Transcripts For BLOOMBERG Countdown 20150209

Imports plunged almost 20 on falling Commodity Prices and week domestic demand. Hello. Welcome to countdown. Also coming up today, australias Prime Minister with a threat to his leadership. Will it be tougher for tony abbott to address his countrys weakest economy in a generation . We start with our bloomberg exclusive this morning. The governor of the central bank of russia has told this channel that russia will not inflate its way out of the financial crisis. In her first ever interview with an International Broadcaster, Elvira Nabiullina told Ryan Chilcote the bank is unlikely to reverse last months surprise rate cut. Inflation is set to slow, having accelerated its fastest in almost seven years. Ryan is here now. Fascinating conversation. We started with the ruble. I asked if one of the worlds worst performing currencys last year, if we can expect more collapses. There is talk of that. She said, no. Have a listen. We are not expecting any massive decrease in the rubles Exchange Rate, because the decline in the oil price was the third biggest in the last 40 years and the amount of external debt that has to be paid this year is about one third less than last year. Year on year inflation. Could it go beyond 20 . Inflation may be higher than the current 10 , but these higher levels of inflation are driven by past taxes. Moreover, id like to point out that other inflation will subside. We expect a contraction in Economic Activity and a contraction in demand. On top of that, we have [indiscernible] thats why we expect inflation to slow down in the second quarter, after the second quarter, in the second half of the year and into 2016. Thats why there is no reason to talk about the inevitability of a rate increase. Wendy you see lowering rates . We will make the decision on rates based on our analysis of the situation in the economy our forecast on economic development, and on the dynamics of inflation. Analyzing the entire balance of risk, inflationary, risks to growth and the financial stability. We will make a decision that is consistent with reducing inflation within the framework of our inflation targeting, and achieving a level of 4 in the midterm. When you lowered rates to 15 , you surprised almost everybody. The conversation began, how independent is Russias Central Bank . Are you independent or is this an arm of the kremlin . When we made the decision on cutting rates, we didnt do it at the expense of inflation. We based it on our forecast for inflation and Economic Growth. Of course, there is a lot of criticism of the central bank, but the bank of russia is used to criticism. There are Interest Groups in the economy. Some gain from a week ruble. Others gain from a strong ruble. For central for many years the central bank has been criticized on all sides. Are you independent . We are independent. There you have it. She has one of the toughest jobs in the world. The seventhlargest economy. She is sitting on close to half 1 trillion worth of assets. Russia is headed into recession. The currency last year was one of the worst performing. Now it is the most volatile. First on rates, Elvira Nabiullina last year nearly tripled rates. Started the year at 5 . Rates went up to 17 . The issue was in january, she cut it to 15 , surprising everyone. Thats what prompted the conversation about whether shes really independent. As you heard, her argument is it is not about where inflation is now. It is about where inflation is going. It is going to pick up in the first half of the year. She conceded that. But in the second half of the year, she says it is going to fall. All the while, she invokes paul volcker at one point as one of the central bank as she likes she paints herself as one who is thinking about inflation and fighting inflation, and someone who will not allow russia to inflate itself out of the crisis. In the context of other Central Banks cutting rates, it wasnt that much of a shock. Yeah. It is a big week in the ukraine conflict. Diplomacy is escalating. Russia france germany on wednesday, merkel heads to washington. Is there a growing position between the u. S. And germany . We dont know. John kerry was asked about that over the weekend and his point was that while we have differences with the United States with the European Union the main difference is whether it is even worth talking about arming the ukrainian military. Those differences, as he put it are tactical, not strategic. Weve got this big pickup in diplomacy. Youve got the four leaders gathering lets see if it happens on wednesday, in minsk. Poroshenko, putin, merkel holla nde, for peace talks. Those four havent met since dday in normandy. Never at that kind of senior level. Never have we had the russian president and the ukrainian president sitting down with two intermediaries like that. This could be really big. There is, as merkel put it, no particular reason to believe that theres any more chance of solving this crisis then there was last week. They just believe that this is an opportunity, an effort that has to be seized upon before it is too late. We will see where it goes. The issue of arming the ukraine is out there. The issue of imposing more sanctions against russia possibly as a compromise is also out there. Ryan, thanks a lot. Well done on that interview. You can find more on both of these stories, the interview with the Central Bank Governor of russia, and the latest developments on ukrainian peace talks, at bloomberg. Com. Lets look at some of the other stories we are following this morning. Alexis tsipras has reaffirmed his governments rejection of international bailout just days before an emergency meeting with the euro area finance ministers. Vowing to condemn the Greek Economy to an eternal recession, or vowing not to tsipras promised to increase minimum wage, restore the income Tax Threshold, and halt infrastructure privatization. The new contract between greece and europe, which will be reflected in a midterm plan for National Reconstruction, will respect the eurozones rules but will not condemn the Greek Economy to eternal recession with conditions for irrational and unreal primary surplus another name for austerity. China registered a record trade surplus in january as imports plunged due to falling Commodity Prices and week domestic demand. Imports fell by the most in five years, declining 19. 9 from a year earlier compared with estimates for just a drop of 3. 2 . Exports slid, leaving a trade surplus of 60 billion. Australias Prime Minister has forwarded a leadership challenge but failed to end speculation that his position is under threat after his colleagues boasted voted against him. They voted against a motion that would have declared his job vacant and allow candidates to run against him. Internal support for the Prime Minister has lindell dwindled in the year and a half since hes been in charge. A leader says that the party will demand wales gets the same funding deal as scotland in the event of a Hung Parliament in mays general elections. Parity with scotland would be the price of cooperation in westminster. I think the fact that theyve had a referendum recently has put the politics of scotland at the heart of the agenda. Theres an opportunity for people in wales to do that in may, i think. There is every chance that there could be a Hung Parliament in may. This question is on the parity of scotland. And, Julianne Moore was among the winners at the bath the awards in london last night, named best asterix best sactress in the drama still alice. Eddie redmayne won best actor for his role in the theory of everything. Boy had was the winner for best film. Join the conversation. Let us know what you are following today. The grammys are trending on twitter. What a night for sam smith. Theres anna, and there i am. After the break, how long can the euro rally continue . We will be speaking to the head of ethics strategy at Imperial Bank of commerce. We will be back after a short break. Sanctions make your life a bit more challenging. How concerned are you about a banking crisis in russia . Theres no doubt, it will affect the Banking System. How often do you check the oil price . Several times a day. We need monetary reforms. No budget policy can watch an extended version of Ryan Chilcotes interview with bank of russian governor Elvira Nabiullina at bloomberg. Com. Welcome back to countdown. The euro strengthening for two consecutive weeks. How long can the rally continue to spike . Lets bring in our next guest to the conversation. He is jeremy stretch, head of fx strategy at Imperial Bank of commerce. It has been two weeks since the greek election. Why has the euro managed to e ke out gains . It hasnt fallen aggressively further, that is the better way to play it. We had a great deal of uncertainty. We now have a little bit of a war. Now, we are getting to the crux of the crisis. We have the finance meanings on wednesday. The finance meetings on wednesday. I think that is going to be the real crystallization of whether the euro is going to maintain its current valuation or whether we see further pressure points which seems likely. Mr. Tsipras suggested that a collision course was inevitable. There could be a collision this week, setting us up for another collision on the 18th of february, when the ecb can vote to continue to grant access to their special liquidity scheme. If the ecb decides to cut greece out, would that be an economic or political decision . You can argue it both ways. If you look at the mechanisms of the agreement, it is a case of agreeing to fund banks which seem to be solvent. That could be a debating point. Weve seen this massive capital slide. That really threatens the solvency of some of those banks and underlines the necessity to require external funding. On that technical point, it is more of an economic or nonpolitical decision. It will also be perceived as political at the same time. Thats going to be the interesting the flip side of the trade is the dollar and fridays jobs report has brought forward expectations again of when the fed will raise rates. January 30 was the alltime high on a correlation weighted basis. Weve had a bit of nervousness since then. Are we back on with the dollar rally after those two weeks of nervousness . I think the way the market has been position, it has been long dollars and excessively long towards the end of last month, in the same way it has been getting short on euros. We have seen a consolidation. Weve seen the data looking spotty. Now that weve seen another strong payrolls report, and average earnings moving up, then i think that puts the fed back onto the table. We thought the fed would be moving by the middle half of this year. We still anticipate that. That feeds through into a general bullish view. I wonder, is the u. S. Economy sufficiently connected to the rest of the world so a strong dollar corrects to some extent and stops the u. S. Economy from pulling away from the rest of the Global Economy . Weve heard from a number of ceos and Business Leaders in america about the damage a strong dollar can do. It is not just the strong dollar, but also the speed of the strengthening dollar. I think thats really the crux of the problem. Even if you put on various hedging strategies, you are not able to shelter yourself from some of those gains. We are still a long way away from saying the dollar is going to be sufficiently strong to hit the growth trajectory. It may hit the margin on corporate earnings, but you may see the top line level being compromised by dollar considerations. I think we are a long way away from saying the dollar is going to hinge on growth. We can expect politicians to put their heads above the parapet. That might be another interesting scenario. Interesting, despite the strength of the dollar, the pound had its best week against the dollar for a year. Strong pmi data giving it a boost. We approach the Inflation Report this year. Maybe we should call it the quarterly deflation report. The governor could signal the economy heading into the negative inflation. Indeed. We also get the letter explaining the miss in the inflation target as well. In a sense, from the presentation aspect, Governor Carney has a difficult position. He can argue, deflation is due to falling Supermarket Prices the price war, and the discrete change in oil dynamics. If the oil price has found a floor, that would suggest that we are getting a oneoff reduction in prices, which is good news for consumers. If we start to see wage growth pick up as well as strength in the labor market then the nearterm inflation target is the nine. The growth dynamics look a little more robust. How much is the weakness in inflation or deflation in the u. K. Going to be to do with oil price, and how much with food prices . Should we look at those differently . Many Central Banks not dealing with Supermarket Price wars but dealing with the Lower Oil Price have been suggesting we need to ignore that weakness in the shortterm. Do the same arguments apply to food prices in the u. K. . I think you do need to look at these Price Reductions and say, they are beneficial to the consumer. They see absolute prices falling , but those prices are not going to continue falling indefinitely. It is not due to price weakness because of a lack of demand. That is the difference between good and bad deflation. If it is due to an aggressive price war, thats very different to say, there isnt enough demand and retailers have been forced to cut prices. I think thats the reason why the u. K. Picture looks better. If we say, the u. S. Is going strongly and we think about hiking rates, i think the market is too complacent on the u. K. As well. Sterling will do well against pretty much everything else. Talking about discrete Price Reductions, what about discrete Interest Rate reductions, as happened in canada and many Central Banks . Dollarcanadian was almost parity in june. Now we are up to 1. 25. What further surprises does the central bank in canada have in store . From the canadian perspective, theyve seen a oneoff shock to incomes in large parts of their economy which are driven by the oil sector. Theyve reacted to that by cutting wages unexpectedly. Markets thought the adjustment in the currency was sufficient to offset that. The bank decided it is probably still a risk and will consider another cut as necessary. We anticipate another cut. The upward trajectory in dollarcanadian has further to run. We are at 1. 25 and change now. We will get back to the sort of extremes we were seeing in 2008 and 2009. Jeremy stretch joining us. The greek Prime Minister alexis tsipras, is on collision course with creditors todays ahead of an emergency meeting with euro area finance ministers. He says he will continue to roll back austerity plans and reject the international Bailout Program in order to avoid what he deems an eternal recession. The new contract between greece and europe, which will be reflected in a midterm plan will respect the eurozones rules of operation, but will not condemn the Greek Economy to eternal recession with conditions for unreal primary surpluses, another name for austerity. Greeces public debt stands at more than 362 billion, about 175 of gdp. That makes it europes most indebted country. Hans nichols has been following this story. Good morning. Where do we stand before this crucial summit in brussels later this weekend . Mark, good morning. Once again, mr. Tsipras has rejected challenged the notion of this international bailout. He says he will not seek an extension. They want to have some sort of temporary bridge. They clearly want to exit. That is their line. He wants to increase the minimum wage, to halt privatization programs. In large part, this is because mr. Tsipras believes this is what his mandate is. I call on you to give a vote of confidence to the social salvation government. I call on you to join us in the struggle for our country, for the future of the country. Join the struggle so that our people can game hope and dignity. We will fight this battle together. I thank you. So, they clearly want some sort of bridge loans to get them through until june. Every time that has been run by other eurozone finance ministers, that has been rejected. That has raised the prospects of a greek exit, which has some finance ministers like george osborne, concerned. If greece left the euro, that would create real instability in Financial Markets in europe. I dont think although we are in a much better place than we were a couple years ago, i think a greek exit would cause real eruptions. That is why weve got to avoid this crisis getting out of control. Mark, a little bit more on the rhetoric from mr. Tsipras. He talked about germany may be repaying loans that were forced upon greece during world war ii. He said he would seek reparations from germany during the nazi era. Minimum wage, 751 euros a month and he wants to increase the ceiling for what greeks can earn taxfree. Both of those were crucial elements that had been reversed by the Bailout Program. Was there anything for creditor countries to cheer . A couple things. He wants to diminish the power of oligarchs and clamp down on tax evasion. Thats something the germans have talked about. It is this question of whether you can take the Bailout Program a la cart. Mr. Rivera farkas said mr. Varro fact is said 70 was fine. That might not fly with other finance leaders. Hans nichols in berlin. Up next, chinese imports fall to a fiveyear low thanks to falling Commodity Prices and week domestic demand. We will be gauging Market Reaction when we come back. Its frustrating being stuck in the house. Good thing xfinitys got 2 hour appointment windows. They even guarantee theyll be on time or i get a 20 credit. Its perfect for me. cause i got things to do. Oh, yeah woooo with a guaranteed 2 hour appointment window and a 97 ontime rate xfinity is perfect for people with a busy life. Welcome back to countdown your code time for a look at the Foreign Exchange markets. The australian Prime Minister surviving a leadership challenge. The latest development out of greece and the ukraine of course. We see traders betting against the australian currency and the euro. Thats against the aussie dollar are paying off while thats against the euro are not. It is down by the most in more than five years. That was against an estimate of a drop of three point 2 . 3. 2 . The aussie is near a 5. 5 year low on the back of that chinese data and the fact that we had tony abbott fighting for his political career and surviving to fight another day for now. To contrast that is where the euro has been going. It has been strengthening for two consecutive weeks, despite all the continued news we see a run the greek delegation and the odyssey that led them all the way across europe last week. The euro area finance mr. Ministers of course meet this week. Further on the greek story, no doubt to come. That is a look at the currency market. The top stories, the greek Prime Minister has reaffirmed his governments rejection of the countrys national Bailout Program. Just days before the emergency meeting with the finance ministers. The promised are promised to increase the minimum wage and restore the income income Tax Threshold and restore privatization in a speech that sets him on a collision course with the company creditors. The new contract between greece and europe will respect the eurozones rules of operation and will not condemn the Greek Economy to a an eternal recession with conditions for an irrational and unreal primary surplus which is another name for austerity. Australian Prime Minister tony and it has thwarted a leadership challenge. 40 of his liberal Party Colleagues voted against him. They voted against a notion that would have declared his job vacant and allowed candidates to run against him. Amid the governments slumping poll ratings and concern about his leadership style. The governor of Russias Central Bank has told bloomberg it is unlikely to reverse the surprise rate cut. Inflation is set to slow after its fastest acceleration in five years. L vera elivra neblina said do you have a favorite central banker out there outside of russia that you set you respect what they do . I have a lot of respect for paul walker. He was able to reduce inflation and carry the country through a difficult period. How often do you check the oil price . Often. Several times a day. Really . Why is the Central Bank Buying so much gold . We increased our gold purchases for 2014. We are diversifying our current policy and we are solving the problem of liquidity. A lot of countries have this problem. Were developing improvements and gold purchases to provide ruble liquidity. We have a pretty big share of gold, less than 12 but we are not the biggest gold holder. You have 39 million trillion ounces, how much more do you need . We will decide based on the situation. What will you do with it all . They maybe need it entered different situations. President putin met with the leaders of germany and france for the weekend, peace talks youre sitting in the central bank, the ruble strengthened in the lead up to those talks, there were expectations, how do you prepare for the reaction . A lot of factors affect the Exchange Rate. Geopolitics and oil. We assume that under the influence the oil price, and the domestic economy condition, the ruble rates will be defined by market factors. That is why we do not make any special preparations. Ira pete, will only enter the foreign call currency market if there are rates to reflect financial stability. There was a moment in september when the ruble fell to 80 on the dollar, could that happen again . December 16 was a really particular day in a lot of ways. There was a great deal of volatility and a big jump in the Exchange Rate. But that day was unique because that is the day we moved back to a floating ruble. We are now a shifter, but due to our assessment of the risks, the market got used to those interventions. By december 16, we left the market. That was the shift to the policy Exchange Rate. That is why we increased the key rate at the same time and the volatility was driven by this shift from one approach that we had for many years where it controlled the Exchange Rate. That is one way of saying you do not see it returning to 80 on the dollar . I dont see any reason for such sharp moves. China registered a record trade surplus with interest plunging to a fiveyear low on falling Commodity Prices and weak domestic demand. Joining us now is yvonne this highlights a number of programs problems for the chinese economy. A recipe of problems for china. More signs of weakness and maybe this makes the case that china may need more stimulus. You have a property slowdown, a slow in manufacturing and then you have a tumble in Commodity Prices and weaker external demand as well as domestic demand. Economists were expecting a gain of 6 and that is the first time exports has fallen in 11 months. But imports might be the big loser. Down near 20 , expecting a fall of 3 , as you mentioned the biggest in more than five years. That brings the total record trade surplus to 60 billion, economists were expecting a 48. 9 billion surplus. We did see they cut last week to bolster lending as well. Some economists expecting a benchmark Interest Rate cut to happen in the First Quarter. But with this new trade data economists are saying that could be a dilemma in terms of the Exchange Rate. With the decline in exports they could be saying something otherwise. Centralbank surprises, certainly a feature of this year. Were approaching the Lunar New Year holiday, are there seasonal distortions in the data . Yes, something we usually see at this time of year. Last year it fell on the first week of february and this year were seeing it two weeks later. We might be dealing with a significantly higher base right now. We are also seeing Commodity Prices, overall they could make an impact. The following rices may exaggerate the weakness as well. We did see that ubs morning note saying that exports if you exclude those factors, exports maintaining firm but imports are anemic. Thank you very much. 6 40 in london. Tony abbott has thwarted a leadership challenge, but failed to and speculation that his position is under threat after 40 of his liberal colleagues voted against them. Internal support for the Prime Minister has dwindled in the year since he has been in charge. Amid government slumping poll ratings and concern about his leadership style. What will the news mean for the economy . We are joined by the chief officer for hsbc in australia. What is your initial reaction to that Prime Minister at it has survived this leadership challenge . Any longterm implications . I think from the economys perspective, the main thing we are looking for is more certainty about what is likely to happen. This story has been dragging for a little while now and tony abbott is still the Prime Minister, but it may be the case that there are questions being asked about whether he will be there. The Political Uncertainty is weakening business confidence. Businesses dont know who will be necessarily running the story and that limits their willingness to invest. Australia is facing pretty big challenges at the moment it would very much help if politics were more stegall stable. The government looking to pass laws that would rein in a budget gap, what chance that they get to push that legislation through . I think the really big challenge is the government came into power at the end of 2013 and was trying to run really tight fiscal policy. A fiscal austerity program. It was really the wrong time to be doing that. Commodity rices were falling china is seeing weaker growth as well. Commodity prices were falling , china is seeing weaker growth as well. Its time to actually provide support for growth and wrote the short run. That is a political shift for the government to do and the current leader is being challenged. And the Prime Minister is saying he has listened and he has learned and he is going to change and bring in a more collegial approach, are the voices criticizing him for not consulting widely enough are they coming from the economics and the Business Community or are those on other subjects . I think it is just tough times at the moment, in terms of running the country. Less revenue because Commodity Prices have been falling and when governments have less revenue you have to make trickier decisions. I think most of it is coming from his own party in terms of what is going on saying we cannot continue to run these tight fiscal settings because the economy is tracking below trend and growth is weaker. Fiscal policy needs to change direction and that is quite a big challenge for a government that came didnt and really tightened up the fiscal screws last year and that has been their major line. When in fact, what we do is we need fiscal policy to be running more loosely. Any change in terms of the key financial jobs . I think there may be changes in terms of the lineup, it is certainly possible that 40 were voting against keeping out in terms of Prime Minister. It is possible they do find other ministers that they want to change and that could facilitate some change in direction which in my view, is the main thing we need to see. Thank you for joining us. You can find more on that story at bloomberg. Com. You can join the conversation on twitter. Let us know the stories you want to hear more about. Focusing bigtime today with Ryan Chilcotes interview with the governor of the chief centralbank of russia. Saying inflation is said to slow. Up next, claims the Private Banking unit have been profit handling secret accounts for an array of criminals for drug cartels and arms dealers. Lets shift gears to oil markets. Our next guest says that running deficits rather than spending is the correct approach to Falling Oil Prices in the middle east. He joins me in dubai, thank you for joining us. Good morning. Are gcc budgets adjusting to new realities in the wake of this Oil Price Slump . Theyre adjusting in the correct way in my opinion. In the past we were seeing gcc budgets and the economy just tracking oil prices. Just under spending when they were high and cutting spending dramatically when they had collapsed and that was leading to a volatile business which was not desirable. We are seeing today from the governments that have released budgets already that they are willing to keep spending despite the drop to make sure that the diversification continues and that growth does not collapse. To some extent, some of the Shock Absorption is taking place through the budgets which is exactly what we needed to see. So fiscal deficits, the new reality after years of surpluses . I think so and i think this is exactly what we need to see. There was a fixation about surpluses for a long time but the fiscal policy is a tool, it is not the goal. The goal is to get the real economy, the goal is growth and development. It is good to see that governments are willing to run a deficit if they have to. It is perfectly sustainable and perfectly comfortable to run a small manageable deficit for a year or two to make sure the economy continues to grow. I do think 2015 will be a year of fiscal deficits that i do not think they will be dramatically larger. You see that oil has bottomed. 4 for brent, it was the biggest increase in two weeks since 1990 it, do you get a sense it has bottomed or do we have further lows . We always thought the First Quarter would be incredibly erratic. There is a lot going on, what is supportive of oil prices is the closure of rakes in the uniteds rigs in the United States. We think well see it declined by april which is a month earlier than we thought. All of the signs, together with the fact that there is still decent growth would suggest that there is whether we have reached the bottom or not, i am not sure . I think the First Quarter will continue to be erratic. I think we will see most of the oil prices coming to the second half of 2015. We are optimistic, we think we will see further increases but most are likely intrathe second half of the year rather than now. Do you think that opec will stand firm and continue to refuse to cut production . The next opec meeting is in june. There is definitely a lot of time for them to assess the situation. If opec takes no action intrajune, even if they keep their supply constant, the oil supply from the United States, the declining supply together with the demand remaining stable, it should eliminate the surplus from the market in the second half anyway. With or without action from opec we would expect this extra supply to evaporate. We would expect oil prices to continue in the second half. We dont think it is necessary for opec to take action intrajune. In june. One of the most interesting things about the removal of the euro cap was speculation about who would be next. A lot of that speculation is on gcc companies and saudi arabia do you think saudi arabia could possibly loosen that peg to the dollar . Is it sustainable . The move by the Swiss National bank, happening at a time when we saw a massive drop in oil prices and a massive u. S. Dollar has given to some change in gcc currencies. I think saudi arabia sits in an incredibly comfort will. We have been a cumulative foreign currency reserves for years and they are now in a position. Theyre exiting saudi arabia the central bank can pay for that and still have 250 billion left. That means saudi arabia can do whatever it wishes with its currency. They will not be forced into action. It is the occasion of them in willing to make a change or not. Their results on keeping the paid has been strong historically peg has been strong historically. The numbers are giving rise to expectations that there are moves in the foreign markets. Thanks you for joining us. Marios, there. We have mark carney speaking with the finance ministers and Central Bank Governors for a two day summit. They will also be speaking with the brazilian Central Bank Governor. He is saying there is no simple answer to a sustainable debt pass in greek. The u. K. Private sector exposure to greek has been modest. Quickly, 30 seconds each. I have chosen from our digital output really year he if you listen in what is happening, you can hear that on this clip anna . Just before the line the top the hour, Mission Director says no go for lunch which triggered nothing because that meant the rocket did not take off. I tell you who did take off sam smith at the grammys. The britt one four major categories, he took him awards in artists of the year, record of the year and also won best vocal album. It riles me a bit, it gets inside your head. Well done. In a firstever interview with an International Broadcaster. The governor of Russias Central Bank says she wont inflate her way out of the economic crisis. There is no budget policy that can create stable Economic Growth. European leaders prepare to meet in minsk as the u. S. Considers Arming Ukrainian forces. The grease Prime Minister says he reaffirms his rejection of the Greek International Bailout Program. Claims that hsbc made significant profits handling secret accounts for an array of criminals. Welcome to anna . Welcome to countdown. This is an enabling the u. K. To continue to grow faster. Some refer to that as anglosaxon capitalism. What are you worried most about when you look around the world and as you sit with your colleagues, what tops your list of concerns . I worry about reform fatigue, unsurprisingly. Many of the toughest reforms are micro reforms that can have big coalitions against them. Most of the things we are doing we will see the benefits of the Structural Reforms intraeurope virtually all of them have a long tail payoff. The Immediate Impact is not necessarily there. I would say with respect to the last point that it does put a greater premium on macro policy being as supportive as possible. Instead of finishing on the navy of negative, let me emphasize the positives. There are many reasons why the ecbs actions of a few weeks ago are important but one of them shows mark carney speaking in turkey at the g20 finance minister meeting that kicks off today. Hes talking what the Global Financial stability and his capacity as chairman. He says there is more work to be done and talking about the u. K. , they were right to aggressively recapitalize their bank being consistent and transparent and the u. K. Is just trying to see a turn focusing on banks rather than greece. He was talking about greece a couple of days ago. We will leave mark carney their in istanbul. Lets get back to a bloomberg exclusive. They have told this channel that russia will not inflate its way out of the crisis. In a firstever interview with Andrew International broadcaster, she told Ryan Chilcott that rates have slowed after having accelerated the fastest in five years. The central bank intrarussia a real topic of conversation. We have been to the bank of russias library this weekend that is just before she headed to the g20 herself. Nowadays, you cannot talk bank policy in russia without talking about section sanctions. She conceded that she checks the oil price several times a day and i asked what it means for the russian economy. If all is going to be around where it is now, 50 a barrel our estimates show the economy will decline. We will have a contraction of 3 . How big of an issue are the sanctions for you as you run the bank . Sanctions are of course a negative. We can see that in our balance of payments, the depression of Exchange Rates and inflationary effects. It is enter issue. We have developed new methods and new instruments to help banks and Companies Say we are becoming more flexible. I guess as a central banker it makes you work a little bit harder. The sanctions make your life more challenging. Naturally. How concerned are you about a banking crisis . We are constantly monitoring the Banking System. There is no doubt it will affect the Banking System. That is an absolutely expected event. Lending rates will be a little bit higher. The quality assets will get worse. If we dont see any systemic problems, our stress tests will see if we get through the difficult period in a stable condition. You have obviously been studying similar crises to the one russia is in now, have even saying, that is one thing this central bank will not do . What we will not do for sure we will not raise inflation and issue more money. In my view, it has been absurd. Countries that try to stoke economy growth by obsessively pumping money into the system lead to the exact opposite. Secondly, we will not fix the Exchange Rate and we will not impose administrative restrictions on capital flows. It is absolutely unproductive. What is your biggest fear . It is not even a fear, a concern and the task we need to take on for the future. Wed Structural Reforms because no budget policy can create stable Economic Growth. To create stable growth need to improve the endless investment climate. We need private investments. It could take the country into an entirely different growth trajectory. That worries me more. Everyone always talks about conducting structural reform but they havent really happened. Now it is vital. You know the russian president , you were his Economic Advisor and an sure you speak on occasion, is he ready for Structural Reforms . Yes, i am absolutely sure of that. The nature of her relationship with the russian president is one that interests a lot of people on the market. You asked her directly if she is independent. She said yes. But last year she tripled rates on december 16 and that final rate hike was 650 basis points to really fight inflation and to fight the collapse of the rule. She was criticized by the russian president and people in the government for reactor reacting to slowly and raising rates too high. Some say if she had reacted earlier she would not have needed to raise them so quickly. Just a short while ago they actually cut them again from 70 to 15 percent after she just suggested she saw no reason to do that she explained to me there is no break in her ideology because she is responding not too inflation, it is rising as she told us earlier, but then she expects it does excite. She things it was caused by the historic collapse in the oil price and does not see those things as repeating themselves. As far as she is concerned, she is independent. It is a pivotal week for ukraine as leaders had to minsk merkel heads to washington today. How is the u. S. Eu relationship when it comes to dealing with this. Were seeing a whole flurry of diplomatic activity and then we saw when say the capital of belarus will be there with the leaders of france and germany. The russian president said the west needs to work out a common physician before that meeting at the event in unit the secretary of state says there is no big division between europe and the United States. The issues intraterms of the approach to russia are tactical and not strategic. Let me assure everybody there is no division and no split. I keep hearing people trying to create one. We are and working closely together, we all believe this challenge will not end through military force. The longer that it takes, the more the off ramps are avoided the more we will be forced. The disagreement between the United States and europe appears to be whether it makes sense to arm the grainy and military. I lot of european governments who are opposed to that idea they say it will only lead to more budget. President obama is still considering whether to arm the crate ukrainians. Weve heard them say it is a bad idea. Then there is the issue when it comes to sanctions. I think the United States i would like to see them take a tougher stance on russia. It is in no countrys interest to introduce sanctions unilaterally. They have to be on the same side you can find more of that story on bloomberg. Com. Lets look at some of the other stories we are following this morning. The greek Prime Minister reaffirmed his governments rejection of the international Bailout Program. Another meeting this week where the greek finance minister vowing not to return the economy to a eternal recession. They will restore the income Tax Threshold and hold privatizations in a speech that set them on a collision course. The new contract between greece and europe will be reflected in a midterm plan will respect the eurozone rules and will not condemn the Greek Economy to eternal recession with conditions for irrational and unreal riemer he surplus which is another name for austerity. The Private Banking unit of hsbc made significant profits handling secret accounts for an array of criminals from drug cartels and arm dealers to tax invaders and fugitive diamond merchants according to a report released by an International News organization. They revealed for the first time the massive sweep of hsbc Private Banking arm when it controlled 100 billion in assets. From the elite to the illicit. Imports plunged due to falling Commodity Prices and weak domestic demand. Imports fell by the most in five years, declining from the year earlier. That compared with estimates that suggest a drop of 3. 2 . Exports cleared 3. 3 leaving a trade surplus. Australian time Prime Minister tony abbott has thwarted a leadership challenge. Liberal mps voted to 61 by 39 against the notion that would have declared his job vacant. Support for the Prime Minister has dwindled since he has been in charge. The leader says her party will demand that wales gets the same funding deal as scotland. Speaking on the bbc, leanne woods says scotland will be the price of cooperation. Julianne moore was among the winners at the bathtub awards in london last night. Eddie read main redmayne one the best bathtub actor for his portrayal of stephen hawking. And the british best Outstanding Film was boyhood. You can join the conversation on twitter. Well done sam smith who won three of the big of four grammy awards. You are mean. It is monday. If you are an investor in european equities you can learn by looking at japans experience, that is the message from our next guest. Investors in eurozone stocks can learn a lesson from japans quantitative easing row graham. Ian, thank you coming in to see us. Quantitative easing, the lessons from japan, these qe programs are designed to push down bond yields but you see a lot of that is the message, this isnt a u. S. Style qe program and is not even a u. K. Program. Really you are using that Exchange Rate to keep the Inflation Expectations high. Bondholders are not going to lose money but the people that really win out our equity holders. Ari suggesting that would be ambitious, but some are suggesting we might get a 30 rise if we see the differential between equity yields and bond yields taken out. The sting in the tail is that you have to be hedged because the offset will be that weaker euro. Then of course there is the politics. What do your models say about the possibility of greece being pushed and falling out of the euro. The good news is the models dont really help you in that kind of situation. But first of all policymakers have been much more innovative than most economists expect them to be. Secondly, if you have not got rid of cyprus, it is unlikely you will let greece go. Nobody is really a winner from greece exit. Is it a case that qe lifts the tide or both rise meeting by everything or not . The lessons from japan are that the international exposed cyclicals do well. So the domestically exposed doesnt perform quite as well. That is one of the bad news, what you do see is some of the internationally exposed yield plays like farmer food and beverages that can carry on performing because youre driving down the bond yields. The bigger market that finds it tough is banks. With a flat yield curve and with micro policy that finds it uncertain, as is where back banks of find it very difficult. It is a messy market. You are not just playing a value game or growth game, youre trying to be much more granular and a specific. Could you argued that it does not lift the european boat at all . Does that money it doesnt stay in europe, where else might ago . When youre seeing the type of liquidity expansion we are starting to see coming out of china, europe expanding liquidity as well and also the japanese, if youre seeing International Liquidity that should help Global Equities generally and hopefully at some stage you might see that into things like commodities but for that we need a shift in the dollar. How much more could we see in the european bond market looking at yields which are already on bond markets. Is there much downside to be had from the bond markets. I think in a situation, the level of debt that is outstanding. In the past you need very much larger real Interest Rates. And if inflation was at zero the only way to do that was drive the bond yields into negative fringes. We expect you might to the german curve go up almost 10 years because you have to find ways of getting that back into the economy and getting nominal growth going. That means you will see more people perhaps moving the same direction. Were going to see more pressure. Whatever learned about where the u. S. Economy is. What does it tell you about where the u. S. Is going on Interest Rates. Can they plow their own thorough . The u. S. Is still focused on maximum employment. Her us that gives you a bias toward equities. The bad news is they will also be affected by the slow oil price. We think the u. S. Inflation will be close to zero. Is the fed really going to be tightening Interest Rates we think it is highly unlikely and we think those interestrate expectations will be pushed down further. And although you get the consumption boost from oil prices there is a decline. Again, this is not an environment where i think the fed is going to be keen to tidy policy, too quickly. Thank you for joining us. The greek Prime Minister on a collision course with the companys creditors for two days. The greek Prime Ministers as he will continue to roll back austerity plans in order to avoid what he deems an eternal recession. The new contract between greece and europe which will be reflected will respect the eurozone rules of operation that will not condemn the Greek Economy to eternal recession with conditions for unnecessary surpluses which is another name for austerity. Their debt is about 175 of gdp that makes it euros most indebted country. Hans, where do we stand before this crucial leader summit later this week . After the european tour, they have come back to square one which is a rejection of the international bailout. They clearly want to leave that in february for the end of this month. He did mention that he wanted to have reparations from germany and talked a little bit about that clearly increasing the temperature and rhetoric ahead of the crucial meeting this week. Thank you or the brief buts a synced hit brief but sis uccint hint. Stay with us. Welcome back, time for a look at the Foreign Exchange market. Plenty to put into the currency part. Chinese trade data, u. S. Jobs data on friday and the australian Prime Minister surviving a leadership challenge. The latest conversations around greece coming out of athens and the conversations in germany and later on this week in minsk. Betting against the australia dollar and the euro. It seems that betting against the australia currency is paying a little bit back. The chinese data is gone to reinforce that position because the slowdown is very evident in the import data. Down by the most in five years. The estimate was for a decrease of 3. 2 . That seems to be moving the currency market. Combine the chinese affect with what we have seen domestically with the Prime Minister tony abbott living to fight another day and for now that leadership challenge, compare that to what is happening with the Euro Currency that is actually strengthening for two consecutive weeks which is despite the greek to her and the greek delegation traveling all across europe before they ended up in germany. Despite all of that we have seen the euro strengthening for two consecutive weeks and despite the ecb efforts. That is where we stand on the currency market. Top stories on bloomberg. The governor of Russias Central Bank has said it is unlikely to reverse the surprise rate cut as inflation is said to slow after it accelerated to the fastest in almost seven years. In the first interview with a International Broadcaster, she said they will stick to its pledge to avoid currency intervention unless the ruvell swing threatens financial stability. China has registered a record trade surplus in january after a plunged to commodity rices and weak domestic demand. That compares with estimates for a drop of 3. 2 . Exports at 3. 3 leaving a trade surplus of 60 billion. This trillion Prime Minister tony abbott thwarted a leadership challenge. After almost 40 of the liberal Party Colleagues voted against him. They voted 6139 against a motion that would have declared his job vacant. Internal support for the Prime Minister has dwindled in the year and a half commits the government slopping slumping poll ratings. The greek Prime Minister has reaffirmed his countrys rejection of the international Bailout Program. Vowing not to condemn the greek week economy to an eternal recession. They want to restore the income Tax Threshold and put a halt the privatization. The new contract between greece and europe which will be reflected in and midterm plan for National Reconstruction will respect the eurozones rules of operation but will not condemn the Greek Economy with conditions for an irrational and unreal primary surplus which is another name for austerity. Not condemning the Greek Economy to an eternal recession. We are joined by the ubs senior economic adviser. How do you view what we heard out of athens yesterday . The colorful language with references to World War Two and reparations from the germans going back to world war ii truax, where is this leading us . It was a remarkably uncover my zings speech. My reaction was twofold. On the one hand there was a part of me that was whooping inside. He was elected on the platform he was articulating yesterday and austerity and 20 years of miss rule. There was a part of me that said if you want to reach an accommodation with your creditors, you have just blown it. I thought certainly the references to the historic duty to claim war reparations was from a rather Strange School of diplomacy. It was a tough speech. I find it difficult to see i was worried that greece might be on the verge of a terminal breakdown in relations with creditors last week i think that will pretty much do it. To many its like he was on the campaign trail with the rhetoric. How do you see europe and that coming together . There is such a divide two weeks into his new government. Everybody thinks, understandably there is a lot on social media and media about the deal. Cap mate reach a deal about growth linked debt repayments and some kind of arrangement with the ecb for paying back loans, im sure that some kind of a deal can be reached but it is not really about the deal anymore. The deal might be to extend things for another six months but there is a bit of a schism now. We see the eurogroup once greece to at least renegotiate or a technical extension of the existing Loan Agreement but theyre basically saying, we told you we are not interested in what we want is permission for bridge finance and increased the issue of treasury bills. To tide them over the summer and get through the hump of debt repayments and probably have the same discussion they are having now. So who benefits . There is a benefit of times because there is more time to sort out positions, but fundamentally, it is not really about the deal anymore. It is about whether greece can live and survive and grow and reform within the straitjacket of the euro, because i dont think the germans and the creditors will change that much. We saw the ecb making life more difficult for greece and now they are meeting on february the 18th where they could have the possibility that we could see greece not able to access liquidity through the ecb, i havent read anything to suggest that will happen, but if we did see that, would that be a political or economic decision . The ecb has to think about everyone else in the. In my mind it would unquestionably be a political decision. If they stopped greece or disapproved of greece having access to the ela assistance that is basically showing them the door, because at that point the Banking System is frozen. Have to introduce capital controls and other sorts of economic emergency measures and that is probably the road to the exit. On the subject of Central Banks who has not cut rates this year . It is only february 9. You had 13 or more last count easing monetary policy, is this a race to the bottom . It is indicative to some degree, it is indicative of things we should rejoice is too strong, but things we should welcome. Inflation is declining because oil prices have fallen by 50 . In and of itself that is a good thing. If Interest Rates are coming down for that reason, that is a good thing. If it is because of a much more worrying concern about the ubiquitous spread of Deflationary Forces some of them coming from china and asia and intrinsically or androgynous lee to the west, that is not such a good reason, but it also speaks to the kind of problems which the world bank and the imf have been trying to get a solution to for the last six months. Which is that the World Economy is growing but is not in great shape. All of the bits that we thought would be taking over the reins of Economic Growth while others were consolidating has not worked out like that. Europe and japan are still maybe cyclically improving but are in a fundamental position and the u. S. Is doing ok, but not fantastic and the emerging markets are serial disappointments. Can we suggest we are just looking at a timing mismatch between the negatives and positives coming from the oil price decline. We just seem to see the negatives. We see a lot of commentary about lower investments and losing headcounts and yet we have not seen the evidence of a consumer boon on the back of this. Is that barking up the wrong tree . Yes, i think it is. The impact of declining oil prices will be felt cumulatively. You probably have not moved far enough into the year to see it properly. It is an unequivocally positive tailwind for most of the worlds gdp but it is a oneoff and it does not necessarily follow that everything will be spent by consumers. As you pointed out, there are offsets from the energy industry, but it is good and it will make what would otherwise have in a more worrisome situation, less troublesome. It is a question of how far do you want to extrapolate. You can extrapolate maybe a couple of quarters into the summer and the autumn after that the decline in trend growth and the weakness in productivity and the issues about growth models in emerging countries in particular, will come back and these factors will dominate in the end. George magnus, senior economic adviser at ubs. You can join the conversation on twitter. Tell us what you are following today. Coming up it is bar chart time. Welcome back, time for todays bar chart are you are you a dollar skeptic . This is the thing that tracks a basket of 10 leading currencies versus the u. S. Dollar. Since reaching a record high you can see right here, a yellow arrow. That goes back to january 2005, dollar investors have had a case of the yips as shown on my chart by the green circle. Fridays blockbuster u. S. Jobs report could prove to be a game changer. This index which goes back over a year, rose 1 . The biggest gain since the end of october. The return for pricing and expectations that the Federal Reserve will raise Interest Rates as soon as midyear. Interestingly fridays move came a day after Morgan Stanley recommended the customers closeout dollar trade in anticipation of a shortterm pullback as the global slowdown drags down the u. S. That concern may just be overblown. Eric stein helps oversee 13 billion of bostonbased eaton which says, we have been in this tugofwar between strong u. S. Performance for the dollar and a weak global outlook. Now the u. S. Strong performance is winning the day. The markets are expecting to see the fed hike so we see a reaction in yields but jpmorgan remains skeptical. Even after the u. S. Payroll support on friday has turned technically neutral from the previously positive start siding overwhelming futures positions favoring the dollar among other reasons but those futures positions are reflected in the actions of hedge funds and other large speculators who increased wages on the dollar versus eight of its major peers last week. It all comes down to one key question. When will the fed raise Interest Rates . Futures data on friday showed a 26 chance that the fed will increase Interest Rates from near zero to at least. 5 in june with a 58 likelihood of an increased by at the september meeting. Contracts earlier put the first rate increase in september. Rate expectations are coming forward. Does that change your start on the dollar . Are you a dollar skeptic . The top stories. The governor of Russias Central Bank as exclusively told loomer theyre unlikely to reverse last months rate cut as the rate is expected to slow after it accelerated for its fastest and almost seven years. In her first interview with an International Broadcaster she said they would stick to the pledge to avoid currency intervention unless the ruble swing reckons financial stability. The Banking Units made significant profits for years handling secret accounts for an array of drug cartels and arms dealers. That is according to a report released by an International News organization. The report reveals for the first time the massive suite of their Private Banking arm when it controlled 100 billion in assets and was said to have the sway of wealthy depositors from the elite to the illicit. China has record trading in january as demand falls to weakening Commodity Prices. Imports fell. That compared with estimates for a drop of 3. 2 . Exports slid 3. 3 leaving a trade surplus of 60 billion. Traditionally there reserved for the super rich but could enter private airline bring a jet to an airport near you. Bloombergs kerry lundgren. People need timely access to wherever they wish to go. That has never changed. Private jets have traditionally been the reserve of the super rich, a recently several companies are making it slightly more accessible. Theyre showing off their newest addition at london city airport. We intended to make sure that the vast majority of our fleet fleet flies into the city. The city is somewhat unique because it is closest to the financial hub. Private jets have been flying out of city since 2002. Now with a 200 Million Pound growth when approved, the airport once the private sector to flourish. By the end of this year we expect to be handling around 6000 and we expect growth of 5 a year. Going doortodoor isnt cheap. From a business perspective we priced the jet center similarly to that which we would price a slot for a commercial aircraft. We are the only airport in london and you are 10 minutes from every where in the city. Less expensive than owning a jet out right that still for the 1 . We will take a short break this is a live shot where equities open in eight minutes or so. A pretty gray sky. We see what is ahead when we come back. Not a good day for swiss banking. Ubs caught in a flurry of news. Caroline hyde joins us. Kick off with ubs, they started the ball rolling on friday. There was news coming from bloomberg that they were being investigated by United States in terms of helping americans evade taxes. When it comes to banking and bank secrecy and improperly using securities to allow owners to conceal their identities. This is six years after a separate Tax Evasion Case that the Justice Department had settled. But news today on ubs is it is eating investigated by the u. S. Justice Department Regarding fx manipulation, currency and a galatian but this time it is structured product. It is suddenly the focus of attention with questions being raised. Questions are being raised as to what bankers were doing and what commissions they were getting and did bankers stand by their legal duties to act on client interest. A fascinating story to come up later about tax evasion there. More from caroline on both of the stories throughout on the move those quote and onto the pulse as well. Stay with us. Good morning and welcome to on the move in london. Happy monday. If there is such a thing. We will get to the morning brief. A collision course. Honoring the mandate of the greek people and ending austerity. The government will not ask for a bailout extension. The chinese imports drop and leave a record trace. If fuels concerns over domestic demand and the exclusive interview with Bloomberg Television has her saying she is unlikely to reverse the rate cut. Well bring you more of the interview. Do not worry about that. Worth watching. The futures are lower and the dax futures are up. It is time to get the market open. Good morning. We had them before and the concern is degrees sand the rising tensions. That is what the group calls a multitude of parish attitude. Lets check in with the equity markets. Almost half a percent lower here. Clearly, the nervousness. The greek Prime Minister rejects the Bailout Program and is vowing to end austerity. There