a little bit better. Three stocks. Very exciting. Lets switch gears and talk central banks. Our next guest is not expect action on thursday but we could get a rate hike in 2015. Joining us now is kevin daly. Always a pleasure. Months ago, will looking at a rate hike toward the end of 2014 at three months later, the second half, what is going on . It would be a huge surprise if there was any policy change. Yet, three months ago, people considered it certainty there would be a policy change by the end of this year. Expectation far have shifted in the space of three months. We, on the whole, have been dovish than the market consistently in recent years. Q1are Still Holding on to 2015 hike. We think that risk has shifted toward the later mode. The market is pricing in toward the second half of next year. We think that the shifted too far. Inflation report next week, i was saying i think it tells more about what is happening in the world. House prices. The obsession next order is wages. Europeang to guess slowdown. What really matters right now for setting rates . You are absolutely right. Satan will be the big day. And next wednesday will be that big day. , really theey said big thing driving them is the labor market and wage growth. In that regards, the last three months, one should not lose sight of that unemployment has gone faster than the bank of england has expected. Wage growth, even though it remains weak and we are under inflation powers, wage growth is showing signs of stabilization on the sequential basis. We expect it to begin to pick up in the months ahead. Thats the big focus. Wasnt the bank of england says about the labor market. They expected to pick up, they hope it will pick up. Do they wait or do they have to move earlier than anticipated to keep what they say is to keep rates below historical averages . One of the key messages from recent speeches that are consistently across the mpc has been given the uncertainty about how far unemployment can fall, theres more big focus on wage growth. They want to see the stabilization of things beginning to pick up and wage growth before they pull the trigger as it were. But with unemployment falling below 6 , i would anticipate the signs of wage growth to come through some. , dos you look at inflation see it to stay around 1 as we go into next year, would you push out your forecast . It is not that we think it is current inflation is unimportant but for the bank of england, they need to focus and they are ahead on Wage Development and continue to eas e policy and inflation is 1 plus growth remains strong and wage pressures are picking up. I think they could hike even with the low inflation. About Global Growth expectations and this one where people expected rates to be. We talked about the end of this year until the second half of next year, with the backdrop of Global Growth, is it over done for you . For me, it is. It is one of the key reasons why we are now for the first time slightly more hawkish than the market on policy. People should not lose sight of the fact that a lot of the developments in the last month or two months will be pretty supported of Global GrowthGoing Forward not just in the u. K. But elsewhere in the u. S. A euro as well. Oil prices have fallen around 25 per barrel. Thats enough to boost the level of gdp around 1 over a year. Thats a pretty big boost of growth. Some concerns about Global Growth currently are overdone. Lets talk politics. If i had a mpc members sitting in your seat and i said, they would say, no, the election does not matter to us. Despite the fact they moved to the meeting, does it matter to them . Sayarket participants theres no possibly they could move a qe2 and i think thats overdone. If they feed the need feel the need, they will. Tha