Transcripts For BLOOMBERG Countdown 20141027

Hello, very good morning to you. I am mark barton. 6 00 here in london this monday morning. 25 banks have fun to the stress test. Euros. Ls 25 billion most of that has been raised by the banks. For more, hans nichols joins us from frankfurt. Good morning, hans. It is the case of the morning after, the afternoon before. It. Hat is one way to put as we are here in franklin, we sift through to see what sorts of capital challenges. What we learned is it is really two countries that needs to raise capital are located. The essential central regulator has just the gun. Are just the beginning and not the end. We have received a lot of information. We have qualitative information. They are making sure they are in good shape in many different aspects. If you look at the stress test it does not include deflation. Were some of them optimistic . I dont think so. I cannot give you a more precise response. It is the worst possible synergy as they were perceived at the time they decided. I believe that is why we are targeting risk that has not materialized at all. Better. Ation is there might be other elements of it hasat develop after been chosen. All in all, i think we are in good shape. The argument from the ecb is s were strongtest enough precisely because so many banks had capital shortfalls. As the day progresses we will focus on which those banks are and what the Market Reaction is. One of those italian banks with the shortfall, our officials worried about to plug that hole . They say they are not. She said she was confident they can raise the money through private sources. They wouldnt have to turn in some cases to the italian government. That is the challenge. When you look at where failed banks reside. They reside in two economies greece and italy. That is the challenge going forward. How do you recapitalize these economyshe underlying them is an very strong . That is what they have to work on. Clearly the bank says they are confident. They are a little concerned about the banks that just squeezed through the lines, that didnt technically failed the stress test. Data,e ecb has all this from their loans, from the i. T. Department. They have a much better idea of what is under the hood. They are going to be watching closely. They are going to continue this process. This is just the beginning of the Regulatory Authority and by no means the end. There is a lot more work to do. Is there a sense this draws the final line in the sand that was the european taking crisis . Banking crisis . Yes and no. It dries draws the line they are healthy and transparent. Everybody knows what the ballot sheets contain. Officials were very careful to say not to say this will lead to a growth in new lending. To companiesome and consumers. The term used over and over again at the ecb in frankfurt, aggregate demand. There is a certain point a cannot do much to stimulate aggregate demand. That also gets into quantitative easing, and that is what we will be talking about at the bundesbank here in frankfurt when we have an interview in about an hours time. Looking forward to it. See you later. Thanks for joining us so far. Hans nichols right there. To the exclusivity of you. Says this marks the end of the banking crisis. I think the banking crisis is behind us. I am never free of worry. I think banks need to keep managing the risks, inengthening capital ratios the future. It is not as if it is the end of my worries. I think it is a major step to put an end to the crisis, to put an end to the uncertainty surrounding the european banking her, and i am sure it will help. For banks to be able to put out credit for the real economy. Our interview. Andreas dombret. Coming up i will be speaking to the european banking chief executive live from brussels. Dont miss that interview in about 30 minutes time. Stocks in hong kong and shanghai falling today. That is on news there is no date for a linkup between the exchanges. The link had been expected by the end of this month. We have the details. What is the latest . Chinese stocks retreating after the Hong Kong Exchange thing most in six months. Ends sankmost the most in six months. It was supposed to be launched right now. That was a pretty big blow yesterday. Was they mentioned technical preparations are done. What is missing is the final approval from chinese regulators. Some say there are some tax hurdles that may be involved. Others are saying occupy prodemocracy protests going on in hong kong could be to blame as well. This could be a chance the Chinese Government is saying about how displeased they are hong kong has failed to put this demonstration to an end. Chinese state council ultimately holds the key. The program will give International Investors never before access to buy stocks on china and other stock market, which has been highly restricted in the past. It also gives investors a chance to buy stocks in hong kong. These delays are adding more pressure on the government to bring normalcy back to the city. There has been speculation the occupy protests mayor have may have been to blame for market volatility. Our investors concerned . Definitely so. We saw that in the first couple minutes of trading. Many have added so many resources. Theyre going to hire more people just for this launch. There is a lot of heavy lifting and Due Diligence to be done in the last six months. They are starting to see more in the markets as well. The hang seng dropped as much as them intense of a percent 7 10 of a percent. You can join the conversation on twitter. About know what you think the results of the european stress test. Are they credible . Mark barton always waiting for your tweets. Heading economy isnt downwards. It is just stalling out. Us next. Tor joins the drugmaker meets to discuss the chief executive. The plan to sell and 8 billion drug portfolio caught the board off guard according to people familiar with the matter. But if one has begun an audit for possible tax fraud. Vodafone has begun an audit for possible tax fraud. As taxy they can value declarations the owner made before it was acquired. They have been plagued by revenue decline for the past four fiscal years. How is this for a tax perk . The former microsoft executive Steve Ballmer could be in line for about 1 billion in tax benefits after purchasing the Los Angeles Clippers basketball team. He could claim about half the Purchase Price under a littleknown tax code covering active owners of sports franchises. Prowestern parties are set to control ukraines parliament after the election. Joining us with more is ryan. What is different about this parliament . A lot of new faces. There is one party called selfreliance, which got their teen percent of the vote. It has come out of nowhere and is completely comprised of new faces. What is really different about this party from the last one is the last Parliament Even after the revolution was supporters. This revolution was only half in a political sense over. This really completed. It is interesting the Prime Minister of ukraine his party got a fit as many votes as the president party. This is the guy back in march that told me he was going to be the most hated Prime Minister in ukrainian history. Was heson he said that was going to have to carry out these reforms that would make him very unpopular. Perhaps one reason he was more unpopular than he thought he was going to be is some of the reforms he didnt get to carry out because those supporters would not let him. They got seven and a half percent of the vote. They passed the 5 threshold, but they are much reduced. This is new blood with a proeu agenda. What are the challenges . On the one hand you have the economy. It is the worstperforming economy and all of europe. It is set to fall by 10 . Then you have the worstperforming currency. That has fallen 37 this year. That thisoncerned now election is over the central bank will allow it to fall even further because they want to keep the house in order and keep inflation down around 50 . In addition to that, they have to find gas, to keep apartment buildings warm this winter. They dont have enough gas. That means they have to cut a deal. They have to find some sort of russia and russian backed rebels. Lets not forget 15 of the ukrainian electorate didnt even vote in these elections. 10 of the district didnt take part because prorussian rebels didnt allow these to come forward. Them are saying these regions should have their own elections. May onans wanted a tonic that same day. The rebels said they will have them. Does russia recognize this election . Russia says they will recognize the election. The our they are already saying these people are represented. That needs to be reflected. Election . The opposition is saying it is one of the dirtiest elections ever. We are going to hear from observers later in the day. I am not in a position to bake a judgment. To make a judgment. Lets not forget the fifth of the country is still rather insecure. Say the conditions were less than ideal. London is 6 18. Stay with us. Much more to come. A big day in brazil. A big day and ukraine. A big day in the euro area after the ecb stress test. Welcome back. The time in london is 6 21. Ukrainian voters have act pro european parties in the first election since the conflict with russia. Voting took lace and a fragile truce. To form a is on track coalition. The result bring a firm victory for proeuropean, proukrainian forces. That gives us a lot of present thes to , where we have steps for anticorruption, steps for rule of law, steps for the investment requirement. The results of the brazilian election has made an impact on the market. In Exchange Traded in turkey a plunge the most in three years. The brazilian economy recorded the slowest growth in two decades. She will return to power with 52 of the vote. The latest on ebola. Cuomo saysvernor travelers exposed to the virus will stay in their homes under a 21 day quarantine. The move is criticized by the white house, but Governor Cuomo says he is trying to address the concerns of many new yorkers. Over the last year the European Central bank has it a stress test of 130 of the biggest banks in the eurozone. Bloomberg gives you what you need to know in 60 seconds. The power of geekonomics was on display this weekend. The roadies of all things animated slot to the event. What is driving the costume clad economy . Loomberg went to find out. I would probably get everything there is. It would probably end up costing 1000 pounds. Nd it is such a shame. Exactly. Likes it is stunning. 50 really highpriced ones, to 100 and over, are stunning. Both of those cost 300 pounds in total. That is good. 6 20 five. 8 25 in london. Dont miss the conversation. We are always on twitter. Tell us about todays top stories. What stories do you want to hear about . This is my twitter handle. We are going to head to brussels for the international communitys reaction to the stress test. The european banking chief executive will join us next. Welcome back. Lets take a look at your fx check. This is eurodollar since the beginning of the year. It is down by 7. 6 . After results from the European Central bank stress test. Currency at a twoyear high. It could show Business Confidence stabilizes in germany. The big news from the ecb yesterday showed the stress test identified a total capital shortfall of 25 billion euros as of the end of 2013. All but the. 3 5 billion euros of which has been made good by the banks. Another of the banks was found lacking. The feeling is these stress tests should allay concerns about the Health Health of the euro area banks. Todayg piece of data out is out of germany. It is the climate index, based on the survey of 7000 executives. Economists expect that to be little change. The gauge was in september after pastning 1. 5 for the three straight months. Lets recap on the stress tests. Have moreperformers than 6 billion euros. Lets get to brussels and the chief executive of the banking federation. Good morning, sir. Thank you for joining us. Good morning. Were the stress tests credible . Were they comprehensive enough for you . I believe they were credible. Resulteased with the because it shows the banks are in much better shape than they were a few years ago. It also shows the banking or is robust. Are you surprised there were no major casualties . Are you surprised none of europes biggest banks were lacking . I am talking banks in germany and spain. There would be a few that would need extra capital. Surprisesre no because these stress tests, the comprehensive assessment has been like a train coming through the station. There has been some time to strengthen the balance sheet. Over the past year the banks have strengthen the Balance Sheets over 200 billion. The Block Capital rules certainly benefited some banks. I am talking about those rules to usellow banks instruments. They were eligible, but they wont be eligible in four years. The rules been used, there would have been 34 banks that would have been failed rather than 24. Does that mean it was to the benefit of europe that the fully fledged capital rules were not used . The fully fledged capital rules are being implemented now. What is important the older banks that had a stress scenario between 5. 5 and 6. 5, the supervisor will take extra care for them. We have some time. The good thing is the rules were a mess. The stress tests were a mess and quite robust. Now it is time to turn to the single market. Again at really look the sing market for financial services. Do you think this is going to get lending moving within the eurozone . He said this has drawn the line in the sand under europes banking crisis. Is this going to start the process of banks lending to businesses . Lending to consumers as well . Think he was right when he talks about the line in the sand. It has to do with the credibility of the Banking Sector. This needs to be done before the start of the supervisory mechanism. If you dont know who is in it, if you dont have a single set of criteria, you cant start this next set. The line in the sand is correct. Shows there is no obstacle to banks lending to the economy. I suppose, but do you think that will begin . Do you think we will get lending to the economy . Its not just about the lending side. Its about the aggregate demand side as well. I completely agree with you. Its the demand side. If you look at the figures you see in the Banking System there are no obstacles. There has to be work on the demand side before the economy why its so that is important we turn to the single market. The president of germanys institute, he was critical because he said the ecbs short because it didnt include the possibility of deflation in the stress test scenario. Is he right . Should it have modeled the scenario for Southern Europe . I think that is very much a question for the next few days and months for the macroeconomist because i have been reading all sorts of reports of other things that should have been included in the stress test. As far as i can see and this was a comprehensive test, and it shows where the banks are right here and now. If you understand, you will agree there is a severe stress shocks canows other be borne by the banks. There are many that are going to plug their capital shortfalls. There are eight lenders who satisfy the ecb requirement. That totals to explain to 5 billion euros. That is not much compared to the 25 billion euro blackhall. Do you think there is going to be a problem for banks raising that capital . For me it is difficult to say what the individual banks will do. The Banking Sector as a whole if you look at the numbers they are quite flexible. If you look at the banks that perform worse, are some of these banks going to have to consolidate . That is very hard for me to because that is individual choices by banks themselves. I am sure the scenarios are on the table. Thanks for joining us. It has been good getting your opinion. Get back to our focus. Those stress test results after a long summer of weak economic data. Our next guest is still optimistic. He is the chief economist who joins us on the line. Good to chat with you. Thanks for joining us. I am going to ask the same ceo of theasked the european banking federation. Were the stress tests credible . I would say they are pretty credible. They did not include the recent drop in inflation. As a result the assumptions on fume or future inflation is not very tough. The other stress tests threeyearabout economic outlook, they did model a severe recession. You could argue even with the drop in prices, the actual on such modest deflation we might be facing would not be more severe than what the stress test model. I would say the stress tests are pretty stressful. Clean . Banks now can they play a part in reviving the stalled euro zone economy . Notost of the banks are across thecially eurozone. We now have enough banks with a that thel of health bank should not be inhibited in terms of lending. As discussed already the major issue is credit demand. It is not credit supply. I think in some of the vulnerable parts of the eurozone italy and greece especially, the stress test results and the elections, which some banks will have to take, that this will play a role. This will help get italian growth up. It will help with greece but for the eurozone in most countries like germany there doesnt seem to be bad issues. There is not a lack of credit. In these countries the stress test would only make a marginal difference. The overall impact for the eurozone would be modest. For some of the most relevant of the should countries, the make a significant difference. As a whole, what is going to boost aggregate demand . We had a drop in confidence following russias aggression against ukraine and a few other crises. We should see a rebound in Economic Confidence by the end of this year or early next year. That would be a major factor in getting lending going. On top of that the residual credit we have in parts of the periphery is easing. Data is becoming less week. This is likely to become a bit firmer by early next year, and that will help the eurozone economy after what is a rough patch now. We are going to hear from the ecb today at 3 30. They will unveil about the covered bond program. Confident . There are many criticizing it, saying it isnt big enough. The ecb needs to think bigger. Is this part of the program just the beginning . Does the ecb need to move onto bigger things, whether it is Corporate Bonds or sovereign debt . Given the rough patch in the we have no given inflation risk whatsoever, i think it would be a good idea for the ecb to move from covered to Corporate Bonds. That might be a step the ecb fewd take in the next months. As borrowing conditions are fairly favorable across the eurozone anyway, whatever the ecb does will have a modest impact. The key is to get these external confidence shocks out of the way. The normal confidence will be the major role in reviving the economy. Earlyb will see to it this year. The key turning point cannot be provided at the ecb. Theyjust has to be external shocks need to fade a little bit. If you are not confident, even the cheapest money wouldnt be spent. The big piece of data out of germany, Business Confidence could drop for a sixth month, but it seems to be stabilizing. Not . Speaking too soon or it would be a nice surprise. We would see another drop in as thes expectations overall discussion in the Business Community seems to be about geopolitical risks, especially, and that will probably be reflected in one further drop and in forwardlooking expectations component. We hope expectations will stabilize to a enough by early next year at the latest and pave the way for a recovery we think would start after christmas rather than before. The stressed with test. Lets and with the stress test. Ecbthat it is done, is the s reputation in tact . I think it is intact and probably strengthen by the exercise. Great to chat with you. Thanks for joining us today. Speaking about the results of the ecb stress test. Thousands take to the streets in rome to protest against labor reforms. We are live in the capital after the break. The advert museum in a symbol of the Cashless Society. The guitarist has made it a personal mission to consign money to history. Abba,m a former member of i guess always a member of abba. I am standing right here in the heart of the museum in stockholm. People are looking at all of those Vinyl Records we have from around the globe. You cannot pay your entry with cash here. In sweden we have our own currency, and we are quick to adapt to new technology. Sweden would be the ideal country to make cashless. Because myhing began son was burgled, and i thought to myself, what would happen in the Cashless Society . What would they do in that with that computer if it cannot be transformed into cash . The deeper i have gotten into it , the more i think it will add benefits to a society that goes cashless. I want to find out what those benefits could be. Wanted to make an example the Economy Today is a gentle, and were going that direction, whether we want it or not. Nothing is going to happen. It is a symbol. It is an abstract symbol. You see where they can go and look at coins and bills. I think that should be the future. We were just discussing our favorite abba song, and it has been decided sos is the winner. Thousands take to the streets in rome to protest against prime labor reform. s we are live in the italian capital after the break. Welcome back. I am mark barton. Italians rallied in rome over renzisend to protest labor overhaul. Alessandro, unions are saying they scored a victory against renzi with his massive rally protesting his job back on saturday. Is it true . What will renzi do now . It is not completely true. Unions are saying they brought one Million People into the streets. If the population of rome is 3 million, it is hard to believe one third is in the streets. There are a lot of people. The messages there are a lot of people that are angry. Renzi will have to speak to them today. He is meeting with the unions. Tozi just yesterday speaking his party that supports him. The majority of his party said, we will listen. We will discuss, but we are going forward, and people who think staying the way we have been for many years, not changing labor laws, these people live in the past. They dont know what they are talking about. Its like they are trying to put a coin in an iphone. They have no idea what modern havee and things of changed. He is saying, thank you for protesting, but we are going to get going. Was trying to change these laws, but he backed off. What has changed . He is doing the same thing berlusconi is doing, but he is succeeding in a sense. He is a member of the left. Berlusconi has the left behind him. Renzi has managed to split the left. It is interesting to get these reforms through. Thank you very much. You got . Looking at afghanistan, we of now in the runup to 11 11. Flag. Ng the union more are a few hundred troops. There will be 300 more troops in kabul, but this has been one of the longest and fiercest conflicts the u. K. Has fought since the second world war. If you see anyone in the armed services, it is a great time to think them for their contribution. It was a great game. Timee time means extra when Manchester United used to serve a goal. It is coming back. Manhe 94th minute, this scored a goal. The manager said he was stupid. He threw off his shirt. Can be absent for a game. He scored a goal. I said before the game, if Manchester United withdrew, i would be happy. It shows you how much they have fallen over the last year. Join me on twitter. Tell me which stories you want to hear about. This man with Ryan Chilcote. Countdown continues. Stay with us. The next test. The stress banks need to have more than its billion euros. The central bank is confident they can find a solution. I think this is totally achievable. I am sure they have come to us with solutions. Left in limbo. Chinese stocks fall as plans for a link between the Shanghai Hong Kong and shanghai stocks have merged. Ukraines first election since the conflict with russia. Welcome back. Time in london is 7 00. It is monday morning. We begin with an exclusive interview. Resident weighs in on the stress test. He says the review marks the end of the banking crisis. I think it can be a turning point for european banks. There has been uncertainty for a number of years about the european Banking Sector. Where are the problems . Now they have been disclosed. The ecb has done it very thoroughly. We know the remaining 13 banks still have more capital to bring in. That has been very helpful. We will support the return of Economic Growth to the euro. The5 banks have failed stress test. Most of it has been raised by banks. For more, hans nichols joins us from frankfurt. A very good morning to you. That havee banks initially failed, all but eight have raised enough capital. 200 billion in capital has been raised. What we have is the result of a process. To see how strong the Banking System looks. Of the banks in italy still need to raise money. I spoke with a board member of the ecb, and i asked what comes next. Next two weeks, in the coming days they will have to explaina solid land to plan to explain. They will have to have a solution in the next two weeks. They will have to implement this solution. Six months or nine months. If the banks choose to raise capital and there is a 25 billion shortfall, will they have any problems raising that capital . I think it will be a much better place to issue liquidity been now because that has a health check transparency exercise. Will know exactly which they are investing in, and they are certain the provisions have been made, the assets are properly valued, so it is safety. Largelyn banks emerged unscathed. We will be talking about that. Really the banks that have barely passed those adverse conditions. I am here at the bundesbank. In a few minutes we will be speaking with the board member. We will get his take on it. The banker by trade is on the board here. We will talk about this artwork was the test Strong Enough . If the the ecb saying stress test wasnt Strong Enough . They say they didnt have a crystal ball. When they devised the stress test they didnt know russia was going to annex ukraine. Inflation would be on the horizon. Even absent taking that into account, they were difficult enough and had enough adverse scenarios that you really see what these banks would do under pressure with 5. 5 threshold in terms of common equity. They are convinced they are secure enough. In some cases it does the market that is going to reveal whether the stress tests were harsh enough. We are going to see adverse reaction in italy later. We will see you later. Live in frankfurt. Today in shanghai falling on news there is no linkup between these exchanges. Even on joins us from hong kong with the details. What is going on . Good morning, mark. Chinese stocks fell for a fifth day. With the operator of Hong Kong Exchange syncing the most in six months. This comes a day after the chief executive officer mentioned there would be no start date. This was a big blow yesterday. It really cause a lot of brokers to be in limbo. They said technical preparations are done. The one thing missing is final approval from chinese regulators. Some say there are tax hurdles involved in all this. Others say the occupy hong kong prodemocracy demonstrations are partly to blame as well. They say these delays are the way for the Chinese Government to show how this plays they are that these demonstrations are still taking place. The Hong Kong Government can put an end to it. It is entering its fifth week now. Chinas state Council Holds the key to win the stock and it starts. They will give international stocksrs a chance to buy in the 4 trillion stock market, which has been restricted in the past. It also gives a chance to buy stocks listed in hong kong. Those delays adding more pressure on the government to restore social order as well as bringing normalcy back to the city. There has been speculation the occupy street protests may have been to blame for market volatility. Our investors concerned . Definitely. I think were starting to see that in the first hours of trade. Many banks have added additional resources. They spent a lot of money in preparation for this watch. In thestarting to see it markets. The Hong Kong Exchanges down as 4. 36 . It has pulled down the benchmark of the hang seng index. The shanghai composite down as much is 7 10 of 1 . Thanks so much. Stay with us here in london. It is 7 00. Bloomberg did the to the bank of italy director deputy general about the stress test. Thetta is optimistic about state of italys Banking System, and we will have that for you right now. I think the exercise has has seen italian bank these strong cases. We need further work. The 25 banks which failed the ecb stress test, nine are in italy. At least italy seems to be the problem child. Why is that . You have a combination of factors that have come together in the country. You have a domestic economy and the third recession since 2008. That basically led to a growing stock of bad loans. Bad loans hit the highest and 1998 in august. That has been compounded by record low Interest Rate environment, which has hindered the banks from boosting confidence. This combination of factors have come together, and that is what comes through in these numbers we received yesterday. Bank . T is next in the they hired advisers. They are considering all options on the table. They havent elaborated on what those may be. It has been twice bailed out since 2009. Fewer,ions are becoming and if the bank is still constrained by legacy issues it inherited when it took over a large rival in 2009 to the longstanding issues compounding with the environment we discussed. Thank you very much. Do join in the conversation. Tell us what you think of the european stress test. Are they credible . Are they comprehensive . Sandat draw a line in the that is a problem for the european Banking Industry . Tell us what stories you want us to cover. Tell us what stories you dont want us to cover. Coming up, the word from the bundesbank. We are going live to frankfurt for stress test reaction from the bundesbank board director. Dont miss that interview next. The ecb failed 27 banks in the stress test. Lets head to frankfurt where hans nichols is live. Good morning. A member of the board of governors. Thank you for joining us. You were a former market participant. Now you are a regulator. Give us your general assessment. Thank you for having me. My view is we are coming off the stress test at the higher end of market expectations. We have the most honest view of ur banks in europe. We have a lot of transparency. We have more fact than one and a half million data points. We know much more, which gives the market the possibility to price the risk accordingly. I think we have a positive outlook. Were the stress test rigorous . Tly i think so. There is some part of the stress test or you could have been more rigorous and parts where we are rigorous. It is the only way to regain credibility and to eventually revitalized market. Where could the test have been more rigorous . In the inflation target. With inflation having come down so much we are probably in line with the stress test. Is rathercreased rigorous. We look at the german bank. They all passed except for one. They raised enough capital. The german bank that just passed the bar, are they in the clear, or do they have more work to do . Basically we had no real failure. All of the german banks have to do much more work. Competition is becoming more international and more fierce. Think digitalization as well as very low Interest Rates in the German Market is a challenge for banks, and they need to do something about that. You are worried about their ability to generate profits in an increasingly competitive world . We have overcapacity in the the bund is paying, and a for consolidation . What should happen bundesbank , any need for consolidation . An if profitability is not nine is not in line consolidation may well help. This point, if costcutting is the way they can restore their Balance Sheets, not necessarily by raising their capital. Need to raisenks capital, will they be able to do that in the private market . We dont have a gap right now. That, they may want to issue equity on the back of the stress tests. Not much equity is needed. I think there will be much calm because the stress test is not asking for more equity, but over time to have stronger equity as capitala stronger position is the best thing for banks to grow. They need to be working in a profitable environment. That is true even with exposure to the shipping industry. It is something we very much supported. You were a central banker before. In a previous life you were an investment banker. How do you expect the markets to react this month . I am not giving recommendations. Normally the Credit Investors are more impressed with the stress test than equity investors. I am expecting a rather, opening. You didnt see much in the japanese market this morning. There were a couple of banks that are in need of equity. They will be looked at carefully today. You mean italian banks. The great banks, will they have equity, giveng the state of the economy . Use of both of the italian both the italian banks and these banks were able to attract more transparency. Re if the price is right, i think they can attract new equity in these market. What hinders investors is the lack of clarity, which we have overcome. We have potentially drawn a line in the sand. Does that mean banks are going to finally start lending . I think this is unrealistic to think the stress test will lead to new loans being extended. We need much more than that. We need these economies to stay away from reform and carry through with structural reforms. If those countries have low spreads, that means the markets are expecting they stay on course. If that is continued, and the banks in these markets have convincing business models, they will be fine. That means we need fiscal policy changes, not necessarily more monetary stimulus. We have a lot of monetary stimulus. What someu look at say is the need to combat the inflation, what is your view . I am not a fan of quantitative easing. We just heard it there. Market expectation is suspected to be subdued. I suspect we are in safe hands with this one. We will see you later. Nichols life in frankfurt. Thousands rally in rome against Prime Minister renzis labor reforms. We are going live to the capital next with the details right after the break. They with us. Stay with us. But these are the figures we have today. There has been a strong testing of the banks. We now know where the remaining weak spots are, so they can be dealt with. That was the dutch finance minister and president of the eurogroup. He spoke in an exclusive interview about the stress test. Welcome back. Time in london is 7 23. Prowestern parties are set to control the Ukrainian Parliament after the election. Joining us now is Ryan Chilcote with the doves. What is different . Now the results have changed a bit. We have got almost dirty percent of the vote cast today. The Prime Ministers party is actually ahead, only by 1 10 of 1 . Whats striking is this is a man when he became Prime Minister said he would be the most hated in the history because of the reform agenda he had to push through, which is going to be painful as part of the 17 billion, yet he is the most popular guy out there. He doesnt know the answer. He doesnt know. He says, we will see. They have a lot of horse trading to go through. He seems like the most likely candidate. Lets not forget the president and Prime Minister are close allies. Despite the fact they have their respective parties they will be together. It looks like it is going to get 13 of the vote, which is extraordinary because this is a group of politicians who have never been in office before. It is completely new blood. Thisis what distinguishes are the men from the last parliament, which had supporters. They swore their allegiance. Sides. Them changed many of them have shown their true colors. I think the other interesting result is some of the radical parties, really proukrainian parties didnt get as much support as people thought. He is saying this is a vote for peace, that the parties of peace have one out. What are the main challenges for this new parliament . You have europes worstperforming economy. The imf said this it it is expected to fall 10 . In addition you have the worst performing currency in ukraine. It has fallen 37 this year. Cold in kiev,t is and they have to get the heat on. That is important. They have the not so small affair of patching up ties with russia and the russian backed rebels if they are going to find some way out of this war they are going to have to do that. Thanks very much. It is one of the closest ever president ial races in brazil. What will be the impact on the economy . Next. Time for your fx check, only one currency in town, it is the euro. This is a oneyear chart. You know the euro is down but it is rising today. Down for the year by 7. 6 . Again, theust rising dollar as rising against much of its major peers. That some oferned the Balance Sheets were too weak. Germany, theout of latest survey. The economy in germany has stabilized. For the stress test, it is all about that today. , that was theuro end of 2013 which is 6. 3 5 billion euros if that hadnt been made good. Most of that 25 billion euros has been made good. Spanishh, no german, no institutions were required to find more capital, but the euro is up today, down 7. 6 against the dollar. These are the top headlines, the ukrainian vote and the countrys first election since the conflict with russia. A fragile truce broken by president poroshenko. Electionsults of the bring the firm victory of democratic proeuropean, proyour cranium and forces proukrainian forces and that gives us the ability to present reform and to bring a stronger 2020 or hisegy to steps for anticorruption, steps for medical reform, steps for the Investment Climate the latest on ebola, new York Governor Andrew Cuomo has said travelers returning from west africa will state under their own home under eight 21day quarantined. This has been criticized by the white house but Governor Cuomo says he is trying to address the fear and concern of new yorkers. The brazilian president ial election as our to been made and it has had an impact on the markets. After the reelection, the brazilian economy reported a surge growth. She was returned to power with 52 percent of the vote. Reelected in the president ial race. Daniel, we spoke with you before the election and we are speaking with you the morning after the election, the Market Reaction. We dont know yet but some saying we could see a big selloff in the stock market and the real. We knew the market did not much, and it that is normal to expect the markets will react, but when she got , she spokeast night about being more open to markets and talking more. The biggest problem was there was not much dialogue between the government and the markets. She says she will open the will set her sights on political reform and has promised great changes, do we believe her . Beforetried to do reform and it wasnt possible, but after the protests in 2013 she tried but there were restraints. Dialogue with the markets is something she will have to do. She arty announced she will change the finance minister who the market doesnt like. Peoplewill that be . Talk about people inside the party but she should open it up to get people more related to the market because that is one of the main challenges she has now is getting the country to grow as much as it can. The good thing for her is the country has the potential for that. It is not like the stalemate during the problem in the country, the country is not growing but has the potential if she has more dialogue with the markets. Hand, you could have the markets not accept her administration. There should be dialogue on both sides. Should she be given leeway by the markets . A honeymoon. . Now i think it will be bad, the markets will be getting out and she has to be quick to reassure that she will try to put this country how will she do that because the economy is in growing . The Workers Party has been in nowr for 12 years, and for four more years until they complete 16 years in power. It is normal for any party involved for 60 years to lose popularity, so now is the time that she is able to do all the things that is important for the country but may not be well accepted. She is to change something in the management of the finances of the country. That she has ang good situation to do now. She willd to know if do that, she has been giving signals that she may do that will brazil be cut to junk . That is one of the big questions. It is. Athink we can get through honeymoon phase if she gives strong indicators that she will work for a better situation of the economy. Thementioned changing relation with the market yesterday as soon issue was elected, she may talk again today about that. Talks foron how she the next 10 days, it may help her get back she has to tackle excessive taxation, excessive bureaucracy, excessive Government Intervention and a clogged regulatory system. She won by 4 million votes out of 150 million how do you unite after a bitter election . Ofit is a clear question agenda between the two candidates. If you think about what they each propose, the difference is how they will deal with business. I asked you what more probusiness people are like, and she has been fighting with the markets for some time. Confidence is at its own problems has had its own problems for the last decade. It is hard to decide who will be the president just by thinking who is better for the relation with business. To growthe potential with her, she just has to be more open to dialogue. The biggest problem is that she is not very keen on being a lula waser for brazil, everywhere talking about how great it was to invest in brazil and that helped still getting that image of thinking that brazil will boom soon and she is not like that. Opposite, she stays in the shade and does not talk much and does not like to talk to people at businesses. That is something she has to change, even if she doesnt want to, just to get someone in the finance minister to go to people and show more for the reputation to grow. You are a writer and commentator, it is your breadandbutter daniel, are you hopeful . , ii try to be optimistic think we have a lot of hard decisions to make now and a lot of things she has to change, she has the opportunity to do that without bringing it problems to the country. It is not like we are in a situation with no way out. There is a way out, she has to follow that path. We had one of your rig is this man in, saying if she doesnt there will be a financial crisis. I dont think we have a early, it is not like we are on the verge of falling into a precipice. In the past month the election was a big problem the past four months, the market has been can campaigning. Whenever she appeared well in the polls the markets would , sot, putting the dollar up now is the time she realizes that she needs the support of the markets and businesses and she needs open dialogue. That and we will do can only hope that she will. I know you are a football fan and the nations favorite footballer later the l classico over the weekend played in assico over the weekend and they lost. Two brazilians follow him a broad . Brazilians follow most of the brazilian players. Who is the number one European Team . I think barcelona. A lot of good brazilian players played in barcelona,. Are a lot of brazilians in the european leagues, i wish i had the stats. There are no englishman in the brazilian leaks. Leagues. Well have a lot of foreigners, the market is not that good and they dont pay as well so they prefer to stay here. It usually comes down to money. It always does. The same with the election. [laughter] is, she has been giving good stuff for the country. Is going down, not just the government, there are a lot of things with the demography. It is not like the country is getting worse, the markets are not supporting her just a focus on that now. The markets have a strong advantage. Some say it will fall 10 . Thank you. Daniel, the author of brazil, the country and the present. Will talk about nickel woman come back. It is barth chart time next. News, the to Company Board made an adjustment to chris feedback or chris biebacker. His plan to sell the drug caught the board off guard. A possible track forward of its vodafone says the tax declarations that ono made before it was acquired. Executiverosoft chief Steve Ballmer could be in line for a billion dollars in tax benefits after the purchase of his basketball team. He bought the clippers in may for 2 billion and could claim half the Purchase Price under a littleknown tax code covering called active owners of sports franchises. Looking at a live shot of the city of london, equities are on in 10 minutes time and after the break we will take a look at something but first let us focus on this. Barts chart. S of nickel has fallen for seven consecutive weeks. That is the longest losing run since july 2001. 14,000 per metric ton. Nickel is used in stainless Steel Production and fell into a bear market last month. See the little white circle that was the high of the year. Since those highs in may, nickel has trop by 30 . Januaryhen, prices, through may had risen by 56 in 2014. That was on concerns that restrictions from indonesia, the worlds eggers producer of the metal, which implemented the worlds biggest producer of the metal, which implemented a ban on exports, has diminished since may because output my not might not be disrupted so much. The philippines shipments to china have threatened the Global Economy and have threatened chinas appetite for metals like nickel which is why the rates are falling. Industry is climbing at the same place, the stockpiles monitored by the london Monetary Exchange have climbed 15 since september. Straights risen 416 weeks, that is the longest stretch since june, but on the for thee, lowcost nickel can benefit consumers. Who are the big consumers . Carmakers. Appliance manufacturers such as whirlpool and electrolux. As the price of nickel holds, it andumers like carmakers consumer appliance manufacturers as well. It has been a fascinating story, nickel come declining along with other commodities. It has been in that market for the last month and the big question is how low will it fall in the coming weeks. We have had seven consecutive weeks of decline, the longest losing run since july 2001. At this time you are looking at a live shot. 10 minutes time, we will take a look at what will be driving todays trade. Back, 751 7 51 here in london. The stockscipating will open higher over europe, futures upby 1 , dax by 1 as well. One of the big themes of the day, the biggest theme of the day, john is here. Jon is here. Is all about that because germany, france, spain none of them needed to raise capital, but also an equal dose of cynicism because there was no blood on the streets. We need blood on the streets to be credible. If you want to look for credibility, look a much money these banks have been raising. Youre talking about 60 billion euros in the last 12 months alone . That points to credibility that the banks took it seriously, but still to the failures. In italy, expected to drop 15 , they need to find 2. 1 billion euros from somewhere. Talk about ite sparking a wave of consolidation across the Banking Sector. That remains to be seen, but lets he would happens. Germangerman spanking Banking System says maybe we needed a few failures. They need consolidation and it will provide lessons to consolidate. Talk about how tough the tests were, the fact that it didnt involve deflation. I asked the Vice President , he said inflation is not there because we dont expect it. Im not sure that is good enough for people out there. The president of the germany efo institute wanted that out. And the efo is important today. Shock, horror, expecting another drop. Thehich the germans, locomotive of the european economy dont want, but the stock market rose last week. The run of declines for now, have ended. Weekend wasst december 2 dozen 13, we had the glosses and big gains day after day. Meeting this week, we are expecting qe to finish. A little bit of a whisper out there, they could leave 5 billion to the next meeting. Finishes. Hat qe how do they change the communication. It will be interesting. A feeling that they will keep considerable or not . Considerable after what . You have to agree that it will stay considerable after qe has finished. What does it even mean anyway . We can discuss that all week. We will. On the move is next. Is forever there. He taught me everything i need to know. On twitter, tell us the story you want to hear about him a the big story to talk about today such as the ecb stress test and the brazilian election and the ukrainian election. A big day in the ukraine today and brazil. Watch out for those shares. They could fall 10 . On the move is next. Stress test, i will see you nice and early tomorrow. Welcome to on the move. I am jonathan ferro. We are moments away from the start of trading. The euro pushes slightly higher. Expected to open steep and in the green. Is thetest release sentiment is morning. The ecb failed 25 out of 100 lenders. Some have not already plugged capital gaps and none of european leaders fell short from spain or france is required to raise capital. Is italian Banking Sector the biggest loser. Name the banks failed the stress test. Capital shortfalls and will speak to the ceo of one of the field lenders, Giuseppe Castagna , that is in two minutes time. That is what we are looking cap. Futures pointing much higher on the back of those stress tests. If you look at the open, equities and a london open 0. 1 higher. Cac a full a full 1 higher. Fridays closeis was so waiting for that. Despite the big banking fail where are wes, . Up of 0. 3 . The ftse trading right now. The cac up. I will bring you the auburn