The open. Stocks surge and as bloomberg reports the boj may help banks offer negative rates on some loans. Good morning to you, caroline. We got a whole bunch of really cool stories doing the rounds. We are watching what is happening with this brexit story. Obama intervention could change the terms. Does this convince britons that maybe the u. K. Should stay in . Cars are in focus as well. Caroline they are. The british pound getting a bit of a pop on the back of that, with the u. S. President saying the u. K. Is better off in the European Union. In berlin, im seeing mercedes on every high street, and daimler once again being embroiled. Tore seems to be no end where the scandal starts and lies. Weve had mitsubishi, now time for, the u. S. Wanting investigation. Already trading on the futures market down 7. 7 according to trade gate. Could see some big moves lower from daimler. Mention of that story we saw last night in the numbers. Going to be interesting. We will find out, as you say, very shortly. 28 minutes until the market open. The boj story having a big impact in asia right now. European markets not really rough acting not really reflecting that at the moment. Mispricedn the wei function, fairly flat open for european equities. I urge you to keep an eye on the dax. Those german carmakers are going to be in focus. That could be one of the biggest stories of the day alongside the boj. Caroline really. We are getting quite a move on the yen, weaker today. That being filtered in as the boj looking to try to give some relief to the banks, looking to help get credit into the real economy, offering negative loans. Percentageis up one point versus the yen. Jen, one of the worst performers on the currency market today. Euro, pretty much flat. We did see that erasing of most of the euros gains yesterday. Mario draghi is focused on credit, not on the exchange rate. I focus on brent. It is up 1. 3 . It has climbed 8 this week alone. And silver, what a week. Seen it up weve more than five percentage points. Now lets have a look at what is happening in the first word news. Lets get over to yvonne man. Yvonne president obama has urged britons to reject the socalled brexit from the eu, writing the European Union doesnt moderate british influence, it magnifies it. He goes on to say that while the u. K. Faces many of the same the bests as the u. S. , way to address them is through collective action. Wall street executives would have to wait at least four years to collect most of their bonus pay and could be forced to return money if their Companies Lose big under rules being proposed to install one of the last major planks of the dodd frank act. The ban on practices that reward excessive risktaking would strike hardest at Senior Executives and Key Employees at financial companies. The fuelefficient see cheating scandal at mitsubishi has cost the company more than 40 of his market value. The news could get worse. Investigators have continued searches at its research and Development Offices and nissan is looking at how the manipulation of test data affected its cars that were made by mitsubishi. Tokswagens board will meet discuss the impact of the emissions cheating scandal a day after the company agreed to buy back cars and compensate u. S. Customers in a deal that he said to cost at least 10 billion. Singer and songwriter prince has died at his home in minnesota at the age of 57. His publicist confirmed his death but did not report a cause. Tmz claims the star had been treated for a Drug Overdose days before his death. Global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. Guy thank you very much indeed. Central banks firmly in focus. Mario draghi telling markets and politicians they need to be patient. He did this yesterday. The ecb president said measures need to be given time but he also left the door open to doing more. Heres a wrap of his comments yesterday. Paste on our regular economic and monetary analysis, we decided to keep the key ecb Interest Rates unchanged. We continue to expect them to remain at present or lower levels for an extended people of time. The risk to the euro area Growth Outlook still remains to the downside. A recent Monetary Policy decisions have improved overall financing conditions which should support the outlook for consumption and investment. Measures in place have clearly improved borrowing conditions for firms and households as well as credit flows across the euro area. , relatedties persist to developments in the Global Economy and geopolitical risks. If there were unwanted tightening in broad financing conditions, that would alter our mediumterm outlook, regarding actcil stands ready to using all available instruments within its mandate. Any time the credibility of a central bank is perceived as being put into question, the result is a delay in the achievement of its objectives. Guy mario draghi speaking yesterday in frankfurt. Kramer is the chief economist at commerzbank. As ever, Central Banks front and center. We have boj news relating to similar way to a the ecb combining negative rates. Talk to me about where we are in this journey. We see draghi leaving the door open. We see the boj may be doing more. Draghi saying we need to be patient . How long . I think it is quite unlikely that the ecb again loses its Monetary Policy in june or september. The Corporate Bond purchases have not yet started and the cbs significantly lowered already their projections for gdp and core inflation. I dont see in the mediumterm significant Downside Risks to these projections. But in order to convince the governing council to do more in the shortterm, you need to see downward revisions in the projections, which i do not expect. Nothing will happen i think in june and september, but i continue to expect the ecb to start acting at the end of the year. Guy so were not done yet. About thisou reporting that bloomberg is producing on the boj that is moving the market . The boj apparently looking maybe to allow banks or helping banks may be to issue loans in negative rates. Does this feel like a bit of copycat, like the boj is looking at this story out of the ecb and saying, we will have a piece of that . Joerg that is possible. The japanese yen has appreciated over the past couple weeks. This puts pressure on the bank of japan to ease Monetary Policy even more. Is,precondition of this they have to avoid more negative Interest Rates as a burden for the banking sector. the end will cut its rate even more into negative territory in order to weaken the yen. Caroline even more into negative territory it is Caroline Hyde from berlin. I want to throw another central bank to the next, the bank of england. We are getting news out of daimler, saying we will see an effect on the u. K. And the european economies if we have a brexit. You have obama speaking out against the brexit. Where do you lie . Case where arese you envisaging the u. K. Stays within the eu . Joerg as far as brexit is concerned, this would have significant implications for the eurozone. The root cause of the debt crisis is not yet solved. In most countries, but it to gdp ratios are markedly higher. This theory would require that the head of States Government act on this, implement reforms for example by shifting to brussels or stricter fiscal rules, but a brexit would strengthen the position of antiEuropean Union forces in the European Union. Inhave the from nationale france, the alternative for germany, and in most other countries, there is emergent antiunion parties, and the government do not dare go for more european integration. But this is needed to solve the debt crisis. When that governments are not able to act, then the pressure on the ecb will increase even further. Implication, if the u. K. Population were to vote for a brexit. Caroline goldman coming out today, saying they are pushing back there forecast for a hike to the Second Quarter of 2017. Sticking with us is Joerg Kraemer at commerzbank. Up next, we are talking much more about the u. K. Obama warning against the brexit ahead of a summit with the big for economies. Can a bit of president ial magic bridge the divide . We discussed that next. Guy welcome back. Here is yvonne man. Yvonne good morning. Daimler firstquarter operating profit fell 8. 5 as the mercedesbenz Division Earnings before interest and taxes from ongoing business declined 2. 7 billion euros. The figures were clouded by the disclosure that tyler is cooperating with the u. S. In anment of justice investigation of emission certification process. Lloyds Banking Group is considering deeper cuts to eliminate 9000 jobs by the end of next year. Britains largest Mortgage Lender could remove more jobs than outlined under the october 2014 plan to help lower expenses. A spokesman for lloyds declined to comment. Googles Parent Company of about said Profit Margins could be it by higher mobile phone use. More smartphones means google gets its services in front of more people, but the company has to pay more to partners to reach users on their phones. Shares slumped nearly 6 . Microsoft shares also fell after hours after profit came in short of estimates with a weak pc market and higher tax rates weighing on the bottom line. Microsoft is trying to transition to cloud and subscription products, away from its transactional business. Iseant pharmaceuticals finalizing a contract to hire a chief executive. Valeant said in march that Mike Peterson would leave the company once a replacement is found. Caroline . Caroline thank you very much indeed. Barack obama arrived in london yesterday evening for a visit to britain and germany, where he will hold a summit. The u. S. President has already entered the debate on the future of europe, urging british voters to reject a brexit. For more, we are joined by Alan Crawford here in berlin. Thank you for joining us on a beautiful morning in berlin. Obama taking to the telegraph to give the u. K. His thoughts. Why is he doing this . What is the impact on the United States . Wants the u. K. As an ally that is stronger in europe. He used very emotive language in this piece. He was talking about the tens of thousands of americans in american cemeteries fighting for europe during the second world war, so it is a significant moment, not unprecedented. Two years ago, he appeared alongside David Cameron to make the case for a strong written that was united, and this was just ahead of the scottish referendum. Might take anaps impact when it comes to the british motor. He comes to germany and it is not just merkel meeting with obama. Italy, alandi from from friends. It seems to be the five big heavyweights coming together, talking terrorism this time. Alan the u. S. President is coming over ostensibly to meet with merkel for a trade fair, but on monday, they are having this g5 meeting that was just announce yesterday. They are talking lidia in particular, which is a mixed focus for europe because there are said to be something in the region of perhaps one Million People waiting in the migrant migrant countries of north africa. Guy allen, can i take you back to the brexit story it is interesting to see how the terms of the trade are starting to change. Migrant countries of norththe market is paying atn to what obama is saying. Do you think the british people will Pay Attention to what hes saying . Give us a concrete response to this. Do british people tend to look towards washington positively . What actual effect do you think this is going to have . Alan i think that rather than listening to individual voices, as important as they are, this important contribution adds to the momentum that weve had. Virtually every european leader backing David Cameron. It is this overwhelming sense that Global Leaders are behind the british Prime Minister on thisj. , we saw it yesterday with the pound going up, with our own bloomberg index, which is a complex amalgamation of holes and actually going down the probability of the u. K. Leaving to 20 . So i think it is significant and it adds to the overall momentum. Caroline were seeing the british pound, the best performer. British pound up 0. 3 . Lets bring in our guest from frankfurt, Joerg Kraemer, chief economist for commerzbank. We were talking about the impact on the bank of england potentially from the brexit. Are you expecting the bank of england to have to hold off any rhetoric about rate hikes . When do you envisage the first potential for rates to rise, depending on whether we see a brexit . Of course isexit economic risk. This would cause a lot of volatility in the market. The bank of england takes this into account. I do not expect them to tighten Monetary Policy ahead of the voting. Guy when you think about the political debate surrounding all this, when you build your models, what are you plugging in . How hard is it to model this stuff . Barack obama comes over, make some comments, moves the dial in terms of polling. How volatile is this win you are trying to calculate the Market Reaction to all this . Joerg you can only make assumptions and scenario analysis. Our main assumption is that in the end, the u. K. Remains in the European Union. However, it indicates that they will vote for a brexit. This should have implications for the eurozone. You have to understand that in each and every country, we have huge antiEuropean Union force. In germany, the alternative for germany party. If for whatever reason the u. K. Were to vote to leave the European Union, this would significantly strengthen the position of other antiEuropean Union forces in the eurozone. And those parties will talk to the u. K. And say, obviously it is possible to leave the club, and this one make the government even more cautious to move towards more european integration. But this is necessarily an order to solve the problems of the eurozone. In the end, a brexit would destabilize to some extent. Guy great speaking with you. Thanks very much indeed. Joerg kraemer, chief economist at commerzbank. And thank you very much indeed to Alan Crawford as well. Caroline, we should probably talk about what is happening in the car sector. Caroline we should. Six minutes away from the open, autos in focus. Daimler coming up with numbers beating. There is concern that it is embroiled in the investigation when it comes to emissions. Volkswagen, hes it managing to step away from the scandal . Coming out with its agreement yesterday. Ryan chilcote is at vw headquarters. We are scattered across germany today. What can we expect from volkswagen . Ryan they have a Board Meeting. It may have already started. We are expecting a little clarity or at least a robust conversation about how much money they are going to set aside after that deal yesterday. What kind of provision are we going to get . How much are they going to pay out in bonuses . Always an interesting conversation given the cheating scandal. Who done it . Always an interesting one. Not everyone has rushed to providine information to investigators. Finally, what kind of dividend can investors expect . Guy ryan, the stock moving this morning. Talk to me about what is going to happen with daimler. Yan interesting obviously a drop in profit from same time last year. However a beat on estimates. Again, another carmaker overshadowed by this emissions scandal. Daimler disclosing that the are part of an investigation with the department of justice, that they are cooperating with the department of justice. Exactly what that means for the company financially, no one knows. But it is going to weigh on the stock price this morning. Guy ryan, thank you very much indeed. We are to focus on daimler as well. The market open is next. Were going to talk about these stocks. Looks like a flat open for europe. That story, next. On the move guy good morning. Youre watching on the move. Im alongside Caroline Hyde. Shes in berlin today. We are moments away from the start of european trading. What is the brief . Caroline president obama urges britons to stay in the eu. Does his intervention change the terms of the brexit trade . Buying its way out of trouble, vw strikes a deal over emissions in the United States. Is the rest of the industry caught up in a scandal . Keep an eye on daimler stock. And money for nothing. The yen sinks and stocks surge as the boj may help banks offer negative rates on some loans. Fascinating day. We are expecting daimler to fall. Were seeing the dax reflecting what could be a negative day for some german stocks. We are down some 0. 7 . We see it performed farmers than the foot to 100. It does seem to be about the carmakers. Keep an eye on daimler. It seems to be caught up in the United States investigation. We are moments away from the open. Lets get over to nejra cehic. Nejra thanks so much, caroline. We saw a mixed trade in asia. The shanghai composite, one of the worst performers in the world this week. Lets see how europe is shaping up. We could see some muted losses. Ftse 100 down almost 0. 4 . Cac 40 pretty much unchanged. We are still waiting for the dax to open up. We can come back to that later. I will be talking carmakers in a moment. First, the euro. It has been tricky this morning. It is pretty much unchanged against the dollar today. We saw the euro with yesterday by mario draghi. We saw it surge to a session id erasedrates before it its losses. The euro is up about 2. 7 since the ecb march meeting. The currency to keep an eye on even after mario draghi said, just be patient. Just to show you some of the main movers today, it is all about the auto sector. Daimler, going to take a wild to open, but firstquarter operating profit fell as the mercedesbenz division spent money to introduce the latest version of the sedan. Volvo, firstquarter earnings did fall because of the north american truck market. Volkswagen off by 2. 4 . It has agreed to fix or buy back about 500,000 into cars in the u. S. A significant step forward in its effort to emerge from the emissions cheating scandal. Guy thank you very much indeed. Lets show you what is happening. As soon as we get daimler, we will bring that to you. The bulk of the sector story is pointing down. Energy and materials, unsurprisingly, given what is happening. It has been a fairly solid week for some areas. We are rotating back into some safer areas. Telcos treating a little higher. Health care and Consumer Staples flat rate now. We are into a risk off mode here, interesting given what is happening in the rest of the world. Pmi data breaking. The composite pmi number coming through at 50. 5. Looks like the manufacturing number at 48. 3 is softer than we thought it would be. The Services Number looks stronger than anticipated. Lets get a daimler number for you. We have been watching very carefully as anticipated, down around 5 . Numbers this morning pretty much matched expectations. This is the boj investigation, the desire for an investigation coming out of the United States surrounding emissions. They worry they are going to be tainted the same way. Is where we stand on the downside, the stock trading at 62. 90. We are softer. We will come back to this story. Arndt ellinghorst is going to join us. He will give us analysis on vw as well. Back to politics. Lets talk about what is happening. President obama has urged the british people to reject the socalled brexit from the eu, writing in todays telegraph. He says, the European Union doesnt moderate british influence, it modifies magnifies it. Brexit, thef the exit from the eu, have criticized obamas intervention, accusing him of double standards. Joining us now, we are joined by washington correspondent toluse open up a. Lets talk a little bit about what is happening here. Obama using incredibly emotive language. The president is referencing what happened in the second world war, talking about the need for European Union unity and referencing the historical narrative that surrounds that. Those words were chosen carefully. Definitely. The president wants to use his popularity in the u. K. , focusing on the voters who are undecided. Hes hoping that his popularity and using some of that language that evokes the long history will get people to be a little nostalgic and think it is better to remain in the eu where they can have a better relationship with the u. S. Caroline how much do you think his words will hit home, and wholeheartedly do you think he really feels this . You can tell by that oped that ran. As soon as air force one landed in the u. K. , he was getting his opinion across. We are expecting to hear more him him. Hes going to do a joint press conference with Prime Minister cameron today. This is probably the main topic. It is not very common to hear a u. S. President weigh in on a foreign election. Caroline going to be making his opinion known throughout the day im sure. Give us a sense, how could this backfire on him, what are the risks at the moment . The potential risks are that people do see him as meddling, that voters see him as an outsider interjecting himself into a family dispute. That is the potential risk he faces. Not very many risks for him back in the u. S. Americans arent following this debate very closely. We are more focusing on our own political debate in the u. S. Guy thanks very much. Plenty more coverage over the next few days as we watch the president here in the u k and over to germany as well. Lets turn our attention to George Saravelos. Hes going to be with us for a little while. The brexit trade, obama making some comments on it, does that change the nature of the trade on the brexit story . From our perspective, the trade hasnt been that much about brexit in terms of sterling, but about the other factors driving the currency. We turned very bearish in november. The country has got a very big deficit. Theres issues around financing that deficit. Bearish, but i would say it is not really about brexit even though it has with these other factors that have come into play this year. Guy this is about the current account. George the current account, the bank of england that has turned very dovish. It is all these other things that have come into place, and theres been a lot of influence into the u. K. Because of the high levels of oil that have come down substantially. A lot of factors have come into play to contribute to starving weakness. Brexit dominates the headlines but is not the underlying driver. Caroline george, caroline from berlin. I wanted to get your take on how much you think investment might be put off until after the referendum, how much this could enter the uks economy. Is it actually starting to feel its effects cooling down in the uks economy . George very hard to say and to monitor this realtime. All one can look at is the data and some of the pmis, which have been coming weaker. Theres other drivers as well. Difficult to separate one from another. The Global Economy has been weakening and the u. K. Is undergoing a higher level of fiscal tightening. All we can say is that growth is slowing. It is one of the factors keeping the bank of england dovish. Contributed tos sterling weakness. Caroline George Saravelos staying with us. Up next, more on the ecb. The ecb president tells markets and german politicians alike to be patient for its policy to take effect. Caroline welcome back to on the move. It is 9 12 in berlin, 8 12 in london. As you can see, a Beautiful Day from berlin. Not a Beautiful Day if you are training autos. Timer being embroiled in the emissions scandal. Late yesterday, we had that headline coming out, the United States department of justice requesting to investigate daimler over emissions certification processes. Thatwn 2. 3 as we had Board Meeting today. Yesterday, it was one of the best performers on the stoxx 600. Really, the auto sector being dragged down. Check this out on the terminal. , you aresector index currently seeing every single auto company in the red. Daimler the worst. Nault,t, bmw, even re despite betterthanexpected numbers showing real growth in europe, nonetheless, this seems to be contagion across the sector. Guy and weve got a great guest coming up later on, Arndt Ellinghorst joining us. We will work our way through the sentiment story that seems to be surrounding that sector and get details on how we should position ourselves for that. Another story we are watching carefully, the yen trading lower, following a bloomberg report that the bank of japan may be considering offering negative rates on some loans to stimulate credit. Lets cross to tokyo to speak to our japan editor. Copycat draghi . Is this what were looking at here . Boj is trying to stimulate banks lending to companies and individual households. The difference between the euro region and japan is that in japan, the problem is not a lack of will or desire to lend or a lack of money to lend. There is a lack of people who want to borrow money. The average deposit to loan ratio is about 70 . In the eu area, it is 131 . Theyve got many more loans out then deposit. Even if japanese banks are paid to lend, they cant find people who want to borrow. It is not clear how much effect this is going to having stimulating credit. Credit was already incredibly loose here. Lowering that two minus something, is that going to have a huge effect on peoples willingness to borrow . Probably not. Caroline james, not sounding all that optimistic. On thego to wcrs bloomberg right now, japanese yen, the worst performer. Seeing some weakening in the yen. Is that going to freed two feet through to the economy . You think perhaps limited effect. The boj has been doing different policies around stimulus. Lending hasnt really taken off since corona came in. It is still about 2 yearoveryear. Weakening of the yen will have sustained weakening of the yen would have a good effect on the economy, but it is too soon to tell. It is too soon to say, is this going to have a huge effect on increasing credit and economic activity. Guy james, thank you very much indeed. Great reporting from bloomberg on what is happening with the boj. George saravelos, global cohead of fx research at deutsche, still with us. Weve talked a little about what is happening with brexit. Lets talk about the ecb and boj. Is this the boj attacking the credit channel or the fx channel . George it is trying to attack the credit channel given that the fx channel didnt work and fx is responding. You could make the case that they are not going aggressive on the negative rate, which ended up going positive for the yen. Im skeptical how powerful this is going to be to push dollaryen higher. To us, it is about the real rate differential. That has collapsed over the last few months. People have stopped believing in abenomics, stopped believing the boj has more tools, and that meeting earlier this year when they cut rates was incredibly important for the market. It changed perceptions about Central Banks. We caroline we seem to be having a going from the ecb. We seem to be trying to say they dont target fx. Now they target credit. Are we going to start to see the call on fiscal stimulus coming from japan as well as we heard from the ecb . George i think we are likely to get fiscal stimulus out of japan. Youve got the question of the increase in consumption tax. I think it is very likely they delay the consumption tax increase and do a supplementary budget. How big will that be . Theres a range of anywhere between 3 trillion to 10 trillion. I think if that fails, doesnt work, we will soon shift to talking about helicopter money, particularly if theres a big negative shock to the economy. Guy it was interesting listening to james talk about the ecb and the boj, very different problems in terms of the debt story, the demand. How comparable are the policy frameworks of the Central Banks . Draghi tells us we need to be patient. You hear from the boj, hurry up. Where are we . There are similarities and differences. The ecb is slightly before the to in terms of the extent which it exhausted monetary toolkit. Theyre still quite a lot of risk premium. It can try and push the currency weaker because it is not as expensive as dollaryen was. The ecb has more policy scope. Eventually, if that doesnt work, they will end up to a similar position as japan. Inflation expectations are still pretty weak. Guy they have been going in a negative direction. Great to see you this morning. Probably not enough time with you but we will be interested in seeing you again. George saravelos from deutsche bank. Up next, it is battle of the charts. See you in a moment. Guy 22 minutes into the market session. It is time for the battle of the charts. Cap im sure has a fantastic one. Let me talk you through what we think my chart is telling you this morning. Then we get George Saravelos view on all this. This is my chart, george. The week has changed sentiment story around china. If we believe the recent risk on rally has been driven by people praising out the risks on china, maybe you should start taking a look at what is happening. And u. S. Big china etf interest in that etf. Interest has started to climb. Weve seen a kick down where other markets have been rallying. Were not done with china yet would be my line, caroline. Caroline perhaps. But today is a story about japan. That phenomenal story coming out of Bloomberg News about the fact that japan is potentially looking to stimulate banks to lend with negative rates. I tell you why. That tragic event that happened in april has really hit manufacturing hard, the earthquake adding to slowing global demand. This chart shows you manufacturing falling off a cliff in april. 47. 9 was your reading today, well below the 50 level. It is in contraction territory. When the white line, the industrial output month on month, will that follow even though her . Look at the spike we had in february. Are we likely to see it continue in to show the pain . What on earth does that mean for the japanese economy . Can it get back on track . George saravelos, we ask you. Guy pick a winner, george. George ill pick china because i think for the next few months, it will be the key driving variable. If you look at what is happening over the last year or so, in china, theres two major forces. One is structural and one is cyclical. The market has always struggled between the two. When stimulus is kicking in, we become more optimistic. Then we start worrying about the risks. I think the last few months have been about the stimulus and the next question is, when does that stimulus start running out and do we start worrying about the Downside Risks . Guy weve been dancing for a while. Caroline it is very difficult to know. The thing i worry about is when you look at the amount of stimulus required to generate stability or some bounceback, it becomes bigger and bigger. The total figures we had in q1 where the biggest weve seen on record. I dont think it can continue to go on for a very long while. I think it is a question of quarters rather than years. Caroline and how does this play into the commodities spectrum . George the commodity spectrum, youve got demand and supply, and supply has been one factor driving oil lower. China is all about the demand side. On the supply side, we are getting a bit more comfortable. On the demand side, china is still a big issue. I wouldnt expect a lot of upside in commodities despite this recent move higher. Caroline well, george, im heartbroken that you didnt take my chart, but i thank you. George saravelos, global cohead of fx research at deutsche bank, putting it all in perspective, still worried about china. Perhaps not quite so about japan. Next, Ryan Chilcote has the latest on volkswagen the day after its u. S. Compensation deal was announced. And keep an eye on daimler stock. Guy welcome back. Im guy johnson alongside Caroline Hyde over in berlin. Caroline, some breaking economic data. Caroline there is, coming out of germany. Weve got a raft of pmi data. Germany coming in at 51. 9 looking at german manufacturing. That is well above that 50 limit for expansion. Germanys services pmi even stronger. That is missing estimates. Growth inng, healthy the services sector, but not as high as expectations have been. The composite dragged lower than expectations. Manufacturing seems to be doing better than expected. With all these scandals engulfing some of their biggest exporters, volkswagen, daimler, what does that do for manufacturing . Guy going to be interesting to see how that trade makes its way through. Lets talk about the markets. We are 31 minutes into the training day. Lets show you these markets. Daxresting to see the underperforming, but not by that much. The ftse with the big oil and materials stocks losing a little more ground. The stocks stories behind this market action, lets find out what is going on. Heres nejra cehic. Nejra starting with the best performer on the stoxx 600, zodiac aerospace. This is gaining after people saidiar with the matter there is an offer for the company. This would unite two of europes against aerospace suppliers. Deliberations are said to be in the early stages. Come more than droppedrs after a offer for zodiac. Were talking about a world leader. It has cut its earnings forecast eight times in the last six months. It has failed to meet schedules and taking on more work than it was capable of handling. This news of a potential bid driving up that stock price. Moving on to volvo, first water operating profit did fall 3 as week u. S. Economic growth hurt this swedish truck maker. The number was a beat, perhaps stock are seeing that move a little higher. One of the worst performers is daimler. Firstquarter operating profit falling 8. 5 . Division spentnz money to introduce the latest version of the e class sedan. Those costs obviously took a toll. A little clouded by the disclosure late yesterday that daimler is cooperating with the u. S. Department of justice in tigation of its emissions process. Caroline . Caroline i think that is engulfing the entire story when it comes to daimler, concerns that it could be swept up in a scandal that has really been focused not only on mitsubishi motors, but volkswagen. Volkswagens Supervisory Board will meet today to discuss the impact of the emissions cheating scandal after the company agreed to buy back cars and compensate u. S. Customers in a deal said to cost at least 10 billion. Ryan chilcote has more. A Beautiful Day. Will it be a positive day for volkswagen . It seemed to be a relief to the share price yesterday. Ryan not necessarily. There are a lot of things we still dont know. And are already meeting they have to decide how much money to set aside. Vw has agreed to set aside 10 billion as part of that department of justice deal that we learned about yesterday. But we dont know whether the Company Wants to set aside more. In addition to that, today the board will be talking about what kind of bonuses but volkswagen executives should get, if any, for 2015. What kind of dividend shareholders could get, and who done it. Theres an internal and external investigation to find out whos behind this. Maybe we will get a little financial clarity, but theres still a lot of questions. Guy daimler stock down heavily this morning. What do we know about its emissions issues . Why thee of the reasons stock is down is because we dont know a whole lot. The disclosure came late last night. Volkswagen cooperating with the department of justice. Justicertment of has asked daimler to investigate its emissions certification process. There are lawsuits against daimler in the United States. The cfo called one of those suits baseless. The substance of that suit is the claimant saying that daimler, some of the cars dont perform in accordance with emissions standards, particularly at cooler temperatures. I think investors are concerned. They dont know how far this goes. Everybody got spooked by vw, still down a good 20 from when we all learned about the scandal it was involved in. A tough day for daimler this morning. Guy thank you very much indeed. Ryan chilcote joining us at vw headquarters. Lets stay with the story. Arndt ellinghorst sitting next to me. Good morning. Is this bad timing for daimler . Arndt it couldnt be worse. You see numbers for the first mercedes, margin of only 1 , underwhelming. The mitsubishi news on the cheat device. It is really bad timing. It seems this is also catching the company unprepared, so we have no details. Guy is that what the market is reacting to . As you explained to me as you sat down, you would normally expect the environment guys knocking on the door, but it is the doj. Arndt normally, you would assume the epa in the u. S. Started negotiation with the company, then taken over by the doj. Now the doj that is overseeing the epa is asking the company to check its processes in the u. S. That is pretty unusual and we dont know why the doj is stepping up now. Guy the market has been nervous vw broke. We now see other shoes dropping. Mitsubishi, daimler, was there an expectation that at some point this was going to be affecting others . Arndt weve seen investigations before. Weve seen officials walking into offices in europe before. That is not really new. It is bundled this week. At a time when volkswagen is getting together in the u. S. I wouldnt go as far here. The doj is asking daimler to check its processes. I think it is regarding socalled aecd devices. There is no talk of a cheat device. It might be a normal investigation. Caroline weve had headlines coming from the cfo of daimler saying they do not know how long the doj probe will take and they say they are going to appoint a law firm to help with this investigation. Lets flip from daimler to volkswagen, which potentially is coming to the end or some sort of relief point. Are you happy with what theyve been announcing yesterday . Arndt i am, caroline. Ive been waiting for this is maybe december last year. I think they could have come up with a very similar agreement much earlier. It is broad. It covers what everyone has been waiting for, significant payment to consumers. They offer a buyback of the cars. Expect a big provision number from the company. I think the stock is really derisked and we can move forward talking about the necessary changes the Company Needs to introduce. Caroline talk to us about those necessary changes. Can volkswagen start to bring its brand back to where it used to be . Can it boost its margin . Caroline we analyze all the stocks globally and theres no carmaker in the world that has a cost base likes volkswagen does. Every cost ratio is at its highest level ever. If gw were just to come back to cost ratios reported in 2010, the company would save 20 billion euros in cost. The opportunity for the volkswagen brand to really restructure the business, bring them back on track, report a 5 to 6 margin, the opportunity is huge. If he gets it done, vw would be earning 25 to 30 euros a share. There is a significant opportunity for shareholders, but the Company Needs to change. Culturally, you talk about the fact this could have become been done in december. Culturally, this is a very on business. I wonder how long that culture is going to take to change. You need to refocus the business, but theres so much embedded stuff that needs to come out. Arndt that is true. It has a special shareholder structure. I would never argue that volkswagen will be as efficient as toyota, but you look at porsche, great business. Audi, fantastic business. The root cause for everything that is wrong he is the vw brand. The vw brand has a new management board, new ceo, pretty new cfo, it is a young team, a new team, and i would really recommend people giving these guys a chance. Them ae time to give chance. So far, the stock market not agreeing with you. Vw caught up in a selloff across the auto industry. Almost every single auto company falling on the auto index in the stoxx 600. Arndt ellinghorst, wonderful to have you on. Thank you. Up next, disappointing results from another luxury goods maker. Erings discuss k firstquarter results. Caroline welcome back to on the move. Caroline hyde live from a beautifully sunny berlin. Not beautifully sunny if you are long some of these german stocks today. Daimler currently off by almost 5 as it finds itself embroiled in the emissions scandal. Also being investigated by the department of justice. Now lets get outside the world of business. Lets get to yvonne man. Yvonne good morning, caroline. Gloomy day in hong kong. Daimler shares falling as emissions came under scrutiny in the u. S. As the company was asked by the Justice Department for the certification process of its diesel cars. The maker of mercedesbenz vehicles said it is cooperating with authorities. Daimler said firstquarter operating profit fell 8. 5 . Lloyds Banking Group considering deeper cuts according to people familiar with knowledge of the matter. Britains largest Mortgage Lender could remove more jobs than outlined in the october 2014 plan to lower expenses. Googles Parent Company of about said Profit Margins could be hit by maier alphabet said Profit Margins could be hit by higher mobile phone usage. The company has to pay more to partners to reach users on their phones. Shares slumped nearly 6 . Microsoft shares also fell after hours after thirdquarter profit tax ratesek with weighing on the bottom line. Microsoft is trying to transition to cloud and subscriptionbased products. That is your Bloomberg Business flash this morning. Guy thank you very much indeed. Another stock that is down after the luxury goods maker missed revenue estimates. Lets speak to our senior luxury goods analyst, deborah aitken. This is down to tourism, i guess. How much of this is under control . What is going on . 2. 6 growth. What we can see is a mix by different brands. Gucci is doing well. It is growing in asia. Them. Doing very well for elsewhere, there are issues also with brands like bottega vinneta. Need to bring that under control, so that it is equally did across different regions. Theres a lot going on. His coming back, 7 growth, doing very well for them. Caroline interesting, deborah. Pricey handbags too. The confidencet in the second half of the year. We know so many Luxury Companies have been hurt by the tragic events that engulfed france and belgium. They sound pretty confident in their second half. Believe them . I do. I think it is more on what is happening with the creative designers around the sector overall. So long as we dont have any of the major big issues, i would imagine the chinese would start to travel again. What we are seeing is more chinese buying at home and traveling to new destinations and that is difficult to capture in the shortterm. It has to be really about making sure that we are doing a lot more on ecommerce in the sector, making sure that we are in the right place, making sure that price points are equated across different regions. Guy thank you very much indeed, deborah aitken. Up next, has markets digest draghis statements, we look ahead to a joint conference between barack obama and David Cameron. How will it feed brexit sentiment . Guy welcome back. Here are some of the highlights of the day. Eurozone pmi data, then before the u. S. Market opens, earnings from ge, mcdonalds, and honeywell. Theres a snapshot of the u. S. Economy. Later, barack obama and David Cameron scheduled to hold it joint news conference. I wonder what they will be talking about. Brexit, possibly. Caroline i think you might be reading those british tea leaves right. Richard jones joins us now, as does our dearly beloved anchor Jonathan Ferro across the atlantic. I want to talk about the yen. Really underperforming today. The british pound was higher on the back of these obama comments. Should we be reacting in quite such an amazing fashion on the fx market to obama . Jonathan the big fascination this morning is dollaryen. Ive got one question. Why should dollaryen move the way it has on any fundamental reason off the back of the story that the bank of japan may lend with a negative rate to some banks. There no fundamental reason in the fx market for that to happen apart from signaling they might do something next week. Richard nine i think we probably have scaled some fairly important technical resistance is in dollaryen. We often talk about the pain trade in fx markets. I think that might be what is going on here. There is anticipation now that weve gone from the market not being certain they are going to do something next week. Guy it was explained to me earlier that maybe theres an idea that they go after the credit channel rather than the fx channel. Is there something to that . Dissimilar to not what the ecb enacted last month. You can see where a slightly different tool they are trying to draw. I think the jury is still out on whether that is effective. But it certainly is something different. If we look at the past eight years of monastery stimulus, this is another quiver in the bow. Jonathan youve got centralbank a telling bank x that we can lend some money to you, and they are thinking, who am i going to lend it to . Theres no demand for this money. Why dont you buy me some customers . That is what they need in japan. Those Companies Need some customers. This has nothing to do with the amount of money available in japan. It is on the other side. It is demand. I dont see how this really addresses any of the fundamental problems in japan right now. Richard does it raise that question that we and grappling with . Do we need more fiscal stimulus as monetary stimulus runs out of effectiveness . Weve heard that out of various constituencies globally. It is not a supply problem. It is that nobody wants it. Caroline richard, if you have a look at the data, pmi manufacturing woeful in japan. Sides,y their economic the natural disasters focusing on what is happening in april. It is interesting. There seems to be a bit of similarity with it. The boj picking up where the ecb has gone. They are going to focus on credit rather than the fx rate. How long will it be until kuroda starts to shout for fiscal stimulus . Thisrd i think the fact manufacturing pmi number below 50, contractionary, it just underscores the scope of the challenges facing the boj, and those challenges arent dissimilar to what is facing the ecb and other policymakers globally. Fiscal policy needs to be part of that conversation and i think the difficult decision needs to be made and Monetary Policy should not the only game in town. Uy jon ferro is back later he will be on the radio with me in just a moment. Richard jones joining us as well. The conversation not going away anytime soon. Germany also very much in this debate. Draghi kicking back against schaeuble. Were going to carry on that conversation. Michael fuchs is going to be joining francine on open the pulse. We will find out how the germans feel about mario draghi during that conversation. The car sector also in focus. Maybe michael will give us a view on what is happening. That is it from on the move. Francine lacqua and the pulse and out of next. 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 online and 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. Staying positive on the negative. Mario draghi insists negative rates are working as bank of japan officials are set to eye sub zero rates. Alphabet mrs. Estimates misses estimates. President obama urges britain to stay in the e. U. , welcome to the pulse im francine lacqua