Brexit votee tipping uks stock valuations . I guess the politics story is front and center. July is shipping up to be quite the month. Weve got the u. K. Story, greece has got a really big payment its got to make, and we potentially get into an interesting u. S. Political story. Hans normally in july, we had to athens. This year, we may be headed to cleveland. You could have a contested convention. We talk about Political Risk. A ted cruz victory represents more Political Risk. A donald trump loss gives you actual political loss. You dont know what you are getting with a ted cruz win. Thats one of the stories that is going to dominate throughout the rest of the spring and summer. Is, thenuestion really next few elements of the story get interesting. We had to new york, pennsylvania, california. It is Hillary Clintons home state in new york. This is where it gets crunchy. Hans we could see Double Barrel risk. The uncertainty on republican side, but if Bernie Sanders continues to not just beat Hillary Clinton but trounce Hillary Clinton, you could have the more likely prospect, or at least it would be more likely than it is right now, that sanders is the democratic nominee. He still has math against him. If he keeps winning, that adds more uncertainty. We are going to have to cohost this show somewhere along the ohio river valley. Guy to be honest, i think you are going to be somewhere stateside. I think we are going to be in athens, as well. Theyve got a big payment to make. We need another presenter on this show. We are less than a half hour from the european open. It looks like european entities are going to open on the front foot. I will show you the fair value calculation. We are in the green. It looks like euro stocks are. Pening up around 7 10 of 1 i will show you a great footsie chart later on in the program. I think ive got a good one today, but i think the chart of is the bike story, electric bikes. Hans are they going to take off . Ive got my own theory on that, and that is that electric bikes only work in flat cities. Dollaryen, weve seen an incredible yen move, all the way down below the 110 range. That is driving the story in japan. To 38. 5,tting close and then shanghai is down. I wanted to do the pounddollar. That is at 1. 41. Lets get to bloombergs first word news. Has extended gains for a second day after kuwait said a deal to freeze output can be reached without iran. U. S. Industry numbers showed supply declined. Minister hasance promised to stick to a plan to remove capital controls after the Prime Ministers sudden resignation through the government into turmoil. Iceland is preparing for an heldn to free 2. 4 billion by investors in glacier bonds. Its the last hurdle before the country can start exiting capital controls for households and corporations, which were imposed during the financial crisis. German Industrial Production declined in february. Production fell 0. 5 from the prior month compared with an estimate for 1. 8 decline in a Bloomberg Survey of economists. Global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. You can find more ands more stories on bloombergs top. Hans it is one of the stories of the morning, and that is that pfizer has decided to terminate ,ts merger with allergan according to a person familiar with the matter. The termination will be costly for pfizer but a win for u. S. Authorities whose rules limiting corporate inversions were announced yesterday. Joining us is sam for, bloombergs intelligence director of european research. Lets bring in wayne bowers, the chief Investment Officer and Northern TrustInvestment Management where he helps oversee 900 billion in assets. Why has this deal been terminated, and how tricky will it be to untangle . Sam the proposed new rules from theu. S. Treasury that is operator word, the proposed rules essentially made it very difficult for pfizer to be able to do much more than just simply move its taxes. That is enough not enough for the earnings in this deal. The key thing in the deal was the ability of the company to use its offshore cash without being penalized by u. S. Tax in terms of share buybacks, which the one of the key Elements Company needed to make the deal work. I think that is why it is going to potentially fall apart. Guy the last three years have been dominated by inversions. It has really affected the sector. Most of the big deals being done were because of this reason. Now that we have this line line drawn, are we done . Wayne one of the biggest problems is overlaps for a lot of companies. Sheets and paper, you can still make some Companies Look like they can get through that barrier, but it does make it quite difficult. Of course coming youve got the political issue. Guy if i was sitting at astra headquarters, would i be thinking, im next . Sam that Company Refused a share price that is now 30 or 25 above with the share price is today. We have recently had some drug trial failures. Do think pfizer has the appetite to come back and have another go to a different issue . Dont forget the lack so gal axo. They are going to change their ceo. That certainly fits the new in version rules. At what isok happening in the m a space. This is been one of the reasons why weve gotten a bit of m a the last few years. Another reason why m a is not going to be happening Going Forward from here . I probably disagree. At one of the motivating factors from an inversion perspective will be closely looked at from the m a side, but also from the governments. It is the u. S. Leading something that other governments can adopt in terms of the retrospective changes they can make to either ity. Policy or domicile o a ceo,set in the seat of looking for market share plays, looking to increase strategy, looking to go into new markets guy real industrial reasons. Wayne that wouldnt go away. I do think it raises the question that perhaps governments, the imf have been calling for the last few years, which is value being created in countries. Therefore, you should have real economic tax and Corporation Revenue raised from that. U. K. Government has been very transparent about it, which is that a reduction in Corporate Tax will try to be more competitive from a government country to country perspective. This issue from the m a perspective, from the inversion point of view raises and highlights some of the underlying competitiveness of country versus Company VersusCompany Country versus country versus Company Versus company. Countries are setting themselves up for an encouragement of economic value. Tax receipts will play into underlying economic growth. That country to country competition you are talking fascinating. It seems like when we have this discussion in currencies, everyone is negative. At what point to we get to a point where there is a race to tax, orom on corporate do you see the g20 stepping in and setting some sort of floor . Wayne i think they already have in terms of the framework. If we looked at the actual Corporation Tax rate, we are looking at 18 to 20 being some sort of floor. We see it in ireland and the u. K. , but there are still large developed countries that have higher rates of Corporation Taxes, 30 , 35 . If you sit in a government, you are looking at your fiscal policy saying, if we are not more competitive, we will lose some of the real domicility. I think its a real important aspect for governments to accept and understand and have a plan for, and it seems the u. K. Does have a plan for that, versus other countries. In the u. S. , theres a believe they want to try to hold and capture not just u. S. Domicility but any revenue created in the world, to bring the tax to the u. S. I want to guy come back and talk about this tax story. Yesterdays big thing was related to people hiding tax. Quick one to you, sam. Do we understand what the rules on inversions coming out actually mean . What does it mean . Does it have an impact . All of these companies have operations in the states. Do we understand that impact yet . Sam again, these are proposed rules. They are not actual rules, but there has already been an outcry saying, multinationals the ability of us to loan to our u. S. Subsidiaries and use that in a text efficient way is closed down by this rule. They say, we cant make investments. The reality is, the small print suggests if you were making it using that loan for actual investments, thats ok. What the u. S. Treasury is trying to do is people using it to reduce their tax bill in the u. S. , which of course i am completely sure of this a going to be one of the key questions in First Quarter results. Is, how will they be impacted from an earnings perspective . Guy great stuff, sam. Thank you very much indeed. Wayne bowers is going to stay with us. Still to come, wisconsin throws up roadblocks for Hillary Clinton and donald trump. We look at what that means for the race next. We are winning because we are uniting the republican party. Hillary, get ready. Here we come. Hans welcome back to on the move. I am hans nichols in a beautiful berlin this morning. Lets head out to wisconsin where the present of primaries have delivered defeats for the frontrunners. Ted cruzs win over donald trump increase the chances of a contested Republican Convention in july. Bernie sanders has now won six contests but now faces long odds to catch clinton in the delegate count. In some ways, your eyes may be better on this. Yours are fresh. When you take a look at what you are seeing in the states, on the republican side, walk me through what you see. Do you see uncertainty . Guy i think we are definitely heading to cleveland. I think it is going to be contested. I think that the trump story is beginning to fade, but it has still got enough legs. We are heading into new york. That could be a strong area for him. I think we are probably, in my mind, headed for that, and that takes us back to this wider Political Risk story. Wayne, you look at july. Eve got brexit weve got a big greek payment. We are headed for contested nomination on the republican side. Is this just a lot of sound and fury that is going to get the market on edge, or is there going to be something tangibly we need to worry about . What werom today, and have seen in the last few months, the ride in terms of market volatility is not going to slow down. It just adds fuel to the fire. There is a reason for investors to become nervous, worried, or somewhat confused. That is drawn from the noise we have heard around populist policy. The sound and fury quote is a use. Wherewhen to you can actually draw that through and say, where is the real economic output from Something Like this, from the u. S. Side, that is not going to happen for a good year in terms of postelection to understand the policies that are going to be put through . Perspective,rexit its a lot closer. If that vote goes through, you are seeing a very quick period of intense negotiation to work out the timetable. Outputs ormic fallouts from what is happening from a political perspective take us through all the way from now for the next 18 months. That is something you can see that going into investorss confidence levels but also market volatility. Through trying to look some of that noise, but the noise just gets stronger and louder. Hans give us that same analysis with oil in your mind. So much of the conversation is looking south to greece and west towards the states. Take us to the middle east. Again, very sensible policies in terms of, you can see there is some try of reduction in supply to try to maintain or stabilize price. There is no significant way of raising other income. Its not a significant, high level of individual or Corporate Tax to support some of the fiscal burden of these countries. On the same side, you have got a significant amount of Security Risk and geoPolitical Risk with the terrorist threat, the instability of supply, but also from irans perspective, the easing of sanctions. You have a maelstrom of confusion or concern within the middle east, but what you can see is that these countries are functioning. Oil is being released and being sold on open markets. You have seen some stability. Again, its not all doom and gloom. We havent seen the 20 a barrel price. We certainly wont see these 75 per barrel price either. From a price perspective, we have seen welcome easing in market price volatility. Guy talking of volatility come up next, weve got a battle of chance between hans and. You are going to be the judge of that. Glencore has been suspended at 2 42 p. M. Wayne is going to stay with us. The chart battle is next. Gekko going to win today 202 hans nichols this week. Can we change that . We will see in a moment. Guy its time for the battle of the charts. Time is short. U. K. Stocks are the most expensive ever versus the stoxx 600. You can see this move to the upside, and i will highlight a couple things. This latest move, happening in november. In the same time, we have seen it bounce back really strongly. On thelower than it is continent. All of this, i say, because i think it is counterintuitive. The brexit story is front and center. What have you got . Its counterintuitive and confusing come and you did yourself no favors trying to explain it. The white line here is iranian output. Oil prices are stable. They are not being affected by the price of iranian crude. They are pumping more and more. This is back in 2011. You see that price of brent not been affected by iran turning on the tap. There is some stability in that part of the world. What do you like better . Wayne im on the spot. I like the simplicity of hans, but i like the counterintuitive of guy. Of game on until the end the week. We will talk about that when we come back. Guy good morning. Welcome to on the move. Im guy johnson, alongside hans nichols. Glencore suspended in hong kong. May be insale the making. Its pfizer has terminated 160 billion merger with allergen. And cruz control. Donald trump loses the wisconsin primary, boosting the odds of a contested gop convention. Votehy isnt the brexit hitting u. K. Stacock valuations . Futures are pointing mostly up, welfare market value in futures are heading north. Lets get to Caroline Hyde at the touchscreen. Caroline yesterday was the most brutal day from the start market that we have seen and twin two months. 165 billion euros were wiped off of the stoxx 600 yesterday. The ftse 100 is up. 2 . Minors are leading the charge. Shale is up 1. 1 . Glencore is trading flat. Cac 40, also a point to present. Once again, the miners and the Oil Companies are leading the charge. Keep an eye on some of these openings. Ofare eating away at some those losses yesterday, but it was a big selloff yesterday, all down to the volatility we are seeing in oil oil is bouncing back. Coming to the rescue. Saudi arabia says they are not freezing unless everyone else, such as iran, freezes as well. Anentially, we could see agreement to halt output, even without iran joining. My massive uptick, but still helping push oil higher and metals higher. Copper is up. 1 . And the haven that is gold is down. 3 today. Watch the metals overall market. Watch one key metal player. Watch the miner that is glencore. It has opened down 1. 5 . Dealis on the back of the we are expecting in the next couple days. Today we have got the news that we could be saying a 40 sale of an agriculture business. The overall business is worth 6 billion. The Investment Board is interested in this business overall. We are expecting it to be announced. Glencore is down by 1. 6 , down from 5 yesterday. Watch how this reacts to the idea of the selling off of that unit. Air france is down some 6 . But as what happens when your chief executive says he is to leave. That is what happens when your chief executive says he is to leave. The head of the airline is stepping down. Remember, he is going to ir ta. H m is up 1. 2 . One quarter profit, firstquarter profit, meeting expectations, but down 29 . The dollar really did hurt h m overall. Local sales are up, but the negativity of the dollar is really hurting. But march sales are up some 2 and that seems to be studying teeadying the ship, guy. Guy we show you what is happening with the imp. Energy is the biggest gainer. Oil is bouncing back and hans has been talking about that. Materials are actually bouncing as well. Downtrials are trading. 3 . Can seehe rotation you today. Industrials are being affected by what is happening more broadly. Consumer staples are trading lower as well. The air france story in there is affecting met. What is interesting is the financials, once again trading under with a little bit of pressure right now. He Financial Sector once again, not getting a big bounce. It has been a very difficult few days. We are joined by the international cio of asset management. And volatility around them, so much unknown. We take ourselves back to the tax story we spoke about at the beginning of the ban program. Firstly, i think it is i play. Ificatioa diversification you are trying to identify from a geopolitical perspective. There is also a need for diversification. We have seen this Amount Energy and financials. Some of these sectors have been significantly beaten up historically in recent quarters and recent years. There is a lot of risk that has been already put into those stock prices, stock valuations. Guy do you like the volatility, though . Likes theone volatility, but i dont think we are facing a market that has no volatility. There is an acceptance that if you are being paid to hold some you areolatility, that being rewarded to hold some of that volatility within the portfolio as well. Ks energies are up, you would not want to own that with the increase in volatility that would occur in those sectors. You are being paid to take some risks. From a portfolio construction perspective, you actually do want the diversification. You want to try and catch some of that valuation. That valuation play comes into when you see those sectors looking distressed, or somewhat weak. Hans isnt going to lead to distortion within portfolios . Wayne if you look at it from a longterm perspective, we saw this with the emerging markets. Months, we few have had a significant amount of worry about emerging markets from an equity perspective, but from a longterm investors perspective, we have seen more inflows into emerging markets. That is either from a portfolio rebalancing perspective where you have a 10 holding in emerging markets two years ago, which is not only a percent of your portfolio. 8 of your portfolio. You could argue that with the evaluation moves you have seen with a current perspective and a underlying debt perspective, it is a good value. Again, you should not ignore some of this volatility and run away from it. You should incorporate that into your portfolio. Not daytrading the portfolio, but looking at the longerterm perspective and sticking with your thematic allocations. Guy do you understand . Hans so inflows guy go ahead, hans. Hans inflows in themselves, dont give a sense of the distortions . They are there for the right fundamental reasons. Wayne absolutely, but you could make a specific play. Lower economic fundamental aroundindicates a worry individual Political Risk, or elements of noncompetitiveness, but if you are thing that play out you have seen that through the last few quarters, where you see valuations drop and currencies fall lower, it could be an opportunistic time to take more of a technical route. You still have a strategic underway. Those opportunity traits come up as well and i think you should try to bring it back to your question about financials and energy markets. If you have taken advantage in the last record or is of some of the weakness you had seen in those sectors, you would have been well rewarded. It is not mean you are strategically overweight, but you are being rewarded to take advantage of some of the weakness in of those sectors. Guy how much of an explanation do you deserve from the fed right now as to what is going on . They are endlessly pushing the market this way and that. How much of a nation do you think janet yellen deserves to give the market how much of a nation to using janet yellen deserves to give a market how much of an explanation do you think janet yellen deserves to give the market . Wayne we have geopolitical issues and risks. Any think as a fed watcher, investor needs to try and take some ownership of their position and the effects the dollar will have, the effect the fed will have on markets. And perhaps, not be reliant on every single word or line within the fomc minutes. You do need to take some responsibility. Put those petitions within the portfolio. It would not surprise me, would we get more clarity . Potentially. Will there be more potential for a little volatility . Absolutely. Guy stay with us. Wayne bowers will continue the conversation. Up next, merkel refuses to cut greek debt. Is a brexit back on the table . More Political Risk, we assess that next. Guy welcome back. You are watching on the move. A number of stocks stories are fund and center. Oil is treating a little bit higher. Air france is under pressure today as a result of what is happening with its ceo. It could be as simple as oil up, airlines down. We will do more digging on that story, but in the meantime, lets get you the bloomberg first world news. Largest canadas pension fund has agreed to pay 2. 5 billion in the glencores agricultural unit. Stakeit will acquire a 40 in the agricultural division. Commoditycomes as the trader and minor advances its plan to sell off assets to curb its debt burden. He was called the president ial primaries have delivered the feeds for the front runners. Ted cruzs clear win over donald trump and creases the chances of a contested Republican Convention in july. Bernie sanders keeps his White House Run alive with victory over Hillary Clinton the socalled democratic socialist has now won the contest and faces long odds to catch clinton in the delegate count. Oil has extended gains for a second day after a deal was that increase output. They can be reached without iran. Crude stockpiles were shown to decline. The governor to opec says major producers have no option to reach an agreement to cap production. A freeze may set a price floor. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. You can find more stories on the bloomberg at top. Hans Angela Merkel has ruled debt,tting graceeeces after discussing it with economic leaders. This comes as greeces Prime Minister continues negotiations with his countrys creditors. What we are talking about is not simply a demand of the german government. But the way we see it within believe it is we legally speaking, not possible. Hans joining us now live from berlin, our bloomberg governor reporter. I think he is one of our great government reporters. He speaks Angela Merkelspeak. You hear what others dont the red line merkel laid out, is that nonnegotiable . Yes, basically merkel is using a legal argument here. That is a clear sign that this is a red line we will be able to cross. It is basically political. She will have the support of lawmakers to go ahead with a cut. Hans there needs to be some sort of debt relief. Maybe that is where they have a great area, but what i hear from the government right now is all of what we talked about last time talking about, all of those things are not negotiable. The one thing that is not negotiable is the red line on debt. What has changed . Is this all refugee related . Birgit this basically sums it up. Last year, the situation was different. Schaeuble had the upper hand. He was very much concerned with making sure the euro is financially and economically sound in the long run. A threat. Ece as now the focus has shifted to refugees. The wisdom is now that we need greece to save the european borders. And schaeuble is very much in line with this. Guy greece has a long history, yet the muscle memory is increasingly that we get through this. Is that still the right reflex reaction, that ultimately there will be a problem and there will be a solution . We will find a way to get greece out of the hole. Has a big payment it must make in july. At that point we will be talking about it, but by the end of the summer, will we be back to where we began . You made an excellent point. And greece is very important with any migration crisis. I do think the muscle memory as absolutely correct. We will expect some kind of solution. It may not be delivered on the day we wanted to be delivered. It tends to be a kick the can down the alley for the next week, month, or quarter. My declination is that we will be disappointed coming down in the summer. Let me bring you back into the conversation. We await july nervously. We always do when it comes to the summit with greece. We got very close to the edge last year. What is the view in berlin . To the edge arehey willin they willing to take greece . C be understand how the yprus administration is set up . How will this relationship work as we get to the crunch point midsummer . Birgit basically, the understanding is that we want not to have such a heated dispute again. And really, the aim is to get this deal by the end of april, beginning of may. But of course, it is a difficult situation to really find a solution. There still is some need for greece to do some reforms and do some concessions. The experience is greece has to come to the crunch. Whether this is necessary this time is questionable. Guy at least there is some flexibility there. Are we in a situation now where we are more worried about the euro or less worried . Again, we have had a series of events, but this feels different. We have a crisis going on in the migration story. We have a terrorism story, which is front and center. India still got a lot of debt in italy, and a spanish economy that does not have a government. Up and youhis all look at what u. S. Investors must be thinking about, what will happen in europe, and the picture is not pretty. How many more elements can we pile on before we actually just say, this is not worth getting involved with. Wayne it really starts from your expectations and your experience. If you have been part of the european landscape from a political watching perspective, your understanding of the slow grind of political change in structural reform and europe is well understood. Froma are looking from it fratt perspective, you can be easily frustrated. People just kind of give up. They say, i just dont need or want that risk of owning european exposure. I do think there are some smart investors out there, whether they are in the u. S. Or asia, taking advantage of some of the structural inefficiencies, the weakness we have seen both in terms of currency and sectors, and they have done really well by owning european exposures. If you strip all of that back and you take into account economic growth, if your expectations are weak, economic growth, be stellar, but if you think of it from a heart rate monitor perspective, european een veryas always then b shallow it is not an anglosaxon cycle if you have the expectation it will be this very shallow cycle, and you have a core holding in europe, not much will go wrong. There are still some fantastic companies and some economic value in terms of its 350 million plus economic society, with the potential to do more Going Forward. It is just your expectations and the understanding of what risk you are prepared to take on. Guy think you very much indeed for your time. Wayne bowers, joining us. Jennen, asirgit well. You can go to the elect function on the terminal. That gives us a great look at the political story. Up next, global bond yields flash a warning sign. We hit an alltime low. European markets, on the front this morning. The ftse 100 up by. 5 . Hans welcome back to on the move. I am here in berlin where the sun is shining. But first, lets get to nejra cehic with your chart of the hour. Ejra am talking about global body else. This year the u. S. Treasury 10 year bond yield has come down significantly. The jgp 10 year yield has dropped below zero. Yesterday, germany 10 year bond yields dropped to the lowest since april, 2015. What this chart shows is global bond yields have fallen to a record, a warning sign on the worldwide economy, some might say. We are looking at the bank of america global field index. They have plunged to the lowest level in a most 20 years of data. In terms of returns, the bonds have returned. The world country index of shares has dropped to 1. 5 , including dividends. Guy japan has to be a big part of this. Japanese yields of got into negative territory. It is not just a van. Just is not japan. It is also germany. Nejra interestingly, there is a great during a bloomberg today talking about the japan of of germanyscation bond market. I looked at he returns to see what the best and worst performing bond indexes were. U. K. , still the best. We were talking about that earlier this year with the risk of exit. By worst is greece, down 3. 6 , followed by portugal at 2. 2 . Guy greece can change very quickly. You can either gain or lose a lot of money very quickly. Nejra, thank you very much. Talking about what is happening in the u. K. , we are talking about the brexit trade next. We have already talked about the fact that what is fascinating here is u. K. Stocks on uprising in the kind of volatility the foreignexchange story is. We will take a look at what is happening with the european stocks. There is a great story on the bloomberg app. Take a look at what is happening with the pound. It is all a contributive factor. The ftse 100 is up. 5 . Take a look out of hans nichols window, i think he is winning with of the weather this morning. But you cant always win. Guy welcome back. You are watching on the move. We are 30 minutes into the trading day. As you can see, european stocks are on the front foot. Glencore, front and center. We will talk about that shortly. Lets get to the stocks stories with Caroline Hyde. Caroline i am talking about chocolate. I am talking about very t. They are growing up 6. 7 . The earnings a looking relatively nice. The profits beat analyst expectations. Some 8 ,did slump of but that is because of the strength of the swiss franc. Fx really does hurt some company earnings. Still strong,c is but they are managing to be analysts expectations. They also see volume growth of 46 . I am talking chocolate as the leader of the pack today. Glencore didg why not amount to as much as we. Xpected, up 1. 5 interestingly, the amount they are getting for the overall, 2. 5 billion being raked in with this agricultural unit. A 40 stake they are selling to thecanadians, the two cao canadian Investment Board. This business will be worth as 6 billion, not as much as many anticipated. It is at the lower end of original valuations. Glencore, up 1 . Perhaps not quite as big a valuation as many hoped for, but nonetheless, glencore is getting a bit of a push up as it is starting to dispose of assets to push down on the debt burden. Airfrance is a bit of a volatile stock. Still has a 5 move for air france. Adnd why . The chief executive waves farewell. For three years he has struggled to fight the unions. This is the biggest airline, i might remind you. Alexander has had enough. He is going to the Airport TransportationAssociation Lobby group. It will take his place . How will they tackle the cost cuts . Many are wondering where that will go when they have a new leader at the helm. Air france, your worst performer 600. E stock sincxx guy traders are more wary of price swings in the next three months than the last year. We talked a little bit about this already, but we are looking at this very clearly in the yen and very clearly inth the pound. There is the yen volatility. Let me zoom in on the last three months. It is now trading above the 12 month volatility. You can see it in the sterling as well, threemonth volatility and 12 month volatility. That line is really clear when it comes to the pound. The brexit story is front and center in a particular trait, but it is interesting to are saying it in a bunch of other ones. Hat, theadd to t secretary is being asked about what is happening. He says was again, we are watching the yen. That could be one of the factors that is very much front and center in investors minds . The market right . Is the Market Pricing risk correctly right now when it comes to the volatility currency apirs . Pairs . With the next three months for the pound be as volatile as the market has suggested . You might still believe that the u. K. With statill stay in. Absolutely. Days to go, plenty of time for the markets to get their knickers in a twist. There is a huge ask yoskew for brexit. Undecidedse the 20 to stay in . We are bearish on sterling. Isnt the best trait to have for the next couple weeks will be long gold, short cable, or i should say sterling. We think sterling could move back. We could probably break that. Shortterm, we are very worried about the pound still and think of gold could be the best performer. Nothing clears the mind of investors more than the absence of alternatives and gold is telling us a story. So, we like gold shortterm. However, once we get past the break the decision, we think and trust the british pragmatism. O stayking for a 52 tuesda in and 40 to leave. 48 to leave. We are hoping this is like the stock referendum. Guy this is the threemonth risk aversion table. The skew is signaling the fact that we are going to see a weaker sterling Going Forward. That we have seen that move come through. We might have added a little bit to it. But nevertheless, how much have we priced in thus far and how much more do we have to go . Give me the kind of how far through this trade army . Are we . You are right. Sterling is down in 18 months. This is where actually, there could be a counter trade opportunity. I think it would get down to 138 on cable. What you need to try and do is tell the expensive sterling insurance policy and buy. If we are right and our baseline scenario and we see a triumph of pragmatism in the final hour, all of a sudden we could start to see like with scotland, over pessimism translate into a relief rally. What i want to do is get our clients to be short with sterling put. Because if you have got 18 of all that you are crediting in the pocket on the left, you are only paying 13 for the coal. We could have an interesting risk and reward opportunity. I think that is coming shortterm. Hans let me look at the timing on this. Does that mean you see 137138 there when you make your move . Do you see that early june, mid june, june 22, june 21, the longest day of the year . Your vet is as good as any. I just think that you see from the momentum that cable rallies are less and less frequent and you are starting to see a lower level and cable could easily push toward 138. There is plenty of time. Theays is a long time been fx markets and we could easily see a test of 138. In market is nervous. Why is the yen so strong and why are equities falling . There is a lot of geoPolitical Risk and that is why gold is the best alternative shortterm. Story is a pair on the dollar trade. We have fed minutes coming up this evening and an explanation from janet yellen as to why the central bank is doing what it is doing, flipflopping on policy. What is the countryside to that trade . Talk me through what you see the dollar doing. The dollar has been going up two and a half years. N i think we have been anticipating fed hikes that arent coming. If anything, i think she needs to get rates higher to be able to cut them, if necessary. I am a dollar bear. I think by default, the dollar could come back to levels of 120 at the end of the year. Strangely enough, i think we could have a very topsyturvy year when it comes to equities. Since the beginning of the year, gold is telling us a story, up 21 since january 1. It is the best currency. That is why a thing investors that have Equity Portfolios close to 30 40 exposure, you need a shock absorber because there are many obstacles to get through, without even mentioning what could happen in november. This uncertainty causes markets to wonder about the dollar and janet yellen is obviously worried that the strength of the dollar has heard earnings and is a track on the economy and is a drag on the economy. I was in the states and speaking to business owners. They set for the first time in a couple years they had to raise ellerys. I think janet will be raising rates, but not at a speed that will kill off the fear of weakness in the dollar. Ys to believe the euro is a bu and we might have seen the low for the year. Look at dollaryen. We believe it will gradually climb back up. We have gold weakening. Remember, the absent currency always strengthens. Bet is something we have to afraid of. I think the bank of japan is ready to intervene. They dont like what is happening in the nikkei and the need to get the dollar back up. We are not in love with the current levels, but we are not in love with the dollar either. 1. 35 has always been a very good longterm support level. We have to be very careful with buying the dollar and just closing your eyes. That is why we like gold, instead of the dollar, regardless. Hans david, thanks. David, you got in knickers, teacups, and breaks. Not in the same sentence, but bonus points there. We will get more on the panama papers, but is this resignation just the tip of the iceberg. What could come next in the scandal . Next, stay with us. Guy european equities are on the front foot this morning. We are up by. 6 . Tokyo did not have such a good day, down by a little bit. Your is your bloomberg first world news. Kumutha pfizer is terminating its 160 billion merger with allergen. This is according to a person familiar with the matter. The move comes after the u. S. Treasury said on monday that new rules would limit what it calls and version transactions. H m has reported firstquarter earnings. The strong dollar weighed on margins pretax profit tells you 3. 3 3 billion kroners. The retail board in january that the strong dollar would continue to add purchasing costs. Is cuttingps nonexecutives from its fixed income. Industry slump. That is according to people with knowledge of the matter. The managing director and head of the business is said to be leaving. Fromllows eight executives the team that have already departed. That is your bloomberg throw flash. Bloomberg first word flash. The last hurdle before the country can start exiting those capital controls. The finance minister has promised to stick with the plan, despite the sudden resignation of the Prime Minister. Lets bring in bloombergs executive editor. This all comes after the panama papers. Why did he step down . Basically, it comes down to optics, ultimately. This is a Prime Minister of a country that has suffered more than most since the financial crisis of 2008. I think it was a combination of just bad optics of the Prime Minister hiding money abroad. I think the reaction plays into it as well. It is pretty much emblazoned in all of our minds how he walked out on the swedish tv that clip one to viral around the world sunday night. To is a very important point for all politicians around the world right now. The substance is important, but also how you are seem to respond to it. Guy tax has become a highly political issue and i think that needs to be talked about as well. For david cameron, there are lines being drawn there as well. This is feedback into british politics . It does a bit, yes. In the u. K. Press today, people are scouring every single word and every single comma. Everythingoking cameron has said over the last couple days, in terms of whether he and his family have benefited from money fashioned in offshore accounts. Of course, it is important to point out that no one is accusing him of wrongdoing, but it is interesting that he is forming his words very carefully. Tax is such an emotive issue right now. This comes at a bad time for kim and right now. He has had a litany of problems for the past couple weeks. The brexit is not going very well. Guy and then boris is stepping up and saying the mp should publish their tax affairs. This adds to that problem for david cameron. John, thank you. Fund hasst pension agreed to pay 2. 5 billion for a 40 stake in glencores agricultural unit. They plan to sell off assets to curb their large debt burden. The stock is trading at 1. 83 . Joining us now to discuss this, is the bloomberg commodity is reporter. Good morning, jesse. Stop initially fell. What is the Market Making of this . Jesse it is depressingly flat, actually. The focus is on the prize. Last year, citigroup put a number of 10 billion on it. Some people might see this price as a bit low, but with of the market flat, people are factoring in the fact that the world is a different place than september of last year. Berline. Se, hans in what are the broader implications . The broader implications for glencore is this is a key pillar of their Debt Reduction plan. They are looking to reduce net debt from 26 billion, which the market has been o uncomfortable with. They have a trajectory to get it down to 17 billion. This is quite a good chunk of that. The most interesting piece of news is they have retained an a 20 stake in the business. They have a target to get net debt to as low as 70 billion. This will go some way to achieve that. They also have a number of potential asset sales in the pipeline of copper mines in australia and south america. It is unclear whether or not they will be achieving this with the right price. Guy the pension fund is significant. Does this change the options surrounding the rest of the sector . Is significant. A lot of the reporting that we have been signify that a were in theudis lead. This would be a chunky price for one player to take on. The is a very Big Development that the pension plan would take this on. It is fitting for glencore, in that this is largely a Canadian Business they acquired in 2012. Guy it will provide stable capital as well. Jesse, thank you there he much indeed. Of next, hours away from the minutes. How dovish is the fomc . An declination from janet yellen. I think this is what the market is waiting for. We discussed this, next. Guy welcome back. You are watching on the move. We are 53 minutes into the critic session with equities. Generally, we are a little bit higher. Dax is liking this morning. Air france is the story and glencore is certainly the story this morning. But me show you what is happening with the mining sector. You are getting a little bit of dispersion in terms of the trade. Glencore is treading up by 1. 87 . Given the news this morning, it is less than angloamerican. But nevertheless, a little bit of a spread in the way the market is moving. Hans; a little bit, but not terribly significant. Later today we look at the minutes from the feds march policy meeting. Glencore is certainly the story this morning. But me show you what is happening with the mining sector. You are getting a little bit of dispersion in terms of the trade. Investors look for any clues on the Central Banks thinking. Markets are pricing in a 0 chance of a market rate hike. Richard jones joins us. Richard, i have already had the pleasure of your company for an hour this morning. I know your answers, but the viewers might not. What are we expecting from the minutes this morning . Richard the minutes give us a little bit more color into the thinking behind tehe feds decisions. In december, they had a unanimous vote to raise rates. When we read the minutes, we saw there were were concerns raised fo by those who voted for a rate rise. It will be interesting to see what the tender of the conversation was at the meeting last month. An does the market deserve explanation . We are worried about the international story. I guess the data is public part of that reasoning, but nevertheless, the fed will have to come out and say, this is why we are in the position we are in. The market at the moment does not have a handle on it. Rihcardchard i like looking ate atlanta fed gdp forecasts. Guy that is the kind of guy you are. Richard the most recent forecast was at 0. 4 for the First Quarter. That they can move has born at what the feds thinking is. Not for extended the fact that the u. S. Economy is outperforming everyone else, it looks like it might be slowing down. Economic activity has picked. They probably will not give explicit guidance because there is a lot of push and pull, i think the minutes will be something the investors will look at because they like to get more insight. Guy it has been really quiet. Rellally quiet. Is this where they start to make their voices heard a little bit more . Well, we have loretta master speaking today, i think at 5 25 london time. She was one of the hawks. It will be interesting to see what her commentary is. Of course, last month we had the chair come out much more dovish. It will be interesting to see the tenor of that debate and what one of the hawks will say. Hans always interesting. The feds minutes give us a little bit more color, as you say, richard. We will be speaking to the Swiss NationalBank President later today. Dont miss that conversation. We had an interesting moment with equities. Oil is going upnd some of the airlines are moving down. Of course, it is a beautiful morning in berlin. They will be interesting conversations here, discussing greece and discussing what to do next. From all of us here in berlin and london, we wish you a good rest of the day. Leveragingde glencore. A merger breaks down. Plans and allergan make for a tire. Cruztory for sanders and boosting the odds of a contested Republican Convention. Francine welcome to the pulse live from european