Transcripts For BLOOMBERG The Pulse 20160112 : vimarsana.com

Last couple of days. Lets get some of the stocks up for you. If we can get the board. Here is a picture from the european stoxx 600. Automakers, investors tried to set valuations after we had a lot of losses. We had a fourday losing streak so far. Maybe a little bit of investors thinking its a right time to go back in. Crude oil at 30. 6. I wanted to show the rand, we saw a big followup to the rand yesterday. Japan still one of the biggest bigs bids as it is considered a haven. Leslie to nejra cehic. Nejra the peoples bank of china is set to repeatedly intervene with the offshore yuan market since yesterday, according to people familiar with the matter. The bank has been cracking down on speculators in a move it is maintaining a stable currency. A fresh record amid speculation currency intervention by Chinas Central Bank is draining the supply of the currency it the overnight highball client. The oneweek break jumped to 33. 8 . Oil is extending declines after brent closed yesterday at the lowest level in 11 years. The cheapest and more than 12 years. Both are at a risk of falling. Expandedplies exacerbating a Global Growth thats a global let. A global glut. Francine lets introduce a guest for the next 30 minutes. He is jim rogers. Jim, great to have you on the program. Thank you for making the time to speak to bloomberg. How much do we know . Do you believe the figures . Jim i dont believe anybodys figures, do you . I believe bloombergs figures. If you listen to government they kiss, you are going to go broke. Francine what indicators do you look at when you talk about china . Things. Re are many when you look at a country, you have to look at so at all sorts of things. With china, there is not as much available. I do go there a lot so i talked to a lot of people. I see a lot of companies. I see things that are happening. Things are slower but that is normal. Francine how worried are you . I am worried about the world in 2016. Which is the Third Largest in the world is in a recession. Many parts of europe as you well know, there are disasters going on. Slumping inonomy is a lot of places. For people to blame all of this on china, china is a victim more than a cause. The real cause is the american centralbank the American Government and Central Banks running up debt. China is a victim like everyone else. I understand your point of view is china is a victim. , theu move the on that world could go back into recession. Do you agree . Do you worry that a debt bubble busting in china . Jim there is no question that there is debt in china. In 2008, when we had a problem, china could help bail us out. America spent a lot of money but we didnt have any saved the. Any saved up. China does have that now. Now. Es have debt its nothing like america or britain. You are going to have bankruptcies in china. I hope the government lets it go bankrupt. That is going to scare a lot of people and be disruptive. That, are worried about dish if youre worried about that, look at the United States. China has staggering reserves. Francine jim, youre not too worried. Does it mean the market should be a lot more confident about how china handles itself . Listen, i make as many mistakes as anybody else. At the moment, i am sure the United States i do own a lot of u. S. Dollars, but i would rather be invested in china then the u. S. There will be problems in china. China trade within the with everybody. If everybody in the world has too. Ems, china will francine we have had problems with volatile markets and currency. What has that taught us . Jim as you know, the United States and imf for the last 11 years has been begging china to let them market and set the rate for the currency. China said ok we will do it your way. We will let the market have more to do with it. The currency had the currency began to be subject to market fluctuation. It is normal that it should have a correction and yielded down for a wild here it and yielded down for a while. It is easier for people to take money out of china. If you have been trapped with the currency for decades, you want to take some out to. If the ghost of further, i hope i am smart enough to buy. Francine talk to me about the u. S. What does that mean for u. S. Treasuries . Jim i am short u. S. Stocks. I am short u. S. Junk bonds. The spread got to be very narrow. Interest rates will be going higher in the u. S. No question of that. Whether the Federal Reserve or market takes them up. We have had this artificial level of Interest Rates for a decade. This has to change. The world cannot go on. What is happening now, the Federal Reserve is destroying all of the people who saved their money. You were brought up saying work hard, savior money and someday every thing will be ok. All of those pensioners are all being destroyed. No Interest Rate. That cannot go on. Francine are you worried that actually if something goes wrong, the fed doesnt have enough ammunition . About theworried gigantic debt in the u. S. I am worried about the fed. What more can they do . What will happen is we will start having problems again. Whether this month or in the spring. The fed will panic, it will try to come to our rescue again. They will print more money, they will lower Interest Rates. Whatever they will do. The fed is the one making this problem and making this problem worse and worse here it worse. Capital is being misallocated. The fed will keep trying because he dont know what else to do. It is the wrong thing to do, i assure you. Francine what is the solution . Jim what you mean they cannot step away. Since when is the Federal Reserve cannot prevent problems when people go bankrupt . In the early 1920s, we had a problem like this. You know what happened . The government raised Interest Rates. They balance the budget and washington. We had a horrible year or two and then we had the best decade in the history of the republic. Francine they are trying to spur inflation. They have been doing qe and inflation is not being picked up. It is something that Central Banks have to revisit. Able to get that up. Jim since when . Since when is inflation good for the world . I read a lot of economic history books. I have never heard people advocating inflation. It is something people try to stay away from. If want to use the japanese example, the japanese market today is down 60 from its alltime high for the six years ago here in if you want to use japan as example, weve got a long period of problems ahead of us. Francine very quickly and then we have to take a break. I am not saying inflation is good. Disinflation is one of the things we have to worry about. Do you agree . Jim no, i dont agree. Stable prices is what mankind has been struggling with your stable prices is what noble people want. They want to know that their stable. Is soluble in francine jim, thank you so much. Not only will we talk more about the bank of japan but his thoughts on your. Crude continues to slide toward 30 a barrel. We will break down the commodities crunch. Lets have a look at the turkish lira. That turkish currency fell with stocks. We heard a loud explosion near istanbuls tourist district. This is just breaking across the bloomberg terminal. Well have more of that. Francine welcome back here it were getting some big news out of turkey. There has been a bomb blast. The turkey currency falling after we had reports of a loud explosion near istanbul tourist district. We understand through the dha news agency. Parts of istanbuls historic lastsula reported after thats after blasts in the cities touristic district. It is extremely sad and having an impact across these emergingmarket currencies. Lets get more from our guest, jim rogers. A quick comment good it feels a little sensitive to talk about markets when there has been a loss of life. When you look at 2016, we are expecting more acts of terror. How should an investor deal with that . Jim you are exactly right. Ne should be prepared for what is happening in turkey is going to happen and a lot of different places. They have no fear of death and they are happy to go and blow up a lot of people. We should be prepared to see what is good to happen. It is going to affect world economies. I am very pessimistic about world economies. Francine i need to correct myself. There has been a blast but we do not know what is causing yet. Coming back to our initial conversation. You are telling me you are long on china compared to the u. S. Next line u. S. The federned you are may have to cut rates . Jim i suspect when things go bad, the bureaucrats in washington are going to say we will save you. They are going to get calls from all over wall street saying the world is coming to an end it if the market goes down 13 , they are going to call the fed, and the fed is made up of bureaucrats and academics and they are going to panic. Hey are going to print they can take us to negative Interest Rate if they want to. I dont have any confidence in the Federal Reserve in the United States at all. Risk is athe biggest policy from its its a bank. Which one has more at risk . Jim the United States centralbank. These are the ones who have been lowering Interest Rates for nearly a decade. These are the ones who said we are going to print money into the cows come home. The other Central Banks joined in. I started printing money too. The congress and president has raised debt to astronomical levels. All of this policy which is madness is started in the washington, d c. I dont like saying it, i am an american. The rest of the world is copying us. We are all going to have to pay the price sometime in the next few years. Francine how worried are you about oil tackle you about oil . Is net benefit for a world economy. Jim it should be great for all of us. It is not great for a rant or nigeria. For iran or nigeria. It should be great for all of us. When ae, as you know, market starts inclining, starts declining, it builds up its own momentum. Francine what happens . Your concern here is what . At the same chart for wti, there is a concern that if you go too low, and you hit off fromhat has cut oil majors. Because of a chance of a recovery worldwide. If we have a panic, sure, you can have a big rally. It will go back to 100. It takes a long time to turn a market around. The oil market is a gigantic market. It takes a long time to turn it around. 100. Ould cost there are things that could cause 100. But not 20 oil. Francine what is your smartest trade for 2016. Jim my smartest trade . I only have one. , i am watch bloomberg sure you find a lot of smartest trades. Sugar. Maybe the short junk bonds. Francine you said you were concerned about europe. Is it because of the brexit concerns . Or oil and its lack of inflation . Jim francine, the whole world is going to become a japan. You tried down these Interest Rates to absurd levels. Can i get returns on these investments . Japan has had 26 years of lost decades. Europe is going that way. I am worried about the whole world. Largest debtor nation in the world. This cannot go on. I dont know where in any history book where you can find this kind of policy is sound. Francine is it too late to reverse course . Jim is it what . Francine too late to reverse course . How do you try and make sure that doesnt happen . Might it think we dont take we have much ammunition left. Japan is coming to the end of its possibilities. They can print more money, but the debt is staggering. If you look back at the early 90s at the early 1990s, scandinavia let people go bankrupt and they started over. After a year or two of pain, they had a great japan has gone the other way and they have had 26 years of problems. History shows policies we have been pursuing cannot last and will not solve the problem. The only way to solve the problem is when there are problems, you let people who make mistakes go bankrupt. Confident people come in and take over the assets, reorganize and start over here at start over. We are saying nobody can fail. This is horrible economics. This cannot work and will not work. Francine jim, great to have you on the program did thank you for talking to us. Program. Thank you for talking to us. Up next, european shares. We break down the mornings trades. Francine welcome back to the pulse. European stocks trading higher after investors set valuations. Mark barton has the details. Detention turning to china. The attention turning to china. The yuan rising. Performingh index below 30. The dollar against the yen. That is the longest losing stretch since 2011. The dollar is oversold against the yen. Crude falling for the seventh day. The since july 2014. Since july 2014. The stoxx 600 balancing between losses and gains. It risingtoday today. Stay with us. Are francine welcome to the pulse, live from bloomberg in london. We are getting some Industrial Production figures to mark barton is standing by. Warmer than usual weather using energy demand, up falling. 7 . Electricity, gas, and steam dropped 2. 1 are in they had forecast no growth on the data. Dependent onemains domestic demand and services. It stagnated in october and drop in november and production will have to arrive to avoid a contraction. Manufacturing delivered a lower than expected performance in november. Output dropped. 4 . A fifthoutput fell 1. 2 per second of consecutive decline. There is weakness in the manufacturing survey. Growth cooled in december. That suggests little contribution to the economy in the fourth quarter. We will see if sterling is reacting. It is. This is a sixday chart. The pound falls for six days. This against the dollar. Its fallen by 1. 4 . Its at its lowest level since june 2010. To do nothing. Keep an eye on sterling. Its been falling in recent months. It is a reason why we keep Interest Rates low, because it puts a lid on inflation. References to sterling weakness. Francine thank you so much. Mark barton there with asp checks. Lets get a flash. 18 ass at alcoa dropped it ordered a loss of . 39 or share. That holds the impact of costcutting impact. Them is fouring cents per share. There was rising demand for aircraft parts. Is poised tot man become the First Chinese person to control a hollywood phone company. He agreed to buy legendary entertainment. The credits include Jurassic World and godzilla. Chinas car sales will accelerate after climbing at the slowest rate climb in 20 years. Accordingncrease 6 to the association of automobile manufacturers that is your Bloomberg Business flash. Francine another industry where china has been a key Growth Drivers hospitality. The largest provider of Hotel Accommodations has been expanding rapidly in the region. The company owns holiday inn and crown plaza during they are opening its 5000 hotel. Its great to have you on the program. You are 112 gets to see the real economy. We speak to investors. You travel and meet people. If we talk about china, what is your feeling . Should we be more concerned than we were last summer western mark is it just in transition so we need to give it more time is . Westmark its an economy in transition. They are trying to become a more consumer led economy. We can see that change. Its one ofness, our fastest markets. The top lineman of the growing in the way you would expect. We are so we knew hotels because demand is fast. If you make an investment in hotel, it might be five years to open. Of openings of new hotels as high as its ever been for us in china. There is a lot of up to miss him in the market. Reaction, irket dont know whats driven that. The growth rate may be lower. An economy that size cant continue growing doubledigit forever. I think we would like to see that in the u. S. Or the u. K. We remain very optimistic about it. People continue to travel and its a growing economy. Francine weve been trying to understand the chinese consumer. Its very different than the u. S. Is it different when they travel . Richard alas the same. A lot is the same. We have done a lot of work in research. Its one of our key markets. Broadly, Consumers Want the same thing. They want hotels of the right place. There are some micro differences. China,ched a brand in its whether 5000 we just open. Its designed to be a chinese hospitality experience. Francine that means what question mark . Changes in the last six or seven years area richard i think in china, our Fastest Growing rands holiday inn. Brand is holiday inn. Ambulance, the things chinese travelers want. What the rooms are like, what food and beverage there is. They eat different sorts of things. Its very tailored. Continental is one of our biggest brand. Mount pleasant plaza is our biggest band in china. Crown plaza is one of our biggest brands in china. The Chinese Government has defined tourism as the fifth color of economic growth. Hotels are getting. Roads, they follow railway lines. You have to get there. The government knows its necessary. We with the first in china weve been there a long time. We are the biggest in china by a long way. Francine youre happy with your partnerships over there . You have a lot of hotels. The model is a huge success. Richard we run the hotels for thirdparty owners. You have to choose you as carefully. Partners carefully. Were very confident in our partners. We do with deals existing partners and half with new partners. Francine how does china compared to the u. S. . How do they compare to your . Europe . Richard people make commitments to travel. We are a little bit of an indicator. Large aspects are the same. I think in china, there is no precedent for china. We cant build a new runway in the u. K. Is there precedent for the scale of growth . , we seethats grown similar opportunities in china. Manyast there will be as hotel rooms in china as there are in the u. S. Thats incredible. These hundred million outbound trips. That helps her business globally to be big in china. Francine this is you being very buis on china polish llish on china. That must translate to the way people go on holiday or it richard at the margin. They are not mutually exclusive. I am positive about travel. Today, you dont live and die in the same village in lifestyle requires people to travel. The u. S. Continues to grow and china continues to grow. It continues to grow. We continue to gain share. Thats an important measure for us. Whatever is happening in the market, i want to grow ahead of the market. Francine thank you so much. We will talk about certain m a in your industry next grade. We will that question to our ceo. Lets have a check of the turkish lira. We have seen a drop in the last dirty minutes or so. This is as it falls with stocks and bonds on the report of an explosion in istanbuls tourist district. We dont know much on it. We will be the latest after this break. Francine welcome back. Were live from london. Lets get to the news. He pushedkaplan says the december rate rise. Economy maybiggest want staying on a path of higher darling costs. 2015 will turnor out to be 2 . Thats relatively sluggish by historical standards. Its been enough to drive down the rate of unemployment in the of. To around 5 by the end 2015. Economists expected gdp growth 2. 5 . To be between sales are set to return to growth after firstquarter figures met estimates good. Rupert murdoch has announced his engagement to supermodel jerry hall. They had been dating since october. That is your first word news. Francine lets talk more with the chief executive from International Intercontinental hotels are in you talked about your views on china and the u. S. We heard news this morning about a possible blast in istanbul. This is the Security Risk in the nation. How much is security a concern when you talk about travel and traveling and your hotels . Richard we are worried about the safety of our employees guest. Big deal as an industry. Whenlers are quite sand about it. Paris is still affected. Theres no question. We see it in other markets. We have very high security standards. We have very strong risk programs. We do everything we can against it. Its somewhat of action. Its something that we worry about on the ground. What are the main halls apart terrorist activity . Personal challenge to you . Richard we have Security Issues around the world. Thelways have to deal with them. We train people. We have fundraising programs to make sure we are doing what we can. Were opening thousands of hotels weve got 1300 hotels in our pipeline. Training people in developing people to work in our hotels is the biggest challenge we are up against. Academys we0 train people in hospitality. Thats the ways deal with it. Francine are you ever worried about over expansion . How difficult is it to keep Quality Control on all of them western mark western mark . Ofhard the only own a few our hotels. Hotel, are opening a there is an opportunity and we work with them on that. We are very proud of that. In new york. Its a great hotel. Its in an upcoming location. We had 3500 hotels and we now removed overhave 1500 hotels in north america. Reasons. Or quality its about driving quality. We set our targets every year. Its measured by our guests and not anything else. Area. Ly important francine you talked about this organic growth. Do you ever feel like you are in m a target question mark western mark western mark . Demonstratinge organic growth is very strong. There are not Many Industries where theyve got that level of growth. We have 5 of the worlds hotel rooms. Its a massive market share gain. Francine will you buy or will you be bought . Richard we have been buying. Leading boutique business last year. Its the fastestgrowing sector. Acquiring brands that fit in our portfolio, thats really important. For us, its about Value Creation and delivery it to our guests. Us asot as important to having the right brand. Hotels by it to 5000 being big for the sake of being bigger. Francine we talked about the middle market, if you look at folio, is there something you think you are missing western mark . Is it will be something in the way that we consume our travel experience in the future western mark . Launched hotels in the u. S. I think we are continuing to evolve. We have a new open lobby concept. Have a whole new room design. Understand the guest is important. We keep an eye on changes and development in the market. We have a very broad array of brands. Openine youre looking to 1300 hotels in five years. Is there anything surprising abouthere you will be opening this . Richard you might be surprised how many are in china. Asia, thereast and are lots of opportunities. In india, there is great opportunity at a huge market. Weve got about 30 hotels and 50 in the pipeline. They take a long time to open. Other than that, its worth pointing out that there are 10 markets in the world that will represent 75 of all growth in the industry. Were were we concentrate not trying to sign hotels everywhere just for the sake of it we want to know where our customers are and where they travel. That is where most of our focus is. Francine thank you so much i enjoyed the conversation. Growth is looking positive. Thats the new take on the economy. Weve bring you that exclusive interview next. Francine welcome back. We are live on bloomberg television. Youre looking at live pictures did from the chris paris. The banks new governor will speak shortly. The dojeakers include governor and that is going on out. We had an exclusive interview. Ie he told us inflation remains low. This is what he had to say. Inflation remains too low. We have ansituation, active and effective. Ofk at our decisions december 3 last year. Andecreased Interest Rates to marchour programs 17. We would reinvest the principle it we have been very act. This is important. We had many studies converging on the fact that his policy will half a percentage point of additional inflation. In the same growth. Economic data. This is the most important point. If we have the tools and capacity of action. Francine the first word is up next. For our viewers, surveillance is up next. He will be talking about the turkish lira. Leftplosion in istanbul several people dead. Turkish geeking out investigating whether it was caused by a suicide bomber. You can follow me on twitter. China steps up intervention. Shortselling currency is destined to fail. Oil extends losses. Stockpiles are increasing as iran boost production. Police are investigating an explosion in istanbul. Several people are dead. This is bloomberg surveillance. I know we have to talk about china. This is the first that we