Transcripts For BLOOMBERG Countdown 20160304

Anna he is manus cranny and i am anna edwards. It has just gone 6 00 in the morning. Now what we have seen in Global Equity markets. Lets talk about Global Equity markets. Broadly positive with Oil Moving Higher in both set to hit eight week highs. Should not draw conclusions about the weekend. We have the npc in china meeting over the weekend. But since february 11. E. M. Is interesting. The stock market in brazil in bull market territory. Manus you have the brazilian market up over 20 . This is the close of his this on february 10 and this is the moment in time when the world changed. I love what they said yesterday, when the tax change, i change my mind. That is channeling keen. What we have here is a momentum change. The fed was tightening and oil was collapsing. Jamie dimon was buying his own stock things have changed. We talked about this with hans reddick. 100 95000 and mr. Delly of over at bridgewater says, i am not bearish on stocks so the question is where do you put your money to work . Since there the moves 10th of february in stocks. Lets talk what was happening overnight and bring our risk radar onto the screen and talk about how we have seen it moving into some emerging market assets. The korean currency had its biggest growth in five months. Oilking in on the price of on nymex. How far into would reach 40 for the upside again . We have copper at the bottom. You can see copper extending its fourmonth run. They set the new growth targets it is climbed for five sessions in a row. Anna nejra cehic has the bloomberg first word news. Nejra with the latest u. S. Payroll data. Expect the Unemployment Rate to hold at the eight year low of 4. 9 . 190 5000 jobs in february after a gain of 151,000 the previous month. China i chinese political leaders are gathering in beijing. There is mounting pressure to find a balance between growth and perform as well as improve the environment and stability in the market. 5 of trade according to the police on the matter. Trading and Investment Banking employees next week according to people familiar with the decision. Australias Securities Regulator started Legal Proceedings over a legend market manipulation. They deny wrongdoing and say they will fight the case. The german finance minister has made his feelings about a potential exit clear. Wolfgang schaeuble was asked about it as he appeared behind George Osborne at the annual conference in london. What would you do if they vote to leave the eu . Cry. Would [laughter] not. Hope that you will it is the decision of the. Ritish people, of course and the depth of the risk within the Republican Party has been highlighted in a biddle exchange between mitt romney and ronald trump. He was wheeled out in a bid to derail the property tycoons march on the way up white house. Is a phony and a fraud. His promises are as worthless as a degree from trump university. Hes playing the members of the public for suckers. He gets a free ride to the white house and all we get is a lousy hat. His to messick policies would lead to recession. He is neither the temperament or the judgment to be president. In america we ceased to be a shining city on a hill. He failed horribly. Say was a race i have to that should have been won. I dont know what happened to him, he disappeared. Manus thank you very much. Lets check out how the markets are faring in asia ahead of the job stay. Juliet is standing by. A pretty good end to the week here, holding on to those eight week highs that we reached on wednesday. The regional benchmark index is on track for 5 weekly gains similar to that gain we are seeing in crude oil prices this week. The shanghai composite up by 0. 4 . It has been fluctuating in and out of positive and negative territory. Here in hong kong we have seen a turnaround on the hang seng index which underperformed for the region yesterday. But they have close a little bit weaker done by a 10th of 1 . Despite the fact we did have the one strengthening with the inflows into the korean market this week. Theyve managed to close higher by one third of 1 . Having a look at some of the movers in the asian region today , we have been very much 3. 4 ing on samsonite up by in seoul on the close in hong kong. That is on that deal agreeing to buy the u. S. Luggage maker for 26. 75 per share. Foxconn deal is close to coming through and the fact that we saw gold running into that bull market coming out of the trade yesterday in europe. A pretty solid session here in asia. Juliet joining us from hong kong. Nonfarmard that u. S. Payrolls expected to show increased hiring in february which could strengthen the feds case for a rate hike later this month or later into the year. Robert kaplan believes that policymakers should not rush to raise rates. I believe that the fed that we should avoid having a predetermined mindset regarding the path to policy. The past should be driven i our ongoing analysis of cyclical and secular trends. Emphasize ate to this juncture that Monetary Policy remains accommodative. , meanwhile ray dalia says that an investor should of expect low returns and volatile Financial Markets but he does not foresee a repeat of the Global Financial crisis. Am not expecting Something Like 2008 because 2008 was a debt crisis. There are a lot coming due in the canary paid. This is not like a crisis situation. It is not one of them. I do not think were promising a big bank crisis type of thing. What were going to see is this kind of situation where there is a dynamic of relative stagnation, lower terms and not much picking up and second and volatile markets. Lets bring in hans redeker who joins us for this hour on the program. Is job stay so lets start with your thoughts around the u. S. Economy. What is the significance about what we will here on jobs . Will it be trucking along and we need to concentrate on inflation . The nonfarm payroll strength is an important indicator but that may still have a couple years to go but with the Unemployment Rate we are looking into wage data. Statistics,k at the this is one of those months where because of seasonal reasons you cannot assume that wages will accelerate but if they would it would have a Significant Impact on the market so it means if you would have a reading coming in it 2. 5 or higher levels, that would put it back into play. Important with respect to where you see the equity market rally. When of the conditions we are considering is where the fed is not in any rush. Fedspletely agree that the should not be in a rush to upgrade but with cost pressure picking up, it will change its behavior and under those circumstances he would have a Significant Impact. Called the risk rally from the 11th of february. Directed into those currencies directed ourselves into those currencies which participate for the higher risk appetite. That means you need to look into highyield. The etf markets , werend record inflows looking at the performances of many not emerging market equities. Really of in brazil 20 which leads an impression. Means many emergingmarket theces are outperforming national or individual performance which is when you have to play catchup. Buy is where you have to the higher part of those indices. Its that can momentum coming through in those other asset classes. The dollar has lagged. Manus this momentum in terms of the yield versus the dollar, what does it take to reignite the market . Werethink the markets under owning emergingmarket risk when you have these benchmarks doing what we are doing than all of a sudden many of these funds are operating out of u. S. Dollars. So that actually means as you are playing catchup with the benchmark and you havent automatic u. S. Dollars seller into play. Been a significant improvement in sentiment based on whats happening in china. There is stabilization there. Time and commodities being supported i stockpiling in asia. Otherwise a fundamental situation has not changed and when you look into the pmi data we have released of it asked few days you have a convergence to the level of pmi which means the economy has not improved but sentiment has improved. So i think in the end of the date the economy will have the bigger impact on markets which means that the risk rally has four weeks to go. After that i would be very careful. Interesting point to leave that. We will be turning to china in our next discussion. 1 00 a. M. U. K. Time, we have the final reading of the italian Fourth Quarter gdp and then it is over to the u. S. Everyone is waiting for those payrolls. At the same time we have u. S. Trade balance figures. Up next, china balancing growth and reform soon as another key tasks. Talk about that when we return. We will be live in beijing. Anybody going up to anna welcome back, this is countdown. Goldman sachs and bank of america are planning job cuts to rein in returns. It will rain in more than 5 . Meanwhile, bank of america will dismiss about 150 trading Investment Banking employees next week according to people familiar with the decision. Samsonite, the Worlds Largest branded luxury maker has agreed to buy cumene. Its the biggest ever acquisition. They plan to retain the design team to ensure that the quality. F the design remains intact with the various segments. Below is an want to have to win. Chinas richest man is pretty the largest cinema chain. Movie theaterest chains. Deal combines americas that is the Bloomberg Business flash. Manus chinas political elite are meeting in beijing to improve the,s 13th fiveyear plan. You want to find a balance between growth and reform. Haidi lun is in beijing for us this morning. Good to see you. Begins tomorrow. Are we going to see any clear policy announcements. . Good morning to you both. We are expecting or hoping for clarity when it comes to this policy. A lot of analysts have said they it will be very clear. The policymakers, growth is slowing 25 years. Theyre trying to prop up near term growth. They had these rate cut since november. Five rrr on top of that. Capacity when it comes to steel and coal. You can see that the environmental reason is another key factor in why that has become a priority position. They have returned with a vengeance ahead of the nbc. Npc. The longerterm economic rebalancing will really be a challenge. And as you know, when chinas debt is searching the 250 last year up from whatever 50 . A lot of economists are saying that this upward trajectory is unsustainable. We are not expecting any big bank reforms. This destruction will form and the capacity is like taking a knife to ones own flesh. It does remain to be seen whether they are made to suffer that shortterm pain to get the economy going again in a sustainable and longterm way. Manus haidi lun in beijing. Back bring hans redeker into the conversation. Jet debtned the to gdp and moodys has caught up, some would say. Of how much concern is the debt to gdp . These are the challenges for the npc. He brought up a very good cart. Good you brought up a very chart. Up to gdp has declined. What it tells you is the declining efficiency of credit. When you look into the fourth numbers we had a growth rate of 6 and for one unit of debt we generated to 427 minutes of gdp. That is not so good a multiplier. Anna is that not the right way to do it . What you have to consider is that the economy is in the process of structural reform and you need speed bumps. Creation is not going to have the same result as we have seen for. Time, one unit of debt was creating multiple units of gdp and now it is the other way around. That does not mean that support measures should not be done. That reward, where that is dissipating, as an analyst you think you are manipulative the yuan. Manipulating reserve requirements. Everyone seems to be haranguing him to move toward Monetary Policy. Its down from prudent to prudent with a slight easing bias. Fxyour opinion, is it the mechanism or monetary . You have to take something in context. West that we in the there is a lot of fingerpointing taking place but we should not forget that the fed did require about 1. 5 years to figure out the right policy for the audit states. Right one at that time that was reached in march 2009 and a guess it is the same in china. He need to take it down to a yourom where you can think about what a surprise for stably changed rates. The higher youth level. Realist Economic Data we art weakening. We believe the level is still too high. He to get the real yields lower. That tells me that we will see continued easing. He will say with us here on the program. Manus coming up next, breaking up is hard to do. Get to thes bloomberg first word news. Nejra cehic is here. Nejra we get the latest nonfarm u. S. Payroll data later. Forecast is 195,000 ofs in february after a gain 161,000 the previous month. Is undernest party mounting pressure to find a balance between growth and reform as well as improve the environment and the yuan in stock market. Goldman sachs planning job cuts to rein in costs. It limit eight more than 5 of traders. Bank of america will dismiss about 150 trading and Investment Banking employees next week according to people familiar with the petition. Australias Securities Regulator has started Legal Proceedings z. Inst anc a nz. Anz denies wrongdoing and says they will fight the case. Mitt romney was wheeled out by derail donaldto trumps marched to the white house. He is a phony and a fraud. His promises are as worthless as a degree from trump university. He is playing the American Public for suckers. He gets a free ride to the white house and a we get is a lousy hat. His domestic policies would lead to recession and his foreign policies would make the world less safe. He has neither the temperament are the judgment to be president and his personal qualities would mean that america would cease to be a shining city on a hill. Mitt is a failed candidate. He failed horribly. He failed badly. That was a race that should have been won. I dont know what happened to him. He disappeared. Global news, 24 hours a day powered by journalists around the world. Take a look at what we will be watching throughout the rest of the trading day. This broader emergingmarket story going on here as well. We talked with hans redeker about appetite for assets. The pendulum swung maybe a little too far and that it will swing back. If you think about why this story is happening, specifically in brazil, its because we think that she will get impeached. Itll become a big story for the rest of the year and already are. If you think about it, is the economy turning, is this the reason there is a trigger point. You can put those two things together for me. Hans, you flagged this momentum move across emerging market assets. You want to see substance in terms of what happens in brazil convinced ofou are doubling down on this trade. That is absolutely right. I wanted to see better economic stability. Concerning the political think aity in brazil, i lot of that has been already priced in. It will have the setback back into the marketplace but we are dealing with this political for quite a while. We are seeing the situation especially in asia. In the year 2013 or 2014, each time something went wrong you are turning to mexico or brazil selling at first another market is turning around and saying, where is the weak spot . It is actually in asia. That has a low return of investment. The need to take Balance Sheets down in the region. Guy brazil for a while was a high beater change on china. Thats right. That means there is going to be a second round effect fact going into brazil and the day after. What was before was that brazil was the first to stop where people were selling and now that is the first stop where people selling in asia. That still means that dollar or 450. Ill go to 440 lower Economic Activity with less emphasis on the supply side of the economy keeping the secular bear market and commodities in check. Really the first what you have to sell. Say,nk the market will because this is not the first stop in futures. This is where you want them to lay the risk rally. Anna guy johnson back at 7 30 on on the move. Manus Wolfgang Schaeuble was asked about an Eu Referendum at the annual conference in london. What would germany do if the u. K. Voted to leave the eu in june . We would cry. [laughter] [applause] but i hope we will not. It is the decision of the british people, of course. Anna speaking to bloomberg at the same event, the chief Economic Advisor underscored Boris Johnsons opinion that britain would be better outside the European Union. In my view the economic prospects of the u. K. Are far better outside and within. Outside than within. Think the u. K. Would do better than the other two countries. Manus the whole brexit debate. Dollar sterling and euro sterling. That aggressive attack on sterling seems to have abated for now. I really do emphasize it for now. Through your prism, volatility rising to an eightmonth high. One week volatility is rising. So the backdrop is still fairly vicious in terms of sterling. In our base case, we assume that britain will stay within the common market. However it will be a very tight race. It will be an emotional race and you will have some risk premium priced in. When we look at that last week we actually thought that the sterling discount relative to rate differential was Something Like four big figures. So now as you are getting rid of as some ofs discount the initial fear abated. Sterling,alk about brexit is a little bit like the ice on the cake. The bearish cake for sterling is baked in with other recipes. We offer pro cyclical fiscal policy. Deficiturrent account which is fluctuating around 4 5 . Focused into buying up commodity stuff. That stuff does not pay any dividends. It means the outside investment has misallocated capital in the past few years. The question to ask yourself is, is that in the price of sterling, or not . It actually means that the cake, the heiress sterling bearish sterling cake are still in place. Manus so it is not baked in the cake. Which brings me to the question, tell me when the cake rises or falls. Where do you see those kinds of moves . Theret you are shown up is a very interesting shot. You look into the you came was u. K. Losing momentum. Manus all on the down. About theu think reason for that, globally we have all of that capacity. We have a procyclical fiscal policy. Fiscally, europe is expanding as a United States has the trial this is pretty much unique. Has to dothe u. K. Quantitative easing because the really high. You have to bite the bullet and normally politicians do that when they have been just elected. The early signs about the budget suggest we will not see them turn their backs. If you wanted to stay credible on the fiscal side, you will present a tight budget. Are additional factors which is suggesting sterling to stay under pressure. And in this exit thing, to watch the news is all important, but the ingredients for sterling weakness for that cake, manus you are talking about a compounding. Anna im getting there he hungry with all of this cake. Manus we never got to the level the cake to drop to. On theink sterling is way down against the u. S. Dollar. There is still room to the downside. Anna that is without a brexit. If you would, you would have a brexit of about 10 big figures. Down. The day of it, we go with could stay down on that day or get significant decline if it would be confirmed. But lets be hopeful. Lets hope we are not getting this type of situation. Anna you would have to cry. I certainly would. I saw Morgan Stanley analysis that said, do you think the ecb could hike before the bank of england . That is concerning. We need to see how that is working into the economy and what it does to longerterm Inflation Expectations and where is the normalization. At the start of the year we were 10 months away from a hike and we bashed all the way up to an extreme 50 months out. The market is incredibly nervous. The market is nervous and the market has a lot of reason to be nervous. When you look what happened in the past few weeks with longerterm inflation continuedns the data weakness we are receiving from asia. Their view so much of data weakness and even some improvements. Gdp and canada was better and in australia was better stop better. You have to consider one thing, all of those economies i was mentioning have a developed Service Sector. When you are in development where one activity declines and the labor market is calling them , under lowstrong circumstances, the initial impulse will be in the Service Sector economy. Is, can you keep generating longterm economic return when productivity is that low . That will come into our mindset later on this year. Next, we have more to talk about. Two roadster verge. Erge. Ads div Central Banks head down different paths. Anna lets get to the Bloomberg Business flash. And bank ofan sachs america are planning job cuts as market route measures return. According to a person briefed on the matter. Meanwhile, bank of america will dismiss about 150 trading and Investment Banking employees next week according to people familiar with the decision. Buy e has agreed to bane any plans to the retain the design team. Movies richest man theater chain amc buying a rival cinema chain for 1. 1 billion. Andombines americas first second biggest theater chain. They oversee china banking. The londonbased bank shift its focused operations in the u. S. And the u. K. That is your Bloomberg Business flash. The bank of japan governor said to Parliament Today he is not considering lowering negative rates further but he will use the three dimensions of quantitive easing. As necessary to ensure his inflation goes goals. S they lose their power dumping money from a helicopter over a community. When japan was going into negative territory, it came as a big surprise. That was dragging the entire index down. The importance of that on the Exchange Rate is as follows. The value at risk because 34 of the risk is outside japan because the past few years you have become a significant outside investor. That actually means you have to take risk off abroad. The most efficient way to do that is to increase the currency hedging ratios. They found a way to sell dollaryen, euroyen and so forth. The market did produce a much higher japanese yen. Anna that explains why it did not have the effect. There are looking into europe and saying, europe is working. Europe has a liability position abroad. This dynamic playing out in japan or europe. I think they looked into. That and said, this is different they have a different set up here. We have to change the way we are operating. Futures toate the look into it before. For instance, if you make sure that the pension fund will no, then itpositive p will be willing and able to accept higher risk abroad, too. The next one will be a strong currency relatively. It will not be like the situation we are currently experiencing. Manus given what kuroda has are said, negative rates now seen as a less powerful tool and markets will ask, what next on the agenda . Is the ecb slightly boxed into more negative banks or do you think because of this raising of the flag or the use of negative rates in japan . Target. Nk the ecb is a the apply to its calling. That means that if they come to the conclusions that negative Interest Rates may not be as initially saw that they have shortterm benefits they undermine the profitability the profitability of banks. The Banking Sector is not possible so how can the Banking Sector support the longterm credit cycle. It is impossible. He need a more innovative approach. Maybe at the next meeting the European Central bank will explore this more innovative approach. Anna what does that mean . They were talking about using more negative Interest Rates. It sounds like you are saying, not done that route. The ecb is likely to look at what is priced in. It will do more and give a more convincing signal. What should the primary alternative be . They maybe will move away from buying silver and have to look into the private sector, too. Manus i am going back to the bank of japan. The last time that the bank of japan intervened was back in 2011. In the currency markets. There has been this progressive move but many people say we are reaching business critical level. 110. 99 was the recent high that you have seen them call a big move. Are the days of currency intervention gone post g20 . Currency intervention. I remember we had the japanese currency starting to weaken in the early part of 2014. Is japan manipulate in its Exchange Rate . People spoke at the g20 reading and that the came to the g20 meeting and they said Monetary Policy should be used in a way to support domestic demand but should not and for ethics. What you have seen is that they have put together a reform package which is allowing the savings in japan being reallocated into asset ownings. That means the onetime adjustment cost dollar yen to go this way. Anna thank you so much. Manus up next, Market Performance for your earnings from the lse, what happens next in the tussle . Manus jobs day in the usa. Nonfarm payrolls expected to show that the pace of hiring picked up in february. Anna chinas political elite trying to improve the latest plan. Growth and stability seen as key tasks. Manus brexit blues. Germanys finance minister makes his feelings clear. What would you do if the good people vote to leave the eu in june . We would cry. [laughter] [applause] manus welcome to jobs day. Anna lets talk of at the market and what we are expecting to see in the european session because its about 12 four hours for markets. Asian stocks broadly higher. Both tracking toward an eightweek high. Marketoing into emerging fx and the brazilian stock market back in bull market territory. Manus i think that is what hans redeker made very clear. He wasn flagged up saying that the money going into emerging markets is happening right now. You need the data to enforce momentum moves in that comes in the middle of march to hold this groundswell. Bearish on stocks and says that japanese Monetary Policy is pushing on a strength and he also says that Monetary Policy must put the money in the hands of the spenders. Anna we have fullyear total revenue up i78 percent. Thebig story is about merger conversations they are having with deutsche bank. The fullyear adjusted basis eps with 109 pence. Manus the lse intends to move toward a 2. 5 times dividend cover range. Ceo toice was for the get your proverbial out around the institution for shareholders and make the case. It will be fascinating because does it put up and shut up . That ice they is will come in and will not make a bed before that time. The bush show their hand in there we might hear from them that they are investigating but there could be other players here. Bloomberg has a survey how this could be worth 32,300 pence per share. Could we see the cma interested. Could there be a chinese bidder . Plenty more to talk about. We get the latest u. S. Nonfarm payrolls later. Expect the unemployed at rate hold an eight year low. The median forecast hundred from0 jobs in february up 151,000 the previous month. Chinas political elite are gathering in beijing to improve the 13th fiveyear plan. There are the mounting pressure to find a balance. They want to ensure stability in the stock market. Goldman sachs and bank of america are planning job cuts as market route pressures return. Thanan will eliminate more 5 of traders in the fixed income business according to a person on the matter. Bank of america will dismiss about 150 trading and Investment Banking employees next week. Australias securities regular started Legal Proceedings against anz. Says the civil action relates to setting the bechtel swap reference between march 2010 and march, 2012. They deny any wrongdoing. The german finance minister has made his feelings about a potential brexit clear. He was asked about it as he appeared alongside George Osborne in london. Do if theuld germany u. K. Voted to leave the eu . Cry. Would laug[laughter] not. Hope we will it is the decision of the british people. Every but he liked his joke. They did in the room as her journalist. Juliet is standing by for us. You. Od morning to it is been a really good week here in asia. The regional benchmark index on track for a weekly gain of 5 . This week is certainly looking a lot better than february. Shanghai composite closing higher than half of 1 . 1 in late trading. You can see a lot of those public stocks leading the way there after we did see a switch out in that space yesterday. The korean index closing a little lower but the nikkei 225 had a good session after fluctuating between positive and negative territory for most of the session. Australia making up five wins in a row now. That is its longest winning streak since december and we saw broadbased buying across the region. This is how the regional index anded today with those Oil Gas Players really leading the way and financial stocks. We did have the asiapacific stocks as a whole holding onto those eightweek highs. Another thing to show you is the we do have this positivity coming through in equities here in asia suing have seen some Good Movement coming through showing the risk is on. High. Ninemonth thank you very much. Juliet taking us to the latest in hong kong. Lets quickly check in on these futures. With of the longest rally in stocks which broke trends yesterday since late autumn. We gave back a little bit yesterday. There were up 0. 5 in london. Here is a lovely story the greek stocks are among the worlds best performers over the past two years and they just had the biggest fiveday search. Between them and the brazilians i dont know where you want to put your money. As we have already been talking about, the nonfarm u. S. Payroll data is expected to show increase hiring. Manus the dallas fed president believes that policy makers should not rush to raise rates. I believe that the fed we should avoid having a predetermined mindset regarding the path to policy. The path should be driven by our ongoing analysis of secular and secular trends. It makes sense to emphasize at this juncture that Monetary Policy in the notice states remains accommodative that i had admit it is somewhat less accommodative than it was on january 1 and might of recent tightening. Meanwhile, ray delly of said lowstors should expect returns and volatile Financial Markets for some time but does not foresee a repeat of the Global Financial crisis. Am not expecting Something Like 2000 and eight because that was a debt crisis. There were a lot of things coming due in the could not be paid. This is not like a crisis situation that way. I do not think we will probably see the big bang crisis. Think we will see this type of situation in which there is a dynamic of lower stagnation, lower terms and not much picking up and low returns and stagnant and volatile markets. Dalio ray delly of ray settling there. But bring in her next guest. Dalio so that is not 2008, that was a credit crisis. Give us your take on the world. Right there he said that 2008 was a debt crisis. Like that, but in actual fact it is probably worse than that in the sense that debt is a lot higher. Global debt is 50 trillion higher than it was before the crisis. So it is not as if there has been substantial deleveraging since the crisis. Of vucevic government had to absorb some of that debt and banks have arguably the leverage to some extent but there are other areas in the country. China is seeing their debt accelerate quite substantially. We are probably in a very dangerous situation and you mentioned the rebounding stocks in the last few sessions are so. To china, whatd are your expectations about whether the chinese will continue to pour hot water on the evaluating their currency . I read some adjusting research thats it were gloomy export data at the start of the year but actually when you look at what everyone else is doing they managed to maintain market share in terms of that export story. The analyst making the point that the case is quite weak for needing the currency. They could weaken the currency to stimulate exports. Why would you do that with a huge trade surplus . That whole argument is pretty nebulous. Manus the movement in the yuan, the devaluation, the shock move in the summertime and to a certain extent we are all obsessed. People are sing stop getting obsessed its all about the basket. It is all about the basket and china has a huge trade doplus so in a sense, why they need to devaluing the currency. It sexually because in actual fact, domestic residents. Articularly want to do that innocent the we are talking but here is chinese authorities allowing that to happen. Were following that move allowing the remedy to decline more so against the dollar than other currencies. Its really a question in china between, do they allow that to happen or do they have to stop people from trying to send cash abroad in tied up in capital controls. I think it will probably be a mix. Anna with interest, your thoughts ahead of our conversation youre talking about the possibility of a trump presidency, you think that is weighing on the u. S. Dollar . Difficult toite untangle from all the other drivers on the dollar. It is. What worries me is the dollar might have this sort of brexit moment we have already had with the pound with the market starts to say, could this really happen and so what does this mean . In the u k the markets are focused by having this specific eu discussion and referendum announcement and the specific decision by boris. But in the u. S. You have to have a specific instance to concentrate the minds. This is crept up and in a sense may be because of other things that have happened it has not impacted the dollar so far but i worry we will get that brexit back in the dollar if you like at some point in the future moment of stops. Manus conversation is never complete. What are you writing into your myspacessian mark view is twice this year. Think the interesting thing for me is that if the fed were really data dependent we would probably be still thinking about raising rates at this early. I never believed that the fed was really data dependent. I think it is taking into account the Global Situation but that will still mean array kite rate hike in june. Manus at not a clock we get the final reading of italian Fourth Quarter gdp and then it is over to the u. S. And the data of the day for february. Anna at the same time there will be u. S. Trade balance for the month of january. Bidding for what. There can be no certain see that any transaction will actually happen. More on the earnings beats and the potential for a deal. That is next. Anna London Stock Exchange Group Released figures of the top of the hour. Manus that comes as the lse is defending its planned merger. It added that there can be no certainty that any transaction will actually occur. Anna here to talk about it is jonathan pryce. Its great to see you and have your thoughts on this this morning. What we learn from the companys morning that is useful in the context of this merger . You can understand why these businesses are attractive. You said headline 78 growth operating underlying growth at 11 . M a is what keeps these high growth rates going and even underlined you have revenue growing 10 or 11 . In the progressive dividend and proper growth. Could clearly be a good time for them to defend the discussions with whomever. The whole thing is beginning to heat up. When the lovely bloomberg price in terms of the bidding war if it gets going. Closed last night at 28 pounds, . 93. How likely are we to see a bidding war . The way to think about it is there may be some dissatisfaction with deutsche. You get more of the growth and the chief executive. And its another deal. Lse shares have moved. Clearly pound weakness is making it more compelling for someone who isnt sterlingbased. As you say, they did the nys deal in november, 2013. They financed cash deals and we have seen them spinning off some of the italian business and the french business. It can be quite a complicated structure but you can understand the temptation to want to see a higher cash offer. Anna does anybody want to see the Brexit Brexit vote . The share price is built into sterling the way it is moved already. But this is more about the relationship method and what happens under the initial margin rules. They have saved margin requirements of over 25 billion in 2015. So the more progression the more the can add value. We have an open access model at the moment. We will not have it if this deal goes ahead. Anna lets talk about brexit from another angle. One finance minister deeply concerned is the finance minister of germany. The gathering of u. K. British business leaders. What would germany do if the u. K. Voted to leave the eu. We would cry. [laughter] [applause] i hope that we will not. It is the decision of the british people. Manus speaking to bloomberg at the same event of the chief Economic Advisor to the london mayor underscored Boris Johnsons argument that britain would be better off outside the European Union. View, the economic prospects for the u. K. Are far better outside the European Union than within. , norway andutside switzerland are two of the wealthiest economies in the world. The u. K. Would do even better. Manus anna lets get back to steve from standard bank. I guess thoughts turn to levels around this brexit conversation. How week with the pound get if we saw some kind of brexit . Some of those things are not equal him a as you might expect and it depends on the length of time after brexit mode. Im not sure that is quite so relevant. The polls are closed in the polls are often wrong anyway. I suspect that if we leave were toapidly, if we stay, we would probably increase by about 5 or so. It is interesting because if you take those figures and say, ok. What probability of brexit makes the pound seem neutral . That level would be 80 . If there were an 80 chance of , then you would be neutral on sterling. So a 20 chance of us leaving and getting a 20 move equates to the same thing. What im saying is that to be neutral on sterling you would really want an 80 pole position and at the moment we are about 5050 almost. It is not looking good for sterling. The pmi have dissipated slightly here and can structure and construction and manufacturing services. Were being hit from multiple fronts attacking sterling. If that ties in, if the npc had a slowdown in the economy is exley of brexit risk and then were looking at mr. Morgan stanley started here. Away from the hike. The quantum shift in sinking on what they can an act is quite a hike. It is, and the main uncertainty there would be the brexit. Brexit it takes us into recession. Well probably have to respond to that with rate cuts. Then the more normative arguments about whether it is a good thing or bad thing, you are weighing on that risk against some of the more positive things about the longerterm. Eu, i cany from the see some of those arguments. Its a very difficult one to weigh out that shortterm change if you want against the potential for any shortterm gain. Ahead of g 10 research at standard bank. Manus 30 minutes away from the start of the trading day. It is nonfarm payroll day. Were back on top. We gave back a little bit of value yesterday. Story of the day has to be one the bull market is back. The bright and sunny city of. Ondon and i go see you monday. Guy welcome to on the move. Were counting down to the european open. Here is what were watching. Job stay in the usa. Nonfarm payrolls are out at 1 30 u. K. Time. Will it take brazil rallied more than 5 overnight entering bull market territory. Well discuss what that rally means and whether it can last. In chinas political