tv Bloomberg Best Bloomberg July 17, 2016 5:00pm-6:01pm EDT
>> coming up the story that shaped the weekend business around the world. equity sores while earning seasons begin with banks in the spotlight. >> it is a case of no news meaning good news. it doesn't sound much she is a huge proponent of austerity. what she said is well done, you one, you fix it. as the u.k. prepares to leave the eu we get more perspective
on what it means for business. plexus will require a complete assessment. it is all straight ahead on bloomberg best. matt: hello and welcome. i'm eric schatzker. youris bloomberg best weekly review of the most important business news, analysis and interviews from bloomberg television around the world. let's begin with a day by day look at the top headlines. many investors had thursday and friday circled on they calendar. the week began with equity market.
the previous record close was 31.8. we barely missed that on friday. >> here is something really weird. higher rates on government securities. it's the yields weren't this low there would be a lot of excitement that because we see yields grinding lower today it feels like people are very nervous. especially when you see it spike back up. those can move pretty quickly.
always it is going to be scrutinized. do we really deserve to keep .ates this low longest winning stretch. ..k. stocks have rallied it is up about 5.4% when you take into account price swings. the u.k. inst europe, it is also global markets rallying. i want to take a look at this because i have this chart showing with japanese stocks are doing.
is pulling up to 51 downing street. margaret thatcher was the first woman prime minister. with herlling up husband philip. here she is. let's listen in. this in an important moment in our country's history. following the referendum we find a date of great change. we will rise to the challenge as we believe the european union we will form a positive role for ourselves and we will make for a worlduntry not for the pre--- from which to view. those whodirectly to were disenfranchised, those who are looking more. she gave a very clear mission statement. she does not sound that she was
a proponent of austerity. this country has been through a lot of the last six years. knowsf this is that she the referendum was about a lot more. it was an antiestablishment vote, a vote against london and privilege. herenk what we are seeing is her attempt to address that that youon to saying will get your exit from the european union but i also hear what you are saying. some breaking news from the bank of england, the rates unchanged. a slim majority expected.
0.5% and it will stay where it has been. and thens as it was headline number for me is that we do not have enough information to make a decision at this stage. coming buta rate cut it was 81. has a background pulling the trigger around. >> it is most of the communications thing really. it is not really long and gives them that chance to explain why they are cutting. is helpful to explain things. >> the rate comes down to zero eventually. i'm not sure about that. there was only one record.
this is the type of stock that investors want to own. on the investment banking side and equity trading as well, everything was really great. store -- story this morning. france extended the state of emergency. after that the the steal they attack in nice that killed 80 people. a truck drove more than a mile. seventhas had its terrorist attack in 18 months. it is going to a critical mass around people.
i think that is the conditions for that. also this is the time when populist crashes increases in europe. the political construct of europe and it is a dangerous combination. serve political instability and that is something europe already has. it is no longer a geographically contained problem , it is all around the world. inspired bybecome these articles of hatred that come out by social media. the french are going to do this. they are much more vigilant.
app. how viral it has gotten is pretty insane. you're going to see multitudes of people playing this game. >> it is been a tough time for nintendo. they have not been able to keep up with the changes in the gaming industry. people are moving to these mobile gaming apps. it is really just a test of the i.t. iceberg. it has such poll. enormous and is that is why we are seeing this insane skyrockets. nintendo's newest game have their stock soaring. >> it is a premium model.
outlet and money? vegas, you canin buy your way inside kind of clubs. essentially it is there a model. >> there has been a trained at the top of burberry. hired this.up they joined at the home of the company. i spoke to our board about all the opportunities and identifying the opportunities that we had ahead of us and that i wanted to address the skills
that we needed in order to execute on those. i certainly didn't start out looking for a ceo. i just felt that i would love to get marco into it. >> he has agreed to buy. what does this mean for amc? >> it puts them back on the trajectory of being a world leader. talks to take in over. isgether and it
looking like it is pretty much a done deal. >> what is this all mean for rhonda? you can see that she is clearly doing that. day says orders climbed more than 60% over the last year. the best-selling amazon gadget that helps the company triple last year. it suggested sales were flat compared to last year. >> i think the results were generally aligned and they also said it was growth for party
sales. >> they come of with the sales. a year ago it was 400 million approximately about was roughly in line in the stock had been coming up. expectations were already there and it was as expected. and what thep amazon is saying. some of it was captured at amazon itself. that is a separate story and a very good one. it shows our ability to. to amazon. straight line ipo success?
it is the biggest technology ipo. can this excitement be sustained and that is the big question here. stickyets, it is very and that is what we have seen the investor momentum going into this listing. can i continue? scarcity.ome that is kind of driving up demand. when it comes to u.s. investors to seek they can be pretty fickle when it comes to platforms. can they continue to expand in asia as is that going into it. what are you going to do with this money? i am very happy with the
initial response to the investor. most of all we are going to focus on investing. services everything to us. eric: growth reported profits. with respect to city and noorgan, it is a case of news as good news. investors were really worried about the acts of brexit. there is little bit of worry about consumer credit. the city navigated the quarter very well. thinking isestment down and consumer credit
performed very well around the world. credit quality is actually improving to some extent. the rate environment has not been as big of a head wind as we might have asked acted. a little disappointing this time. , they were sorow strong in terms of gaining on both sides of the balance sheet. there was an expectation that the result would be similar. slight disappointment there. ♪
best. it has been a momentous week in global politics. the transfer of power from david cameron to theresa may ended weeks of limbo with the united kingdom. starting with the formation a patent. -- of a new. binet. he will be britain's finance prime minister. he was defense secretary before he was foreign secretary. country's finance minister will have a big role with the european union. he is well to that job. he knows many of the leaders. it is going to be crucial for
chancellor to maintain access to the single market. >> had that happen? what bastadd asked is going to do now, it was almost it's he had been wiped out of the political landscape but now he is now foreign secretary. very interesting to see in this cabinet that theresa may is putting together both brexit tears and remainders having to remain as one team. a very divided country after that referendum. czar, what are his credentials? he ran for leadership in the party.
he was concerned about civil liberties so there are a lot of dimensions to this guy. he wrote an article here domestically thought his home in the u.k. about that. he has also talked about doing quick trade deals. he sees paris trading with europe as a possibility. he is also been there all along those lines. they are all from the liberal and of the brexit movement. they think britain could survive very well and the problem with that brexit movement is there are two groups of people. one group likes that but the other group want to know more globalization. >> is it wise putting all of
, some sayks and fears very shrewd. they say it is unpalatable for the nation. >> that is a little bit too macro -- machiavellian. in position.le able and very good. he will be determined to make a great success of this. the extrication of britain from the european union which will be the test of the first term. about philip hammond. >> i don't think he is going to be a great performing chancellor.
mostsurprised you the burns,ohnson were always not even in the cabinet. those will do. johnson was and continues to be the big surprise. it is a very interesting choice. not have been surprised if she had given him nothing. the one thing she could have that all these havecult launches, you have your shot. i am here and i'm going to fix it. done, youaid was well one, you fix it. eric: in australia and japan this week, the him -- incumbent leaders appeared to strengthen
their leadership. whether the film -- political games will transfer to their tracking economy. >> australian stocks look at games as martin trimble claims of election victory a week after the polls close. votes are still being >> it does. the australian electoral commission is not going to declare a final tally until july 15 when the deadline closes for postal votes. the government has been returned with the slim majority. we take a look at the tally, the coalition on 76 seats. or, leading in 76 seats but the opposition labor party at 69. the government may get to 77 seats. >> also putting australia on negative credit watch last week made plenty of headlines. it seems the market shrugged it off. >> australia still looks good.
the u.s. and u.k. had a downgrade but investors still like those bonds. look at japan's debt. that still has got negative yields as well. currency, equity and bond markets are unconcerned. >> japanese prime minister shinzo abe has a convincing victory in the upper house elections. does this election win puts abe in a stronger position to move forward with the stimulus plan? >> it does put him in a stronger position. it looks like he is heading for a two thirds majority in the upper house. the question remains how will he use that majority? in the past three and half years we have definitely seen a lot of action since the first era of monetary policy. the bank of japan has been a lot of money, bought a lot of assets a government bonds to help stimulate the economy. we are also seeing fiscal spending.
the government spent quite a lot. but then we come to that third aero -- arrow of economic reform. that is the question mark. you have to see if you will knuckle down to do more for economic reforms. >> there is a lot of calls for fiscal stimulus from abe, including a close advisor calling for a 20 trillion yen boost. that is what? 199 billion u.s. dollars. are we going to get it? >> we're certainly going to get more stimulus. we will get a lot of stimulus. will we get 20 trillion? i'm not sure about that. >> here is another of the week's geopolitical shock that will reverberate through global markets. an international tribunal ruled against china in his dispute with the philippines over control of the south china sea. >> china's claim to what 80% of the south china sea has been ruled null and void. an international tribunal ruled
that it china's efforts have exceeded the law. china make clear it will not comply with this ruling. there is no enforcement mechanism either, no international maritime police force. what is the significance of this ruling beyond the fact that it's a legal ruling? >> it actually means a lot. maybe not today or tomorrow, but it sets in normative baseline by which to judge claims over the south china sea and elsewhere. it also puts china on notice that it needs to abide by international law. and that this is a case where people around the world are judging it based on his actions, not just what it says. >> china saying they hope they can resolve this diplomatically through talks. what is even the likelihood of that? >> is clear that china will not abide by the tribunal ruling. what china would expect now is a set of negotiations with the philippines. it is probably what the
philippines, especially under the new government, the president, would like to achieve. detect and -- he does not want to go from china. he made that very clear. he was elected on domestic issues, not international issues. he was elected to help poverty and inequality and criminality. so, he was to diffuse the crisis, but more importantly to convince china there is a need for massive foreign investment to come to the philippines. that could be the tide of the in that situation. erik: coming up, the future of business in the u.k. and europe has taken center stage since the brexit referendum. this week some of the world's
♪ erik: you are watching "bloomberg best." i'm erik schatzker. britain has a new prime minister and a new cabinet, but as the u.k. prepares to negotiate its exit it's unclear how businesses will be affected. throughout the week on bloomberg television we spoke with high profile business leaders about their brexit concerns and their plan to deal with the changes. let's start with my exquisite -- exclusive conversation with the head of the ubs investment bank.
i asked him what brexit will mean for the thousands of people he employees in the u.k. >> we would need to consider moving a number of our employees to european union countries. we will still have a base in the u.k., still deal with the u.k. in the way we deal with the u.k. today. most probably we are looking at other countries that are not european union based would not change. but the part of the business that is eu business done from london would need to be done from elsewhere. erik: we are talking about 5000 people that you employ currently in london in that scenario. how many of them are we talking about moving? >> i would say you have a significant impact. i would say ubs is a swiss organization that has had plans in place for a long time to
follow market development. but i would not say something that is on our doorstep tomorrow. it is something we have some time, although not as much as we would like to prepare for. erik: the world need to know the applications are for london as a financial center and for all the banks that operate there. so when you say significantly, are we talking about half your people? our half of your people going to zurich, frankfurt, are they going to paris, madrid? >> i do think -- when i say significant people it would be a significant percentage. i can't tell you how many. but, it would be relevant for everyone to be concerned that this will require a complete reassessment of our model going forward. >> last week saw nearly $18 billion dollars worth of u.k. funds shuttered or gated. you chose a different road. you devalued the fund.
are you going to gate the fund? give us a sense of what happens next for your property exposure. >> monday last week we saw redemptions almost at zero -- $2 million on a $3 billion fund. then the surprise news came in the afternoon that one of the funds was gating. that of course caused the panic selling in the market. and, you can understand people taking money out of a property find at nav in investing at a 20% discount. and so it was a good arbitrage. we took the view that one of our obligations was to provide liquidity to our holders. we got a valuation done by our valuer on a stress valuation. they came back about 20% to 25%. which is what we applied.
>> 2007- 2008 injury down by about 40%. martin, this will cause commercial property assets to be sold. how much will commercial property assets drop by? kennett touch the 2007-2008 value? >> no, i do not think so. we are in a very, very different environment this time. 2007-2008 was a liquidity driven crisis. there was no liquidity in the market. the world was awash with liquidity at the moment. with the pound, we are seeing a huge institutional interest in u.k. property. >> we are obviously very big and committed to both the u.k. and to europe. they are fantastic markets for us. we are fantastic customers in that market. we will help them anyway we possibly can. >> would you have to rethink
your operation in europe or the u.k. because the regulations? and so on in so forth? >> make no mistake, no matter how it does unfold we will be very active in helping our customers and aggressively focused on the market. >> what issues would be on your radar before determining you will tweak the operations in those markets? >> the things that are effective or affect our decisions in markets are availability of people. do we have access to quality people coming out of quality universities so we can build our workforce? we make various decisions on where to house service support and sales operations. we would like to bring this operations as close to customers and is close to talent as we possibly can. most of our decisions when we hire and place development centers really revolve around access to talent, access to markets, access to customers. >> do you think the doomsday
scenarios we've heard before the vote took place, will they still play out? >> i think it will have a impact. for example, you have to negotiate on the exit terms. how long is that going to take? it may take two years or four years. who knows? but then once that happens no british company can then pass forward to europe. you will have to redeploy people and decide which countries to go to. ireland, or the netherlands, or where? where to have their headquarters. will all the people leave, all the businesses leave? i don't think so. >> how about you? >> yeah, we have a large operation and we have a new company that passports in the europe, we will have to change that.
but i do not think the insurance industry will change that much. lord will be lords. only about 4% of their business is in sterling. all the rest is in currencies. i don't think that will be a big problem but there will be an adjustment period. the automobile industry and the u.k. will be hard-hit. once you get rid of all the treaties, the economic treaties, it is going to cause a problem. erik: from business conditions on the ground to big business in the air. conversations from the air show are coming up next. this is bloomberg. ♪
top aviation executives gathered to talk shop and strike deals with the farnborough airshow. guy johnson was there to get their thoughts on the state of the industry and the impact of brexit. >> tell me what brexit means for your business. >> for other than the foreign exchange upheavals due to this brexit, we still have passenger numbers. we still have passengers traveling in and out of europe. as a matter of fact, more and more people are now flying into the u.k. because of the lower -- >> wouldn't this be a golden opportunity to raise that state? the stock is suppressed. >> we are at 15.24 everyone to stay at that level. we are long-term investment so we are confident this relationship between us and aig will keep growing and we will
keep on benefiting from each other's purchasing power. >> you don't see this as an opportunity to raise the stake? >> we are not thinking about that at all. >> are you worried about the instability? >> we are not worried about instability. we have full confidence in the british economy and the british government. things will rebound and things, business will be as usual. this is what i think will happen. >> we don't see brexit affecting long-term plans. we have a long-term perspective. we have been in the u.k. for 75 years and we will continue to ramp up. we don't see our plans changing. >> the pound continues to fall. is there a competitive currency story here we need to talk about? >> to a degree. we do not see currency fluctuation changing the
behavior of our customers a lot. in the long-term business like aerospace local currency fluctuations don't tend to drive our decision on supply chain. we can drive affordability, we that said, where try to take advantage of it. >> let's talk about interest rates. interest rates are incredibly low at the moment. does that kind of offset the cheaper oil prices? they can run all the planes a little longer and by new airplanes at low interest rates. does one offset the other? >> i think it helps in the overall financing marketplace and create economic movement around the world. i think it's advantageous and encourages some additional investment infrastructure, which i think is a key enabler for the aerospace business. >> the business community as a whole expects decisions to be taken. so, uncertainty is not good. the new prime minister, i think, is good news for everybody. regarding airbus, we are committed to the country. we are of course a very disappointed, but we don't expect it will affect our relationship as we have more than 15,000 employees.
and, david cameron yesterday confirmed that the u.k. will remain a business-friendly land and will support aerospace. >> expectations were low and where demand is going to be. is demand for aircraft now falling, do you think? >> we have seen increased traffic numbers. 6.5% globally last year. the first six months we can see another 6% year after year. so, the market is bullish. airlines need more aircraft faster. especially for the family. i would not be surprised if tony tony fernandez for air asia would need more family-friendly aircraft. >> boeing in the dust on the second day of the air show. airbus lended a $12.6 billion -- landed a $12.6 billion airliner deal from air asia.
it will bring its tally to 223 aircraft. >> a huge order coming through. $12.6 billion. i'm assuming you did not pay list price. >> no, i wouldn't be standing here if i did. >> in terms of purchasing aircraft, it's very important. this is a buyers market. >> i think it is. let's be real. there are not too many orders going around this airshow. it is been a dryer period after a boom period. timing is everything. and, we are very happy with what we have done with airbus. there is plenty of liquidity out there. on top of the fact we are disposing a lot of the older aircraft. so that gives us a little cash. we have a leasing company that we are going to sell. cash is not the main issue here. >> interest rates around the world -- to go a little further -- >> that's another reason for
buying but we are buying. interest rates are good. we don't see any pressure as it rises. with brexit happening, etc., we do not see it rising anytime soon. i mean, we capitalized on brexit. we capitalize on the fact there is a lack of orders. we took a punt on that and we are very happy with what we've got. ♪
european markets. they have been big, big underperformers. >> i also like to look in currencies. i pulled up wcrs to see a role reversal today. check out these currencies against the dollar. right up at the top year, you have the british pound gaining 2% against the dollar. down at the very bottom in the japanese yen losing 2% against the dollar. erik: there are about 30,000 functions on the bloomberg. we always enjoy showing you our favorite some bloomberg television. maybe they will become your favorites. here is another function you will find useful. quic go. it will take you to quick takes we can get context and insights about timely topics. the subject of this week's quick take is the black lives matter movement. >> they exist because of this. >> and this.
and this. >> you shot 4 bullets into him, serve. -- sir. he was just getting his license and registration, sir. >> they can rise to this. >> black lives matter! >> it's a #, a rallying cry in a movement. is direct the intersection of race relations and deadly force in america. so here is the situation -- the u.s. government does not keep an official count of shootings by law enforcement, but an ongoing watch group tallied 990 fatal shootings by law enforcement in 2015. of the 93 unarmed civilians killed by police in each cases, more than 40% are black despite the fact of black people make up 13% of the nation's population. in 1992, los angeles police officers were acquitted of the beating of black tab -- black cap driver -- black cab driver rodney king. there was anger and riots but no movement. today the difference is social media. how did this movement start?
in 2012 trayvon martin was gunned down by george zimmerman, a neighborhood watch volunteer he claimed he shot him in self-defense. after zimmerman's acquittal, the first black lives matter debuted as a hashtag on twitter. you reemerged in a vaguely a year later when michael brown was shot by ferguson police officer darren wilson at a protest freedom ride that took place under the black lives matter banner. more than 500 people attended. in august 2014 the #black lives matter was used more than 52,000 times. now, here is the argument. following the shootings of especially police officers during a protest march in dallas, the black lives matter movement is spilling over to being an election issue. although not a clear-cut one. while hillary clinton is staunchly in favor of the black lives matter movement, she has not impressed the movement's leaders. they disrupted a speech and private fundraiser as well as a speechwriter husband, former
president bill clinton. >> i love protesters. except when they won't let you answer. >> donald trump is in favor. >> you can hear it once. all lives matter. >> trump's been critical of the black lives matter protesters and said police are " the most mistreated people in this country." ♪ erik: that was just one of the many quick picks you can find on the bloomberg. you can also find them at bloomberg.com, along with all the latest business news and analysis 24 hours a day. that will be all for "bloomberg best." thank you for watching. i'm erik schatzker. this is bloomberg. ♪
emily: i'm emily chang. this is "best of bloomberg west." we bring you all of our top interviews from the week. pokemon go was unleashed into the world. the mobile game sent nintendo stocks soaring, and it led to fans with injuries. we will explain what all the fuss is about. the biggest technology ipo of the year. the japanese company line debuts this week. amazon prime day's triumphant second coming. this online outlet is out with the biggest sale day ever for amazon.