Transcripts For BLOOMBERG Countdown 20150504

Negotiations. Mcdonalds reveals its comeback recipe. The ceo serves up a turnaround plan. We look at what could change. Welcome to countdown. Im manus cranny. Im caroline hyde. Coming up come a bloomberg exclusive. Amen considered the last a man considered europes last dictator. Have how the competence impacted his country. Lets begin with asia. Estimates adding further weight to forecasts that policymakers could step up stimulus to support this is a little bit of a different story versus the official data. That is right. New orders fell sharply. That basically evaporated. Overall reduction was stagnant. Not a good report in this april survey. Let me take a look at the numbers with you. This is the steepest contraction in a year. He shows chinas economic challenges the slowdown in economy, it may take more stimulus to arrest it. That is one of the reasons we are seeing market move higher. We will get to that in a moment. Back to these numbers. The pressure is on to roll out the new stimulus. This forget they want to maintain a 7 gdp growth target. To do so against this backdrop, they say they are saying theyre likely to speed up for structure spending. They may cut the benchmark Interest Rate. Beijing moves to cut reserve ratios by a full percentage point this year to stoke lending and counter this slowdown we have seen across china. In europe, talks on a greek bailout deal was used. It follows days of intense negotiations. There seems to be mixed or reaction . It is hard to tell. We do not have indication they are closer to a deal. I think it is good they are still talking. They have intense negotiations. It doesnt look like they have made much headway. They havent walked away. Greece is looking at wednesday when the ecb is going to review its emergency lending operation for greece. The ecb is hoping they can show enough in order to grace is hoping they control enough in order to appease the ecb. They have got to be paying out wages and pensions does greece have enough cash . It is hard to tell. They shuffle things around in april were able to make payments in april. Looks like in the near term they will be able to do the same thing. That to repay the imf about one million one billion euros. They are hoping to get some help on the ecb this week. They have still got to show progress. Talks resumed today. They are still going on. We will look and see what happens. Talk to us about the sticking points. The main ones, the creditors they are looking for reforms and progress and asset sales in the Privatization Program in athens. These are things that the greeks have promised in the Election Campaign back in january that they would ease. These are things that they told the voters they were going to ease off on. We are having a big conundrum. More fundamental point is that the greece is talking then interim deal that will unlock some money in this bailout that they need. The eurogroup is talking about comprehensive deal. Theyll have to come to some agreement on what kind of agreement they are going to get in order to make progress. Agree on what type of agreements of the agreements continue. Thank you very much. After the election in the United Kingdom polls are still putting labour and conservative and neck. Noeck neck and neck. That is according to one who could pay for involvement is we asked just how confidence he felt about being reelected. I believe the United Kingdom should be united. Help keep the u. K. Together. I also think the polls are stating they have got a great track record. We have shown we could make a difference a get things done in this part of the world. They want to break up the United Kingdom. It is the raison detre. He has been telling local members he sees this election as a stepping stone for independence. A lot of people are really excited a really frightened. I think some who havent always been supporters will vote to make sure we keep they want to do something that is the exact opposite. They want to break up the United Kingdom. The choice people face now who do you want . Do we want to keep the government on life support . Show we could deliver a strong and stable government. Keep the government in the center. Lets look at companies. Mcdonnell chief executive serves up his recipe for a comeback mcdonalds chief executive serves up his recipe for a comeback. He hopes to speed up the kitchen and supplying up customers choices. The menu trim bloomberg takes a look at some of mac donald mcdonalds biggest missteps in recent months. Mcdonalds has a problem. People are eating less of their food. Stores in the u. S. Have declined for the past six quarters in a row. Here are im manus cranny. A mcdonalds biggest missteps here are four of mcdonalds biggest missteps. Mcdonalds has been adding a lot of items in an attempt to lure new customers. Now it is too big for its own good. The Company Recently got rid of it seven underperforming sandwiches. Even after that purge, the menu is still 40 items fatter and it was in 2007. As fast food workers in cities across the u. S. Clamor for a boost to their barely minimum wages, mcdonalds has taken the brunt of the pr quagmire. It says it will raise workers pay to at least a dollar above local minimum wages. Even offering vacation benefits but only at stores that the him but he. The changes will only affect about 10 of domestic stores. It is not just employees who are disgruntled. It is store owners. A recent survey found the relationship between mcdonalds and its u. S. Franchise owners is the worst it has been in over a decade. Opening up a mcdonalds requires an investment of about one or 2 million. The sales slump means that franchises are making less money. Finally, the company is missing a big opportunity in mobile. They have show a good mobile app could do for sales. Customers ordering via taco bell rock up bills higher than regular orders. Mcdonalds has lagged behind competitors. It is going to be releasing a mobile app the summer. Lets get you up to speed on some of the top stories. Isis supporters have boarded what appears to be an attack in texas overnight. The claim comes after police shot to gunman whod started shooting at a secret officer. Police in texas suspected the car that may have contained a bomb. Markets are closed in the United Kingdom and in japan. European markets are open for business. Saudi arabia they will publish rules today opening to a statement on its website. Reaching an agreement to buy a stake in a soccer team in italy. Control of the soccer champion would remain in the hands of berlusconi and his company. The 20th annual Conference Begins in new york today. David einhorn and a capital cofounder are monks the speakers. Bloomberg will be live from their. There. Find more by going to bloomberg. Com. X coming up, a look at the potential he is scary outcome for the u. K. Election. And volkswagen board meets today. Coming up we speak to an investment manager as the saudi stock markets outline rules to Foreign Investors. It is monday morning. What is on your mind . Caroline and i are on twitter. I like that. That will be an interesting throwback. What does it mean for investment in the u. K. . Meanwhile, greeces imf payment deadline looms. Didnt strike a deal . More after the break. Welcome back. It is democracy usually a stable and rather boring affair at least it used to be. But the latest elections are proving to be the most unpredictable in recent history. Having nightmares about possible outcomes. British general elections usually you note the result the night before hand. This one is not like that. No one knows. When you Wander Around westminster, everyone is wondering what will happen. In 2010, we had a parliament best started everything out in five days. This time both labour and the conservatives are going to try to negotiate with three or four other parties. Almost all have said they do not want to be in a coalition. Her majestys government has to continue. David cameron will carry on as Prime Minister. Ministers even if they lost their seats, will continue as ministers. It would be hard to decide. You have got no authority. Around 50 members of parliament who cannot be trusted to vote with the government on difficult things. This government may technically have a majority. At any minute, it could collapse. It tries to do something that is own the Prime Minister will be incredibly cautious about doing anything that might upset people. These people start to hold the whole party to ransom. What happens in a minority government . The opposition starts playing games with you. Guerrilla warfare. Suddenly you have to stay for midnight votes or 10 00 p. M. Votes or 1 00 a. M. Votes. It is that for peoples health. Look at the minority liberal government. Members of parliament dying. It is a fear for any business if you have a conservative government, you definitely have a referendum. It is exactly like a guillotine hanging over your head. If you have a minority labor government, it is hard to force them into holding a referendum. Suddenly leaving starts to look more likely. The idea of having a referendum on Scottish Independence in september 2014 was that you would kill the question. Despite the fact that scottish nationalists lost the referendum or because of that, they have vastly grown in numbers. The phrase that people used in scotland even ahead of the referendum was nationalists zombie nationalist. They wont die. They will keep asking questions. Before the voters lets get more what it means. All rather ghoulish. Nightmarish aspects. Bad because im british and sitting here in it. In terms of government come almost to the easiest bit of scaring us is not been able to decide very much. Perhaps not as many tax increases as some would like. Perhaps not a referendum. One government isnt always the worst thing that could possibly happen as opposed to radical government of one form or another. So far, the community it has been incredibly relaxed. Last week terribly low yields. But im nervous. Almost more than anything else huge amounts of uncertainty while we tried to get a government together. Bet against the pound . I think the pound is double dribble. Is still vulnerable. I wouldnt rule out some outcomes. We would like to rebalance the economy. If they are this relaxed about it, surely they could wake up. Hang on. What are these people going to do . Lets not get down. That is all down to a great deal of negotiations. The markets, everyone is writing about the markets. Would you agree with that . If they do, how much impact with that have on the euro . Were edging toward some kind of a deal. I still think the risk is negative from their. If you start off that if greece leaves with a be bad for greece . Would it be bad for greece . In terms of the worst deal come if you like it is the worst deal for contagion risk. Going backwards in the polls. That would give him a fresh lease on life. We get some kind of a deal. At the moment, we have got a wealth of data coming out today. France looks pretty weak, as does norway and switzerland. Everywhere else growth. Probably not much further. Well spend a lot of time thinking about last weeks bond market moves. The markets have gone from very overboard to very oversold on any kind of momentum indicator. I think we will be very choppy. Marching two basis points closest 20 every single day. Still, quantitative easing. It would be soon easier for the ecb to buy now. The other piece of data was inflation surprises. Inflation surprises investors in the u. S. Switzerland japan, the highest since 2012. Are we about to see a significant change in the inflation perspective on a global basis . We have done in a sense it is amazing how much Commodity Prices and oil most of all drives inflation sentiment and inflation data across everything. It went to a low level. We got excited about the inflation as a theme. Again, we were too excited. There is still a lot of things that are still there. Places like japan, a temporary pushup in prices. For now, the jump is going to it is going to hit. Tomorrow the aussie decision. It looks like they could cut. Yes. That is probably the consensus. The more the Research Resource good to have you in come especially on monday. Gold stars for that. [laughter] coming up following the highprofile resignation of a chairman last month. Will we learn more about who will be in the driving seat at europes largest carmaker . Stay with us. Just because im away from my desk doesnt mean im not working. Comcast business understands that. Their wifi isnt just fast near the router. Its fast in the break room. Fast in the conference room. Fast in toms office. Fast in other toms office. Fast in the foyer [pronounced foyyer] or is it foyer [pronounced foyyay] . Fast in the hallway. I feel like ive been here before. Switch now and get the fastest wifi everywhere. Comcast business. Built for business. Welcome back to countdown. Disappointing data from china. Chinese Services Later in the week. And unemployment numbers in the u. S. The kick it off with the aussie dollar. It has rebounded over the past four sessions. The market is the least along of aussie dollars since the end of march. It is down for the fourth day in a row. That disappointed on the manufacturing side. The market says this is sunday 5 75 they will cut rates. 25 out of 29 we have pulled polled say this is the opportunity to do that. The market is very much focused on a rate cut in that currency. That is a position on the aussie dollar. Lets look at the yen in the and the yuan. His warning he is stepping up the creek and he scrutiny. Look at the longerterm chart. You begin to understand the kind of pressure. That is the dynamic. It is giving them competitive headwinds. Our top story we have broken the 120 level. The yen is at its lowest level. The dollar at a threeweek high. The positioning of the market is the best dollar gains of the lowest in 2012. Yen moving lower. You begin to understand why people are looking. The market is the best for the dollar. That according to the people we have spoken to say the market is out of sync. Thank you. A check in on some of our other top stories should trailing economists estimates. Policy makers step up the stimulus to shore up growth. The showing regulators say it found no evidence of misconduct as investigates movement in the dollar ahead of centralbank decisions. It rose ahead of the monetary announcement. The next decision is tomorrow. The bank is expected to cut rates. The duchess of cambridge has given birth to her second child, a daughter. He will be fourth in line to the british throne. The baby is as of yet unnamed. You can find more on that story at bloomberg. Com your. Bloomberg. Com europe. Our guest joins us from berlin. Do you expect a new chairman . No, we dont. The meeting would be chaired by the former chairman of the labor union. They will be two new board members. We do not expect a new chairman today. There has been so much speculation around this dispute. Do we think there will be a validation . What do you expect . The two new members who will sit on the board today are two nieces. That makes it less likely that an outsider will come in and become the new chairman of the company. And they can many ways today will be a validation of the trust that the board has shown. We are going to get the replacements for the chairman andtis wife. They are going to fill the supervisory boards and it will not change anything in the business. We expect statements from them . I think we can expect them to back him. I do not think there will be any immediate change in the business with these two people taking the seats. They are nieces of piech. They will follow the lead that has been established by the board. We look forward to hearing that. Thank you. Europes longest serving leader is often called the last remaining dictator. He runs the republic of belarus. His election would mean being in power for another five years. We find out how the situation in ukraine is impacting him and his country. It is a country that has been ruled by one man for 21 years. Another victory for Alexander Poroshenko in belarus. As say it wasnt free or fair. In opposition has sought to challenge him with bloody consequences. President ial elections are just months away and we are in the country of belarus to gauge the mood. People and politicians here are anxious. What happened in ukraine has strengthened president s lukashenkos position in the country. Could belarus be the next crimea . The Eastern European nation of belarus became a country 25 years ago when the soviet union collapsed. It is wedge between the European Union and a resurgent russia. For centuries, it has been a frontier between its larger and more powerful neighbors. Belarus is russias closest ally today, but over the last year, it has become concerned about its big brother. Belarus is about as close as you can get to russia. It is hard for people to get their head around. Belarus still feels like the soviet union. Not much has changed over the last quartercentury. That right there is a monument to the founder of the kgb. This across the street is the headquarters of belaruss kgb. Thats right. Belarus never change the name. Belarus get some of the kgb kept some of the kgb methods. The president lukashenko fought back. In the red jacket is one of the president ial candidates. As polls closed, he was beaten, hospitalized, and thrown into a kgb cell alongside other president ial hopefuls. Today giving up on revolution. When i got out of jail in 2010, i had one goal organize a ukrainian style revolution. But the situation in you can has destroyed my plan. He is more concerned about the very existence of belarus than democratic reform. The slightest attempt to carry out something that looks like a revolution here will lead to russian intervention. We are on our way to meet the president of belarus. He is preparing for his fifth interview. After three years of asking for an interview, he is ready to talk. We have been invited to his brandnew palace of independence. I want to ask if russia is a threat. There are a lot of people in russia who thinks and peerless to clean imprerialistically. Whoever comes to us with a sword will die with a sword. The opposition to use says that crimea is like a present to you. People are concerned, forget about. Forget about lukashenko. That is cynical. We wouldnt lose our country because of crimea. People in belarus have begun to understood about Everything Else. One thing belarus doesnt have is economic stability. The majority of belarus exports go to russia. This was one of the biggest tractor factories in all of the soviet union. It is on the outside. It is a look like it has changed much since then. It does not look like it has changed much since then. Is still close employs close to 20,000 people. There is little demand for its goods. Cheap energy and vocational bailout from russia, belarus would be belly up. Critics say that economic reliance is a creepy threat to their sovereignty. Russias actions in ukraine do not sit well with everyone here. A professor at oxford gives a view. We do not want to play a part of Vladimir Putins imperial project. We like being our own country. That is ok. Patriotism is on the rise especially among the young. A concert with it are celebrating all things belarus sian. A growing sense of national identity. Itanother five years in power. Ryan chilcote bloomberg. Join us on twitter. Make sure you jump in and join the conversation. Trending today, still over that fight we have seen with mayweather and pacquaio. More on that after the break. Isis supporters a claim comes after police shot two gunmen were a cartoon exhibition was being held. They started shooting at security officers. Police in texas suspected the car may have contained a bomb. Markets closed in the u k and in japan. European markets are open. A Conference Begins in new york today. David einhorn is amongst one of the speakers. Bloomberg will be live. Saudi arabia is to open its stock market to foreigners from june 15, giving investors direct access in the middle east. Joining us now in saudi arabia is our guest. Wonderful to have you on the program. Give us a sense of what this good unleashed for that markets. The moment it looks only about 1 of investment is from Foreign Investors. How they could it become . It could become quite big. We expect that over the next five years. It could reach all the way to 40 billion. That could be 10 of the total market. It is important. Once they join that is going to lift the importance and inflow of foreign direct investments. When do you think of that could be accomplished . How big would be relative to anything in existence . Is probably going to happen between 1824 months after Foreign Investors begin to invest directly, which is june of this year. Evidently saudi arabia stock market is extremely important. It is one is the biggest stories in the emerging market. It is bigger than the russian market. It is bigger than indonesia. This is the big story for everybody waiting to participate in. Were looking at pictures of the new king. Paint us a picture about the geopolitics that investors should be aware of who are looking to get into this stock market being unveiled. What are the risks and opportunities of the changing of the guard at the top . Saudi arabia is important. Despite the geopolitical concerns that many how come it is a fantastic market in terms of the graphics. Is the biggest economy in the middle east. It has a population of 30 million people. The demographics are fantastic people the demographics are important. Recreates a lot of pent up demand. They have monumental changes. You will see even more changes come historic changes, over the next few months. Actually, the new opening of the markets, we shouldnt think it is all about oil money or oil companies. You are talking about consumer growth. You are absolutely right. It is not included in the stock market. It does not about oil. It is Everything Else included. Let me give you an example. When the king announces benefits of salaries and bonuses to everybody in saudi arabia, all Government Employees everybody benefits, retailers benefited. Iphone retailers and all of these mobile phone providers. There is a consumer story that we missed because of the oil. How much has this been factored into prices . Will you miss the wave . Or is there more growth question absolutely. As we said, this is far better. Oil was priced at i think there is the lottery pricing going on. It sounds as if you could the a very easy matter. Thank you for the coming up, we take a look at our favorite stories come including a new york foodie taste on london restaurants. Welcome back to countdown. In case you missed the events it was a baby. What caught my eye was the maternity wing. She was barely there. In and out. Second one. Apparently it gets easier. The New York Times the couple are on their way with the baby to norfolk to meet the queen. What is the baby going to be called . Alice is 114. Charlotte 31. The least likely is i will have to go back and look at that. Lilly. You can read manuss writing. Well done. A new york chef was over a little while ago. She was a british woman was in new york blazing. She is coming over to help give out prizes for awards. She sink london is super exciting. She is saying london is super exciting. She says it was one of her favorite meals last year. I havent yet. It has been on my to do list. The first on the list. Join us in the next hour. Manus chinas manufacturing miss. We are live in hong kong with the market reaction. Plus what it could mean for future easing. Caroline last push for power. With three days to go until the u. K. General election and no party in a clear lead, ed miliband talked down some of the challenges. We bring you the latest. Manus differences over a deal. A compromise between greece and its european creditors over Economic Reforms remains elusive ahead of this weeks imf payments. We bring you the Details Behind the days of negotiations. Caroline mcdonalds reveals its comeback recipe. The comeback plan for the struggling fast food chain. What could change. Caroline welcome to countdown. I am caroline hyde. Manus and i am manus cranny. Caroline Ryan Chilcote sat down with the man considered europes last remaining dictator. He is up for reelection. How the conflict in Eastern Ukraine has impacted his country. We bring you that exclusive conversation. Manus lets begin the day with our attention on asia and china manufacturing. It was a miss. Pma data pmi data trailed estimates. Zeb eckert is in hong kong. This is one of these classic moments where the official data and the survey data tell different stories. Zeb they certainly do. The private survey data is what we are looking at this month because the april numbers are still are showing the steepest contraction in a year. That is what we saw today. Interestingly, stocks advanced because the number was so bad the market believes we will see more stimulus out of china. That is what you would expect given this sharp fall in new orders. Also, this event are in of domestic demand and the fact that production levels at factories stagnated in the month of april. 48. 9, the steepest contraction in a year for the pmi figure. In march, the level was 49. 6. Anything under 50 indicates contraction. This is consistent with the overall slowdown we have seen in china this year. will see an Interest Rate cut during the month of may by the chinese government. The reserve ratio cuts so far this year have tried to stoke lending, but not enough to counter the slowdown we have had. China wanting to maintain a 7 growth rate. You can bet there will be stimulus activity. Ubs saying the government will speed up infrastructure spending. We are seeing Property Developers rallying today. Take a look at the developers in hong kong. They are leading in the hang seng. Financials are under a bit of pressure in the hong kong session. Hsbc down 1. 5 . We are expecting earnings numbers this week and watching that closely. Cathay pacific it is leading declines are now in hong kong. Shanghai shares briefly fell after that number this morning. They are now higher as well. Manus thanks for the roundup. Zeb eckert in hong kong. Caroline closer to home now. Three days to go until election day in the u. K. And the polls are still putting labor and conservatives. With no party expected to gain a majority, negotiations are beginning. David cameron and nick clegg plan talks within hours. Denny alexander told bloomberg about his partys requirements for any deal. We have set out some of the things that we would insist on in coalition negotiations. Having a plan to finish the job. That plan needs to be a fair one. We would ask a bit more from those who have the worst in terms of tax rises. We want to make sure that we invest in education much more. That would be a redline i believe the coalition needs a strong and stable government. We need to make sure that we deliver some of our key policies. Because you have had you have had a balanced, carefully thought through, fair plan for investing in our economy and getting the country back on track. We would not see the negotiations that we are seeing if it wasnt for the role of government. In the end, i went into politics to try to do the right thing. The fairminded voters in this country will reward us for that. Caroline joining us now is the woman who put the questions to danny alexander. Glamour glamour, glamour. Talk to us about the campaign trail in scotland. The rise seems to be uncontrollable there at the moment. I have to say it was a bit of an eyeopener. I went campaigning with denny alexander, who has held the seat for 10 years. The amount of people who would not have voted yes in septembers referendum but were committed s p voters was really striking. It seemed that any fear they had in declaring themselves to be snp voters has disappeared. Manus one of our colleagues stories says it has quadrupled. That is a phenomenal achievement. I mean, it is. You would expect it to go up after no vote in the referendum. They have run a very intense campaign. They have targeted those yes voters who were not snp members. They have slightly changed the rules needed to become an snp candidate. They have a lot of new people on board. Not sort of nationalist loonies, if you know what i mean. They have kind of made themselves a much more mainstream party. Nicola sturgeon is seen by many as being less lecturing them alex hammond. For many people, she represents a kind of happy medium. They feel that they can endorse her where they could not with hammond. Manus yet here, south of the border, she is painted as this villain vixen that would have ed miliband in the palm of her hand. How important is the snp . Time and time again, labor has said no, they will not. There is a nuance to the phrasing, that they will not do for more with the snp. They do not need it. Snp said they would back labor if labor try to form a government. The difficulty in saying no backroom deals, going forward, it is very hard to pass things without seeming to be negotiating with the party that is almost certainly going to be the Third Largest party in parliament. Caroline talk to me about what it means for the liberal democrats. Will they lose all of their seats . They are currently predicted to lose all their seats in mainland scotland. The only seat that is expected to hold has a strange relationship with mainland scotland. Caroline they are going it alone. Yes, it is very bad news for the democrats, but also for labor. Caroline we will be talking to you throughout the morning. Thank you so much for coming in so early. Manus lets turn our attention to mcdonalds. The ceo serves up his recipe for a comeback at the Fast Food Restaurant today. The turnaround includes getting rid of a few sandwiches in the hopes of speeding up its kitchens and simplifying customer choices. The menu trim might not be enough to boost sales. Bloomberg takes a look at some of mcdonalds biggest missteps in the past months. Mcdonalds has a problem. People are eating less and less of their food and samestore sales in the u. S. Have declined for the past six quarters in a row. Here are four of mcdonalds biggest missteps of recent months. Mcdonalds has been adding lats lots of new items in an attempt to lower customers. Problem is that menu is now too big for its own good. The company easily got rid of its seven underperforming sandwiches. Even after that, the menu is still 40 items fatter than it was in 2007. As fast food workers at cities across the u. S. Clamor for a boost to their barely minimum wage mcdonalds has taken the brunt of the pr quagmire. In response, the company has said that it will raise pay to at least one dollar above local minimum wages. And even offer vacation benefits. But only if stores of stores that the company owns directly, which means it will affect about 10 of domestic scores stores. It is not just employees that are disgruntled. It is store owners, too. The relationship between mcdonalds and its u. S. Franchise owners is the worst it has been in over a decade. Opening a mcdonalds requires an investment of about 1 million 2 million. Of course, a sales slump ins that franchises are making less money. Finally, the company is missing a big opportunity and mobile. Fast Food Companies like taco bell and starbucks have shown what a good mobile app can do for sales. Customers ordering via taco bells app rack up bills averaging 20 higher than regular orders. Mcdonalds has lagged behind its competitors, but is expected to release a global app this summer. Caroline meanwhile, the talks on a greek bailout deal following four days of intense negotiations. Are they any closer to an agreement . We have reports and counter reports that they seem to be making headway. There still seem to be some strong redlines from the greek point of view. It has been an interesting weekend in that sense. We had the talks that negotiations were proceeding in a much more positive climate and the fact that the Greek Negotiating Team that was seen as a positive sign for the talks. Late last night, the government came and said there is no interim solution. We are looking for a complete reform package by the end of the month. It seems that the two sides are far apart on the redlines. We have been talking for so long about the labor market reform the sale of state assets, and the fiscal assumptions. To give you a vague idea it is around 800 million euros. Three or four times that number. Caroline that news out earlier from your labor minister saying they will not implement any measures that will lead to pension cuts. Very much based on the labor and pension acts, not willing to cut them. What about cash . They have plenty of payments coming up. Have they got enough . They have the imf payment on the sixth that is around 100 million euros. They are fine with that. They have the first installment of wages next week and a very large payment on the 12th around 770 million euros. There is an issue on these payments. It is a very tough period for the greek government cashwise. They are looking to review the amount, maybe a haircut on the collateral the greek banks are using or quite positively the issue of raising the tbill cap at the moment so that the greek government can increase its shortterm borrowing abilities. Cash is scarce. The ecb meeting on wednesday will be closely watched to see if greece is running out of time even faster than we anticipate at the moment. Caroline wednesday, we have the ecb meeting to decide on emergency liquidity. What other key dates do we have coming up . There seem to be so many payments here and there. What should we be looking for . The greek government imposed deadlines. Arbitrary that it does not meet at the end. We have this sunday deadline that has passed. Now we are talking about a deal until the end of may. As we are running out of cash the cash flow situation cannot be we cannot say for sure if it will be the 15th of may for the 15th of june because the cash flow situation is so dire. That is why at the moment, they are looking for a solution before the eurogroup meeting on may 11. Not necessarily a solution, but a sign of Real Progress towards a complete reform package. Caroline the saga continues. Thank you very much indeed. Manus some of the top stories on bloomberg this hour. Markets are closed here in the United Kingdom and in japan. Other european markets are open. Saudi arabia plans to allow foreigners direct access to its stock market. This is according to a statement on their website. An agreement in principle to buy a stake in ac milan. Control of the seventime european soccer Champion Team would remain in the hands of berlusconi and his company. Isis supporters have claimed an attack on texas. You are looking for live shots at live shots of the scene in texas, where the incident took place. According to the director of site Intelligence Police shot and killed two gunmen who drove up to the building where a mohammed cartoon exhibition was being held. This is in garland, texas. They suspected the car may have contained a bomb. The 20th annual sloan investment Conference Begins today. Bill ackman, Jeffrey Gundlach are among the speakers. Bloomberg will be live. Join us for more. Go to bloomberg. Com to see what is on the minds of europe. London is closed, but the rest of europe is open. Caroline you can follow the conversation on twitter as well. Let us know what you think of the show and the new baby. The royal baby seems to be trending. Star wars is on the cover of vanity fair. And the labour Party Getting backing. Do follow us. Manus coming up later, nightmare on downing street. The potentially scary outcomes of the u. K. Election. And the rules for when it opens its doors to Foreign Investors. We will look ahead to comcasts firstquarter results after its takeover of time warner fell through last month. Caroline first, more about the u. K. Election. Our next guest says the full risk is not priced in to the markets. Caroline three days to go until u. K. Voters head to the polls. An overall winner is still looking unlikely. Our next guest says that when it comes to the pound, the markets are overpricing fiscal risk and underpricing monetary risk. More on what that means. What do you mean . There is a sense that there is a bit of a focus on the election this week. I think we are going to get the real story after the election. Right now, the focus is on the shortterm event risk. Looking ahead, about the bank of england, we will see some sort of pricing as we expect a less bondfriendly climate in the Second Quarter of this year. Once the electoral uncertainty is lifted it will be weeks of political headlines which will keep the market on the defensive. After that, we will get a reminder that the u. K. Economy is not falling off a cliff. Inflation will head back towards 2. 5 . We will probably see a rate hike before the end of the year. Manus that is a contrary view to what the markets believe. It is all down to may 13. What im struggling to reconcile is why there is the virgins is divergence between what the markets believe and you are calling for a rate hike in the Fourth Quarter . Yes. I think it is realistic. Manus why . The last minutes were a brave policy effort of universal currency entitlement. Everybody seems to be in this global currency war. The bank of england sent a clear message that the markets are underpricing the Interest Rates from the last inflation report. Sterling is no longer a disinflation very disinflationary risk. A faster than expected drop on the cpi. With Global Oil Prices bottoming out we have probably seen the low point of inflation and we will get towards a very difficult second half of the year. The bank has been saying that strength is no longer a deterrent to rate hikes. It is a strong signal that they are preparing for a rate hike. Caroline the u. S. And u. K. Go in one direction. On the other side, stimulus in europe and potentially more stimulus in china. What do you think about the data coming out . Manus i think the chinese huey ofs chinese q. E. Of some kind asset purchases some nationalization of private sector risk to help recapitalize the Financial System and create an environment whereby we can see productivitycreating investment growth come back, i think that would be a complementary thing. Which means that some of the voluntarily the volatility in on yields in bond yields will see a resolution in greece. Manus bund yields are nowhere near the price they should be. To put it in perspective, the biggest bond writing since 1993 took place last week. It was a virtual exodus. We saw them rise by 22 basis points. I think that there are forces which will be driving yields higher in the weeks ahead. One of them is the fact that we are getting a sense from Inflation Expectations and the pmi that the ecb q. E. Is working. Bond yields at the long and will rise further on the back of growth and deflation expectations. We also have a resolution in greece which is more likely. Of course, we also have this nation market collapse. We have so much Bank Liquidity everybody is at one end of the market. Now people are trying to get to the other end of the market. We are seeing this volatility yield. Caroline great to have you on. Manus 7 30 this monday morning. London might be on vacation, but the rest of the world is working quite hard. The chinese have delivered their data. The Australian Dollar is down. The purchasing Managers Index came in below what the market was anticipating. This is all going to impact on the aussie dollar. What you see is an aussie dollar which has rallied somewhat over the past 30 days. It is giving some of that back ahead of the rba policy meeting tomorrow. 75 probability that they will cut rates to 2 . The market is least short of the aussie dollar than it has been in the past two months. The market was illprepared for a rate cut. The aussie dollar not exactly flatlining, down a little bit lower. I want to show you a cross currency, which we do not often look at. The South Koreans could be getting ready to do something and brought with regards to their currency. This is the yen declining and the won rising. It is actually inverted. You have the won falling and the yen rising. I want to show you the longer term trend, showing the won at its strongest level against the won since 2008. No specific level has been noted. They may find tune the movement on their currency. You may see the South Koreans get involved. How is the market condition for the bank of japan . The yen trading through this 120 level. Dollaryen at a threewe high. Speculation in terms of positioning. The market is the lowest since 2012. The market is not really positioned for more extensive moves to the upside. That is the story we are running on bloomberg. Com this morning. Caroline thank you very much indeed. Lets check in on some of the other top stories is hour. Chinese manufacturing data trailed estimates as new orders declined. The figures underscored forecasts for policymakers to step up stimulus to shore up growth. The australian regulator said it found no evidence of misconduct after it investigated a movement in the dollar ahead of the central bank decision. The aussie dollar rose or fell at least. 6 ahead of the policy announcement. The next rba decision is tomorrow. The bank is expected to cut rates. U. S. Media giant comcast reports earnings before the markets open in the states today. Investors will be listening for commentary on Strategic Options and capital return plans after comcast planned to take over Time Warner Cable but it fell through. The duchess of cambridge has given birth to her second child and it is a daughter. It will be the fourth in line to the british throne. The baby is as yet unnamed. More on that story on bloomberg. Com. Manus a month to go before for an investors can begin trading in saudi stocks. The market regulator is due to publish their rules on how they will be able to do that. Elliott gotkine has more. The rules have yet to be made public. Foreign investors are already complaining. Why . Elliott that is right. The Capital Market authority which regulates the saudi stock market is due to publish today the rules that will govern the opening up of that stock market to Foreign Investors. It could be later on this afternoon. We will have an inkling into some of the broader rules that will govern trading for foreigners. Institutional investors will have to have at least five figures under management and at least five years experience. They may cap the ownership of particular stocks at 49 . Beyond that, the depth is in the detail. The response from certain investors they are not particularly happy with it. They are already asking for some changes, according to the newspaper. Foreign investors want to be able to subscribe to initial public offerings. They want an extension of the settlement period they will have in order to settle trades. They are expecting clarification on restrictions on certain companies. These rules are due to come into force on june 15. Foreign investors will finally be able to directly invest in saudi stocks. Manus just remind us of the significant of the saudi stock market to foreigners. It is not just oilbased stocks. There are some restrictions in some of the cities, but what is this market . Elliott it is stateowned and not traded, so you will not get the Worlds Largest oil company but the Worlds Largest petrochemicals maker is listed. Beyond that, you are talking about a market that is the middle east vaguest market worth half 1 trillion, and it is currently one of the most closed markets, only open to saudi nationals. After june 15, it will become open to be include in indexes run by msci and ftse for example. We have already seen it as one of the best performers of this year despite the dropping oil price. Some investors reckon that opening up to Foreign Investors could see an additional 40 billion being funneled towards saudi stocks. Some institutions out there say that they are already stockpicking in anticipation of the opening up of the saudi stock market. They reckon they will go for private health care and consumer stocks. The young population certainly likes to spend money. Analysts earlier talking about the bonuses given out to state workers. The government is trying to diversify away from oil anyway. That is due to happen in some six weeks time. Manus thanks for the roundup. Caroline lets turn our attention to some news closer to home now. British democracy. The may 7 elections are proving to be the most unpredictable in recent history. It is not only downing street having nightmares about the possible outcome. British general elections usually know the result four months before hand. This one is not like that. No one knows. When you Wander Around westminster, everyone is saying, what is going to happen . In 2010, we did have a hung parliament, but they started they sorted the whole thing out in five days. This time, both labor and conservatives will be trying to negotiate with three other parties. Almost all of those parties have said they do not want to be in a coalition. Her majestys government has to continue. David cameron will just carry on as Prime Minister. Ministers, even if they have lost their seats in parliament will continue as ministers. It will be hard to decide anything because you have got no authority. There are now around 50 members of parliament who just cannot be trusted to vote with the government on difficult things. This government may technically have a majority but at any minute, it could collapse because it tries to do something that its own back benches will not wear. The Prime Minister will be incredibly cautious about doing anything that might upset people. Effectively, these people start to hold parties ransom. What happens in a minority government, the opposition starts playing games with you. They start running guerrilla warfare. Suddenly, you have 9 00 p. M. Votes or 1 00 a. M. Votes. 19741979, you could see members of parliament dying. It is a fear for any business that is based in britain that exports to europe. If you have a conservative government, you definitely have a referendum on living in the eu. If you have a minority labor government, it is toss one to imagine that government being forced into holding a referendum and suddenly, leaving starts to look a lot more likely. The idea of having a referendum on Scottish Independence in september 2014 was that you would kill the question. Despite the fact that the scottish nationalists lost the referendum or maybe because of that they have vastly thrown their support in growing numbers the phrase that people have used in scotland ahead of the referendum is zombie nationalists. They will not die. They will keep coming back and asking the question. Or them, this is the question. Manus three days to go in the u. K. General election. The outcome is anybodys guess. Lets take a look at what the u. K. Investment perspective might be with the management director of great to have you with us. It is a roll of the dice in terms of what happens or how the various combinations go. Especially for you, at the company and how have you changed asset allocations going into this election . There is some uncertainty. The likely outcome is not going to be known for some days afterwards. We have not changed our portfolio until we know for certain what the outcome is going to be. One way or another, we will probably muddle through. As we muddle through, things will carry on. Caroline you say if it is ok. What would be ok . The best outcome would be some continuation of what we had before, a liberal Democrat Coalition with the conservatives. We do not know whether that is likely or possible, but it is the best outcome. We are not looking at either party as being very extreme in this area. One way or another, it will work through. Manus you talk about mainstream markets and you see some of the headline markets as far ahead. Your Core Holdings have underperformed. Do you think that changes as you look towards the rest of the year . Not just the u. K. , but worldwide, we are seeing very little growth coming through. That is going to put down bond yields to lower levels. Generally, they are very low levels. That tells us that the mainstream markets are going to produce more returns. We have got to deliver something more attractive than the basic returns that are likely. Caroline what is that different strategy . Is it all about the Smaller Companies . Big Companies Find it hard to grow when the world is not growing. They struggle to produce a return. Lots of Small Companies go bust, but they have great growth potential. With more growth potential, they can deliver growth in the world is not growing. They can invest for productivity improvements when we are not getting productivity improvements. They can generate cash returns at a time when the world is not your not growing. Manus you have Consumer Discretionary stocks as the largest portion of your fund. Give us a flavor of some of the names. Is that all predicated on a u. K. Recovery story question not really. The point is about u. K. Consumers. International greetings is a wrapping paper company, one of the top three in the world. Not an exciting sector, but a company which has invested 10 million in in their growth capacity. That is improving their ability for margins and taking market share. It is improving their business at a time when most companies are not growing much. The insurance sector, london is one of the leaders. We have some very good companies. Caroline are these Smaller Companies more or less exposed to Political Uncertainty and Coalition Building . They are more exposed. On the other hand, they are more flexible. There are some companies which, if the world changes a certain way there are some companies which are beneficiaries of that. They can take it of the changes and grow when the world is not growing. That is the key thing we are looking for. Manus always keen to get other peoples opinion on how the world might turn out after this election. What would be the best for markets . I think the markets would surge if we have a continuation of what we had. A conservative minority with smaller parties to run a working majority. I think that would put quite a big surge in the markets because bond yields are low and equity yields look attractive versus bond yields at 1. 6 . If anything, i think they are slightly held back at the moment. Caroline you brought up wrapping paper before, which i think is a very exciting sector. What other Key Companies are sectors do you keep an eye on . We look for companies that are improving productivity. Productivity is not happening at the moment. We are looking for companies which can invest a certain amount of. Of capex. You talk about Software Companies generally, there are quite a large number of them and they have done very well for us. Services that are improving logistics or services for retailers. In the u. S. , it is being sold by microsoft directly. Manus great to have you with us this morning. Surveys williams, thank you so much. Up next, an exclusive interview with the man who some call the last day tatar. Ryan chilcote went to meet him in belarus. Stay tuned for that. Caroline welcome back. Lets check in on some of the top stories. Isis supporters have claimed an attack on texas overnight. The claim comes after police shot and killed two gunmen who drove up to a building where a mohammed cartoons exhibition was being held. Police in garland, texas suspected the car may have contained a bomb. Markets are closed today in the United Kingdom as well as in japan. European markets are open. The 20th annual sohn investment Conference Begins today. Bill ackman, David Einhorn and jeffrey good luck gundlach are among the speakers. Bloomberg will be live. Manus it is brisk business literally on the streets of hong kong for the new sport watch. The scarcity and the huge demand in china has driven a thriving secondary market for apples latest gadget. Stephen engle went out for ray market watches gray market watches. Stocking up on apple watches from resellers to give as gifts back home. The apple watches are more expensive in china. Plus, i could not even find any in guangzhou. I did not expect this craziness to happen and i did not expect it to be such a hot item. I think people are going after the apple watch because there is a limited supply. What are the gray market prices here in hong kong . The most expensive one is 10,000 hong kong dollars. About 1300 u. S. Dollars. The list price is about 700. If you want to pay almost double, you can be an early adopter of the apple watch here in china. It is new. That is why i want to try it. I guess i will have the pay more than 2000 hong kong dollars more than the original price. If that is too rich for your blood, you can go down scale with the crossborder version. They are not really knockoffs they are more a phone on your wrist. It has a simple card that you can put a sim card you can put in and talk. The best part, just 780 hong kong dollars. That is 100. Most of the customers were focused squarely on the pricier apple watch. This sounds a lot like scalping, but in hong kong, it is perfectly legal. A number of different vendors lined up along the sidewalk. They are not selling the apple watch, they are actually buying it and they sell for a premium on the mainland. About 5000 hong kong dollars less than 700. They will sell it to a wholesaler for a premium. Many buyers who got their orders in two apple before the april 24 launch are selling them back on the secondary market for up to 70 profit. Normally, i by about 10 apple watches a day for resale. I can sell about 15 or 16 watches a day. I am not worried about over stocking. Even so, we can sell them in china, where the demand is still high and will continue to be high. She says she is off to find more apple watches. She has already bought six of them. As long as i can find them. Money is not a problem. Manus two minutes before the start of european trading. Lets take a little bit of a look at what is on todays schedule. The purchasing Managers Index was disappointing from china. The australian central bank, the aussie dollar had a little bit of a runup. The Rate Decision 78 betting they will go for a rate cut to 2 . Caroline another record low. Manus and you have the Chinese Services number. Interesting to see what that is after the manufacturing numbers we had today. Caroline meanwhile, wednesday greece has a 200 million euro payment due to the imf. Many feel it can make that payment. Thursday is what we have been obsessing about for the last month or so, the u. K. General election. We will be heading to the polls to vote. Friday u. S. Nonfarm payrolls. Will we see the pickup that we are expecting . Manus then you get those adp numbers on thursday. That will be a little bit of a curtain raise for the market. A couple of voices we have had in the past 24 hours. Caroline one who votes, one who does not. Manus mr. From mester from cleveland is reiterating that all meetings are possible. They say it is down she says it is down to the data. It is still a very much a game in terms of the rate hikes. Caroline in april, the first decline since june. Meanwhile, a bit of news coming up ahead of on the move. It is all about m a monday potentially, when it comes to pop chemicals. Manus the big one for monsanto is in terms of how they will fund the deal. It does not get much more sexy than that, guys. Caroline you are talking now. We will talk much more about that deal on on the move up next. Jonathan good morning and welcome to on the move. Moments away from the start of european trading. The ftse closed for the bank holiday. Plenty happening elsewhere. Your morning brief. China slow down. Hsbc gauging manufacturing contracted more than expected. It threatens to drop below leadership target of 7 preno deal. After four days of negotiation between greece, greece hopes for a breakthrough and he remains elusive. Mcdonalds combat recipe. The worst sales in a decade. Come back recipe. The fast food turnaround place plan. The things i will be watching very looking at features a little higher. 53 points higher. Manus cranny has your market open. Manus the bond market. Liquidity open in london open a holiday. The great conundrum is this, selling or going against the market is a wonderful thing in theory. You have the european banks. That will cost you money. Once is movement, a nice