Month . It could be for Global Markets as a rough start sense fx thetility and pushes shanghai composite to its longest losing streak since january. I certainly would not describe this as a bubble economy. We have relatively weak Global Growth but the u. S. Economy has been doing well and domestic strength has been propelling u s forward in in spite of the fact we are suffering a drag from the global economy. Francine the weak safety play set up treasuries for the biggest two week gain since january. Now, for more, we have the chart of the hour coming up a first heres mark with your asset check. Yen, on discussion of the i thought it would be lovely to do technical analysis, something we have not done on the dollaryen as talk turns to possible boj intervention. The dollar is rising against the yen. Many saying 105 is a key level for the boj to intervene. This is a 12 month chart, and it shows the dollaryen moving average as well as the price, which is down to 109. 7. The dollar has been following. The 50 Day Moving Average is the purple line. The 200 day is the green line. If a asset is rising you would like the 50 Day Moving Average to be above the 200 Day Moving Average. That is a negative for the dollar. Also negative for the dollar, is trading below both the 200 day and the 50 Day Moving Average. Ideally it would be trading above both. So, thats a negative. That means the momentum is certainly to the downside for the dollar. Look at the bottom half of the chart. This is the relative strength index. This tells us whether an asset is overbought or oversold. Any figure above 70 shows an asset is overbought. Now, earlier today the dollaryen fell below 30, meaning it was oversold. But for those technical analysts, when it is below 30, that is not the time to buy the dollar. Its only when it crosses above the 30 line, which it has done, it is above 30 once again to 31. 5. So, the moving average is a negative for the dollar but the shortterm rsi is a positive for the dollar. Take what you want away from the t. A. On the dollaryen. Lets move onto equities. This is the stoxx 600 over the last six months. Ast friday the stock 600 fell. Its rising today but still it is on track for its fourth weekly drop, the longest losing stretch since october 2014. Since reaching that twomonth high on march 16, the index has fallen by 5 . Since it reached that 2. 5 year low on february 11, the stoxx 600 as jumped by 8 . Lets put it even more and perspective, since the stoxx 600 reached a record high last april, it is down by 20 . I will leave you with the bestperforming sectors this week, which will lead me to a chart im going to show you in 20 minutes time, healthcare stocks. Bestperforming interesting group. The chart i will show you in 20 minutes shows it is not just down to m a expectation. Francine i have a secret chart of the hour which im keeping for later. It has to do with the yen. Yen again some of the noncommercial positioning. This is your oil check. Ts now gaining 3 is six days. Ets lets get to the first word news. Nejra thanks. David cameron has revealed he did have a stake in an offshore fund till six years ago. It is the first time the Prime Minister has answered the question of whether he ever benefited from the investment. He spoke to itv news. Prime minister Cameron Samantha and i owned 5000 units in an Investment Trust which we sold in january 2010. That was worth 30,000 pounds. I paid income tax on the avidends, but there wa s prophet but it was less than the Capital Gains tax, but it was subject to all the u. K. Taxes. Business as usual for the Icelandic Central Bank despite the political turmoil the country is expanding. The Central Bank Governor told reducerg that plans to capital controls will go ahead despite the Prime Minister standing down earlier this week and the government facing a noconfidence vote today in the wake of the Panama Papers scandal. We are never concerned about the politics. Theres a political process for choosing a parliament and a government. We work with whatever government is in power at any given time. We give our advice and we have our independence in terms of Monetary Policy. Credit suisse has told employees to avoid discussing the brexit before the referendum in june. Staff to stays away from events where the issue might be a race and not talk about in public. Overseas banks could move elsewhere if britain votes to leave the bloc. Global news powered by 2400 journalists in 150 news bureaus around the world. Francine . Francine thank you. Now, we have john molton on set, p or heder of better says i will let Start Talking until you show me the chart of the hour. He demanded i show it to him now. Lets go to it. I picked a benchmarking of yen against noncommercial positioning. It basically shows us that traders, despite yen weakening today, expected to continue to go up. This means investor appetite has jumped the most since 2011 for y en, and that its looking like it is not really abating. So, thank you so much for getting on. I have you for an hour and we have to talk about yen, Interest Rates and mathematics. I know you have a pet hate against some of our rivals that cant dot ehri m do their math. The environment is risky. So, it must be more difficult for you to find deals. John it is. Private equity deals are slow in europe at the moment. Very slow in the u. K. Francine because of cheap money. John cheap money and uncertainty. The brexit bears something on the u. K. Deals. People are reluctant to take till that is over and done with but that has slowed down a lot. 2 3 reduction in private equity deals are being recorded. Francine is it because a lot of companies are in trouble because of cheap financing . Jon there are very few companies in trouble. Of significant distress in europe. Francine so we are mispricing distress. Jon there is nothing new. We are continue to keep growing companies that cant afford a proper industry. Which means productivity goes down and growth goes. Changee this wont until we start normalizing Interest Rates and that is five years down the line. Hat we dont know w normalizing means. 10 years ago it seemed impossible we would have a decade of have a percent base rate in the u. K. It is just very strange. We do need higher rates to get efficient and proper allocation of capital and to get the economy going again. The central bank doesnt wnat want to do it. Francine we also have to give the economies to give them time to start growing. Money fromback Central Banks right now, do you not think we would see a global recession . Actually, history is full of recession and boom. And actually a recession is when you clear out the rubbish and g et economies back into order again. We have not had one. Francine we have not seen it done by Central Banks . Jon Central Banks have been this time trying desperately to avoid having a downswing. Me, go back tot 2008 when it looked like the Banking System was going to blwo ow up. They are completely hooked on q. E. Francine its the markets that are hooked on q. E. Jon no, its both. The centrali f banks decide they would be preparative tolerate some pain, volumes, for the better longterm, we would get out of this unpleasant embrace of low growth and eurozone being a good example. Francine so, is in a prone because they concerned about growth or is it a problem because inflation is nowhere to be seen . Out of control. It is their mandate to do more. Jon inflation would be healthy to see come back. Its quite odd. Growth in the u. K. Seems to do its best when inflation is at 3 or 4 . . It continues like your yen chart. Negative Interest Rates and the bloody currency goes up. It shows what a world world we have got into it we have gone well away from the free market. You try and find out why the yen is going up there are lots of articles talking about hedging. Nobody really understands it. Francine if everybody understood it, it would be difficult to make money in the markets. We will have more of this conversation in just a couple minutes. Stay with the pulse, because we have plenty coming your way including camerons trust issue. The Panama Papers leads to downing street. Cameron admits to making money off and offshore fund. We debate a brexit with jon molton and what a sanders or Trump Presidency would mean for america. We are live from the ambrosetti workshop. Francine we did see a spike in back ofs may be on the some news we had from the Russian Energy minister. Hes saying that Oil Producers are discussing phrasing Oil Production freezing Oil Production at january levels. He said, were hoping for success at doha. We first of all spoke to the deputy crown prince of saudi arabia 10 days ago. He made it clear we will not see a production freeze if iran does not join in. Then we heard from the Kuwaiti Oil Minister saying they are ready to freeze. Opec is always saying they are expecting other produces to do more. Break from seen as a the Russian Energy minister saying they are discussing a freeze at the levels in january. Nejra verizon plans to make a firstround bid for yahoo s web business and is willing to acquire its to penn state its s japan stake. Paid for theit tool that used to break into an iphone last month and is considering whether to tell apple how it was done. U. S. Authorities dropped a suit against the tech giant after help from a third party to access data on the iphone that belong to one of the San Bernardino terrorists. Goldman sachs has promoted scott to head its u. S. Interest rates business. He was name a partner in 2012 and will leave the u. S. Interestrate product Trading Group according to a memo. Francine lets talk about the continued fallout from the penama papers. David cameron has revealed he did previously owned a stake in an offshore fund set up by his late father. Prime minister cameron we owned we sold in which january 2010. I paid income tax on the dividends, but there was a profit, but it was less than the Capital Gains tax allowance so i did not pay Capital Gains, but it was subject to all the u. K. Taxes in all the normal ways. Francine in an exclusive interview, iceland central banker says it is business as usual despite the resignation of the countrys Prime Minister earlier this week. We are never concerned about politics. Theres a political process for choosing a parliament and s etting up governments. We work with whatever government is in power at at any given time. We give our advice and we have our independence in terms of setting Monetary Policy irrespective of what government is in place. Francine jon, when you read about the penama papers, what was your initial thought . There must be a crossover into your business. Jon there is. I chair the Stock Exchange and guernsey. The after effects are very severe. It worried me greatly when he came out. I was surprised as many at the extent of what they found. Then, there has been all kinds of comment, some of it accurate and some of it desperately in accurate francine the implications for havens, isss tax that you get lumped in the same bag. Jon terrible really because mostly we exist, tax havens, they are not low tax. Might put u. K. Punchin Pension Funds and not suffer a tax. It isot tax avoidance just putting people back were they started. A lot of it is taking advantage of the fact that these places have more sensible regulation. Of course, there is risk. There will be all kinds of wild things. Vince cable talking about direct role. A little tricky. Going back to henry the viii. But anyway the issues are much more complicated. Forhe u. K. A tax haven nondomiciled individuals . Yes. The most secretive place is the state of nevada or you can still have total confidentiality and what you have got. Its a very complex thing. To lump them together really is right. Absolutely people involved in sanctions and tax evasion, theyre a real problem and offshore centers have to make sure those things do not happen. Jon francine i remember covering t20 when gordon brown has going to crackdown. Jon things have been done. Over the course of the years, Money Laundering rules, exchange of information have come in. There is much less scope for shenanigans, let alone crookedness than there used to be. I think it is a much rarer thing to happen but it does still happen. It is not just limited to panama. Francine a quick question. I do not want to talk brexit because we will come to it. Is anything that is bad for cameron good for brexit . Is there less of a link . Jon i do not think there is much of a link. It is not going to make much difference to the brexit debate. Francine stick around. We have 40 minutes with jon molton. What happens when things do not go to plan and the turnaround business . Francine the markets high this morning. Lets head straight to the bloomberg with mark barton. Mark lets start with a tub of the leaderboard on the stock 600. A lot of italian lenders. Chiefts from unicredits executive that Financial Institutions and italy are intensely involved with negotiations with Institutional Investors to be involved in this fund to recapitalize trouble binders. You will see many of the italian lenders rallying today. That is what is happening. Stoxx 600 is up by. 5 . The best performing Industry Group has been the health care industry. You will think the reason for that has been m a speculation after the scupper ring of the deal between pfizer and allergan. It is not the only reason. Because analysts are very bullish on the health care industry. In fact, relative to the stoxx 600, they are the most bullish ever. That is fascinating. That is what the top chart shows us. The bottom chart shows us the actual performance of the stoxx 600 health care index. Have00 healthcare stocks outperformed in the last three years. Fascinating to know that after this Industry Group, the health care industry, had its worst quarter in a year, it had its best week. It is down to analysts boosting their profit expectations. Cutting profit expectations for the stocks excited. Very quickly, i want to show you what is happening to European Equity markets today. There is the ftse, the dax, the cac. W we are rising today. But the trend has been down friday, up monday. Our fourthing for consecutive weekly drop, the longest losing stretch since october 2014. Francine thank you so much. Up next, lower for longer. Could a brexit see u. K. Rates below 0. 5 in the next decade . We will talk brexit and david cameron. Well also be talking a little bit of yen. We had quite a week for yen. Today a little pressure is off but there are a lot of banker needs tovernor kuroda do something and that must be direct intervention. Will he succeed . That is the main question coming up next. Show me movies with romance. Show me more like this. Show me previously watched. Whats recommended for me. X1 makes it easy to find what you love. Call or go online and switch to x1. Only with xfinity. Rancine welcome to the pulse live from london. Im francine lacqua. Lets get straight to the bloomberg first word news with you much a hitch. Trillion a day Foreign Exchange market has had a rocky week. Volatility has risen toward the highest since 2011 as the yen surged to a high versus the dollar before retreating. Japans currency has still climbed at least 2 against all its major peers since april 1 on it tumbling equity and commodity prices. That sparked a debate about how close local officials are to intervention. Revealed thathas he did have a stake in an offshore fund set up by his late father until six years ago. It is the first time the british Prime Minister has answered the question of whether he benefited from the investment. Samantha and i had a joint account. , which we000 units sold in january 2010. That was worth Something Like 30,000 pounds. I paid income tax on the dividend, but there was a profit on it, but it was less than the Capital Gains tax allows. It was subject to all the u. K. Taxes in all the normal ways. Nejra business as usual for the icelandic centralbank despite political turmoil. The Central Bank Governor told bloomberg that plans to reduce capital controls will go ahead despite the Prime Minister standing down earlier this week and the government facing a noconfidence vote in the wake of the Panama Papers scandal. Aboutare never concerned politics. Theres a political process for choosing parliament and setting up government. What government is in power in any given time. We have our independence in terms of Monetary Policy. 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. Francine we are getting breaking news in the last couple minutes. Dollarpound, you 1. 4115 after manufacturing for the month of february, that output declining 1. 1 . 0. 2 mists estimated a decline. Concerning news as we are just three to four months away from brexit. A lot of uncertainty on the market. London mayoral candidate has pledged to be the most probusiness mayor the u. K. Capital has ever had. Speaking to caroline hyde, he said it is crucial to the citys future that britain remains in the eu. The idea of turning our back to the European Union, 500 million potential customers, the idea of walking away from a market that has led to so many jobs in london, the expansion of so many businesses, is ludicrous. The idea that we could elect a mayor who wants to leave the European Union is taking a real risk. Sadiq khan is just one of those standing in londons mayoral election. Lets stick with the brexit theme. According to one economist at bloomberg intelligence, uncertainty following a brexit , british exitit letsEuropean Union talk about potential fallout or benefits of a brexit. And jonlcome Nicola Moulton from better capital. Welcome to the program. If you look at brexit, it must mean for your business that theres a lot of uncertainty, uncertainty that the u. K. Economy probably doesnt need. Theres uncertainty for everybody, not just my business. If we were to leave the European Union, that 22 years of not really knowing what we are going. I think the main point really is that the key decision was not to be part of the euro. I did not feel that was the right thing to do. We have now is a trade arrangement largely which is very key and important for the u. K. I think the idea that we are going to go out and renegotiate trade deals around the world on our own is a bit fanciful. Representing 20 of the worlds gdp is different from representing 3 of the worlds gdp. Francine would the u. K. Automatically go into recession or would the pound fall off a cliff . What we are to do is understand the repercussions, but we dont know. Nicola the pound has already been pretty weak. It was 1. 70 against the dollar not long ago. It is now 1. 41. It was very strong against the euro when everything was going on with greece and it has gradually come way down. Youve just said that we have for manufacturing figures. Having a weaker currency isnt a bad thing if you are an exporter, but it reflects the opinions of the markets about uncertainty, the effect it might have, and the way that is expressed is by selling sterling. Francine are you probrexit . Guernsey, so i already live outside the eu. Francine can you vote in the referendum . Jon i can. You can vote 15 years after youve ceased being a resident. I wont because it doesnt seem appropriate. Francine so you can speak freely. Jon i think on barnes im actually probrexit, but i dont see any point staying in a club where the members seem to be happy with economies that go nowhere, where regulation grows without limit, where over time, you will become internationally noncompetitive. Francine would you feel differently if you resided and paid taxes in this country . Jon i still do pay taxes in the country. I wouldnt feel different at all. I know it is possible to live outside the eu. We do very nicely indeed. It is hard, the scenario of modeling people are doing, a little better than astrology. What would happen if there was a vote of brexit . It is at least a twoyear process. It requires all kinds of improbable agreements amongst the members. What will actually happen is if you get a vote to come out, you will get a better proposition francine would you . Jon you would. I dont know what, but it probably would be better. Francine and yet, nicola, the counterargument is that we dont know what kind of deal, what and of resentment. We are still influenced. Nicola the key thing is to look at inward investment. Take that as an example. One of the reasons weve had so much inward investment is that we are in the eu but we are a more businessfriendly place. Better employment laws and so on. Take the car industry. We made 1. 6 million vehicles in this country last year. That industry was apparently going to disappear. Because of the japanese investing so much money here, ata, they bought land rover and jaguar, and bmw have taken the mini brand and revived it, and also bought rollsroyce theyve invested huge amounts of money. We export a vast number of cars. Of those 1. 6 million, 80 of them are exported, part of that to the eu. The eu has a tax on cars from outside of 10 for new cars and 5 for components. That is going to massively damaged the booming car industry. I keep on being asked or told is the problems surrounding our communication is not that focus on the benefits of staying out, but on the scenario if the u. K. Leaves the eu. Nicola there are benefits of staying in. The Single Market is not yet complete. The business isnt complete. We are a massively biased economy in that 70 of our economy relates to services. Not just Financial Services, but architecture, advertising, accountants. There are huge swathes of the Service Industry where britain is the global leader. We will benefit if the Single Market is completed. Francine we are not doing too badly. Why take a chance . Jon perfectly good argument. You can carry on as you are. As the years go by, you might live to regret it. The tide of regulation and complexity will gradually slow down our economy relative to people outside the eu. Francine you can negotiate. Jon and should. Free trade is a great idea with the eurozone. Some other things are obviously good ideas. But somethings we just dont need. Why do we need to be in a social charter . You dont. Theres tons of regulation we dont want. Francine arent we fighting the regulation . David cameron doesnt show up at every meeting and say, ill sign this piece of paper. Hes trying to keep the best interest of this country. Jon hes definitely losing the battle quite badly. The Financial Services industry is threatened by staying in as well as coming out as the europeans put in more eggs. We are at war, basically, with paris and frankfurt for where that Financial Services go. This is not a black and white argument anywhere. Francine we going to take a short break and come back. Nicola horlick and jon moulton. Next, we are also live at a workshop in italy where leading economists, finance ministers, and ceos are gathered to discuss the global outlook. We speak to luigi about capitalism. Look at that. I think that is where George Clooney lives. Francine leading economists, finance ministers, and ceos are in italy for the workshop on the river banks of the lake. Is an economist and professor of finance at the university of chicago. He joins us from the event. Luigi, great to have you on the program. Youve done a lot of work on income inequality, on capitalism, and i guess now weve never really seen times like this before. We have corbyn in the u. K. , bernie sanders, donald trump. What is going on around the world that people express their votes for nonmoderate politicians . Luigi first of all, it is a bit funny to discuss about income inequality here at this luxurious villa next to George Clooneys villa, but that said, ithink in my book in 2012, described the u. S. Economic situation and said that populist was inevitable. The question was which kind of populist we will get. Sure enough, we have seen populists. One is the socialist, sanders, and the second one is a more lahtwing populist a berlusconi in donald trump. Unfortunately, we dont see a lot of clams, a lot of policies in the United States to address this. Francine is this antiestablishment for the sake of it or is it that centralbank policy, income inequality, is making people feel that it is a lost generation . Luigi i think it is much more the latter. I think people are willing to capitalism if capitalism is providing growth, income for everybody, and some appearance of being fair. Unfortunately, none of these conditions is in place today in the United States. I think the growth is limited. Game is a sense that the is rigged. That is the reason why even four years ago, i said populism is inevitable and we need to deal with the cause of it rather than just saying these are crazy people. Francine this is not a problem only carved down for the u. S. This is a problem across europe and the u. K. Think the, but i United Kingdom is more similar to the u. S. For reasons in europe, the problem is more the ecb policy and the difficulties of growing overall. The problem is the entire western world. I think the inequality is more severe in the United States and the United Kingdom. Jon do you think that quantitative easing and these policies of very low Interest Rates are adding to income inequality, making the rich richer again . Luigi they do. Draghi,ir, with mario that is the only thing he can do given the rules of the ecb. I dont think he has other choices at the moment. Im not saying that it is necessarily the wrong policy, but you are right. I think it adds to the income inequality. Francine luigi, great to have you on the program. From zingales joining us italy. Still joining us, nicola horlick, jon moulton. I wonder how much that income inequality plays in the u. K. Debate. We had a u. K. Election not long ago. It hasnt been 12 months. There was unilateral support almost for david cameron. I dont understand why hes losing that so much. Nicola weve had this whole thing going on about these investments. I think it is normal. When a government is newly elected, everything is wonderful. As time goes on, you get opposition and elections and protest votes. Im sure there will be protest votes in the may election. Importantt was a very one. If you have quantitative easing, you have real assets going up in value that tend to favor the rich. The rich have got richer and the poor have got poorer and we are in this strange uncharted territory. It is a very strange situation. It is worrying because Interest Rates are extremely low when the economy has been doing reasonably well. If it trends down, we dont have any firepower. The worst may still be to come in a couple years time. Are you expecting shocks . This is what you were mentioning before, that we needed to normalize a year ago. We wereeresting that just being told the ecb only had one thing they could do and it is something which leads to still further inequality in society. This is not good. Francine what i dont understand is the alternative is probably a recession and the breakup of the eurozone. Right . Jon depression is really bad. Francine much worse. Nicola that is what we were trying to avoid. Jon at some point, we ought to be prepared to take a short recession to get things sorted out. It is painful. Politicians hate that and so do most other people. But in the long term, you will be better if you take the pain and get it over with. Francine we were talking about brexit, one of the big risks. Are we in and out or is it impossible to think what happens . Nicola if we leave the eu, that is going to add to the uncertainty and there are going to be huge risks to our economy. There are 2. 3 million jobs directly dependent on our relationship to the eu. Onecbi reckons about million of those jobs will go. Francine do you think we will leave . Jon i think those numbers are a bit aggressive. I dont think we will leave. I think the vote will be to stay in. I think people will be too frightened of the possibilities. They would be right to be. Nicola the bookies think we will stay in and they seem to be better at judging these things. Francine thank you so much. Nicola horlick and jon moulton from better capital. Up next, what happens when things dont go to plan in the turnaround business. Jon moulton, founder of better capital, is still with us. We talked a little about brexit. We talked a little about qe. How do you turn around steel . Theres all this controversy regarding tata steel. Jon i think it is incredibly difficult. The basics of the industry are really horrible. Massive overcapacity globally. Very price insensitive. They will operate at pretty well any price. That has depressed global prices sharply. ,ou try to work in the u. K. With u. K. Wages, u. K. Our prices, u. K. Taxation, and it is just too hard. I dont know theres an easy way through. The only way of saving that industry involves central help from the government measured in several billion pounds territory. Francine is it worth keeping it . Jon i would have to say i think that is a very difficult question. Obviously you think it is if you work there. If you dont work there, you would have to say that industry is really hard work and while bits of it are worth saving, there are some of value added bits, the only valuable route is to make it a scrap business rather than a Blast Furnace business. The problem is that costs hundreds of millions to do. Youve got massive problems with the existing fund deficit, with huge li na costs, so the arithmetic is very daunting. They have got to get that cleared by the eu. Supporting the Steel Industry is generally viewed as a legal within the eu. Francine that brings us full circle. Thank you for staying us for the hour. Stay with bloomberg. We have plenty coming your way. Tom keene joins me from new york. We have some great guests coming up. We will be speaking to Nouriel Roubini and the former imf chief economist. All of that coming up in the next two hours. Your pain stocks again. While commodities we can for the first time in six days. The yen isays move, bracing for to go past 105. How what can the government do to stem the longerterm rally . They were cameron admits he owns shares in an offshore fund we saw brexit and global risks. This is bloomberg surveillance. Im friends a lot but in london with tom keene in new york
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