Welcome to count down here on monday morning. Commodities look at and the dollar. We have a chart dating back to the beginning of the year. In the white, we have the fed sinking the greenback. Seem to be backtracking and you see the commodity is weaker and the dollar is stronger. Surging. Is the equity session to not playing today. By. 2 on the exchange today. Down anddity story is it will weigh on the product currency. Oryd is driving the oil leak is the markets catching up and the assets increased. Word newsthe first now. loosened controls. Lagarde says that china is on track with this and expects more difficulties on the way. It will be good and it will not go without this on the road. There is a delicate balance to be struck with the economy and the reforms that need to be accelerated. Minister setsian the first time in 30 years. Say it is a handbrake on growth. The senate will have an additional risk with the legislation. These of time to pass important laws. If the senate fails to pass the laws, i will suggest they dissolve parliament. Visitma has arrived for a and is the first sitting president to travel to cuba since coolidge. He will meet castro. The authorities called off a football match two hours before a link and it came after out aamic state carried suicide bombing. The conservative party has worsened with the criticism of the style and the focus. Smith says he is no longer able being lowered. Concerned that the government i want to succeed is not able to do the things it should and it gets the deficit down. day. Now, you can find more on our website. Thank you very much. Lets check the asian markets. China is moving higher this morning. Bring us up to date. We are seeing a mixed picture here in the tight ranges and it is falling with the margin it is as much as 2 . About thislking loans and that offered and cutting Interest Rates on the debt. Boom andhen we saw the while we saw the bust. This is a move the government wants to bring more normalization and a signal. Fading away in some ways. These within oil and glass gas with the services up. You see them up and it is boosting the sentiment with everyone still worried and cautious. It was a mixed picture in the asian session. The chinese policy makers have underscored concerns. They said china will do what it must to address the situation. We will strengthen that the regulations and drop the risks to stock and make sure there is no systemic risk. This is the bottom line. There are other economic concerns for officials. They are speaking out about the debt and we have heard about that many times. Weekend, we heard from people who said the same thing and there were comments we heard and we heard from other officials that there is a lot of and they are looking at the regulatory things. Lending and they focusing on about andcorporate debt level theyre looking at the shadow lending that goes on with the Property Developers outside the regulatory structures. There are some that we have heard from top officials. Thank you very much. Andre getting breaking news they are talking about the management of that business. About lookingng who theto the year and ceong over and become the on it will become chairman. It looks like different people will be taking on these rules and they will be the chairman of the business. With a change at the top related financial services. And and Asset Management business that is active. You are interested in the insurance sector, this is the conversation we were having with the debt and the economy. We are joined now in the studio. It is great to have you here. Is up with the other voices suggesting concern on the level of indebtedness. Is going through a balancing of the economy and there are demographics that we and the economy china adjusting in recent years. The adjustment that will not be smooth. Use is theould chinese authorities. One is to devalue the currency and sharp shocks. Wantis how the chinese everyone to look at this story now. To october of 2014 are the moves, they gradually devaluing the currency. Is that something we will see continue . This is not competitive and this issituation where a response to the balancing of theeconomy and they have reserveslowly losing and they are moving in the opposite directions. For china and i do not think that we have seen the end of this. The European Union my cost theywas a warning and stepped up the campaign for a brexit. It was lower than what it would otherwise be. Investors look to pay up to protect against the increase. We have a chart here that shows long hedging of stocks in theing and this is u. K. Or do you see this getting how strong do you see that bouncing . The increase of the risks are not fully priced in go belowterling king those levels we saw in the crisis. , it hasthe dollar is onlyand it theyvalued by about 7 and will weekend, if the u. K. Exits. Make the noise at the end. The domestic of and it increases the chances of a brexit. The conservatives got a victory and they are within the party. At this point, the debate is t and iteases uncertainty it is aimportant and 5050 chance. That is where they are trading. Thank you. Next, a meeting to discuss weeachment proceedings and will discuss that and the emerging markets. This is countdown. Kong and it is hong is to 19 and 6 19 here in london. Higher week of political drama. The recommendation on whether to impeach. The leader. Outing bring in justin. It is good to see you. The pressure is mounting and we are seeing protests taking place. Not the same kinds of records that we saw with numbers of people coming out in on thef pressing forward theachment process and affair had turned into a popular coup. At the end of the day, we will see things pick up. Coming daysd the whether to send the impeachment process of and the series of hoops we still have to jump through to get to the process. The other event going on is a decision as to whether they will allow the former president to become part of the cabinet. That is an attempt to shore up the power base because of the influence as the former president to keep the coalition together and the synnex say it is an attempt to keep him from being arrested by the police as part of a corruption investigation. Really fascinating. They presided over a different picture of the brazilian economy. We are heading towards a contraction and we had nothing like that last year and a history books. On the other side, the markets are getting excited by the prospects and it seems it is just about good for the markets and they are up more than 9 against the dollar with the stock market outperforming every other market and the brazilian yields falling to the lowest and the markets are andng it at the moment things come to a head. Thank you for giving us the update on the story. Andcurrency retreated developing stocks are in a decline. We have the latest. The bull market after back in theary and they checked emerging index and it is up. Coming off of the rally, we look at the market effects and commodity decline with them and this showsge the changes in the emerging with the best gains and there is concern the rally went to far and too the dollar. By the question is what the dollar andx gaining again today the currency strength may be in play with the relative strength dropping the dollar the go higher again. As iat do you make of this sit here and talk with the guests and the things that we would trade around. What do you think . It would be different and we is going to be said dollar is strong against the euro and not the yen. Were week and the stronger dollar is consistent. Be more practical and more selective. It seems to be based around heights by the fed. It is projected and the markets expect a hike. Avoid the market move and there is an improvement. I have the chart of physicians with the index coming down. Talk about how they are positioned. Is the lightest it has they areears and against the u. S. Dollar. Looking forward as the fed continues to hike. Shorttermremains a squeeze of the position of head. We will look out for that. Thank you for spending the halfhour with us. Program, bigger is not necessarily better. Looking at the prospects of a smaller iphone and trying to persuade people who have not been tempted to upgrade to do so. More on the ipad. We will have analysis. ] anna welcome mat, you are watching countdown. Stock indexenchmark has rallied for the first time in two months after policymakers loosened controls on margin lending. Said thatlagarde china is on track but expects there to be more difficult phases along the way. That transition will be good for china and could for the world. Without like any transition, it will not go without some bumps on the road. There is a difference between deliberately slowing economy and perform that needs to be and reform that needs to be accelerated. They set the scene for an early election which would see both houses of Parliament Dissolved for the first time in 30 years unless the Senate Passes legislation to crack on trade unions. Barack obama has arrived in a rainy havana for a threeday visit. The first sitting president to travel to cuba since 1928. Turkish authorities called off a football match in istanbul about two hours before kickoffs after a man linked to the socalled Islamic State carried out a suicide bombing in istanbul on saturday that killed 13 people. Iain duncan smith followed up his resignation of the cabinet with criticism of David Camerons government. He said he was no longer able to government with lower higher taxes for earners. The government that i want to cc succeed is not able to do the kinds of things it has because it has become too who can lessose afford to have that fallen them. Russian investigators say that the flight recorders recovered from a flyby passenger jet which crashed on saturday are damaged but it is possible to retrieve the data. All 52 people on board were killed when it burst into flames during a landing attempt. The airline ceo says conditions were appropriate despite three other carriers diverting flights elsewhere. The brazilian miner has confirmed that its former ceo has died in a plane crash in sao paulo. They were killed when the single engine turboprop can done minutes after takeoff. Whoaid tribute to agnelli oversaw a 100 billion increase to its market capitalization. Is powered by our 2400 journalists run the rope around the world. Lets look at our chart of the hour. We are joined by guy johnson. You have got a chance chart, gold versus silver. Guy this is not an indication that you should sell one and by the other but it shows the relationship between the two. A whole period where you could be alternating between buying one and buying the other. You dont have to sell one because during the very owed, gold up 105 and silver up 407 . It is telling us that they snap back below the indication line. And you should buy more silver than gold but you do not have to sell it at either. Risesto every time this guy that is the rally that we will be seeing. Gold has had a tough period as of late. Aheadold has stretched and we need to bring that ratio back in line. Anna what these metals are used for is different. It is that the point of the chart but sealed silver does trade more around industrial fundamentals, and gold is typically a safe haven play. Guy if you look at the chart it is a reasonably good predictor of the relative performance. Silver has good industrial use, but nevertheless, something to Pay Attention to. Is it a slight yellow or brown . Guy maybe gold. Guy johnson back in just under an hour. Ever since apple launched the iphone in 2007, bigger has been better. Nara che pitch is here with more nejra cehic is here with more. Nejra this is the time of year when iphone sales start to decelerate. The idea is to attract those customers holding on to the two euro five s and to the and 5c. Old 5s this one is expected to be called the iphone se. It will allow apple to try out some new suppliers. The key thing here is rolling out this phone two months after saying Quarterly Sales were likely to decline for the first time in more than a decade. This new phone is an attempt to turn that around when sales traditionally slow down. Anna the price points will be allimportant. The optionhe moment, is that they spend 549 on the basic version of the iphone 6, or they buy a less extensive android phone. This lower end model may persuade them to stick with apple products. Weve been told that the new processor will new phone will boast a faster processor then the iphone 5s. Anonymous another thing tim cook is expected to talk about today is a new ipad. Ipad sales have been falling, too. Nejraer che hatch cehic with what to look out for from apple later. Get to our next guest. The professor of management and technology at the university where he works. Great to see you. Lets talk about japan. Risking a technical recession. How nervous argue about the fundamentals . The fundamentals are regressing fairly nicely, but the external factors are becoming negative. That is casting a shadow over our positivitys. We can talk about the nominal factors that mr. Abe was trying to propel. How did he do that . He gave them a lot of breathing room by weakening the yen. Unfortunately, the first two arrows have worked but Japanese Companies have not reinvested. Were seeing stagnation where they are becoming excessively conservative due to the external factors and unfortunately his scheme is not as effective. Lesson for howhe you get appellees to invest forgetting companies to invest forhat is the lesson companies to invest . Is it by making money cheaper . Definitely not. Capital expenditure has not really come back like we expected. Ofte of of the affect the fact that we are due replacement demand. Japaneseust of companies by their future. Create a much more rooted factor. Anna you mentioned the two arrows, we have this reform agenda referred to as abenomics 2. 0. Do we have a reinvigorated version and what will it mean for the reform of the japanese economy . The trajectory that you mentioned is longer than the first two. Youond set of arrows look at the details of it. With focused on longer issues, structural issues. Unless we solve these problems, people will not spend. Fragility of japanese spending behavior has been increase ine 3 consumption tax. None of the economists expected that the happen, but it did. Understands that you have to work on structural issues because the market cannot wait that long. Anna is there anything on the table that is radical enough to address delivering a higher birthrate . He can basically only try to change legislation. It takes a long time to change, especially in a conservative country like japan. Important is to show a sign he is for it. He has not done enough fiscal measures to prove he is for it. Anna our guest will stay with us on the program. Lets tell you what is coming up in your week ahead. It is a shorter, but busy week. Apple unveils a newer product today, a smaller screened iphone and new ipad. Vote inix state primaries and caucuses this week. We get an update on the u. S. Manufacturing sector. And of course, it is a four day trading week. The market for the closed on friday. Up next, commodities and emerging markets and focus at the conference in paris. Manus cranny is life. Ve. We will join him,. , next. Anna you are looking at a live shot very early in the morning, or yesterday evening, depending how you look at it. We are expecting to see a weaker start of the u. S. Trade. The s p in positive territory yesterday. The tech to the blimp business flash Bloomberg Business flash. That is according to a warning from the confederation of british industry as it steps up its campaign against the socalled brexit. Apple is set to unveil an iphone with a four inch screen. It will be the first time that the iconic smartphone has been made smaller. Enticek is hoping to holdouts even if they dont want a larger device. Casino has had its rating slashed to junk by standard and poor. The loss of Business Diversity diversification and disposals in asia. The chief executive officer quatre will retire on december 1. His duties will be split between his successor and another. He could be the front runner to succeed Douglas Finch as chairman of hsbc. Prices rose 1. 3 pushing the above average 300,000 pounds for the first time. That is according to write move. Says the average asking price increased 7. 6 compared with a year earlier. That is your Bloomberg Business flash. Commodities and emerging markets are in focus at the gac conference in paris. Manus cranny is there for us. Good morning to you. Manus the title of the conference for the gic this year. Roi have francois villeo vigaro, and i have the chair of fromic, Michael Drury mcbain. A couple big stories, michael, great to see you, thank you for inviting us. A couple of big stories over the weekend. Volatility is the big story. They are loosening up the controls and margin lending. Has the worst passed for china . The market started this year with three big concerns. The stock market, which no one cares about. The Federal Reserve speaking last week posted strongest for 2016 and debt. Ill take any of these are concerns right now. I dont think any of these are concerns right now. Everybody that comes to bloomberg tells me there is so much excess. My concern would be in terms of we creatingels are a huge mother and father debt problem in china . Has to go somewhere because it does not go into equity. There are two sides of the coin. You end up with too much personal debt. If they can join the consumer economy, it will balance out over time, but that is a decade long process. Tous that takes us back capital flows. The biggest preoccupation at the moment is the capital outflow. I am looking at it the wrong prism. Correct me. We know the money ends up in sydney and vancouver and drives up home prices. Since the peak in chinese reserves, we have had devaluations of 25 in australia, 25 in canada and apparently an increasing outflow. Money isestion is, the leaving the central bank, but is it leaving china . People used to have large stores of red backs and another have greenbacks. Manus where is the money flowing . I think it is flying into visible dollars. A lot of people in singapore they were keeping you on because it was yuan, because it was an increasing currency with positive interest rate, have now switched to dollars. They are afraid the yuan will devalue against it. Manus were hearing about the deflation in china. Will they achieve that . Will it stymie the level of exporter devaluation around the world . Largest is still the number of exporters on the planet and theyre running a massive surplus. Two years ago, during the corruption crisis, they were going three. We think they are going 5. 5 now. Manus you would lay the blame for global corruption what do you mean by that . Mistake, a policy Corruption Campaign that slow down china and the world, especially commodities. There was a policy response, lower Interest Rates, negative in some countries, fiscal stimulus, and devaluations run the world. Lester we had a 4 growth in nominal gdp. Manus do you think they will leave the currency alone . Oni think they are the lead fiscal stimulus in the world and everyone is starting to adopt their success. Manus have a great conference, thank you for the invitation. Back to you, anna. Fiscal stimulus again coming back to the conversation. Much more to go, a little bit of spain, a little bit of the chairman at ubs later in the day. Anna manus cranny joining us from paris. Lets get back to my guest in the studio. Fiscal stimulus in china, the conversation there, whether that will be forthcoming. That is something the japanese would like to see . They are one of our biggest trade partners. People think we are in competition. It is a totally different structure. The strength of china is very important. Needed to the reason the markets slumped to so much is corporations are not investing. Any stimulus package from china is good news for japan. Talk to me about the changes we are seeing in the governance environment in japan. You are skeptical on some of those moves that have been introduced or are being called for to echo what we see in the u. S. A run quarterly reporting around quarterly reporting. And increased transparency. My question is, can it really increased transparency . I dont think so. We are japanese, we are not americans. Edly theduce blindfold american system to japanese government is bad. Excessive inclination toward american governments would mean that we would lose our own competitiveness. That is a bad thing. Anna is this up in japanese businesses feel pressured to produce . They are being pressured. Anna more so now . More so now. Many cannot tell the difference between a good decent pension activistss a lot of who, in my personal opinion are financial thugs. They cant tell the difference. They are totally different. Anna they come from different and banks of the spectrum from different ends of the spe ctrum. Thank you for joining us. A reminder that this afternoon we will bring you the conversation with an ecb board member at 3 00 p. M. U. K. Time. A great story on bloomberg this morning. Sixfold since negative rates were introduced. The supermarket moves in on home Retail Sector the close on friday. Anna debt piling up. Pboc sounds a warning in china. Christine lagarde strikes a positive tone on china. She still remains cautious. A balance must be struck between a deliberately slowing economy and reforms that need to be accelerated. Apple is hoping to unveil a slimmer phone that could capture a portion of an already saturated market. A warm welcome to count down. It has just gone 7 00 here in london. Lets talk about what the futures are telling us here in europe. It looks as if we are expecting to open the foot to 100 features down around 0. 1 . We do not have much in the way of catch up because after europe closed, u. S. Markets fell a bit. Lets check in on the risk radar. The Chinese Market in the overnight session excluding japan by 0. 2 overall. Justve a weaker oil price, shy of 1. 5 on nymex. That is having a heavy impact on some of the commodity related currencies. Done by 0. 6 against the u. S. Dollar. That is a quick look at the risk radar. Chinas benchmark stock index has rallied above the 3000 level the first time in two months. That is after policymakers loosened controls on lending. The managing director, christine lagarde, has said that china is on track, but expects there to be more difficulties on the way. That transition will be good for china, and good for the world. Like any transition, it will not go without bumps on the road. We should expect that, because there is a delicate balance to be struck between a deliberately slowing economy and reforms that need to be accelerated. The australian Prime Minister has set the scene for an early election which would see both houses of Parliament Dissolved for the first time in 30 years, unless the Senate Passes legislation to crack down on trade unions who he says are acting as a handbrake on growth. The growth slows and obstruction by the greens on this key legislation must and buying. Must end. They will have an additional three weeks to deal with the legislation. Plenty of time to pack these important laws. They will dissolve both houses of parliament and issue a write t for an election. President barack obama they willuba allow the communist government to seize historic acre opportunities. A football match between is symbol and another kind between istanbul two hours before the match siding a threat by a man who carried out an islamic terrorist bombing on tuesday. In Britains Conservative Party has worsened after Iain Duncan Smith followed up his resignation from the cabinet with criticism of the style and focus of David Camerons government. He said he was the longer able to support cuts to Welfare Benefits while taxes the higher earners and companies are being lowered. My motive now without question in my mind is that i am concerned that this government that i want to succeed is not able to do the kinds of things that it should, because it has become too focused on narrowly getting the deficit down without saying where that should fall, other than on those who i think progressively can less afford to have that fall on them. Daylobal news, 24 hours a powered by our 2400 journalists and more than 100 news bureaus around the world. Anna lets check the Market Action in the asian section. Mixed, the picture was the last time we talked. What are they saying now . A pretty uneventful start of the week with the exception of china. We had japan closed for a holiday but you can see a mixed picture across the board. The big story,e shanghai up 2 right now after the government loosens its grip on margin lending. Now this is a signal that they allowing for more buying into the market. Another Second Chance for the china market. A little bit of pressure in singapore down about 1 . We are down on the regional inch mark today. Benchmark today. We are well above that 3000 level now. This is during the peak after the imposed those controls. 60 . G on margin, more than hopefully this will spur and boost sentiment into the market, and a bit more normalization. We didnt see up to 1. 5 now. As far as fx goes, the dollar still in play here, reasserting itself after selloff. Of thoseing markets currencies falling back to earth after the fed meeting. Aboute a weakening of 0. 5 . Currenciesty weakening as well. The aussie dollar is interesting. It is poised to have its best month in five years, but blackrock is among one that is not as bullish or convinced about the turnaround in the economy. They believe that the aussie dollar could fall to as much as 65 u. S. Cents by this year. China cutting the hang seng by the most in three months today. When it comes to the dollar, it is weakening against its major peers. That 111ck, along level, falling below that on friday. Getting to up to speed with what you need to know. The company is in a stronger position to take over the retailer after the South African couple he dropped out of the race. The u. K. Supermarket has offered about 1. 3 billion pounds in cash and stock for the argyle retail chain. Charles, good to see you this morning. Fill us in on what we might have missed if we went home at the end of trading friday. I think there was a bit of a deadline so sainsbury had to put up or shut up. They repeated the indicative offer and made it a firm offer. There is a degree to which one hitt feel they are getting slightly on the cheek, but there is the question of why they want to buy it. This is a response to what i call the amazonization of retail. They need to get into a position where they can deliver a wider range of goods. They need to be able to do it quickly which argos is experimenting with. Amazonization sounds like a made up word, but you are a man qualified to make upwards. 10 on theown around day. A substantial decline in the trading session. 9. 9 . Ubt at the price of sainsburys was up a little bit higher if you include the dividend. There is a special dividend that home retail shareholders will get. There is a 2. 8p final dividend that they will pay. It depends exactly what the sainsburys share prices. It is about 170. Anna why did stein hoffer step away . We can wait and see a little bit. I think that are ghosts i argos issues are that profitability is going down and the sales are getting weaker. It is having some difficulty expanding the image into the midmarket. That is something that maybe sainsburys can address. Certainly, steinhoff is doing the reverse. Anna steinhoff going elsewhere instead. I saw that one of the french retailers after them is urging them not to sell just yet. I think that steinhoff. Is doing the opposite. You have this position where steinhoff with amid t a mid to lower brand is courting darty to broaden its appeal in france. Anna 10 minutes past 7 00. Later today, apple is expected to launch an array of new products. Caroline is here to discuss the move further. Why the smaller phone . It seems an interesting one. They liked the bigger screens. This is targeted at the diehard 5s. S of the iphone 5c and they are trying to draw them into the smaller iphone which has slightly faster processing and a new camera and will help with the new operating system. Might not be able to support the operating system upgrades that much more. Look him many there are to convert. Ss andnge band of 5 5cs. It will be interesting to see the price point. Remember the iphone 5c was expected to be a slightly cheaper product, but it came in at 550. Many felt that was too expensive. What will be the price point when you have iphone successs at 650. One 6ss what will it do to the average selling price . Gettinggenerally about people to upgrade to a slightly smaller font and not dapple smaller phone and not start dappling with android phones. Anna a new tablet is another feature we could see unveiled today. Caroline this could be a smaller ipad pro. This is all about enterprise in the Business User and having a detachable keyboard. This is a new segment. The detachable tablet was invented by microsoft and they seem not to be eeking into that territory. They want to tempt people with a smaller screen and really lock in to the enterprise user and start getting us to start buying into them much more. This is not an area many analysts feel will be a growing area. They are expecting to see tablet sales slow. At an event called in the loop later today in copper tina, many and in cupertino, many analysts are bracing themselves for nothings exciting for the rest of the year. They say that apple media events will be underwhelming, and the sales are likely to fall the rest of the year. Notably, it is all about tomorrow. The court case coming when apple faces the magistrates later on tomorrow. Of theou wonder which stories will play highest, dont you . Debt at with total almost 250 of gdp, what can policymakers do about a surge of leverage in the world at the largest economy . Anna welcome back, this is countdown. Here is a picture of london looking gloomy this morning. The pound is also a little bit weaker. Lets get a look at bloombergs business flash now. Unionving the european may cost the u. K. 100 billion pounds in economic output. That is a warning from the confederation of british industry as it steps up its campaign. A vote to leave could cause a serious shock to the u. K. Economy. Mark zuckerberg hazmat chinas has met chinas up again the chief. Aganda been chinas prop chief in china. Casino slashed to junk by standard poors. To weaker than expected earnings and the loss of business diversification as a result of disposals in asia. The french retailer responded by reaffirming its operational prospects. Officerf executive henri will retire december 1. They will split his role with the man taking over as ceo and dniester vern the coming denise duvern becoming chairman. Henri could be on the shortlist to succeed as the ceo of hsbc. Anna chinese policymakers have concern abouteir the surge in leverage of the worlds secondlargest economy. It came after the National PeoplesCongress Meeting the chest chinas top priority is securing annual growth for years to come. The vice premier said that china would do what it must address the situation. We will strengthen all around regulations and tamp down the risks to the stocks, bonds, foreign exchange, and property markets. This is our bottom line. Lets bring in our quality editor now. Another big concern for china. Many voices have spoken out about the level of debt in this economy. You just heard the comment about 6. 5 growth. That is the real baseline for the next five years they just got reiterated in the fiveyear plan. We are hearing that over and over from the top officials that they will be able to do that. Inside that is addressing the risks, and some of these are leverage. We heard, for the second time in a couple weeks, from the Central Bank Governor this weekend that he is looking at this. That debt as a percentage of gdp is 250 . We know they are watching those risks. Anna which of the particular debts are they concerned about . They talked on this program about the level of indebtedness of state owned enterprises, and whether that falls onto the government balance sheet. Then there is the local administrations and their levels of debt. Where is the concern . I think those are both concerns and are has not been a lot of delineation. That the governor has talked about a couple of times housing and how there has been a diversions. Also a lot of lending that is not regulated. He has cited this before as. Omething he has his eyes on anna lets head back to manus cranny. He is joined by someone who has served as a member of the shadow council. Good to see you again. Manus thank you very much. I have manuel, currently the a hugeconomist over at global producer of cement in spain. His credentials run wide. We were chatting at dinner last night about the variety of measures that the European Central bank has taken. Is said to me that the ltro going to be a lifesaver. How will it be a lifesaver in the dynamic of spain and europe . The combination of negative rates, which tends to put a lot of pressure on the banking sector, particularly when you want to lend and pressure them to expand the credit channel, you need to give them something else. Room to room room to maneuver and incentive to lend. It is the piece that was missing and was very important. Manus part of the argument is that you can bring a horse to water, but you cannot make that horse drink. That is the essence of the article this morning. You are seeing excess reserve at the ecb rise by sixfold. There is no demand. I would argue differently. Unless you bring the horse to water, he definitely will not drink. You have to get him close. That partnership with the ecb is doing precisely that. In spain, credit has not risen tremendously, but it has gone up. Now we are seeing some credit coming through in the consumption sector and mortgages. Not quite as much for corporate, but it is already moving, which is the first step. Benevolente have a ecb, what happens next with in spain . There is great talk of consolidation. Will it be they who are the predators . What will happen in the Banking Industry there . The fact that you have negative rates, and free money for the banks, that does not really mean they will not have to consolidate. We will see very strong consolidation in the banking sector. Manus will it be european creditors as well as spanish. There, the spanish big banks. They know the market and the potential. They have always been there. I would hope that there are incentives for other banks to getr the market and really banking to be broadbased, having big banks everywhere. Manus there is also the discussion that the lenders became much more about the measures, rather than putting pressure on europe. What do you make about staying with a not so low euro, and where is your target for the euro . I the last one, i wish knew. The traditional bureau worked its way through the wealth channel. You move into negative rates. Negative rates work through the Exchange Rate channel, primarily in countries like denmark or sweden. I think that the eurozone is too large. In that context, the fact it is working through other transition mechanisms, hopefully by pressuring banks to lend and give up credit we may not have demand, but you have to at least have supply, that is the way to work up. The forecast for the euro is tough. Manus be brave. Lets put it this way, if i look at my models, they should go close to parity but the truth is they are around 1. 10. Reality is very hardheaded. Notging market policies are transmitting into Exchange Rates. Gous do you think you will to elections again and what is the biggest risk from the political challenge . Spain has grown quite well. About 2. 5 last year and 2 this year. Dynamically it is doing ok. People are not worried yet. We have a government. We have a budget. We have an acting government. They can limit anything they want except implement anything except reform. What is the problem . Reform. Manus the difference between where reality and the euro will be. Anna thank you so much, manus. More from manus as we go to the start of the day. I will see you tomorrow. Move. Elcome to on the it is 7 30 in london. Where accounting you down to the european open. I am guy johnson. Hans nichols is the way on assignment. Longer lived king dollar. Goldman sachs holds back to its gains. Some investors agree on that. Let us know what you think. Not enough,takes is negative returns on deposits are boosting bank lending. We will discuss that