Continue astroubles a social Network Fails to add new users and says sales will miss estimates. A warm welcome to countdown. Anna its 6 00 in the morning here in london. Youre watching countdown and we have some results coming in this morning. Manus youre safe, thats the message, despite underlying profit coming in at 4. 5 theion, just slightly below 4. 57 billion estimated by the market. Rio says no longer appropriate for a progressive dividend policy. The final dividend comes in at 1. 05 per share. They maintained the 2015 for. Our dividend this is all about protecting yourself from an s p downgrade. S p real says further actions will be taken to maintain the balance sheet. They are in protection mode. The rio will speak to time ono at 7 45 u. K. On the move. Bankes secondlargest Fourth Quarter profit missing analyst estimates with earnings falling. 400 Million Euros in litigation cited outweighing again from the sale of their stake in the asset manager, the topline story. Frederick odea, the chief executive talking about how it may have difficulty reaching its profitability targets this year. Record low Interest Rates, unstable Financial Market. Refraining from making reductions that were underway at Deutsche Bank and credit squeeze. Insurance is a big theme this morning. Manus the best paying stock and has been for the past five years. Continuing to pay . 17 a share. The new ceo will join the company a little earlier than the market anticipated. 8000 jobs to go by 2018. They will from their original guidance of 300 million and they are unlikely to hit the return on equity of 14 . We will be speaking with the interim ceo at 7 20. Before we move on, rio saying they will pay a dividend of not reports 51. 10 and billion dividend. Cover onhave a lot to the markets. Lets focus on some of them market moves. A resurgence in the japanese yen, back at levels we have not seen since 2014. Taking a back to 2014, thats what drove the dollar again down and what caused the big move. Undoing,have is an massive moves. Gold at its highest level in eight months, this years best performing commodity. Its not a tough ground to wear, is it . Playing catchup. Its been closed for three days but it is the worst Start Hong Kong has had to a Lunar New Year since 1994. Manus stockpiles rising in the United States and my favorite start of the day, total volume is 75 above the 100 day moving average. Janet yellen says while further rate hikes may be delayed by the turmoil in the markets, she will not abandon the program, making her twice yearly address on capital hill she said volatility had tighten Financial Conditions and could weigh on the Economic Outlook but would not affect fed policy in the longterm. The Hedge Fund Manager who successfully bet against mortgages during the subprime crisis thinks the worlds secondbiggest economy may end up having to print more than 10 trillion to recapitalize banks. The ceo of frances secondlargest bank thinks markets are overreacting. He told bloomberg the current climate is nowhere near as bad as the 2008 crisis. The situation today has not seem to deal with the situation we saw in 2008. Were not in this type of crisis today. The Banking System in the world is much stronger and the average capital has been doubled. We cannot compare the Current Situation with 2008. The social network announcing user growth stalled in the last quarter and said it failed to meet estimates. Dorsey wants to make it more accessible but twitter has been unable to attract a wider audience. According to the associated press, nestle terminated its fiveyear contract a year early saying it here for its image after recent negative publicity surrounding the sport. Dayal news 24 hours a powered by our journalists around the world. Lets get up to speed with asian markets. Zeb eckert is standing by. Where are we in the trade up after the Lunar New Year . Or seeing inop shares in hong kong today, no trading action in shanghai because of the Lunar New Year holiday continuing as those markets come back online they. Lets get a snapshot of the regional inch mark right now. Japan remains closed as well. We are down 1. 4 . The only sector doing well today is health care. Broadbased declines and the Global Environment is what is to blame here. The plunge in crude prices, european brent credit bank credit worthiness. The Property Market in particular as capital outflows. Key concerns. Lets look at the regional stock indices to tell you how were trading. Japan, taiwan and china are the markets that are closed. Geopolitical tensions factoring into that market today given the rising tensions with north korea and the significant decision to industrialhe case on complex is significant politically and perhaps as well to the market today. Shares in australia and jakarta looking a bit different. Gains today despite the drop in oil prices. Shares, butining new zealand seeing a client a decline. Year over the chinese new in one section of calhoun. A key concern for tourism because it does not present a welcoming image of hong kong and jewelers falling today on concern that people will not come to shop and visit. Jets bc about a hsbc and petro china later in the show. Japan is now closed and china still closed. A complicated picture. Lets talk about janet yellen. She is a knowledge that market volatility may delay rate hikes. Lets listen. The fomc anticipates Economic Conditions will evolve in a manner that will more it only gradual increases in the federal lines rate. In addition, the committee expects the federal funds rate is likely to remain for some time below the levels expected to prevail in the longer run. Financial conditions in the u. S. Have recently become less supportive of growth. With declines in broad measures of equity prices, higher borrowing rates for riskier borrowers and a further appreciation of the dollar, these developments if they prove persistent could weigh on the outlook for Economic Activity in the labor market, although declines of longerterm Interest Rates in oil prices provide some the fomc do not expect is going to be sent in a situation where its necessary to cut rates. Lets remember that the labor market is continuing to perform and i continue to think many other factors holding down inflation are transitory. I dont think its going to be. Ecessary to cut rates with that said, Monetary Policy is not on a preset course and if it turned out that it would be at thery, obviously be omc what is necessary to achieve our goals that congress has assigned us. Act by thehigh wire fed governor janet yellen. Advisor, thank you for joining us. Abandon. Not if these issues are persistent on a global basis, they might have to change their mind. What do you make of it . Good morning. Just looking at the futures basically its safe to say that at this point, janet yellen did not persuade the is a logicalhere case for doing any significant typing this your. The probability according to the markets, even a single move before june is about one in 20 in the probability of a move, of a single rate hike this year is about one in sick. The probability according to the markets of a move in march is absolutely zero. Given that the markets would not expect the fed to move it all in march means it would be impossible for the fed to do it even if they wanted to because it would just be too big of a shock for the market. The bottom line is that if the fed thinks there is a case for any further rate hikes this year, they will have to persuade the public and Financial Market investors the rationale for doing it. It sounds like youre suggesting she would have to sound a lot more hawkish next time around in the month ahead of they want to persuade the market of further high to come. Its the substance, not the tone of the remarks. Testimonyhing in the that she gave was a specific acknowledgment that there are Downside Risks to the outlook. In december the fed said the risks were balanced and a lot of people were surprised at that. December obvious in that the risks were tilted to the downside. In january the fed decided not to say anything at all about the balance of risk. Now they are acknowledging that the risk are to the downside. One thing she passed over lightly with the latest eta on Inflation Expectations has been very negative, including the latest survey from the new york fed of consumer Inflation Expectations. Its the lowest it has ever been in the history of that survey. A lot of commentators noted that. Janet yellen said things that reasonably stable. I think the reason the markets are convinced is because the , many of these indicators are pointing in the direction of easing and its hard to think about how the fed would make a case why it would be logical to continue any further rate hikes this year. Manus she did address the possibility of negative rates and she commented, i do not be in ahe fomc will situation where it is necessary to cut rates. Think there is any reason to know what the potential is available. Its fascinating, isnt it . A number of major Central Banks in negative rate mode and youve hinted about Inflation Expectations. Fedm disappointed that the still hasnt determined if it could use this tool. In her testimony sheet knowledge that the fed had not yet got a clear legal reading of what their authority is to push rates below zero. Oates say that the market estimates now are that theres a 30 probability the fed will have to cut rates soon. That probability can keep going up. We will see how the World Economy evolves. This friday there is an important retail sales report coming but Inventory Data, wholesale Inventory Data makes it look like this quarter could be a very slow quarter for the u. S. Economy. The scenario where we are teetering on the edge of potentially ready to slide into a recession in the lie few months is a possibility. Its urgent for the Federal Reserve to prepare contingency plans. Thank you so much for joining us there on the phone. Thank you for joining us this evening. Richard is listening intently in the studio. The view coming through loud and clear was that she hasnt persuaded the market of the feds view that there would be further hikes. Absolutely. Going into her testimony the day before there was little chance of any hikes in the first few meetings. Look at the end of december. Less than one in Three Chances of a hike. At the end of the month that was twice as high as it is now. What is interesting is that the tone has changed from december to now. The risks were then balanced and now there acknowledging downside risk. Investors feel comfortable with the fact that they dont expect any hikes this year. Anna but if her task was not to ,reate more turmoil in markets perhaps you could say that has been achieved. Markets in the u. S. Are flat and stock markets in asia are noisy because of various market closures. We have not fallen off another cliff in the sense of nervousness around the Global Growth story as result of what she said. There were no major surprises. I think the price action in dollar yen will be a worry to do bank of japan. Since they enacted their new policy of negative Interest Rates, the yen has appreciated 8 . Weve got so much to get through. Thank you so much for joining us, richard jones. Eight economists see a in a bid to combat persistent inflation. We will bring you that decision as it happens. Manus heres a look at what else is on the day ahead. Googles head of business will appear to discuss 130 Million Pounds of back taxes. Out weekly jobless claims and janet yellen will reappear before the Senate BankingCommittee Following her testimony yesterday when she said the fed bank may delay. Into the realig numbers as profits declined 51 . Anna welcome back to countdown. Lets talk about whats happening in the mining sector. Rio reporting will year profits declining 51 . They pay the dividend for 20142015 that they will revise where they are. Our guest is in cape town. Great to have you with us on the phone. , this is pretty much expected, was in it . What do we reckon on that . As you said, investors have been focused on the dividend of all these minors. Rio tinto with the strongest balance sheet. There were some expectation they would maintain it, which the have. Policygressive dividend has become a bit controversial. Sense tot make much keep a promise to maintain increasing your dividend. What about the numbers coming out of the business end . Focus on cash the remains relentless, they will only invest in the best projects in their portfolio. What were the broader takeaways . Was in line with analyst expectations, no real surprise there. Revenue down 13 billion. They said the lower Commodity Prices wiped out 7. 7 billion of underlying earnings. Significant price declines in those commodities. High cost iron ore is leading the market. This is one of the most contentious issues at the conference you are at down there. Keep digging it up and selling it off and you squash the high cost producers. Iron ore is under incredible pressure. Exactly right. The comments from rio today at cold abuse from cape town this week. Its a slow process of supply exiting the market. Thats been the critical issue for a lot of these commodities. Until we start to see the high market and the producers going bankrupt, there is few hopes of a rebound. Anna thanks for joining us there from cape town. The ceo of rioo tinto during the on the move program. Inus 39 increase fourthquarter profits. The conference call. The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls eventually they have to end. Unless you have the comcast business voice mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Make your business phone mobile with voice mobility. Comcast business. Built for business. Janet yellen says that while further rate hikes a be delayed by the turmoil in the market, she will not abandon the program. Making her twice yearly address on capitol hill, she said volatility could weigh on the Economic Outlook. The yen sword on her comments, reaching levels not seen since late 2014. Gold climbed to an eightmonth high. Chinas Banking System could see losses of more than four times though suffered by u. S. Banks during the Global Economic crash. So says the head Hedge Fund Manager who says the worlds secondbiggest economy may have to print 10 trillion to recapitalize banks. The ceo of frances secondlargest says the markets are overreacting. He told bloomberg the current crime it climate is nowhere near as bad as the 2008 crisis. The situation has nothing to do with the situation we saw in 2008. We are not in this type of crisis at all. The Banking System in the world is much stronger than it was at that time. We cannot compare the Current Situation with what we had to manage in 2008. Twitter fell after saying it sales will miss estimates. The ceo wants to make the site more accessible but its been unable to attract a wider audience. Nestle has dumped its sponsorship of international athletics. It terminated its fiveyear contract in your early saying it reared for its image after the negative energy. Global news 24 hours a day. Anna european banks are under pressure. The French Investment Bank posted a 39 increase in fourthquarter profit. The company ceo joins us now from paris for an exclusive interview. Great to have the on the program. Thanks for coming in to talk to us. It seems that your business seems to be bucking some wider trends in banking. Is that a fair reflection of whats going on here . How are you managing to do that . I think weve been pretty good a growing all our business during the full year and in the fourth order. Solutions is a key division for us and represents 45 of our pretax profit. His grown Something Like 30 over the year in terms of revenues and orton percent in terms of contribution to profits. With 33 billion new inflows into our dividend. We had great performance in a very tough environment and even the most challenged part, the fixed income business has grown 7 during the last quarter despite the environment. So weve been able to be well managing our position in this market. Rewardingyou are shareholders with . 10 a share. The shareholders are being remunerated and your bucking the market trend, it has to be sent has be said. I assume there are a few people knocking on your door saying what is the bonus trend will you raise bonuses on this exceptional performance in your fixed Income Division . Talk us through the remuneration and bonus policy. Have consistent remuneration of our employees. The bonus pool this year will be the , which is less than net of 18 . So yes, it is an increasing bonus pool but we have to take into account the challenging market. Anna lets talk about your intentions toward the United States. Youve made an investment into a , what makesthe u. S. You so confident you can grow in the u. S. With other european banks decided to pull back to some extent from operations there, and do you have further expansion plans . The u. S. Is a very important market for us. Management asset business is within the u. S. We are managing over 400 billion of assets there. Weve been growing quickly over the course of the last years. One of our key strategies is to develop a strategy that we put in place years ago including the act that we want to increase revenues coming from feebased business. And going more into the advisory business is a key element to us. Thate going to make acquisition with peter g solomon which is a great small sized, highquality wall street firm. Ourhink that we can enhance military business in the u. S. We made a movie year ago by which a business in paris ina highly Successful Team that segment in europe. We are trying to create a global framework where he can bring advice and solutions to our clients. Good to hear that one institution seems to be going with a clear strategy. I hope your year is good. Has details. E hyde its a brutal session if youre coming back from holiday. This shows how every single industry is being crushed today. Playing catchup but it show that despite the dovish tones coming from janet yellen yesterday, it was not enough to spur equity which closed lower in the United States. 1. 5 , industrials down 2. 3 . I. T. Being beaten up across the atlantic in the United States and also in hong kong. Energy down 5 as well. Oil once again tumbling lower. We are also seeing an appetite for the havens. This is the gold and yen rally. It is yen versus dollar. We have a crescendo in the yen, continuing on its higher trajectory. Gold is the orange line and were going into these havens amid risk aversion. You can see where the pain is being felt and money is flowing. Gold is the best performing commodity. Tinto the from rio pain that continues to afflict these companies. 51 drop in profit. This is analyst recommendation on rio tinto. Recommendations, yellow is the proportion saying hold the stock in red is the proportion saying to sell. Are seeing the proportion of buyers take that much higher. Is it because analysts are behind the curve . This is the target price for the shares on rio tinto, above where it has been trading. Analysts are too optimistic on the stop on the stock, it would seem. They are raining back that progressive dividend. Lets switch our attention to china. The Banking System could see losses of more than four times those suffered by the u. S. Banks during the Global Economic crash. Investors,letter to he says what were witnessing is the recessing of the largest macro imbalanced the world has ever seen. Credit in china has reached its near term limits and there will be profound publications for the rest of the world. Manus lets welcome our next guest, Morgan Stanleys chief european economist. Welcome to the show. Talking about the sheer scale of lending in the chinese Banking System. , the impactws down could be colossal and that will have ramifications here in europe. How concerned are you about china . We are not that concerned about chinese growth. We think there will be a moderation in growth but that is a longterm trend and a sign of the rebalancing of the chinese economy away from the industrial sector to the services sector. If anything our concern is more about the deflationary pressures that china creates for the rest of the world. If anything, china seems to be changing choosing the path of japan in dealing with its nonperforming loan problem. Thats very much where we are focused. Capacity in excess place, therefore not as aggressively and quickly having the fault and the cleansing of the system here is a big difference between the u. S. And china is that china is a country assetas a massive foreign position. As an economy, they are very able to digest the losses that might have accumulated in the Financial System. Thats something we should bear in mind. That the whole issue everyones told us is that the u. S. Did deal with their nonperforming loans and therefore is much further ahead. You are saying or suggesting just keep it all on the table and dont clean up the system. Uickly youre talking about 3. 5. Rillion of equities im fascinated to know, why not get more aggressive about dealing with the Banking System . Im not saying thats what they should do, im saying thats what they seem to do. I think obviously a different Economic System has different ways of dealing with it. Compare europe with the u. S. Insolvency different legislation than we have here in europe. We are still dragging some of the losses from the financial crisis around with some Banking Systems. Anna where does it leave your assessment of how close we are from a global recession . A lot of people are talking about the highyield market in the u. S. And wondering how far through the Financial System what concerns permeate and it does for the real growth situation. The pop that possibility of a global recession is about 20 and rising at the moment. Growth or less for at least a year. We will adjust near the 2. 5 thats only two quarters and you need a full year of that. There are a lot of supportive factors for Global Growth. Low Interest Rates and expansion of Monetary Policy. Manus what did you make of Janet Yellens testimony . Concerned about the persistence of these volatile issues. Theres an interesting disconnect. I dont remember seeing such a big discrepancy between where the fed thinks Interest Rates will go and what the market thinks. Yesterday, you understood why she was recognizing the risk and sounding dovish but still sounding like someone who if possible wants to raise rates, whereas my colleagues in markets were thinking she was not dovish enough for what the markets want and where the market is at the moment. There was a lot of talk about how much the fine after turmoil can weigh on the economy. Theyou concerned about extent of selloff are seeing in u. S. Equity markets and what that says about where the u. S. Is going . Yes and no. Equity markets sold off thereally, but equally were almost as many instances where the equity markets sold off and there was no recession after work. We will only really know with hindsight. Manus up next, euro area gdp growth has declined steadily. We will look at the numbers in our discussion next. Stay tuned. Anna welcome back. Reportede generale fourthquarter profit that missed analyst estimates. We spoke to the deputy ceo about the potential cost. First of all, there is no new litigation. It is a conservative approach. Zurich insurance reported a fourth order loss after damage claims. The net loss of 400 24 Million Dollars compared with a profit of 860 million a year earlier. Nokias fourthquarter earnings topped estimates. The company kept costs in check. Thats your Bloomberg Business flash. Morgan stanleys chief european economist is still with us. Fed. Scussed the lets switch our attention back here to home. The European Central bank, the great negative experiment. Do you think negative rates will go lower and do you think they will deliver growth . We think they will go lower. We are expecting another 10 basis points from the ecb in north and 10 basis points from japan in the summer. They will go further negative and i think what they obviously achieve apart from the obvious impact on currencies, which might not be as lasting as some people had hoped, they are meant to increase the velocity of the reserves. It basically means that when the ecb is on a buying program, because you get charged the deposit rate if youre just selling assets to them and then dealinghe cash, you are ideally youre not going to do that if you just want to sit on the cash. You get sellers that are keen to do Something Else with the money , like moving into risk assets. Or alternatively you want to move away from european assets. Anna the other argument is they squeeze bank profits and make less likelyy to land into the real economy. I think negative interest shock thereell as be because the central bank tells you and signals clearly that they mean business, they and they areing pulling out all the stops. The longer it lasts, its no longer triage, its no longer an emergency measure but becomes like permanent medication. Shortlived effects on the currency. The japanese may as well not bother to go to negative rate. Worldwide our top story this morning on the yen. They are the last bastion of traditional havens, the euro and the yen. You said shock there be. Qe went along for a very long time, eight or nine years. There be, its desperate therapy, is it not . Were coming out of the great recession, so that means unprecedented measures were necessary. But i think dialing them back is quite important. Not because im worried about asset problems but because of the negative side effects. You could see that earlier in the yearbook when people are still thinking the fed would hike three or four times this year. That it had a positive impact on the u. S. Banking sector and u. S. Bank stocks and created a divergence between europe and the u. S. Anna thank you very much for joining us this morning. User twitter announced growth stalled in the last quarter. The Ceo Jack Dorsey wants to make the site more accessible that they have been unable to attract a wider audience. Caroline update with hyde. A real worry for investors is a lack of user growth. Caroline they have diehard fans, twitter. They have 320 million active users. The language is just too difficult for new people to want to come on board and access twitter. So this word is wounded, its not growing. 320 million, exactly the same for the fourth order as the third quarter. Outou looking at stripping , users on nonsmartphones users are actually falling down to 305 million. Put that number into perspective, its five times thanthan ace books facebooks users. Offer . Es twitter have to this is why the First Quarter also missed forecasts. Markets wanted to see 43 growth. Jack dorsey is back. What other changes is he considering . Hes promising significant changes, expanding from 140 characters, and what about changing the cap structure the app . And more eyeballs is interesting. Usersuld see 500 million at it if you could see advertisements linked to tweets. They want to make it easier to use and invest in live streaming. But he still has two companies that he manages. Anna thank you very much, Caroline Hyde on twitter. We live in a pick and choose world. Choose, choose, choose. But at bedtime. Why settle for this . Enter sleep number and the ultimate sleep number event, going on now. Sleepiq technology tells you how well you slept and what adjustments you can make. You like the bed soft. Hes more hardcore. So your sleep goes from good to great to wow only at a sleep number store, right now save 50 on the ultimate limited edition bed, plus 24month financing. Hurry, ends monday. Know better sleep with sleep number. The holiday is over. Hong kong stocks suffered their worst start to the Lunar New Year since 1994 on concerns about the World Economy. Anna janet yellen says the market volatility will not make the abandon rate hikes. With thee deputy ceo secondbiggest bank said worries about a repeat of 2008 are overblown. Market is about fears in the industry. My view is that those fears are disconnected from the reality. Manus twitter trembles. Anna the social Network Fails to add new users. They also say sales will miss estimates. Ountdown. Come to c anna lets talk a bit about where it is expected to open. A little bit confusing, we have had australia up and hong kong down. Hong kong is really playing catchup. London, and you have had real it is progressive dividend policy trying to avoid a downgrade. Thehave money flowing into yen. If a negative opening again on these European Equity markets. Many are tied up with what is going on with the commodity space. That is driving. Also, what is the message from janet yellen . Reflect, and police to the course in terms of raising rates . Soon not expecting anytime they left to cut a rates. Talking about how the labor market has improved, she says theyre not on a preset course. A lot to digest as we go over what janet yellen said. Are set fort for a negative open. We have the yen surging, and the gold up as well. With that in mind, lets look at with the japanese yen is doing. 112. 59, level 17 in quite some time. Manus just 3 shy of rimmer oda came in with the supplies levels of stimulus . The hang seng playing a catchup. Crude at the bottom of your screen, down to 27. A 15 loss in the past five days. About 75 ing volumes above the 100 day moving. This is the french oil major, 2015 adjusted net profit. This is for the whole of the year 10. 5 billion against an billion. Of 9. 9 what would they do with the dividend . That is the focus for the sector. They are paying a dividend 61 euros per share. That is exactly in line with the estimate. Italready heard the ceo works like the annual profit to decline substantially by more than 20 . This is frances biggest oil company. A weakness in the oil price margins have been narrowing. That was the area that in previous quarters have been helping out this sector. They are giving us if you mark headlines. That is interesting. They were in line with estimates, broadly. Manus that will save the investors, for now. Lets get to the first word news with Caroline Hyde. Caroline the Federal Reserve chair janet yellen says that while further rate hikes may be delayed by the turmoil, she will not abandon the program. Making the twice yearly address, she said recent volatility has could weigh on the Economic Outlook. She said it would not affect fed policy in the longterm. Chinas Banking System could see a loss of more than four times those suffered by u. S. Banks during the Global Economic crash. Is bettingd manager against mortgage the subprime crisis thinks the world secondbiggest economy may have to print more than 10 trillion of yuan. That could pressure the currency to devalue in excess of 30 against the dollar. The ceo of frances secondlargest bank thinks markets are overreacting. He told bloomberg the current climate is nowhere near as bad ss 2000 and eights 2008 crisis. This is nothing to do with what we saw in 2008. Where not in this kind of trouble yet. The Banking System, and the world, is much stronger. The average capital has been double for all the industry. We cannot compare the Current Situation with what we had. Caroline twitter fell in extended trade. After the social network announced user growth stalled in the last quarter. Sales will miss estimates. Was to make the site more accessible, but it has been unable to attract a wider audience. Global news 24 hours a day thanks to our more than 2400 journalists. Anna lets take a little of the asian markets are doing. In session. D some areas are playing catchup. Things that were open yesterday, they are now close. Tell us what is going on. David we cant make heads or tails of it really. Markets in the region are seeing generally a down day. Lets take a look of the asiapacific index minus japan. China is close, taiwan is closed, china reopens on monday. What you are seeing in hong kong is a quite significant to drop stop the worst to start the Lunar New Year since 1994. Stocks trading at the 12 lows here. Take a look at the numbers, hang seng composite down 4 . Lows e twoyear threeyear lows, rather, and south korea. Largely on geopolitical tension, that is having an impact on key stocks. The bigger story is the commodity story. The story but oil prices, they are falling. Int is leading to decline terms of chinese oil producers. Take a look at petro china down 5 . Also watching asia bc as it nears a decision to keep its headquarters in london or bring them back here to the fragrant harbor. Today, youocal store heard about the riots that took place earlier. Or the bloody riot in hong kong, it doesnt necessarily present a good picture of tourism. We are seeing an impact today to retail, travel, and leisure share. A major jeweler side big decline in its sales. Maye is concern that some delay their trip because of the riots in hong kong. That is not a usual occurrence. Manus thank you very much. The theme ofe to the past 24 hours. Janet yellen the knowledge market volatility may delay rate hikes. But she insisted it would not force her to abandon them. Take a listen. Economiclen conditions believe all than a manner that will warrant only gradual increases in the federal fund. Committeen, the expects the federal funds rate is likely to remain for some time. That are levels expected to prevail in the longer run. Financial conditions in the United States have recently become less supportive of growth. Higher borrowing rates for riskier borrowers, and a further appreciation of the dollar. These developments, if they eighe persistent, could w on the outlook of Economic Activity. Although decline in longerterm Interest Rates and oil prices provide some offset. Fomc is expect that the going to be soon in the situation where it is necessary to cut rates. Lets remember that the labor market is continuing to perform well, to improve. I continue to think many of the factors holding down inflation are transitory. I dont think it will be necessary to cut rates. That said, Monetary Policy is not on a preset course. If it turned out to that it would be necessary, obviously, the fomc would do what is needed to achieve the goals the congress has assigned us. Anna joining us now, the mental called the 2014 bond rally. Good morning, what did you make of what janet yellen had to say . Was there a delay in the rate hikes . Has done lots of work already. There were reports under the doddfrank stress test that was laying out the Financial Market conditions. That is stock market, high yield markets, Housing Markets. Around the world, including japan, china, the eurozone, it is quite an extensive piece of work. They were saying that there were adverse scenarios and severely adverse scenarios. Clearly, the fed to get it. It knows what is going on. It is compared to act. They cant cannot did and say they change their minds immediately after two months of hiking rates. Clearly, they are ready. They have done the work. They are watching what is going on. It is highly unlikely there will be hikes in march. Demand,ou are the bond you called the bond market last year bond man, you call the bond market last year. The progressive move of u. S. Rates was about eight weeks ago. It has flattened. The narrowesthave spread between twoyear money, and tenure money since 2007. Take it away. What do you think . Steven it is quite an ominous signal that the curve is flattening. It is telling the fed things are not good out there. ,his move in 10 year treasuries about 50 basis point so far, has happened way ahead of schedule. Anna you were talking but 1. 5 by the end of this year. Now were already down to 1. 66 . Steven it is ahead of schedule. It is highly unlikely that move will happen again next month. We need to pause here, and weight. The market could even correct a bit. It is not going to change my mind. I think yields will be lower, not higher. The pace will have to slow down, because this has gotten crazy. Manus 1. 5 , can we break through that . Steven we can, and we have changed a few forecasts. 1 cut forecasts to 1 from. 4 . We cut down to five basis points, that is 0. 05 basis points, so nothing. The jgb forecast has come down. U. S. Forecast remains we 1. 5 noelow go below one is really forecasting anything lower than 1. 5 . Maybe that will come through in the coming months. Is thatl happen next the incoming data will shift the Financial Conditions. The incoming data being weaker makes it easier for economists notthe fed to justify hiking rates. Even the projections of lower rates in the future could be affected. Morning, oned this of the words this morning is ominous. He set out to where you think those headwinds are coming from. You mentioned Financial Condition to the u. S. To what extent does the tightening of Financial Condition turn into something more substantial or mainstream . Steven exactly, while we are talking but all of these rate and moving things around, the real world is quite unaffected. At some point, it spills over. Normally the u. S. , we talk abut Housing Market and Credit Condition in general. There was already signs in the data. Economy data has been surprisingly on the downside for a few months, apart from payrolls. As we know, is a lagging indicator. It does not tell us the next move. Inflation is much weaker than anybody expected. It is kind of coming through. That is telling you something. Anna you dont worry that the data in the payroll report means more inflation . Steven not at all, because you can slice and dice it. There is evidence of some increase in areas. But the general picture is not that bad. Manus a lot are using the word of people are using the word recession. Terms ofour view in the propensity for recession . People in the markets know that the yield curve is the best predictor for future recession. The short earned has been anchored for about seven years. If you adjust for that distortion, the curve is inverted. You can see it in the oas, and in the swaps. The curve is inverted if you adjust for that distortion. This will tell you something as well. I will say Financial Markets are telling you that you are very close to the next negative gdp print, if you like. Or, it could well be that you have very low gdp. It doesnt come through as technically a recession. Economists cant actually call it a recession but it is pretty close. Everyone is downgrading their gdp forecast. It says to me that you do get the conventional Economic Data signal that is needed to justify with the markets have been going. Anna thank you very much. Lets get to caroline. Manus you will break some of these numbers. Added like many German Companies if you have some double move your stocks you have to come out with an early. They came out with full earnings early, and their great. It will upgrade their outlook for 2016. 16 ,ted sales rose overall, for this year they now see doubledigit growth rates for both profit, operating profit, and for currency neutral sales. That is coming out earlier than the march 3 date with it will announce that fullyear final numbers. Theyre coming in ahead of the curve. Management already pushed their shares up in early hours trading. Theyre also taking goodwill hit on their profit, this is a company that just brought in a new ceo in october. He joins from the board in august. Y had been under forming underperforming with the likes and under armour. This could boosted shares today as the upgrade outlook for 2016. Anna they give her a much. Teven, a key segue into our number station about europe. Earnings beat estimates, just one micro example. We were talking earlier about data that was improving around europe. Are in many parts of europe. Talking what the improving underlying situation. How do you see it . Good, if things were so there wouldnt be a negative rate. They got the better on a relative basis. There is some encouragement in the data. It is not all doom and gloom, but it is not good enough on a relative basis, historically, it is just a bit better than it was recently. Willveryone expects ecb cut rates again. If twoyear german bonds are at 50 basis points, it is telling you the direction of travel. Rates are coming down, they will probably do Something Else with the quantity of bonds that they are buying. Policy is going easier. Did anybody in the room think it is going anywhere else . Manus you have been in bond markets for steven too long. [laughter] manus how concerned are you about negative rates . The ecb have said the lower buying can open up. Currency markets are ignoring negative rates in japan. How worried are you buy the consequences of negative rates . We had a discussion the other day, their view was that it does little to propagate the growth. Teven it is the latest iteration of unconventional policy. Of 2 ne has the sort inflation target, some from underneath some are symmetrical. If that is the imperative, why not have 1 rate and except he did only hit 1 on inflation. 1 is the rate you have in the nordic countries. It is the direct some travel for the ecb to go lower. Maybe not as far, but who knows. To hit 2 mportant inflation. Over a 20 year. Thever a 20 year period, accumulative effect would be 50 . Reduce the much you real value of the sovereign debt. That is the problem. The debt overhang has gotten worse. Anna that is why you need to tackle that. And not worry if there are other negative effects and negative rate such as bank profit. Perversed produce some incentive. Sector ise banking being hit from every possible angle. The flat curve will affect the way that banks make money. Negative rates put them into negative earnings positions. They have to pass that on to the economies. That is kind of deflationary, and a way. Banks have tha bai the bail in this year. We already had one. They will worry about that. Cases, it seems that governments will have to help a banks out. You have this in italy right now, it just goes on. Manus i thought that was what contingent convertibles were for. Steven exactly. If you take the risk, you should be able to manage it. The backing system is just too big in the eurozone. It has to come down in size. Manus great to have you with us this morning. Some great thoughts in terms of market and what comes next. Always a pleasure to have you. Anna thank you. A fourthquarter loss after damage claims. Were joined on the foam of the companys interim ceo. Much or joining us. Lets talk a little bit about the management of the business. Youre bringing in a new ceo earlier than perhaps the market had expected. What does that tell us about your desire to get a grip of things . Tom thank you very much for having me. Good morning to you. When i wasi was keen appointed ceo to get a new one in as quickly as possible. It will bet now that available early them we envisioned. We said he would be there the first of may. It is clear that he is available earlier. I do want to see to it that we top of excellent ceo on the organization as quickly as possible. We agreed with him that he would start his work on march 7. Manus a good morning to you. I want to talk about the dividends. Many investors will be relieved. Youre the top payer, you have been for the past five years. Is that sustainable . Tom i mean, the dividend is a groupsflection of the cash generation, which has been very healthy. We set a target for cash 9eration of a 9 billion billion. Were way ahead of that in our strategy cycle. That allows us to pay this unchanged dividend which is also a reflection of our Strong Capital position. Anna that is looking backwards, but what about looking forward . What can you tell us about the future . Policy have an outspoken to pay a sustainable dividend. Dividendhat the over 2015 is a clear reflection of that. We will continue to pay a sustainable dividend. It is highly dependent on the performance of the company. If we look at that, especially general insurance had a disappointing year. We have taken all necessary steps. We are in the process of implementing all necessary steps to increase profitability of the general Insurance Business. As we believe, within this year, a will see what we call progressive improvement in the profitability of the general Insurance Business. Manus when you get a combined rate in the general Insurance Business, that is what the market really wants. What is a realistic target in that general Insurance Business . Youre one of the worst performance business in the stoxx 600. , we clearly, as i saidm, had disappointing result in general. He right stepst to improve profitability. Lets not underestimate the fact that our Global Business has performed very well. The farmers exchanges, which we manage, have done very well manus that combined ratio in the general Insurance Business, what are you going to say when he arrives . When will we get this combined ratio . Ratio of theined general insurance at this time is unacceptable. We are certainly aiming at a much improvement in the combined ratio. Two major factors. First of all, a strengthening of our underwriting capabilities is very important to get the loss ratio down. Secondly, a major project of lunch already is lowering the expenses. We are aiming to lower our expenses in 2016 by more than 300 million, and by a billion by the end of 2018. Both factors, and improvement in underwriting and a much tighter cost control, will lead to an improvement in the combined ratio. Anna thank you so much for joining us. The interim ceo of zurich insurance. Manus some clear messages there in terms of getting business back on track. This is the picture across europe. We have a negative read, you oil under pressure. It will be a tough one. On the move is coming up next. Guy welcome to on the move, were counting it down to the European Equity open. Whatsingly, the fed yellen said yesterday. She will say it again a little bit later today. Maybe not four, maybe two, maybe one. Theyre not canceling hikes, but curtailing them. That is taking center stage. The market is split. The economy is steaming ahead in sweden. We will talk about the currency. Later on in the program, sam walsh