Transcripts For BLOOMBERG Countdown 20160330

Anna a welcome to the program everybody. 6 00 in the morning here this wednesday. Manus, thank you very much. ,his is janet yellen yesterday cautious and gradual the watchword. Bloomberg has what she had to say in the immediate aftermath, month towards the worst in five years. A contrast to last week, hearing that the talks was whether that the meeting was still on. Manus a lot of the argument, the people that spoke last week, there was a real sense of interpretation that this was her finest, strongest, commanding thech in terms of commanderinchief of the federal reserve. I quite like this. We are being a little bit tongue an inching. It goes to the heart of the issue. Rp function,at the wr we have shifted. 28 probability of a height in june. No sign of a height, 54 of ability by the end ina there was a 6 chance april. Nowall chance earlier, zero. Manus cranny have emerging markets really shifting gear. The biggest jump in almost two weeks. We are getting back a little bit of this this morning. You are seeing the biggest rally and march since january 2012 grade south korea and taiwan down 7 billion funds in march, nearly 3 billion flowed in during the last week. Anna let us have a look at various assets responding. And what janet yellen had to say. Slightly more complicated, isnt it . S phe equity markets, the u. S. Market up, at the u. S. 2016 hydrated that has been picked up in asia. Uity markets it is little bit more complex. We have a stronger yen. Those in the currency market send to focus on as a result of the global risk. Manus the fact that he did not go over this, it was much speculated 10 trillion of stimulus. Keep an eye on the oil. Oil drops, waiting for inventory today. Iran is on its way. Anna let us get the bloomberg first word. Production has dropped the most since march of 2011, since the earthquake. That is as falling exports Holding Domestic car production down 6. 2 percent in february, after rising in january. A survey by bloomberg has forecasted a 4. 9 drop. Brazils embattled president has suffered a new vote on her future with the Biggest Party leaving her country. The Democratic Movement party held elections, and the president denies any wrongdoing. In a Corruption Scandal that has reached the highest level of government and business. A lower house vote on her impeachment is expected the middle of next month. Public in front runner donald trump said he is sticking with his Campaign Manager, despite him being accused of battery at a rally. Florida Police Released pictures of what they say is an altercation between Corey Lewandowski and a female reporter. Trump called the situation unfair. And he says he will no longer honor his pledge to support the pick forpublil republican president. He will resent his promise because he has been equated very unfairly by the party. David cameron should present a positive vision of the European Union, rather than using fear to dissuade people to vote to stay in the block. That is according to a house of lords panel. Committeean union said the remaining campaign will require the support of people from across the political spectrum. And that means appealing to the values that britain shares with other eu nations. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. You can find more on bloomberg at top. Manus let us get into the market now with heidi. In hong kong. G by we are sort of feasting on what they said yesterday. That is the hangover, versus the janet yellen dove hitting the market. Give us the rundown. That is right. Really just the japanese market sort of slowing, very robust dying that we are seeing. Let us start off with japan, giving the rate that we had terrible Industrial Production number skimming through this morning. It is not helping. But it is part of the disappointment coming through e, thise minister abb package has been widely , and we do have a blowup budget. But that did not help sentiment very much at all. 1 , by about 8 10 of extending losses into the afternoon session. That is also that yen strength story coming off of that longest streak since october. The dollar biggest story is playing across asia in a very bad way. Japan has the repatriated profits. A very strong gains across the region. Financials in particular, driving these gains that we are seeing. Hong kong up by 4 10 of 1 . Shanghai jumping the most in a week, up by about 6 10 of 1 . At the moment, we have some pretty Favorable Bank earnings actually one bank earning that is driving sentiment. The surprising upside was the communication, posting a modest profit of 1. 4 . Also, there seems to be suggestions that there is a bad loan. The ratio of those sort of obligations bombing outcome at least according to some analysts who have crawled through that data. That has a nice sheen to the big banks, kicking off earnings season. We are getting another rate from the bank of china, icbc. But we are seeing a very strong session for financials here in hong kong and also in shanghai. A chinesede, Pharmaceutical Company is said to be bidding on the french pharma group. So it is the most on record without close to 30 in the session. Guys . Anna haidi lun joining us from hong kong. Thank you. Back to jenna yellen, she has insisted that Interest Rates will be raised at a cautious pace. And one of her most detailed policy discussions, the fed chair gave investors a list of conditions they need to watch for future rate hikes. Manus stabilization of foreign economies, and the financial market, and no further appreciation of the dollar. Janet given the risk to the outlook, i consider it appropriate for the committee to proceed cautiously in adjusting policy. This caution is especially warranted because with the federal fund rates so low, the ability to use conventional Monetary Policy to respond to the economic disturbances is asymmetric. One must be careful, however, not to overstate the asymmetries affecting monetary policies at the moment. Even if the federal funds rate were to return to near zero, they was still have considerable scope to provide additional accommodation. In the event that oil prices were to fall again, it could have adverse spillover effects to the rest of the Global Economy. To the Downside Risk outlook were to materialize, they would likely slow u. S. Economic activity, at least to some extent. There is a consensus that chinas economy will slow in the coming years, as it transitions away from investment towards consumption. And from the exports to domestic sources of growth. There is much uncertainty, however, about how smoothly this transition will proceed. And about the policy framework in place to manage any Financial Disruptions that might accompany. Manus let us bring in our guest, stuart robertson. He is a senior economist. Good to have you with us. It is a line in one of the stories, and absent of unity, the commanderinchief setting the tone, grasping the needle, really resetting the dial. Sort of putting away those hawkish voices. Do you think he achieved that . Stuart it was a very commanding performance, very clear. Very clear message. She knows this is going to be reported, such is clearly quite happy to give that dovish message to markets. They will proceed cautiously. Anna setting out quite a Shopping List of risk to the economy, in particular, the global focus being set to remain. Stewart very much so. We are watching china and the emerging markets, they are aware of that. Setting policy not just for their own economy, they cannot ignore that as well. They have to make sure that the pattern of what is happening in the u. S. Inflation may seem like yesterdays story. That could buy them in the future. They have to be a little bit careful. Manus they have to be a little bit careful. I say this lightly tongueincheek. But this is the dollar affect, the dollar dove. She found a lot of wrong. But the momentum in the dollar, the fed do not want a stronger dollar. And this is a critically important point, isnt it, in terms of what she is trying to do shifting that dial. Fadart it is not just a that is not what the stronger dollar, it is important for the emerging market universe. And the fed does not want to feel the pressure much more. Monetary conditions are not just about Interest Rates, theyre about currencies, too. As you say, they dont want the dollar to be that strong. Anna we saw quite a bit of emergingmarket assets as result of what she was saying, she seemed skeptical that the uptick we saw in core inflation is going to be durable. Although we have seen some investment houses, pimco and others manus pimco and blackrock. Anna how concerned are you about inflation the u. S. . Stewart it is a very legitimate concern to have. It has been a concern and not a concern. During that period when it did not move at all, the fed was telling us do not worry. If we see any signs of emerging inflation, we will act. All you have had signs, and they have really given a very strong hint that they wish to act anymore. Manus a very significant market move, equities will we get all of the losses. In a new high. Twoyear note collapses, but this is the Inflation Expectation gauge. This is the difference between ndyear government bo and treasury protective policies. That has begun to go up. And there really is an absolute shift in the dial. I should also say, this is fascinating. The fed still has considerable scope, even if rates go back to zero. She did not touch on the negative rate argument. Pushing is about expectations. This is what all of the Central Banks are worried about, pushing to fiveyear low. The break even is lower. This is what they are concerned about. The morbid fascination with moving these expectations lower. Deflation we have had some of the return was welcome. It was we wanted to see. But we now have a little bit of it in america. Core inflation is about 2 , pretty much close to what their target is. The headline is lower, but we know that oil has a big influence there. It is a worry with inflation with inflation, that if you let it out of the bag, he can bite you. Anna it seems to be this thought process that perhaps the fed is happy to let things run a little hot in that department. When that be the way you would characterize it . That is exactly right. They are very comfortable with the idea of letting inflation rise little bit, letting it overshoot the rather lose target of 2 . They would not mind a bit of inflation, quite willing to let that happen and respond to it, well then act in advance of it. Lovelythere is a piece on the bloomberg about opportunistic inflation, moving before you are ahead of yourself. I will pull up wirp, this is your rate expectation. We have gone to zero for april. She stayed away from getting or june. To that april june we are now looking at 20 . We do not get the probability. Looking at december, 63 . What do you see, what do you expect, what is your rate cycle . april, i think we can probably rollout. June is still a possibility. But as you alluded to, there is quite a list of things that have to be ticked that happen. We will see. As if the economic remains it has been, and Financial Markets remain calm, and they certainly had a boost from what janet yellen said yesterday, i think june is on the cards. We have to get different movements for the market to get ready. Anna thank you very much. Ewart stays with us. Manus 10 00 u. K. Time, we have the eurozone consumer confidence. Admit day, it is the u. S. Mortgage application. An hourat is followed later by german inflation. We will see how far the picture in europe diverges from what we see in the u. S. Manus up next, why japan thinks that inflation has fallen the most in 2011. Details, coming up. Anna welcome back 36 18 in london. Let us get the Bloomberg Business flash. Thank you so much. Shares in sharp have risen overnight that they are edging closer to a takeover of the Japanese Electronics producer. b said they want an agreement as soon as possible. But according to one person familiar, they are seeking to cut the amount they will pay for equity in chart. Considering to sell the u. K. Steel division, the metal producing arm of the biggest conglomerate says that global oversupply and high manufacturing costs mean that trading conditions in britain and europe have rapidly deteriorated. They closed plants and cut jobs in the u. K. Last year as the chinese exports surged to an alltime high. 4000g plans to cut about jobs from the commercial Airplanes Division by the middle of the year. It is part of a broader effort to reduce costs, amid fears from airbus. But the u. S. Maker says and does not play or any involuntary layoffs, for now. Googles ceo received an impressive a package in 2015. In his first year at the house, he was awarded just under 100 million in restricted stock, as well as a 650,000 salary. And last month, he got an extra set of restricted shares, valued at 199 million. Making him one of the best executives of a publicly traded company. And after Bloomberg Business flash, anna . thank you very much. Japans industrial reduction numbers drop the most since the earthquake in 2011. Some 6. 2 in february, after rising in january. Anna economists had forecast 4. 9 to let us get more from Jodi Schneider in tokyo. Thisus what is behind sizable decline, though . Josdi there are several factor. One is that there was a steel mill explosion in japan that halted production, domestic production, from toyota. So obviously, that is something that affected it in a way, one would assume that we will not have that again. But there was also five months of lower exports, and with china continuing to slow, china being japans largest trading partner, that is certainly a factor. And another factor is the sluggish demand at home. That has been sort of leading to lower industrial output, as well. Manus jodi, this seems to underscore the weakness in the economy. We are on recession watch with japan. And it is a question of the other reports, whether they are going to tip the balance. Just looking at some of the pmi, they do not look that enthusiastic. Right, and obviously, even if you take out the factor of the steel mill its lotion and toyota, you know, holding production, the path is not a growth path for production. The things we are seeing, the weakness in the exports, the situation not really markedly change with china, so one would think that the exports are going to be off for some time. The question about the gdp that you raise is an interesting one. One that economists are a little lit on. We had contraction in 2015. If there is contraction in the quarter we just ended, he see it next month, that will be a recession of course. That will come in depending on how you count, a second recession since abe can back into government. Quarter ofth contraction since he came back into government in 2013. None of that seems to bode well. But there are some economists say they see production ramping up little bit, some sign that april may be a pretty good month. March is a better one. And the median forecast for this quarter, for gdp, is 0. 6 growth. Which is very slow growth, but not contraction. Well have to see on that one. We will know in a few weeks. Anna thank you for the update. Jodi schneider with all the details. Stillw we have stewart with us in the studio. Give us your thoughts on japan, not a growth path, getting out of the noise of Industrial Production. Not a growth point. Stewart there was some special factors, the underlying picture as you said, one of recession. The last 10 years. And surveys still suggesting it will remain subdued for a while. And we are going to be worried about japans gdp for the next year, probably much longer than that. Manus policy responses everything. You have negative rates in japan and europe. There is one beside found on japan this morning, this is why we have had a lot of commercial paper being offered. The central bank is off, nearly 6 billion of paper that was offered. The central bank said we are not paying. 6. And they left 20 , 20 on the table. And this is what we have on the table, the sixmonth rate, the 10year and the fiveyear, we are collapsing further and further. But even the central bank is now balking, with the market is taking negative rates. Versus commercial paper is at. 65 . This is fight back, isnt it . Stewart it is a little bit scary, and the whole concept of negative Interest Rates is a bizarre one. But it shows the position we are in. If we get gdp numbers, another recession in japan, then the pressure will grow for the bank to deliver more stimulus in asset prices. I do not think the negative yield. In forever. If they think it is necessary and required. Anna there is a big question about where the Central Banks go next. They have tried negative rates. We will see how that is going. What the europeans doing negative rates, as well. And the ecb this morning speaking to in fact a interview call publishing the details on the ecb website send a helicopter money is not part of the discussion at the moment. It is fairly inflammatory turmoil. Manus never part of the language. Anna one thing you cannot see Central Banks doing. Stewart that is right. I think phrases are perhaps unnecessarily emotive. Printing money is another one. I prefer creating money. That is what banks used to do. They were compromised because of the financial crisis. But actually creating money is something the Central Banks can always do. Anna what does helicopter money mean to you . Stewart that is exactly what it means. Creating money, done by asset prices. But you can print more. You can always print more. Anna a different distribution channel, rather than going out and buying the bond market. And the old economics 101, banks would create money, because theyre not doing it as well as Central Banks. Way,ing money, in another but that is all theyre doing. Its probably the right thing to do. But it is a difficult game. Manus you are actually well, i dont know what the right adjective is. You talk about negative interest not pumpedswiss beyond belief. If anything, it had a negative effect on the equities board over that period of time. Stewart that is right. We never know the factor, it couldve been worse if it never happened. What you are certainly right. The aim of negative interest investors intosh other assets, boosting their prices. As you say, that has not really happen. Anna thank you very much. Stewart robertson stays with us. Manus brazils Largest Party has abandoned the embattled president. The question on everybodys lips, is impeachment the next step for Dilma Rousseff . Show me movies with explosions. Show me more like this. Show me previously watched. Whats recommended for me. X1 makes it easy to find what blows you away. Call or go onliand switch to x1. Only with xfinity. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Manus it is 6 30 in london. 7 30 in brussels. Let us get the first word news. Good morning. Janet yellen has again insisted that Interest Rates will be raised at a cautious pace, and one of her most detailed policy discussions this year. She gave investors a list of conditions they need to watch for future rate hikes, including stabilization of foreign economies and markets with no further depreciation of the dollar. Janet given the risk to the outlook, i consider it appropriate for the committee to proceed cautiously in adjusting policy. This caution is especially warranted because with the federal funds rate so low, the fmocs ability to use commissioner Monetary Policy to respond to economic disturbances is asymmetric. Japans Industrial Production thedropped the lowest since march 2011 earthquake, as falling exports stop demand. And the steel mill explosion halted car production at toyota. Output was down 6. 2 , after rising in january. Economists surveyed by bloomberg have forecasted a 5. 9 drop. Hasils embattled president suffered a new blow ahead of a vote of her future with the countrys Biggest Party leading her coalition government. The Democratic Movement party held six ministries and her administration. She denied any wrongdoing, amid a Corruption Scandal that has reached the highest level of government and business. A lower house vote on her impeachment is expected in the middle of next month. David cameron should present a positive vision of the European Union, rather than using fear to persuade people to vote to stay in the block. That is according to a house of lords panel, that the european will Committee Said require the support of people from across the political spectrum. And that means appealing to the values of britains trading with other european nations. 20,000 bottles of wine from a selle wilcellar will go to somef these inmate. Half of the billionaires collection was acquired over the 40 years. Is expected to fetch 50 million. Global news 24 hours a day, powered by more than 150 news bureaus around the world. Manus thank you very much. Let us get up to speed on these markets. Nejra is with us. Yellin is pervasive in the move, shifted the dollar down. She has the hawks out of business. That equals a weaker dollar. We saw the dollar suffered its biggest loss in more than a week after she spoke. You see the drop there, it is the white line. It is headed for its worst month in five years. In fact for the dollar is down against all the major peers in march. Over the past two days, and lost almost all of the gains that it made last week. What we saw with crude oil, i track that on the yellow line, that did weaken. After sheses in crude spoke. But we have since recovered, and part of that has been dubbed the weaker dollar. You can see the divergence between the two there. But of course, i need to show you what happened in u. S. Treasuries. We did see a rally across treasuries. The highlight of the twoyear note the most sensitive to fed policy. And you can see twoyear yields fell to the lowest in two months. Anna and we have seen the impacts of what janet yellen have to say in emerging markets, feeling the impact. Najra that is right. I want to talk about asian stocks first, because we see a bit of a difference between asia stocks. We are seeing losses largely down to the stronger yen today. But again, what i want to highlight in emerging markets, because we have seen a rally across emerging markets off the back of janet yellen speech, the worlds longest bull market i dont know if you can guess what it is, but it is malaysia. Than doubled since the 2008 lows, without succumbing to a 20 drop. This is despite the fact the Prime Minister is battling corruption allegations, Energy Exports are dropping because of loyal all oil prices. Profits are dropping. The reason we are seeing this rally in hedge funds moving into malaysian stocks is that it is trading at near cheap levels of global equities, and almost a decade. And it has some of the most lowest volatility in the region. One money manager put it really nice. Boring is sometimes peaceful. Manus i like that. Anna i think so. And that has some bearing on the next story. Frantically, not waiting around to see if the reason to rebound on the stoxx 600 will hold. Guy johnson joins us. Story, the story is not boring. But it is the fact that there is not been much move. Guy it is quite depressing, really. Basically, this is a stock chart of the 600. Can janet yellen do what mario draghi has failed to do . Look what is happening here. You have a rally on the bottom, january and february not too pretty. But now the stoxx 600 is stuck in a range. Inded for its worst month nearly a year in terms of the performance that it has delivered. It is trading at a massive spread to the u. S. Market, 14. 75 earnings. A big spread their on the multiples. And yet it cannot break out. Investors are not convinced that mario draghi has been an upgrade is the market is waiting to catch up and close that spread . Or are european markets sidley going to go nowhere for the rest of the year . Manus i like what you said, can mario draghi do what janet yellen has managed . Guy but of course, janet yellen has succeeded. Nejra just told us. Mario draghi did not deliver that. Be thatut it could mario draghi is not there to sustain it. Yes, i know all of them say they are there not to target currency. They are not there to look after markets, they do have a consideration. This goes back to the argument we had a little bit earlier. Which is the impact of negative rates. The impact of stimulus, in whatever form. Hasnt that played out in equity markets, in switzerland and europe . That would be the bottom line u . R you, when tha banks talkingal about asset prices, the idea of the nation targeting asset prices is one that does not play very well the general population. But it is part of the monetary transmission mechanism. Absolutely. That is what qe was about. Raising asset prices. Anna assets, not boring. But we get a relief. Manus it really is. Anna it is a relief after the start of the year, other than boring. Guy, thank you. Guy johnson back in just under an hour. The Biggest Party in brazil has delivered a fresh blow to Dilma Rousseff, just weeks before an expected vote on impeachment. Carrigan has more. This is the largest support she has. Tactical play. Mike was and you is this, how much of a surprise is it for us in the west . Well, it was the largest support for Dilma Rousseff read it no longer is. Not a surprise really, manus, when you consider the level of popular protest against her administration. The wholey in which impeachment process is unfolding. The legal wrangling over the toointment, or not, of lula the cabinet. You cannot really see how any party that is part of her coalition would want to be connected with her anymore. In this current environment, and today, were going to have another party the Progressive Party making or at least meeting and very likely making the same decision to leave her coalition. Anna where does the story go next . Do we see the gradual unwinding of the coalition . Is that where the saga next takes us . Does, anna. Ink it when you look at the momentum of this process now, we have come as i mentioned earlier, the judicial process going on in the background. The continual allegations concerning the corruption probe. She seemsry fact that to be losing allies everywhere. She is a very resilient and affiant character. We had her key advisor coming out yesterday saying, this was not a surprise. They expected the decision of the pmdb. But he will now look to strengthen her government and continue. So no signs that she is going to step down. All of these things continuing to unfold, and as long as that goes on for the markets will be as it seems at the moment enjoying the ride. They see that the endgame is very close here. And the endgame is ultimate impeachment or resignation, should it come to that, of Dilma Rousseff. Manus amazing how the markets react. There are a couple of amazing graphics and the story. Investors just rallying away. Beginningrket really to believe that the new government would reduce rates. A new leader would reduce rates. Justin very difficult to escape the conclusion that, the sense that Interest Rates might come down in brazil, after three or four years at which they increased at almost doubled more than 7 to 14 . Dilmae sense is that if rousseff goes, the currency is really strong. That reigns in inflation. We saw a deceleration in february, somewhat surprisingly. And that has fed into the market, and the very real sense that, as i say, Interest Rates could come down by the end of the year to around 13 . Sort at decline of some 14. 25 , at the moment. Manus justin, thank you very much. Our managing editor on global emerging markets. Anna breaking news out of japan. For theike jakarta, maker of car parts in particular air back when theyre putting their worst case of airbag recall at ¥2. 7 trillion. This is breaking news is coming through from japan this morning. This is having an impact at the tail end of the japanese session on their shares. The loss,extending down by 7. 2 . As we are speaking on the back of his developing news. Manus lets bring back to the conversation, stewart robertson. We just had that discussion there with justin, who is our em editor. I find it utterly fascinating that every time impeachment is mentioned, they go for a rally. There is a significant when you look at this. You thehows politics. Politics is the new outlook him as it were, when it comes to emerging markets. This is a gripping story. Stewart it is. When you look at the em universe, it is not just about fundamentals or what the dollar is doing. You have to pay great attention, whatever the country. , malaysia. The political backdrop matters enormously. What is happening shows us how much of an interest it can have on currency. Anus year today, rialto up. 5 . The Malaysian Ringgit up. There is a whole host of factors really at play here. Comert many of these after a huge decline. Anna and the bounce in commodities is helping. Thank you very much, stewart robertson. Manus chinese Bank Earnings are out, let us go higher. After one of the biggest state lenders reported overnight. Anna for more on that and report to come, let us get out to the Asian Pacific bank senior editor, great to see you frances. Do you see any results from bocom . Francis income coming in better than expected for the Fourth Quarter. I think most importantly, it is contained in only 41 . Which is lower than the industrywide average of 51 from last year. Another National Bank has showed this similar trend. So i think it extends into 2016 for most of the chinese banks. And the lenders maybe become more cautious is a going take that much for caution. Manus tell us about the bad loans. This is a huge story. Of badbout the pace loans, we are talking about it, writing about it. Give us some perspective on that. And perhaps, what the government plans to do. Francis ok. Banks hast list of loads from the Third Quarter on. But the lenders have been actively disposing and writing off much of the bad loans for the last year. And that is why you see the bad debt talents close lower. And that may take apart in the equity swap program. Advocated by the regulator. And while that might not be enough of a good thing for the sector, it may help relieve banks of the depression shortterm. Thanks for the update. Francis chan with a look at the banking sector. Robertson is still with us. You look at the banking sector, the bad loan buildup. Is that an area that worries you . Stewart indeed. Many areas about china worry is. It is a worry about continually. It is there, it is important, we have to Pay Attention to it. With many things in china, some of the information, you wonder if youre are getting the whole picture. But it is clear. The authorities there are going to go for growth. Put that above the idea of economic transition, that we know is inevitable. Manus it is interesting. Im looking at one of our lead stories. The yuan drops against a basket of currencies. Stability, this vision of stability i should say, in terms of the you one uan itself, they are incrementally lowering. Are we going to see a more dramatic move this year . Stewart i think they would like to avoid a dramatic move, any transitions they would like to happen slowly. But i think it is very clear with a growth objective they have, that a weaker currency is more likely than a stronger one. I believe it will happen gradually, arriving in the basket rather than just the dollar. Anna thank you very much for joining us. Robertson, senior economist. Industry,dons tech they speak out against brexit. And we are joined by a member of the proe. U. Camp. That is next. Anna welcome back. 6 49 in london. It is the middle of the night, very early in the morning over in new york. Start the trading day, and you have equities having a decent pulse as result of what janet yellen at the say at the Economic Club of new york. Let us take to japan now, though. At least in terms of the news flow. We have this report coming out saying they put the worstcase airbag recall trend at trillions of dollars. It is a story that has been running for years. The share price over in tokyo, coming at the end of the japanese session, down by 19. 5 . Thetill taking a toll on business authorities, losing a considerate amount of ground when you consider it currently around the 414 mark. And just some years ago, it was many multiples of that. Manus it was indeed. We are seeing the lowest price trade since november 8, 2006. Billion, we have lost ¥8. 32 billion. On the back of that, its a little bit more news. The scalewhere near and size at this juncture, as we understand it. Recalling, and the recall includes the cayenne and the brake pedals. More news around the car. Anna 6 51 in london. The june referendum on membership in the eu, they are speaking out in support of remaining in the block. Last year, russ shaw launched a group c. Saying brexit would have a negative impact on companies trying to enter the u. K. Market. Manus russ joins us now in the studio, to put a face to the voice. Right. Where are we in this great debate . Aroundogy typically here, as we think of technology and innovation, smaller companies. Mean . Ould leaving the eu what is the biggest risk for the Technology Group that you represent, if we vote brexit. The numberi think one issue we hear from our technical advocates is shortage of talent. And the eu provides a great Talent Pipeline for many of the startups we see across london. And frankly, that we see across the rest of the country. That is the number one issue. I think secondly, were looking at investment levels. Over 2 billion went into london startups and scale of in 2015. Anytime you put a degree of uncertainty around some in like a referendum like this, we are see investors say, wait a minute, im not going to put any more money into this space. And third, one of the things we talked to our Small Businesses about is opposite the cost of doing business. There is a piece of legislation moving to russells call the digital Single Market which will harmonize ecommerce regulation and make intellectual property rules much clearer. It will bring that saving compliant costreduction to startups, and that is a good thing. Anna we will unpack some of those things. But is to take you back, you said that your membership is telling you they want to stay in the eu. How much is that about what small tech businesses want today and how much the larger ones want today . You are not just representing the small entrepreneur here. You have other big businesses, salesforce also talking to you. Russ absolutely. And i think across the board when i talk to leaders from startups to larger corporations, most are saying we should remain in the eu. More about advocates represent the start of society. That is really who we are there to help. That is the voice we are trying to project. A largerear that from corporations, too. Across the board when i look at the digital and textbased, it is a resounding let us remain. Than why is it different what we hear from Small Business and in general, that they are a bit more skeptical about staying in the eu . Russ i think many that we deal with you seven intercept business that when you set up an intercept business from day one, they are looking to trade across the eu. Many other businesses need to set up International Components from a severe looking for talent not this from the u. K. From across the eu. What are it is language skills, etc. And the concern is that if we have a brexit, the door to that talent will close. The door to that Investment Opportunity will close. They are saying, wait a minute, we dont want to be a part of this. We like the way things are. Yes, there is room for improvement. Her is always room for improvement. Let us keep going with what we have. Manus the scanner i have in london come from outside of britain. It is not just the talent and skill that comes into work in your startup, my large company, otherwise,is bt or it is about founder capital. Repercussion in terms of put s in numbers around thi terms of capital. Let us try to understand what it would really mean for potential loss of capital. Over i mentioned in 2015, 2 billion went behind london startups. 4 increaset like a over the previous five years. We are seeing billions of dollars go to these businesses. London has 12 of europes 40 unit points, billion dollar value to businesses. London is a digital capital of europe. If you say, wait a minute, we are going to close this down. We are going to say no to these entrepreneurs coming in from europe to set up these businesses, that funding was her to go away. And we will move to berlin, dublin, moving to paris. And it will not stay here. That is the risk. Manasquan just to flip the coin, is it dublin or berlin . In the event we wake up and we are gone . Uss if we wake up on the 24th, i think you see things happen in berlin, paris, amsterdam, stockholm. If you do not like it there because you are out of the eu, we are a welcome place to do business. Many of these businesses that up here because the u. K. Has been part of the eu. This is a great place to be. So that you can access the rest of europe very easily. If you close that door, a lot of these businesses will say, well, i am not sure i will stick around. Beingruss, thank yo you for being here. Anna proceed with caution. That is a message from janet yellen. Striking a dovish tone, spelling out what the fed rate hike will be. That is the story. As we see equity markets higher over in london, indicated up 50 points. And u. S. Futures. Anna getting a boost from what janet yellen had to say. We will be back, in a couple of minutes. Manus cautious tone. Janet yellen once again insists rate hikes will be datadependent as she stresses a gradual approach to tightening. Japans Industrial Production plunges by the most since the 2011 earthquake. Falling exports sap demand. A worstcase scenario. Billion, airbag maker to cut to is set to estimate the potential price of the biggest recall in history. Shares plunged 20 in tokyo. Brazils Largest Party pulls away from the Ruling Coalition in the latest blow to embattled president rousseff. Good morning and welcome. It is countdown. I am manus cranny. Edwards. M anna the equity markets in asia got a boost from what janet yellen had to say, gradual and cautious, some of the words she was using to describe the approach to Interest Rate hikes in the united states. It certainly took the edge off the dollar. How is that reflected in the futures . Manus london is up 9 10 of 1 . We have oil rallying. The dollar pop is over, and the oil is back. London up 9 10 of 1 . Paris is up 0. 5 . The nasdaq increased 1. 7 . Apple and microsoft on the run. Should we do a touch of live tv and show what is going on with the dollar . The dollar is definitely where you are being seeing the move. 8 10 of 1 lower from the bloomberg dollar inter index. Were hearing a plethora of hawkish voices coming out of the fed. The msci emerging markets chart, risk on for emerging markets gone it seems. A more complex picture outside those specific equity asset classes. We have seen a merging market currencies headed for their biggest monthly gain in almost seven years. The msci, its best run since january 2011. South korea and taiwan, 7 billion went in in the month of march. Nearly 3 billion flooded in in the week closing on the 23rd. We mentioned the dollar down. Oil is taking a little bit of a move to the upside, 1 . We now hear that iran is going to the dough hot talks doha talks. If you are at the table, youre either listening or participating. Anna all opec members except for libya are scheduled to attend those talks. Russia will join the meeting, while argentina and brazil have declined. We are getting consensus on attending that meeting. Lets check in on the bloomberg first word news. Good morning. Japans Industrial Production has dropped the most since the march 2011 earthquake. Anding exports sap demand, a steel mill explosion halted domestic production. Output slumped 6. 2 in february after rising in january. Economists had forecast a 5. 9 drop. Brazils embattled president has suffered a new blow ahead of the vote on her future with the countrys Biggest Party leaving her coalition government. The Democratic Movement party held six ministries in Dilma Rousseffs administration. Wrongdoing in a Corruption Scandal. A lower house vote on her impeachment is expected in the middle of next month. Shares in airbag maker takata have plunge this morning after it said its estimated a comprehensive callback of its airbag inflators would total 24 billion. According to a person familiar with the matter, the worst recall scenario would involve 287. 7 million airbag inflators. Republican front runner donald trump says he is sticking with his Campaign Manager despite the him being accused of battery at a rally. Florida police say they can show an altercation between Corey Lewandowski and a female reporter. Trump says he will no longer honor his pledge to support the republican pick for president. He said he was rescinding his promise to back the gop nominee because he had been treated very unfairly. Should present a positive vision of the European Union rather than using fear to persuade people to vote to stay bloc. That is according to a house of lords panel. The European Union Committee Says the remain campaign will require the support of people from across the political spectrum, and that means appealing to the values britain shares with other eu nations. News 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world, and you can find more stories on the bloomberg top. Anna breaking news coming in on the swedish banking same. Proposal changed their from the nomination committee. Sundstroem will not be proposed. This is on your des page. You pick it up, and you begin to dive deeper in terms of the performance. Typically, we do this when ceos arrive or leave from their various destinations. The chairman has been in the seat three years. In marchver tenure of 2013. His p or group, 8. 81 . And he8 years of age, has been in his deputy position since 2013. Benchmark in line. Ina six minutes past 7 00 london. Lets go to asia and find out how markets are performing. Haidi, good morning to you. Janet yellen giving a boost to many of the markets in your part of the world. Haidi when janet yellen speaks, we have quite a positive reaction after those remarks, throughss miss coming dovishness coming through. We had seoul and tokyo close for the day, the kospi ending up for tenths of 1 . The nikkei 225, ending the day am extending those losses in the last 15 minutes or so of trade. That is the strong yen story, the flipside of what we are seeing from this dollar weakness. Uncertainty some for japanese financials as we grapple with the fact that perhaps this negative rate experiment is not working. We have a strong yen. What can shinzo abe do next to get this stagnant environment going again . Elsewhere, it is a pretty bright picture. We are risk on. Take a look at these resources. Singapore, up by 1. 5 . Weve got gains coming through from australia, although we are off session highs. Shanghai, picking up for the sessions. In three shanghai, now up over 2 with 45 minutes or so left in trading. Buying,g, seeing robust up 1. 5 . This is driven by gains across financials. Surprise fromde chinas fifthlargest lender, reporting profit up 1. 4 . That was a surprise. There is a sense that the negative news flow coming out of chinese lenders, in particular when it comes to on per underperforming loans and bad debt coverage, may have bottomed out. We are seeing strong gains from bocom. I want to talk about this stock that was a standout for all the theg reasons, takata, airbag maker. We have this worstcase an area from a person familiar with the matter. Airbag recalls could be set at 24 billion. A 10year low, close to a 10year low for takata. Before i go, i want to show you the other side of the story of all of this dollar weakness we had been tracking. The malaysian ringo, we dont often talk about this currency, but we are seeing the best month since 1998. Git weve also got the improvement, the pickup in crude prices. Malaysia is asias only not oil exporter. Net oil exporter. Very much risk on. This was one of those currencies that suffered so badly in the taper tantrum. It is seeing its best month since the Asian Financial crisis. Manus thank you very much. The question is, can those flows her . If you listen to janet yellen that seems to be the question. Anna she says Interest Rates will be raised at a cautious pace. The fed chair gave investors a list of conditions they need to watch for future rate hikes. Manus they include stabilization of foreign economies and their Financial Markets, and no further appreciation of the dollar. Yellen given the risk to the outlook, i consider it appropriate for the committee to proceed cautiously in policy. This caution is warranted because, with the federal funds rate so low, the fomcs ability to use conventional Monetary Policy to respond to economic disturbances is asymmetric. One must be careful not to overstate the asymmetries affecting Monetary Policy at the moment. Even if the federal funds rate were to return to near zero, the fomc would still have considerable scope to provide additional accommodation. In the event oil prices were to fall again, either development could have adverse spillover of facts to the rest of the Global Economy. If such Downside Risks to the outlook were to materialize, they would likely slow u. S. Economic activity to some extent. There is a consensus that chinas economy will slow in the coming years, as it transitions away from investment toward consumption, and from exports toward domestic sources of growth. Is much uncertainty, however, about how smoothly this transition will proceed and about the policy framework in place to manage any Financial Disruptions that might accompany it. There. Anet yellen lets bring into the conversation the Global Market strategist at j. P. Morgan asset management. He joins us in the studio. Lets talk about the fed. Gradual, cautious, these are the dovish words coming through from the fed, a contrast to last week when we heard this hawkish talk. What is your best estimate of when we see rates rise in the u. S. . Think we are seeing may be a rate hike in june at the earliest. We will see if the Global Climate warrants this rate hike. The word i retained from Janet Yellens speech was asymmetric. Curve, higher than being behind the curve, and that is clearly what the fed wants to do with the moment. There may be a high level of inflation at some point. You see the risk side to being ahead of the curve in terms of Dollar Strength and the implication it has for commodities, emerging markets. The fed is not in a hurry from a u. S. Perspective to hike rates. Inflation is contained although increasing, and its important, after the engagement of the g 20 to bring some relief for emerging markets and commodity exporters. Manus i have sort of represented yellen, a very Strong Performance is what seems to be the consensus, but there is a view building that these are Central Banks beginning to reengage. That is the clear message from yellen, followed by the easing precluded by the ecb. We are waiting to hear from the bank of japan. To be inflation. That seems to be the underlying tenor. Its better to let it pop a opportunisticthan deflation. Spiral the deflationary or disinflation is the main reason that the Global Economy main risk that the Global Economy faces at the moment. Inflation would be a luxury. Anna she is not sure how durable this pickup in core inflation is in the u. S. Do you see it as something durable . Vincent we see that the most should bleedpment through into wage growth, as well. Obviously, there are demographic dynamics at play with baby boomers leaving the market. It also has an effect on the wage dynamic in the u. S. , but i think looking at the job market, higher core inflation looks like its coming. Manus it looks like she has reset the agenda for the dollar. When yellen began to speak, the bloomberg dollar index anna took us through some of the against 16 felt major peers, the worst month in five years. My question to you is, how much more maneuvering, how much more of a shift do you think the fed wants to see in the dollar in terms of its move lower . It is something they are conscious of. Vincent i think the fed definitely want to remove the pressure behind the dollar. I dont know if there is a clear target. Was first to have a clear Monetary Policy aimed at weakening the dollar at some point. Its clear the strong dollar has hurt the u. S. Economy more than was needed, and definitely want to take off some of the pressure on sectors in the u. S. We saw the u. S. Economy grew pretty well last year. The First Quarter was a little bit more challenging. We saw firstquarter growth soow potential this year, this dollar weakening comes at the right moment. Anna thank you. You will stay with us little bit later on the program. Manus up next, if fresh blow for bruce f. How brazils Largest Party has abandoned the embattled president. Anna you are watching countdown. The pound is at 1. 4 399 against the u. S. Dollar, a sunny start to the day in london. It is bright out there. That is uplifting. Shares an air bag maker takata have plunged this morning. That is after it is said to have estimated that a comprehensive callback of its airbag inflators would total 24 billion. The worst case recall scenario would involved 287. 5 million inflators. Shares in sharp have and overnight on reports that foxconn is edging closer to its takeover of the Japanese Electronics maker. That is as the boards of both companies me today. Wantshas said that it agreement as soon as possible, but according to one person familiar, foxconn is seeking to cut the amount it will pay for equity. To cut 4000 jobs from its commercial Airplanes Division by the middle of the year. That is part of a broader effort to reduce costs amid fierce but theion from airbus, u. S. Plane maker says it doesnt plan in voluntary layoffs for now. That is your Bloomberg Business flash. Manus thank you very much. Lets turn our attention to america. Brazils Biggest Political Party has abandoned the Ruling Coalition government, delivering a blow to the president Dilma Rousseff weeks before the vote on her impeachment. Anna managing editor Justin Kerrigan has details for us. Decision tos abandon support for rousseff much of a surprise . Justin not really, anna. When you consider the backdrop, the level of popular protests, the unfolding allegations concerning the scandal that andounded Dilma Rousseff, just the Shifting Sands in terms of her support generally come it took the pmdb 10 minutes to make the decision. Today, we get another meeting from one of the Key Coalition Party Supports in her government, the Progressive Party. Probably likely to go the same way. Removal, thisthe gradual removal, stepbystep, of the support she has an and the prospects dont look very bright for her future at all. That is probably the understatement thus far of the First Quarter. Great to get your perspective. All eyes on that potential impeachment, Justin Kerrigan, managing editor for global emerging markets. Lets bring our guest back in, Global Market strategist at j. P. Morgan asset management. Brazil is the prism through which we look into emerging markets. What do you make of the current debacle in brazil . Vincent we are not making any political assessment of the situation. Most economies agree on the fact that we need some leadership change in brazil. We are nearer to this point now then a few months ago, so its probably a good thing. Looking from an investors perspective, what we have seen this year are two important triggers to make the emerging market more appealing, stabilization of Commodity Prices and emergingmarket currencies. The cost of hedging emergingmarket currencies dropped substantially, which means we can make decent money both on themarkets, debt and equity side. We still need a few additional elements to be bullish on individual markets. Momentum is growth missing in most countries, and this should turn into earnings momentum for the equity market. We are missing those elements at the moment, but looking back at the performance of assets, theres an Inflection Point for emerging markets already behind us. Looking at the flows, we have strong momentum since the beginning of the year. Im starting to see european investors considering to reenter as we speak. Manus lets turn our perspective back to europe. Weve got this chart, at the moment, trending on the bloomberg. Its like a 14point range. We have managed to regain all of those losses, but what we are seeing is investors pulling money out of over the past seven weeks. What exactly is going on . Weve got a benevolent ecb. Weve got a banana benevolent federal reserve. Does that tally for you in terms of the flow . Vincent we have seen seven consecutive weeks of negative flows, 7 billion out of the asset class. You can see the outflows concentrated in february and march just at the time when markets were recovering from their lows. See that most investors have given up on european equities. We might overweight european equities at the moment, and i still think there is the potential for equity markets in nurope to move higher tha their end of last year level. Anna what is key for investors . Is it the profitability of european businesses . Is it more benevolence from the ecb . Is it a more positive fundamental growth picture in europe . Vincent i believe the fundamental positive growth picture is there and underestimated by markets. We have a few good elements in place. I am still in europe most of my time. We have at the moment better growth revised for the Fourth Quarter of 2015. We still have domestic demand. We have government expenditure, which is very supportive. We have a supportive Monetary Policy, and we even have some budgetary stimulus from the european commission. We may see that the plan is finally getting traction. Elements are a game changer in itself, but altogether, we should have decent growth this year. If only we did not have this political risk, which is spoiling the party, but profitability is key. We saw a poor fourthquarter earnings season in europe, and we have to hope and see that the growth momentum feedster into better earnings for european equities this year. Manus thank you very much for joining us. That will do it for countdown. On the move is next. We are half a work half hour away from the start of the trading day. Risky today. Manus we are back here tomorrow morning to do it all again at 6 00 a. M. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 59. 95 a month. Comcast business. Built for business. Guy welcome to on the move. It is 7 30 in london. It is 8 30 in berlin. I am guy johnson alongside hans nichols. He is in germany, and this is what the pair of us are watching. Yellen takes control. The fed chair sets risk assets higher as she puts the hawks back in their box. The question is, how long will they stay there . Disappointing data. Japans Industrial Production plge