Absorbs David Cameron, he appears before parliament to silence the critics. What will it take to get his focus back on the brexit . It is going to be a busy week. Suspect once again investorsminds are going to be transfixed on what is happening in japan. Hans everyone is going to wake up and see what tokyo is doing, trading inversely to what can is doing, and yen is very strong. It doesnt seem like yen is willing to budge. That is the one aspect i want to look at. Then weve got a bunch of earnings to sort through. Will we see those priceearnings ratios come into line . Guy looking at the downgrades, the bar is so incredibly low. It is going to be fascinating to allwhether theyve shaken those downgrades out and we can get over that. The other story is what is happening with commodities. Youve got this buildup to doha but you see a bifurcated market, metals and oil, and other commodities as well. Really interesting set up there. Hans weve seen copper on a bit of a rebound. You and i were joking about chinese pork futures, but it does give an indication. We are going to get a busy show. I will send it back over to you. I think weve got a guest coming as well. Guy we do. I want to show everybody what is happening with the markets right now. Looks like we are going to see a softer open this morning. The second column in the red. Youre a stoxx down by around zero point 16 . Looks like a softer story. Lets figure out what is happening in asia. Lets get the bloomberg first word news with juliette saly. Juliette thanks, guy. Standard chartered is seeking to sell 4. 4 billion of assets in asia. It is part of plans by the londonbased lender to reduce its Balance Sheet after booking record impairment. Chinas Consumer Prices remained buoyant last month on surging food prices. Marchdex was at 2. 3 in from a year earlier. Food prices jumped 7. 6 . Producer price declines narrowed from a drop of 4. 9 in february. The first month on month increase since 2013. Face cameron will lawmakers later following a week of scrutiny of his Financial Affairs after he published tax data in an attempt to demonstrate his integrity. He admitted that his handling of the scandal hadnt been great. I could have handled this better. I know there are lessons to learn and i will learn. Dont blame number 10 downing street or nameless advisors. Blame me. I will learn the lesson. Juliette danny willis has become the first briton to win the masters in 20 years. He claims his major with a brilliant five under par. Defending champion Jordan Spieth led by five shots, but dropped six in three holes. 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. Guy thank you very much indeed. The crisis surrounding jacob zuma has deepened with several Financial Institutions distancing themselves. The family had withdrawn from the board of their Holding Company in order to insulate it from the scandal. We are joined by nazeem howa, the ceo of ok investment. The time tor taking talk with us today. When do you expect your banking relationships to be restored . Nazeem i hope as soon as possible. 7500 in this, and the immediate family, is very worried about their futures. I listened to some local radio stations over the weekend, imploring the banks to resume normal relations. I hope that i can get some appointments with the banks this morning and convince them. Guy are you talking to the same institutions that have walked possible you or new Financial Institutions that could work with you . Give us some names. Who has walked away from you and who do you expect to be establishing relationships with . Major banksfour have walked away from us. We need one of them at least to offer some kind of service. Banks talking to all four and assuring them the correctness of what weve done. We need to employ them to think about our workers, the 7500 and their immediate families. That theirt matters, livelihoods are not affected by this decision. Guy you confirmed last week that you had contacted various government officials to assist you. Im curious, why did you think that was a good course of action given the fact that it is this political Business Link that seems to be at the heart of this story . What kind of reactions did you get when you contacted those officials . Nazeem let me start with why did we do it. The major challenge today is job creation. , it was, dos whatever it takes. Is minister of finance politically responsible for the Banking Sector. It is unprecedented for four Banking Institutions to walk away from a business. It has never happened, i think, in the world. Plea for someto kind of assistance and guidance on how we can restore those relationships. No other reason that we would do that. What response have we had . Very little right now. But we will continue to do whatever it takes. Can,ll speak to whoever we business organizations, political organizations, banks themselves, to really see for the jobs of our people. Hans hans nichols here in berlin. You say you are reaching out to those four banks. How much time are you giving yourself to restore relations . Are we talking days or weeks . Useem the banks have given until the end of may, so weve got a couple weeks to either get the relationships restored or something else. Without the major banks, the jobs are at risk. I think we may need to take some drastic measures this week. Revenues will be impacted immediately as the Banking Services are withdrawn. We might need to take some serious actions this week. This ast is it about youve already highlighted is, all for major banks walking away from a company en masse. That strikes you, im sure, as odd. That strikes me as odd. What do you think sparked this . Was there coordination between these banks . Was there pressure put on them by a third party . Why did it happen so suddenly and with all four major banks being involved at the same time . By one ofgot asked the editors of the major Financial Institutions if we believe there is a force there. We dont have any concrete evidence of that. I dont want to make that assumption. Clearly, as i say, it is unprecedented. It has never happened before. Particularly in a country where we had major corruption scandals , we are the First Business that suffered this. The second point i would make to you is, what surprises us is this very strong action taken against the backdrop of not a single charge made against us, no evidence of corruption, or anything else. You are innocent until proven guilty. It would a scene that our 7500 staff members, their livelihoods taken away, weve not been guilty of anything, but 7500 people are likely to lose their jobs for reasons known to the banks, not ourselves. Hans when you go to the banks and meet with them, is your argument about the job losses or are you going to be making a fundamentally different argument . How will you convince them to restore relations . Nazeem i will start from the job losses because that is the most important to me. The 7500 staff our family. For them and their families to be impacted by this decision is something we want to avoid at all cost. My second argument will be around the issue of making decisions against a backdrop of no concrete evidence against anyone in the group. Thely, if we believe in democracy we all talk about, we must assume innocent until proven guilty. This creates a stranglehold around our business. Thatjust to followup on point, it is the guptas relationship with the business that is causing the Financial Institutions their concern. Do you think the action taken thus far by your shareholder is enough to convince the banks or do you think that you guys need to talk about maybe your shareholders divesting a stake in the business . I think that is not a decision for me to take. That is a shareholder decision on whether to divest or not. Theres no indication they want to do that. From our point of view, i think the shareholders have taken a big step to save the 7500 jobs and i would argue that should be enough for the banks to do the right thing to save these jobs. Ok. Have you spoken to the shareholder since friday . Nazeem i have not. Theyve taken a decision to distance themselves from the business and theyve lived up to their decision. It to the Management Team to take charge of the business on a daytoday basis. Guy if you need to talk to them, do you know where they are . Nazeem certainly i know where they are. They are not in hiding. But the decision theyve taken is the management will run the business. Theyve entrusted us with every single decision. Guy nazeem howa, ceo of ok investments, thank you for your time. Up next, diminishing returns. Alice he investors giving warning on negative rates. What can we learn from the boj policy backfire . Central banksl descend deeper into negative rates, policymakers are sounding a warning over the ecb executive board member warned of diminishing returns while blackrock ceo larry think said negative Interest Rates are particularly worrying and potentially counterproductive. When we have our conversations before the show. Sometimes it is counterproductive. The focus is how much more damage negative for it could potentially do. Guy we flipped from Central Banks being seen as promarket to know maybe the kind of do no harm story coming front and center. Maybe that is becoming hard and parcel of the narrative now. Joining us in london, stephen mack low smith. Is that something we need to worry about . Weve got european Central Banks going into negative territory. Is that something we could extrapolate into our sphere . I think we need to look at the ecb policy which flows from what they did with the stress test on the banks and the banking union. Essentially, what they wanted to do was make sure the Banking Sector would fit the purpose and then put in place stimulus. If you look at what they did in their latest meeting, there was a very clear signal that they are trying to include the flow of credit into the eurozone. That would suggest they are succeeding, but that credit flow hans[indiscernible] they are justk looking at transfer mechanisms, credit flow. Stephen it would be useful to the eurozone, but if you look at what eurodollar has done, there was a very steep decline when the announcement of qe came in. Since marchapril of last year, eurodollar has been pretty much in range. I dont think the primary perspective is to target a weaker currency. Guy however, is this going to be enough to convince International Investors to step acting to europe . You look at what has happened in the divergence between the s p and what has happened in the european indices. Different directions in many measures. What is it going to take to get International Investors back in . Stephen it is going to take Earnings Growth. This is very much a kind of show me european earnings. Last year, the picture for europe including the u. K. Was disappointing. A lot of that down to weakness in energy and commodities. At earnings, it was mid single digits. We would expect something more this year. Valuation is attractive. If you start getting Earnings Growth, it should interest of them. Hans for earnings in this quarter, dont we have to do x banks,ties companies, x the consumer side. Im struggling to see whether growth is going to come from if you have so Much Negative sentiment weighing on them. Stephen the dax is very sensitive to global trade. That as a european investor, one of the greatest things about european markets is, wherever there is a growth story, it is normally a European Company that is benefiting from that. Weve been focusing very much on the domestic economy. Didng said that, if you have a pickup in emerging markets and global trade, theres any number of areas that look attractive. We think the evidence is patchy at the moment. Guy have we got to the point where im going to take evidence from the s p year. Earnings downgrade massively lower, and as a result of which, weve gotten to a low point very briefly. The low my sense is point was the Fourth Quarter of last year. The expected levels of growth now for markets as a whole are very low indeed. I think that is going to improve if credit continues to rebound. Guy stephen macklowsmith is going to stay with us. Minutes away from the open. We will count you down. 10 minutes to go. Hans welcome back to on the move. It is time for the battle of the chart. You see the s p 500. We are to walk you through our charts. You pick the winner. The blue line is the s p. Pricetoearnings ratio shows that it peaked. We see big corrections. Weve seen those corrections and weve seen the s p react. Give us a sense what we could be expecting. Does this chart show us that we shouldnt have, like second marriage, a triumph of hope over experience . Guy i think youve picked a good chart. Our guest today is an equity guy. Im going to try to fight against that. This is an inflation story. Where is inflation coming from and where is it going . One of the places it is coming from, china, take prices absolutely soaring of late. You can see that december through january. It is going to be in sustaining interesting to see whether you see that come through. Inflation in the states really starting to pick up. You see that reflected in the bond markets. Maybe this idea that inflation is going to become something to think about sooner rather than later is going to be one of the interesting stories. Going to hand it over to you now delicately. What is resonating right now . Me, your chart about inflation is the one that really resonates. One of the things that we talk about is anchoring. I think the people are anchoring on the low Inflation Numbers that weve seen over the last year or two years. The expectation is that inflation cannot rise. Marketsig surprise in is rising inflation. Guy great stuff. A win for me. The market opens. Guy good morning. Welcome. Youre watching on the move. Im alongside hans nichols in berlin. What are we watching . The bank of japan tame a defying again . The currency hits a fresh 17month high against the dollar. And a quarter to forget. Earnings season kicks off. For 2016 . E low point and a taxing affair. As the Panama Papers controversy absorbs David Cameron, he tries to silence his critics. What will it take to get the focus back on brexit . Fair market value showing mostly positive. Tech 40 positive. Tax in negative territory. Lets head out to Caroline Hyde at the touchscreen for the open. Caroline thank you very much indeed. We saw a significant surge on friday. Full to 100 closed up 1. 1 . Will we see a little money come out as we see oil track lower . Oil had such a surge on friday. Oil rig counts starting to come down. Concerns about the ongoing supply glut. We are opening flat on the ftse. Rio tinto on the higher side. Perhaps one to look out for this weekend. Cac 40 opening just flat. We are seeing airbus, some of the worst performers. Lvmh, they come out after the bell with quarterly sales. The dax opening 0. 4 lower. Maybe tracking oil a little bit lower. Remember what those significant moves we saw last week. Maybe just a little bit of rearranging when you see such a surging oil over the past few days. Phenomenal moves on the back of that oil rig count. A bit of risk aversion in the gold market. Money out of equities, into the haven that is gold. Chinas ppi numbers coming in better. We saw the first monthly gain in Producer Prices since 2013. Weve seen copper go that little bit higher. Thats get some stock movers. We have got some significant stories. , will they beered offloading assets to the tune of 4. 4 billion of assets they are looking to dispose of . Standard chartered pushes higher. S. A. P. Off 1. 6 . Reported sales on friday that missed forecasts. Seems they had to come ahead of their formal numbers. Revenue down 5 . The group, a bit of m a. Chinese buyer coming in for this Swiss Company which makes airline catering. Guy thank you very much indeed, caroline. That me give you the broad picture as to what is happening. Let me show you the map. What is the wheel telling us this morning . One sector in positive territory. The banks are rising this morning. A number of banks on the move. Take a look at what is happening. Consumer staples, information technology, and energy. Keep an eye on the Energy Sector this week. I expect volatility building up to this bill on meeting. Eting. A me hans the question of who will attend will drive prices as well. Chinas cpi remained buoyant last month, rising 2. 3 mainly due to surging food prices. Thats go to beijing where Tom Mackenzie is standing by. Increased pork prices coincide with your arrival in china. We will ask you to come clean on that. Give us the implications for pboc policy. Great timing, wasnt it . Part of thessential chinese food basket here. That rises the highest weve seen since 2012. Vegetable prices also going up. This feeding into the rise in ,nflation we saw in march slightly below the forecast of 2. 4 inflation, but it is now, focus is now on the pboc. The consensus amongst economists is that easing is on the table. Weve seen strong data, this inflation target still below the centralbank target of 3 . Commerzbank saying they still expect a cut in Interest Rates from the pboc this year and three reserve ratio cuts as well. Guy let me pick up, tom. To my mind, what is really interesting is what is happening at the factory gate level. The first rise since 2013. Tom absolutely. Theyve been on a deflationary cycle for some months. Those prices have started to marchow, down 4. 3 in from 4. 9 in february. That has been linked to higher Commodity Prices. It is Commodity Prices more than demand. Not sure yet if that is going to be sustained, but that is for sure a positive. Weve also seen a pickup in the Real Estate Market in china. The toptier cities have seen upticks in the Property Market i quite some margin, feeding into higher prices at the factory gate as well. Later this week, even i out for trade data on wednesday and gdp data on friday. Guy tom, great stuff. Thank you very much indeed. Lets bring back in stephen macklowsmith. Inflation, just starting to pick up. Lets come back to this theme weve been discussing. How much of a repricing would you get if weve got it wrong here and we are focused on deflation when we should be focused on inflation . Stephen if we come back to what we were talking about earlier, some of that pressure on earnings is coming from very low prevailing rates of inflation. When we talk about earnings levels falls in headline of inflation mean you are putting a lot of pressure on that. Wouldurn in inflation immediately alleviate some of the pressure guy . Guy how would you change the relationship between bonds and equities . Stephen difficult to know how bonds would react. Headline inflation rates have been moving up for the last three or four months. On yields have come down. Of, if you didn see a selloff in the bond markets, it would make the valuation of equities less attractive. For what it is worth, our teams are not expecting that. They are expecting yields to stay fairly low. If what is happening here is that people are crowding into bonds as a riskfreetrade and you are getting alleviation of pressure on earnings, that should be good news. Guy do you expect a pickup in inflation . Stephen i would say if you look at commodities sectors, they recovered very steeply. You can probably see a continuation of that. Hans im not just bitter that you crowned guy the winner of the chart battle, but when you look at the potential inflation indicators, aside from a few random food increases, where do you see the Inflation Forces coming from, upward pressure on wages, and if so, where . Stephen the employment picture around the world has been improving for some time. Toare not remotely close full employment yet. I guess the way we interpret those numbers in europe, having peaked in 2013, unemployment falling since then, we would view that as private sector job creation. Theres still a long way to go before full employment. If you start to get increases in wages inflation, you are already seeing a healthy level of Consumer Confidence from the eurozone. I would expect some improvement in inflation coming from that. Guy and could we expect inflation to remain the centralbank reaction to this is going to be very interesting. Would we expect Central Banks to allow it to run hot . Stephen i think if you look at the way the fed is choosing its rhetoric, the fed is inclined to tighten from here. But the fed is not going to act unless it is absolutely confident that the recovery his selfsustaining. I would infer from that that they are going to be much more sensitive to Business Confidence sentiment. The ecb is committed now to qe for an extended period. There again, i think they are going to be low rates for an extended period. If you get a recovery in inflation, all you are talking about is inflation returning on target. Guy given the market position, even a return to normal is a significant move. Stephen yes, so we have to see how bond markets react. Too early to Start Building a portfolio around it . Stephen in my view, you wait for the evidence. Hans i just want to bring in some quick breaking news on the german bunds. Twoyear notes down to their lowest level since that march 10 ecb meeting. 0. 521 . That gives you a sense of how low things are. 0. 15 . S are down at a huge move, but we are seeing some action in the twoyear. Stephen macklowsmith is going to stay with us. Lots more to discuss coming ahead. Hans welcome back. I am hans nichols in berlin. Lets get the news from hong kong with juliette saly. Thanks, hans. Standard chartered is seeking to sell 4. 4 billion of assets in asia according to people with knowledge of the matter. It is part of plans to reduce its Balance Sheet after record impairment. Chinas Consumer Prices remained buoyant last month on surging food prices. The index was at 2. 3 in march from a year earlier. Food prices jumped 7. 6 . Producer price declines narrowed to 4. 3 from a drop of 4. 9 in february and posted the first month on month increase since 2013. David cameron will face lawmakers later following a week of scrutiny of his Financial Affairs. It comes after he published six years of tax data to demonstrate his integrity. The british Prime Minister admitted that his handling of the scandal hadnt been great. I know that i should have handled this better. I know there are lessons to learn and i will learn. And dont claim number 10 downing street or nameless advisors. Blame me and i will learn the lesson. Danny willett has become the first briton to win the masters in 20 years. The englishman claimed his major with a brilliant five under par 67. Jordan spieth led by five shots as he approached the 10th, but dropped six shots in three holes. Global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. You can find more stories on the bloomberg at top. Guy thanks so much. You, like everybody else went to bed last night thinking spieth had it. What happened . Nobody knows. Talking about things that are catching us by surprise, lets turn to the markets. Italian peripheral banks largely on the upside. Waiting for this meeting in italy to finalize. They will get a deal done on the italian Banking Sector. Certainly good news for unicredit as people begin to worry about it. Under performance from that sector. They are trading a little bit higher. Telecom italia on the downside. Nestle, check and see what is happening with the dividend. Season kicks off today with investors turning their attention to the first Major Company to report firstquarter earnings. Investors are braced for the steepest earnings slump since the financial crisis. Our reporter joins us now. Stephen macklowsmith still with us, head of strategy for european equities in london. Good morning. Talk about this earnings season. As you said, the worst quarter in the u. S. Since the financial crisis. Earnings are expected to contract 10 . A lot of that has to do with, the First Quarter in markets, we all remember one of the most volatile quarters. It is historically a quarter where clients come in fresh from their business break and they want to do business. They want to get out on their ideas. It was really not like that. It was a quiet for the ipos. Markets trading weve already got banks warning us this is not going to be a good quarter for earnings. Angus america, and jpmorgan. Hans hans here in berlin. S. A. P. Reported early. They are down about 1. 5 on the dax this morning. We expect bad numbers from Deutsche Bank in part because of the revenue story. Where are you optimistic . Could weustries potentially see some positive results from . Sofia im looking at our is prettyables and it negative across the board. For europe, on a whole, profits twoexpected to contract. 8 . That is quite surprising in a year where we have the European Central bank unleashing all that draghi has to give us, and the economy is doing it is better than it was in the financial crisis and i think people forget that. Forecast forfrom a growth of as much as 5. 7 . You asked me for positive point. We have health care. A defensive industry. It is now the biggest industry in europe because banks had that big fall in the First Quarter. If we do get a boost from the health care sector, maybe that could give us some support for the market. But the market really needs Earnings Growth and it doesnt look like were going to get it. Guy stephen, where do the prices come from . We know that banks are going to be tough. Sophia brings up the health care sector. Is there an area that is going to stand out for you . Stephen if you look at the s p 500 earnings, biggest pressure nergy, commodities, and financial. That is mirrored in europe. Consensus is expecting zero growth. We are not expecting Energy Earnings in europe. The maps on top are very steep. The issue for the sectors is not over yet. As i said earlier, we are seeing signs of strengthen domestic sectors. That is where we are focusing our attention. Seems to be a bigger story in u. S. Equity markets. Stock buybacks. How much distortion is taking place with the stock buybacks . Stephen i think that stock buybacks has been a very successful strategy over the last five or six years, given that cost in capital has been extremely low. It has been a profitable trade for companies to take that cheap borrowing and use it to retire stock as shares fall. I would expect that as policy normalizes, the impact from stock buybacks would dissipate somewhat, but it is still going to be a very important part of the u. S. Landscape. Hans to get an accurate read of these companies, should we look at return on equity . What sort of lens do you put on to see through what is going on with this Financial Engineering . Stephen if your profitability is really under pressure, then decreasing your number of shares is not going to mask that follow on profitability. If your business is perfectly satisfactory, reducing number of shares is going to result in a boost and shareholders get rewarded. Guy can i break it down a different way . Looking at what happens within europe, small caps, any kind of geographical story, any differences slice it a different way for me. Sofia i think stephen mentioned a good point, which is the domestic story in europe. A lot of the Big Companies that we look at on the benchmark, the stoxx 600, they are very exposed to the International Economy through whatever is happening in moves, thecurrency euro had a very good quarter against the dollar, so that could impact those companies. But if we look at small caps, spanish companies, companies that depend on growth in italy even, even though growth is not particularly good, at least they are more shielded from what is happening elsewhere. Maybe that could be the positive story. Europe is not all equal now. Small caps have actually been doing much better than large caps in the past few months. Stephen, do you play the small caplargecap story . The last few weeks, small caps have started to do well. What can i take from that . Is that going to carry on . Stephen we are interested in small caps. We have a successful Small Cap Team running a variety of funds. We are very happy to invest across the market cap scale where we can find good news. Going back to last year, smallcap earnings improved relative to large cap earnings by roughly 25 points. This is all about the domestic economy which is improving. There is a cloud of manufacturing. The little small caps are in that space. Guy great stuff. Thank you very much indeed. Of bloomberg sofia news and stephen macklowsmith from jpmorgan. Up next, japan. Banks are the worst performers on the benchmark topix. We will dig into the sector, next. Hans welcome back. I am hans nichols in berlin. Lets go to Caroline Hyde for the chart of the hour. Caroline i wanted to focus on japan. Today is a day that we see the topix, the nikkei, falling because of the strength of the yen. We are seeing banks feeling the pain as we refocus our attention on more negative rate cuts from the bank of japan. This is a chart of the topix trading on price to books. We are seeing that come down on the benchmark. We are just above one. Look how much cheaper it is buying topix back. His is an index we are at record lows at the moment. We are trading the cheapest on record amid speculation that the bank of japan could cut rates further into negative territory. What does that do for the banks . Pain as they are charged to store money with the bank of japan. Pain as they dont want to pass that on to savers. Pain for their bottom line. Keep an eye on bank of kyoto. Guy caroline, thank you very much indeed. Up next, staying with japan, the boj tries to tame that if i in jan as Foreign Investors lose faith. Guy will go back. We are 30 minutes into the trading day. Lets see how things are shaping up. Extended over the last 10 minutes stocks are going down by around one half of 1 . The Energy Sector in trouble a mixed picture with the pressure. Financials are the place where market seems to be seeking safety. Lets find out which stocks of you to focus on. Caroline thanks. You hinted at a few i am focusing on one Software Company with the laggards and leaders of the stoxx 600. We are off by three Percentage Points at the moment, being cut by an underperforming credit suisse. A lot of volatility in the market, stocks being moved, and we are seeing porsche being moved by a call to go underway. S. A. P. Off, and other German Companies also on the down. The numbers were living up to expectations. The Americas Region in particular was where they had been finding some of their deals later than expected. Revenue up 5 , but not as high as many have wanted, operating profit below expectation as well, for clearly missing on the cloud and revenue expectation elements. I leave you with a leader. It had to be halted in trading because it had surge so high. We are currently up five Percentage Points. The italian lenders are in the spotlight today. And banks areals gathering today to try and ensure that it moves toward consolidation, that we can get a fund that will help recapitalize some of the struggling lenders in italy, be able to get rid of their nonperforming loans. The italian treasury is meeting today with executives of the major banks. There is so much hope and it is being driven into these italian banks. Hans thank you. As again strength continues on japanese stocks, International Investors may be losing faith. 2016, first day of foreign traders have been pulling out of tokyo for 13 straight weeks, the longest stretch since 1998. They dumped more than 45 billion of shares as the yen gains for a seventh day, the longest streak since 2003. I propose we rename the show on the yen because it seems like all we ever talk about. Marketu know that the can only focus on one particular thing at any particular moment. So the spotlight is definitely on the yen right now. Iowa wedding to see if japanese investors decide to step up. That will be one of the interesting stories over the next few days. Lets get another take on this with the investor strategist at ubs. Good morning. Make or break week, make or break a month . It is starting to feel like a make or break a month. A lot will depend on the months end policy decision. You look at these levels and the and wherewhere we are we expect them to be and we want to know what is holding them having Central Banks with negative rates, focusing on Exchange Rate channels and ultimately they have to look out for their own economy. They are in trouble right now. Guy is the issue that this is real money flow . As a result it is part of the stock . I think those short yen positions from the International Investors and the cable, japanese stocks long. That clearly has come back and i dont think i dont think it will be a one of policy shift. What canphase will be you do to force japanese savings overseas. No foreign yield and the boj didnt have to do anything as long as foreign yields are going and our japanese investors saving with news its either slightly positive or slightly negative because with risk aversion we tend to think they liquidate their net foreign assets, but they should actually lose the ability anywhere else in the world, it would deliver on target and their incredibility. I think the jury is still out. Hans jeffrey, i love that point. It gives you the op is down, down is up in japan. Every time we hear from central Bank Officials, they seem to have the counter fact. They havent been able to dry the price of the yen up. You are looking at mechanisms that are Still Available to the bank of japan, look in the duet this point . Are they fundamentally facing a credibility problem . I think if you listen to the fmv and ecb when they say negative rates work, you really have to mean what you say and i think one of the initial issues on japans own negative rate framework is that it is complicated. Minutes,ok at the ecb they rejected the multitiered framework because it was difficult to communicate to the market. But on that front they need to be that we have to go back to abenomics. I think it is that side of credibility which has left the market wanting. Hans that third arrow thats helicopter money . What is the third arrow that could convince markets they mean what they say . What you are saying is they need to say i love you and buy a box of chocolates, and the bank of japan has above the boss of chocolates. What should be in the chocolate box . The bank of japan will always point to the third arrow it has to be on the government side , they need topdown structure reform and Corporate Governance and immigration policy. What we are seeing now is the breach of tourism policy but that is shortterm. If you want longerterm growth, which can stabilize potential growth in japan, that will be a key part of it. Its not just the boj many Central Banks are telling their government to do their share of the work in terms of structural reform and that seems to be a bit more pressing in japan. Guy would you say its extreme . Can say is quite light. If you compare a different points there will be the argument that, given the amount of liquidation that has happened, there will be a lack of short in the market. That doesnt mean markets are positioned long; you have the point of the there may be a task. Just aooking at, its lot of shorts have been liquidated and i think in that sense positioning is clear but you need the policy followup and without that i dont think there will always be an intervention risk but i think stressing that is about the peso depreciation for the yen rather the level. Hink any level right now we will see a couple big figures starting to build up. To you have gone from short neutral. Is that keeping them from going significantly net long . From a Traders Point of view, when you have a neutral positioning, it also means that when you have new flow coming in a can be quite aggressive. Especially for a big player like the boj. They are always going to be on the lookout for a rain check and for them to take a long dollaryen position, they want that proper followup. Guy is this a lead indicator the eurogroup stop i believe that policy was somewhat synchronized the right now i think what they have done was how they view the banking and driveld help credit growth. The strategy has leverage somewhat but if you look at 15, we arer, 114, 1 slightly comfortable with the levels. I think that anchor a relatively good inflation forecast. They have to be aware of each other. You have to go back to carneys speech in february, telling the ecb and the boj that the Central Banks going negative it starts to generate demand and that should be a conference of guy the third arrow has finally delivered. Always a pleasure. Thank you. Hell be staying with us. Dont miss our conversation sakibara. He says the boj will only intervene at 100. The people of the market are talking about 105. The uks Prime Minister gets ready to Face Parliament after the Panama Papers scandal. Can he draw a line . Will discuss that, next. Hans good morning, im hans nichols in berlin full lets get the Bloomberg Business flash. Juliette Standard Chartered is set to sell at least 4. 4 billion of assets, according to people familiar with the matter. It is part of their plan to reduce its Balance Sheets after setting record impairments. And centraltreasury Bank Officials will meet with executives of major banks later according to people with knowledge grew. Funds in bank free capitalization and healthy institutions for nonperforming loans. Shares are trading lower this morning after sales missed analyst estimates, revenue rising 5. 1 to 4. 7 3 billion euros since the First Quarter. That is as some deals climb later than expected and the reiteration of forecast. That is your Bloomberg Business flash. Guy thank you. David cameron will face lawmakers today following a week of scrutiny in his financial his linkn the wake of to an offshore investment trust. He came under heavy fire, and admits he couldve handled it better. I know that i should have handled this better. I could have handled this better. I know there are lessons to learn, and i will learn them. And dont blame 10 downing street or nameless advisors; blame me. I will learn the lesson. I think he took an awful long time to say what money he had in those trust, what money was family, whatby his money he has received as a result of it, and what taxi has paid on it. There has been a series of changing stories coming out of downing street that has been a statement every 1824 hours since last monday. Yet still not finished because he hasnt said exactly how much tax he did or didnt pay. I dont see any evidence that he did anything improper, let alone the legal, and he has gone further than a leader in history. It has been crushingly disappointed for his own supporters. He couldnt give us a straight answer, and it has taken a week to get this far. I think there are a lot more questions to be asked. Guy u. K. Politics is front and center. Ubs Wealth Management and our politics how is the Political Landscape changed . Trust in David Cameron has eroded. Its almost a textbook example of how not to handle a story. Downing street has made a mess of this. Of course, there are no allegations that he has done anything illegal. The story itself isnt particularly bank, its just that he took a while to come clean, and this is an uncontrollable machine at this stage. This is the first time he actually faced mps, because parliament has been in recess. So we need to see him take control. Jeffrey, how do you explain these political events to your clients. When you look at the latest revelations on cameron, is this materially changing the brexit conversation for you and what do you tell your clients . Overall, clients will just be concerned its another and other camps should really pushing their own agenda. Right now they are trying to preserve so the u. K. Is within the eu and arguably right now thiss about populism could actually incense that side of the population, but if we look at markets, if we look at how he has behaved, it doesnt change much, they are much more sensible than the polling data butow things are changing, there will be a well of populism about what happened in iceland amongst and that is it going to go away anytime soon. Doesnt bring close closer the time at which we have a Prime Minister in this country . You are getting to the point where cameron is uncomfortable he has already indicated he will not stick around. Does it make it any easier . Referendumter that if he wins does he go . I mean, a lot depends on what the vote will be. If you miss is the referendum, it is almost impossible to stay on. In terms of this issue, it takes a lot more to make a Prime Minister resign. Guy into suggesting if he wins the vote fairly decisively, than he is probably going to stick around for a while, things will calm down. He has already said he is stepping down before the next election. All he has to do is smooth the transition to the next later. If the vote is closed, skeptics will still hold quite a lot of sway, and it could be at war for a lot longer. This may prompt them to go sooner. Hans on that close this question i must assume that howand break that close does it need to be for Boris Johnson to make his case to Party Members and members of parliament how close is a need to be before we can start saying Prime Minister johnson . If it is a vote to stay in it would be very close. He is taking a bit of a gamble on this one. I think the government and David Cameron if it is any less than 6040, internal warfare will continue in this issue will not go away. I think we will need to see quite a lot of ruckus and more developments before we have a leadership summit. Guy lets wrap it up with where this gets priced in. The risk reversal has affected the skew on sterling and we have moved quite sharply. It continues to move lower how much more has that trade got . Right now the Institutional Investors are putting on options if you need insurance you probably have it already. We dont have any marginal drivers and unless there is a sudden shift in the polls on a consistent basis, comprehensively putting data on the baseline scenario, i think you will have to see the move. But once that ships i think this will be further but for now there is too much downside. Guy thank you very much. Thank you. Up next, its all about european banks. Guy welcome back. The central Bank Officials in italy will be the executives later today, according to people familiar with knowledge of the talks. It would help them tackle nonperforming loans. We are joined now on set to talk about it. Week, meetingst this week, what is still to be decided . Well, quite a lot. If you were going to they are trying to set up one, maybe two. Probably one. That will on the one hand take bad loans off the books, and on the other, helped recapitalize the bank. That is major and getting ready to backstop. Guy so you created that bank for these assets and you find the good banks a little bit more to allow them to carry on. You. Its about more complicated than that, and the details arent clear. We dont really know much about what the thinking is. What we do know is that they are going to be meeting today, and they are going to talk about this, and try and find a solution that will push everyone guy including brussels . They would have to. Well have to see how it pans out. It is not at all clear. They want to finish it off by this week, because they do have a major policy the needs to be sorted in some way or another. There are a lot of nonperforming loans. Sticking with that theme, sector,e in the banking the first european country to use a new law to share losses of a failed bank with senior creditors that is the first time this new law is being used, but werent there some examples of banks going under in portugal at the end of last year as well . Yes, and that freaked everybody out. The thing is there, there were four italian banks that were resolved at the end of last year, but they werent resolved under the new law. Own, nows, on its blazing a trail down bank brrd, Bank Resolution and recovery directive. Hans is exciting stuff, but what does that mean for the actual bank . There is an awful lot of moving parts in the situation. For one, it is no longer a bank. They had a lot of bad loans, and eventually when it was nationalized effectively it is a box. The issue with the sector that complicates it is that the offered guarantees on 11 billion its a lot. And it doesnt have any money. Guy bit of a problem. Small problem. Guy thank you very much. We are watching daily mail, a fascinating story with yahoo . Francine the yen rallies as stocks in tokyo extend two weeks of losses. Just how high japans currency can go. Turbulence shares as shares slump is the italian fashion house reports is lowest profit in 10 years. Cameron prepares to Face Parliament. Francine