Transcripts For BLOOMBERG The Pulse 20151020 : vimarsana.com

BLOOMBERG The Pulse October 20, 2015

Headquarters in london. Im manus cranny. Now chinas president xi jinping landed in the u. K. Last night to a red carpet reception. And it is perhaps not surprising that he is being given a royal welcome. David cameron said the visit will bring more than 30 billion pounds of worth of deals and investments. Caroline hyde joins us. Good day to you. President xi will meet the queen later today. Tell me about the financial benefits, the deal that we expect to be announced. Caroline you said it. 30 billion pounds worth. Almost 4,000 jobs. Almost every Industry Group can be a winner here. They are able to access the consumers in china more. Structure within this visit. We understand xi jinping will be traveling to manchester. It is going to be Energy Winning out. Im sure it is going to be finance winning out as well. Energy. Were hearing over the potential deals, money coming in to help finance but also design, build Nuclear Reactors here in the United Kingdom. Were expecting Chinese Companies to come into those deal and expecting the Financial Sector, the foreign urrency element of london. We dominate that space. Ho of the market. 40 of the market. Peoples bank of china is selling debt. The First Time Ever denominated in yuan abroad. They are doing it in london. Sovereign debt to be sold in london as well. Yuandenominated debt. All of this showing what the Financial Sector can win out and hopefully it will start to rebalance things in the rest of europe. We are in deficit when it comes to our chinese trade. Were 30 billion in deficit because we import far more than we export. Manus give me a sense of what pomp and ceremony they are going to have in the house behind you . It . S a small house, isnt caroline the red carpet being rolled out. Get a sense of the anticipation. If you pan to my left, youll see hundreds of chinese nationals are coming already to wave in president xi jinping. We understand Prince Charles will be there and he will meet for a private wluverage the queen and the houses of parliament, the lords and the m. P. s he will be speaking with this afternoon and then a state banquet and even then he stays the night with the queen in Buckingham Palace and of course beside him. Re they will be in manchester, seeing the stadium home to manchester city. He will be going with David Cameron and also visiting with george osbourne. Imperial university. This is about seeing the Technology Companies and tech talents and signing deals worth 30 billion pounds. This is about the government really trying to woo. After remember what has been a difficult time after the Prime Minister met with the dalai lama, the spiritual leader of ticket. Tibet. We might see protests, concerns about human rights in china and Animal Rights in china and of course what they are doing the Steel Industry here. Imports come in, cheap steel imports from china. It may be a tough discussion but i think for the time David Cameron is putting out the positive when it comes to the relationship. Back to you. Manus Caroline Hyde outside Buckingham Palace. Ere joined by allianzs chief investment officer. It has all the pomp and ceremony. Is this about our trade relationship . What do they get out of it . They get credibility. Exactly. We are seeing the birth of new currency. Really not quite coming of age but getting to a stage where it will be closer to being able to float freely and become a true, true world currency. Were not quite there yet. We saw that in august with the changes of the central parity rate which then led to upset everywhere around the world. We have got somewhere to go. We are very close. We have november 1, i think, we have so were very close. Manus the u. S. Treasury department put out a statement. Our judgment is that it remains below its appropriate evaluation. This is a generosity from the americans. They are supporting it at the moment. Will they continue . Do you see a movement . Do you see a further devaluation, evaluation, take your pick on the word. We dont know and they dont know themselves what the equilibrium wait is yet. Rate is yet. They need to get it to a level where by they need not support it and then well see. It seems it is slightly below where it is at the moment. Manus i want to put up the graphic that we had up there for a moment. Is there a moment in time when they want to move on it and there has been some substantial moves in term turnovers stocks. The yellow line, the commodities. We did get the growth since 2009 which we think is probably a real number. We think bloomberg 6. 6 . Just on the turn of lacking. We are. That was the Biggest Issue in august was not a small move that was made. It was what then opened up as far as the potential large devaluation that we were talking about, 20 . And also what it meant as far as the economy was concerned because nobody really believes these numbers. Manus you have two facts at the top of your notes. China. In interpret of corporate and exports for the u. S. It is still very small. Were talking about 1 of the exports. But the economy is now 15 of the world. The population is 20 of the world. And so we know in time it is going to be more significant for us all and we can see in the Financial Market it is having a bigger impact on Global Markets than it has had. That means that we need to be far more aware of whats happening in china than we used to be as far as growth, corporate profit and particularly the currency. Manus youre going stay with us. We have a little bit more to get to. Mcdonalds chief investment allianz. Al stephen harp we are a surprise majority. Justin trudeaus victory marks comeback political n the countrys history. 6 billion to a u. S. Hedge fund client in june before recovering the money later. A Junior Member of the Fx Sales Team used a gross mig rather than a net figure prompting a bigger payment. San francisco fed president jon williams sees reason to increase rates soon and slowly. He said the central bank is progressing toward a mandate in stable prices and maximum employment. We want to get this just right, and that means probably in my view, moving a little bit earlier and then moving more rage gradually and weight waiting longer than moving rapidly. Manus were going to talk Monetary Policy in the u. K. At 11 00 today, tune in. Exclusive interview john fero. So the fed, when they raise, raise an Interest Rate is a good thing and will actually reduce uncertainty. I will let them pick the time when they do it but the facts is i think it will be a good hing, not a bad thing. Manus that was jamie dimon speaking in an exclusive interview saying that the fed rate debate also sat with San Francisco fed president jon williams. He said the u. S. Central bank should raise rates in the near future. My view is that some of the slowdown in jobs is really because of the strength in the dollar and other things and other factors. Im not so worried about the slowdown and some of the recent data. Again, it is supportive of continuing to improve in the labor market. The g. D. P. Tracker suggests were going to see 0. 9,. 9 of a growth for the Third Quarter. Is that too low . Do you need to see something higher in order to support the case for higher rates . My mantra is not to get too caught up into the onthonmonth. Of course there is some payback in the Third Quarter. My view is it will be about 2 rowth on an annual rate. You dont want to get caught up on this months data or the quarter data. For 2016 r forecast for the first half or for the entire year come down with the slowing in growth this fall . No, in fact my forecast in term turnovers Unemployment Rate has come down a little bit because we have seen unemployment come dawn quicker than expected. Also other indicators in the labor market have continued to improve at a really healthy clip. My view of the g. D. P. Growth next year is for growth to be around 2. 25 . Inflation will come back to 2 over the next couple of years. That hasnt changed. The near term inflation outlook has been held down by the strength of the dollar and oil. Where does it leave you in having a decision to raise rates by the on the other hand this year. You said you expected that to happen as sf the data come in as you forecast. This is my own view on this. I expect to see unemployment get down to about 5 and dip below that later this year or early next year. I expect to see continuing signs that inflation is stabilized and may be underlying moving back to 2 . Zero Interest Rates, in the extraordinary accommodation we have in place i dont think is necessary to support growth. I think the time to start raising growth in the future in my perspective. Well watch all the data i hear from all of my colleagues and contacts in the community. Manus great interview there. You want to stay with bloomberg, because later today well speak with the bank of englands lone dissenter. That is at 12 noon with jonathan ferro. Lucy, listening to williams there, in the near future in the near future, it is all data dependent but he is clearly aligning himself in the hawkish camp. Where do you stand in the great debate . Well, it looks as if since it is last a balanced adjustment, we now have monetary conditions which are slightly more favorable for raising. Precisely ere where we are with a different balance. So were still around 50 50. They probably dont know themselves yet. Manus they had a pretty bad reporting season. They would very much appreciate to have a margin. Manus lets talk about some of your big cause. You took some money off health care. Youre not running to buy energy. But if the opportunity presents itself, you would. You have some conviction calls. We have u. B. S. I like that name. Sergio to go see monti in a couple weeks. Are they the leader in that group for you . We like wealth management. Look at Morgan Stanleys results. It is doing well. That seems to us to be a q. E. Beneficiary. Also there is a trend in asia for more assets that need managing. It seems to be a structural trend. U. B. S. Has a brand which has survived throughout the financial crisis. Everything that they and others were involved in were the brand that still has credibility and they are gaining market shares. That is part of it that we like. Were not keen on Investment Banking and that is the reason why were were happy that we are manus i want to recap some of the headlines that we had from the e. C. B. And get your take on them. They released this report a few minutes ago and basically said that banks ease lending standards to companies in the Third Quarter. They say q. E. Has had a net ing impact on the credit standards in the Third Quarter and here is the golden ticket. E. C. B. Bank reports rising demands for Company Loans and for mortgages. This is nirvana, isnt it . Not quite yet. It is a step in the right direction. It is not we have been we have seen some pickup in lending over the past six months in europe. Previous to that, Interest Rates were very low but there was no confidence and there was really no activity. Were talking, you know, very small numbers. But it is moving in the right direction. If we can continue on this path, and we need need more q. E. , but that seems to be available, then we can see if this recovery can be and little bit of because at the moment, you can barely see it. Manus you have to stay with me. Were going to talk canada and commodities in a very short time. Mcdonald from allianz global investors. 6 billion. Yep, thats right. 6 billion, oh, to be the man or whom that pressed that. Well take a look at Deutsche Banks costly mistake. Coming up next. Manus welcome back. This is the pulse live on bloomberg television, radio, also streaming on your tablet, on your phone and on bloomberg. Com. Troubles in an apparent error. Deutsche bank reportedly sent about billion to a u. S. Hedge fund client in june. Before recovering the money a day later. Here is hans nichols. Hans, this is a pretty significant amount of money to send to the wrong destination for anyone. Hans i think that is correct. We have 6 billion. It was trovered next day. The Financial Times initially broke this story. We should give them credit. I want to show you what the receipt did when they reported it. This is one way to see what foreign things are doing. Take a look at this when it was published. It recovered in the same way that Deutsche Bank recovered some of that 6 billion payment. What this had to do with is at the end of the day, banks figure out their processing claims. They did this, usually they are supposed to do it on a net basis. At this the point, they a junior trader did it on a gross basis. The next day the money was returned. The c. E. O. Laid out on sunday night a total reshuffle. Lots of musical chairs. Colin was the head of the investment bank. He will be leaving. Jeff irwin will be taking head of that, kind of revamped unit. Lots of changes there. One other quick note of this. The head of Societe Generale gave an interview talking about how you still need to have five or six big european banks for european lending. Ma us in, youre starting to hear concerns about what european banks are doing and whether or not these Capital Requirements are too sten youous. Manus that is going to be the big issue. Whether you create a weakened Playing Field between the europeans and the americans. Hans, thanks for running us through on the fx issues at deutschea. Deutsche. Commodities, it has claimed another victim. Canada has a new Prime Minister. Stin trudeaus labor party against harpers plans. It was triggered by the collapse in the oil prices. Lucy mebbed is still with us. This is a big thing. The sequence consequences, the real global consequences of commodity crush. Justin trude noh power with a backlash against austerity. You have a norwegian stepping into the sovereign wealth fund. Consequences here, are we looking at something more substantial . It is improvement in consumption which we were hoping to see and it has not come through yet. You ought to begin to see that coming through. In the u. S. We really havent seen that. Thats what were watching the the potential upside from it. It is still commodity producing. Nations are still saying there is some momentum in their g. D. P. That is not going to change. For the moment because china is the biggest consumer of these commodities and 50 of the demand in many of these commodities. Manus let me bring you in. Were back at 45 on crude. We have seen this little bit of a go through the market again in the past 24 hours. These commodities and oil simply dont have a firm footing. There is wrangling going on at opec as well. This is the worlds most expensive oil. Incredibly expensive to produce, maybe 100 a barrel. It makes no economic sense, these prices and is one more example how the oil crash is making making producing countries week and consuming countries strong. Manus there is the argument that the looney or the Canadian Dollar actually strengthens because this delays any rate cut by the canadians. Could very well be. Manus ok. Very short and thank you very much, will, for coming down ant and lucy. Next up on the pulse, will driverless vehicles mean the death of the Car Insurance industry . My next c. E. O. Would probably abhor the thought but it might do something for his margins. Well talk the improvement in road safety. Driverless cars and cyberrisk. I just had a horrible nightmare. My companys entire network went down, and i was home in bed, unaware. But that would never happen. Comcast business monitors my Companys Network 24 hours a day and calls and emails me if something, like this scary storm, takes it offline. So i can rest easy. What. You dont have a desk bed . Dont be left in the dark. Get proactive alerts 24 7. Comcast business. Built for business. Tand thats what were doings to chat xfinity. Rself, we are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Manus welcome back. Were live from bloombergs European Headquarters in london. Im manus cranny. Time to get you up to speed with our latest headlines. A warning, there is flash photography. David cameron says xi jinping will bring more than 30 billion pounds in deals and investments to the u. K. The Prime Ministers office said that will create almost 4,000 jobs. The u. K. Is striking an ccommodative tone. San francisco fed president John Williams sees a reason to increase rates soon and slowly. He said the central bank is progressing towards its dual mandate. And maximum employment. We want to get this just right. That means in my view moving earlier and moving more gradually than waiting longer and moving rapidly. Manus canadas liberal party ousted steeve harper. Justin trudeau has the biggest political comeback in the countrys history. Those are your top headlines. Lets get up to speed with the markets. We have

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