friday morning. breaking news across the bloomberg number the chinese authority in banking are taking action for those banks that they consider our lending perhaps a little bit too fast and too furious. we saw the loans hit record levels this week. this concern about indebtedness of the chinese population at large, and the corporate -- overall indebtedness -- expanded over 200% per capita. the people's bank of china are determined that some banks who have landed too fast, they have raised the reserve required ratio. this is according to people familiar with the matter. this will be regional banks, among the lenders, seen as overstretching themselves. they did not give us any additional details, and terms of the banks that were actually affected. or how much the reserve requirements would actually impact the marketplace. of course, this is all about china rebalancing exactly what is going on. let us take the conversation, you were looking at the currency there, the yuan has had a good run. the biggest weekly month in a year, and we see the chinese authorities moving on the stabilization and ahead of the g-20. let us get to the markets. i am looking at dollar-yen. this is a very personification of why the markets are perturbed at the moment. you are looking at quite a significant strengthening of the dollar-yen. it has moved to the most, strengthened the most in stew thousand eight. when you have here essentially is a cold. this is a theme we will see on bloomberg, we surveyed 63 economists. 27 say the moves of the bank of japan and the governor are likely to get to 2% an inflation targets. what you see of course is inventory, oil hitting and 86-year high. that added fuel. the sugar the risk-reward. you have 10-year government bonds, wall street are holding the most treasuries since october 2013. 10-year government bonds down 1.73%. we are seeing that add to the voice of where they think cutting treasuries will go. holding at gold, 1226. this week, that is up for six straight sessions. wti down halfou, a percent. by 504 million barrels for the highest since 1930. one thing just an open we are seeing the norwegian central-bank governor that excessive use of the oil income -- he has predicted a need to withdraw $10 billion from the fund this year. that have to have repercussions in terms of global perspective. one company with a global perspective is hans nichols. taken away. hans: manus, net income is a miss for olli. the estimate was for 1.5 6 billion euros. so a clear miss on net income. operatingook at 2015, profits came in at 10.7 billion. when we look at the dividend, it will be paid out at 730. the estimate was for 740. a slight mist there, so operating profit was at the upper end of the margin. one quick number that caught my attention here, the net income from their asset management division, 637 million. that is right around where we are expecting it to come in. but the big number to focus in on fourth-quarter net income, it is a clear miss. coming in at 1.42 versus estimates of 1.56. manus: that dividend survey going to be a topic of conversation or is when we get underway. we have the ceo joining us at 6:45 on countdown. how to do miss the dividend, what does it mean? what is the share buyback, what is going on at pimco? all of that to come with the cfo coming up later. but is it you up to speed, bloomberg first were news, caroline hyde is here. caroline: david cameron's negotiations with eu leaders spills into a second day, as he searches for a deal on membership is something he can sell to the british voters. he is facing resistance over more demands for welfare curbing, and objections for plans to protect the financial industry. ecb the boj following the on negative rates, a quarter of the economy in the world is under subzero. those surveyed is in a negative rates will help governor k uroda. meanwhile, only 42% say the policy is succeeding in the euro area. china's currency is heading for the biggest weekly advance in a year. but the rally should not be taken as a sign of china's great reversal in capital flows. goldman sachs is warning that any further shock to depreciation will only accelerate the exit. with $550 billion of outflows in the second half of 2015, and the yuan is weakening $100 billion more. a $9 billion fund manager is pessimistic about the market. his global equity fund beat 99% of peers, but it now has a dividend fund in cash. with all the recent turmoil, he says he has no immediate plans to buy shares. the former treasury secretary larry summers said the biggest challenge to the u.s. economy is getting inflation to move toward the federal reserve old. speaking to bloomberg, he said that the fed should hold off on for the rate hikes. larry: we are in a new world where the challenge is not excessive inflation. the challenge is getting inflation up to 2%. and markets are saying that is not going to happen in any major place over the next decade. caroline: donald trump has described hope francis as disgraceful, as he disgrace his immigration stance. he said it is not about building walls, and it is not christian. the republican presidential front-runner once a war on the mexican border to combat illegal immigration. he says it is disgraceful to question his face. global news 24 hours a day in more than 150 news bureaus around the world. manus: is are no one in the world that can be spared from donald trump? market,ake us to the the chinese markets have had a bit of a run this week. the currency has had a strong week. we just have news coming through that the chinese pc of the are going to get hard and heavy for those going fast and furious. alliteration for friday. zeb: yeah, they certainly are. and donald trump cannot do anything about this one. we are watching this news from the pcob. sources telling us they may raise the ratio that boosted lending too fast. they have apparently come to the conclusion that these banks that have increased lending too fast recently, and reserve ratio needs to be hiked. that should be good news essentially for banks, bringing down the risk profile and engendering more confidence among investors. but it does that among uncertainty as to which banks are effective. going forward, if that lending will turn sour -- bad lending. we don't want that for nonperforming loans. the shanghai composite and hang seng are lower. it is a mixed day across the region. we started out lower. but you did see pockets of gain in thailand, sri lanka, as well as wellington, new zealand. australia, we are seeing commodity related shares declining. take a look -- 8/10 of 1%. tal mining down 13% on that stock. take a look at hong kong today, really a story of property-related shares. there, bigelopment developers in hong kong rising. despite concerns that the property market here is in for a quite challenging time, these developers will have a lot of unsold inventory on the books. prices are not where they would like them to be. and certainly, demand is anemic. and sellers are not able to match with buyers because the price. we want to watch the developers closely. the are taking a risk today. the macau casinos are down. galaxy entertainment, after mgm reported a big drop out of revenues in macau. watch that space closely. taken altogether, you see the decline just under 1% for the asia-pacific. theuses see that the yen, risk aversion is back on in the market. ist is why we see the nikkei down by 1.5%. a lot going down, and this news out of china sure to catch investors here. manus: thank you very much. zeb eckert in china. no deal for david cameron yeah, the u.k. prime minister's proposals were met with resistance from france and eastern european states. pre-much as expected. let us get to brussels more ryan chilcote is standing by. do you have enough shirts with you? you could be there until tomorrow. i am not going to answer that question, manus. this is comic like you said, likely to go on until tomorrow. cap's they could get it done today. but i do think that generally speaking, people are not quite as confident as they were coming into this. they thought it would be done quickly. we caught up with a very weary italian prime minister in the wee hours of the morning. he said i'm a bit less optimistic of a u.k. deal than i was before the summit began. that reason is because, in part, negotiating tactics. think about this. to have the bosses agreeing a one million pounds salary. you have a draft contract that says you are entitled to that salary for four years. pretty confident they will agree, and even though they will resist, they are just feigning resistance. the when you come into the room, i want a 13-year deal. more specifically, i want a twon-year deal with three-year period's where it could be expended. the british prime minister, with his so-called emergency brake on a period of time that migrants working in the u.k. from the eu would have to wait until they could get those benefits in the u.k. everybody thought it was going to be four years. he changes it to 13. eastern european countries say five. on it goes into the morning. that is just one problem, of course. there are others for the french appeared to still be upset with some of the language when it comes to how the euro countries deal with the non-euro using countries. that gets into the banking system. that conversation continues. finally, the belgians wanted to introduce new language saying enough is enough. this is a long negotiation, we need to make sure we do not come back. we need to preclude a second referendum and discourage people from having referendums in other countries. we need to make it clear in the language of this deal that this would be final, no more negotiating. so, there was a win to be a in the breakfast this morning. now we are looking at a belgian brunch. we could be here for the weekend. everybody wants to get a deal done. but it is looking more difficult than yesterday. manus: they go right down to the wire. and usually, usually they tried to agree. ryan, stay tuned. you are there for the day. well done. ryan chilcote in brussels. let us bring in saker. he joins me this morning. we will get the allianz number this morning. we aresten to hans, going down to the wire. classic negotiation -- david cameron is to come home with a kind of triumph rent opposition to turn the polls. negotiation nobody really wanted. i don't think mr. cameron wants to negotiate. he is not a euro skeptic. so they are all sort of going to the wire. the danger is, of course, you go to the wire and you cannot make a deal. and people are going to vote against being in the euro. and that, i think, people have not thought very carefully about. out a paper, the only benchmark we have is greenland. that was 1985. that took them three years. you have raised some serious warning flags in terms of the paper you have written, foreign dprect investment and tg risk. saker: there are two issues. it is basically financial industry and media. the financial industry is the heart of europe. the city of london, essentially, ask as the main financial center. that will undoubtedly be expected by a brexit. a lot of foreign companies, vertically from the u.s., think of the united kingdom as the friendly part of europe that they can set up in. the language they understand. that becomes less attractive with time. so i'm not entirely convinced that this is entirely happening without overtime. the thing that will be noticed medially, over time, there will be something from it. manus: we have comparison in terms of the market dominance the united kingdom has. this is what we own. we own the fx market. we own the derivatives market. alley on thefund lane. this is the manifestation of risk. 180 billion pounds. 12% of u.k. gdp. in terms of taxes, 66 billion pounds. i am not talking about the square mile. it is beyond that. toer: look, if you look people like us, investment strategist, whatever happens, we will continue to abide by european rules. because we have to. the question is, we need a passport, what happens to the position of london as a whole. you do have a parallel. after 9/11, the united states of america closed in on itself. and very slowly, as result of that, new york lost dominance. and london took that dominance over. manus: there is always someone waiting in the wings. it is taken to the market. we have 90 seconds to get to it. this is volatility in sterling over the next six months. would say the i market is positioned for brexit. is there more to come? saker: they are worried about it. manus: 15-20% drop? saker: you have to put a risk premium on selling. the currency will stand on itself. manasquan how does it manifest itself in terms of guilt in our market? we caught up with pimco. they said 40% probability that if we vote for brexit this will have an impact and the bank of england will have to push hikes way into the long route, something in 2015. saker: it is interesting. because, of course, sterling being weak means we have to import inflation. but they will be worried about economic growth in the u.k. and they might not raise interest rates. it is quite complicated. i think most people are assuming this will go to the wire, but it will be ok. i am not sure it will be either. onus on credit swaps government bonds, we have not seen this is 2013. it is nowhere near that panic level. but the market is worried. is markingmarket itself, saying the position of the u.k. government will change if we have a brexit. there is a referendum, and if we have a brexit, the position of u.k. government debt and of sterling will change and will weaken. and it will be more risky than it was before. manus: we like to deal in fact the bloomberg. you will stay with me. the rest ofe for countdown. for more on the conversation, to into bloomberg radio. our colleagues on first work europe will be speaking to the institute of directors, as well as the confederation of british industries. that is a 9:45 london time. here is your day ahead. in this hour, the governor of the people's bank of china speaks at an event in beijing. they said they would raise the reserve ratio for some banks it thinks glenn to quickly. retail sales out of the that kingdom. this afternoon, we get a reading of inflation in the u.s.. the also hear from cleveland present. then it is eurozone chief economist. more, after this break. ♪ manus: 6:21 in london. the people's bank of china, as it was telling you at the start of the show, then determined that some banks have increased lending to fast. they have raise the required reserve ratio, according to people familiar with the fatter. let us get to malcom scott. malcolm, what do we understand? what is the significance? is this prudent? malcolm: it does look to be prudence in play. but it should be distinguished from monetary tightening. just yesterday, we saw the bank trying to guide interest rates lower. that is the money market corridor style rates, shipping towards the benchmark rate. which we get the surprise announcements from later. the guiding interest rates on the money markets are lower. so this should be seen in the context of its new macro credential assessment system, which they announced recently. this is maybe one of the first exercises of that. so we had a big lending inch in january, two and a half trillion yuan. that is about 385 billion u.s. dollars in one month. this seems to be recognition that some of that may have been a bit too fast. so there for and put the brakes on some the smaller lenders. manus: malcolm, thank you very much. malcom scott in hong kong. saker is still with me. when you see this kind of action this will jar against everything we think of ,timulus, not in rate cuts what do you make of this news? your: as we heard from correspondent for these are some banks. the ones they judge to possibly be the most venturing. time,t the same continuing to simulate the economy? manus: one of the biggest news pieces was about the aggregate finance. this shows you the other explosion. saker: and that is what they are worried about. manus: this is what they are word about. the justification in terms of his blowout, credit and chinese companies are trying to pay off the debt. they gorge themselves in terms of dollar debt. has been flipped great let's take a look at over five years, it has a fantastic story. the switch around or the huge trade in terms of chinese unwinding, you see the quarter strength all the way $3 trillion was borrowed. my question to you is, look, are we near the end of that trade? this is over five years. saker: i would say that this binge you just pointed to is trying to borrow local currency. it has gone too far. and they're doing this and the companies are behaving this as if the company is doing normally. they are saying, hang on a moment. we are trying to soften where we want to. manus: in the break there, you were sort of saying to me, actually, what you're more concerned about is what i was talking about. the dollar-yen trade. -- if we lookthis at this move that you see on the it will unwind, it is quite large. manus: my point is this. in oil,top freaking out but they do not tell us anything prophetic. the new rate of growth. chin . china stabilize. are you seeing snapback after snapback? using this telling me something much more dramatic about global markets? saker: there are people with very big positions that might be exposed. that is what worries me. the markets are beginning to be affected by people on the periphery, dealing on positions which are taken and strategies that are either momentum or factor base. these signals become quite significant for them, and they have the ability to move markets. and that leads on the mental investors on the sideline. manus: how is this affecting you? translate this into what it makes me do. saker: so we are looking at the volatility we have seen, and we do not quite understand where it is coming from. we understand the market is declining, we are expecting corrections in the market. what we do not understand is the degree of volatility that is happening, and why it is happening. we cannot link between. and what we think is happening, there are a lot of strategies trading on signals. but what happens to the banks, as we saw with deutsche bank for example -- manus: we have a little bit more time to talk about that after the break. saker is from hermes investor bank. gucci pulling it out of the bag. ♪ manus: welcome back. this is the president of the bank of china. he is saying that the government should play a role when markets failed. and of course, this is after willnews that the pcob raise the reserve requirements on those institutions that are lending to fast and too furious, so to speak. growth is still slowing, but still in a reasonable range. the comments coming from the head of the people's bank of china, and all of this on a day when we see perhaps little bit more prudence -- that would be the word coming through from the people's bank of china in terms of the lending, the lending policies that have gone on. as credit exploded the quite phenomenal levels. as we get a little bit more from the head of the people's bank of china, we will bring that to you. more dramatic than that. let us the bloomberg first were news with caroline hyde. caroline: david cameron's negotiations have stalled into a second day. dealis as he pleads for a on membership that he can sell to the voters. he is facing resistance over more demands for welfare curbing on non-british citizens, and to protect the financial industry in the city of london. a $9 billion fund manager is pessimistic about the outlooks for markets. fund big 99%uity of their peers, but he now has on the 16% of his fund in cash. with all of the recent turmoil, douglas says he has no immediate plans to buy share. the former treasury secretary, larry summers, said the u.s. economy is getting inflation to move toward the federal reserve gold. speaking to bloomberg, he said the fed should hold off on for the rate hikes. why thehe reason challenge is not excessive inflation, the challenge is getting inflation up to 2%. and markets are saying that is not going to happen in any major place. over the next decade. caroline: donald trump has described pope francis as disgraceful, after he criticized his anti-immigration stance. that someoneters who thinks only of building walls, not bridges, is not christian. the republican presidential front-runner once a wall along the mexican border to combat illegal immigration. he said it is disgraceful for a religious leader to question someone's fate. global news 24 hours a day and more than 150 news bureaus around the world. manus: bring us up-to-date on the markets. we are coming to what is the end of it to mold to us week, in terms of oil and the yuan. this big move in the yen. caroline: the slight safety this morning, you are seeing money coming out of equities. it is a down day, to a pretty stellar week. this is your asian-pacific index overall, the asian-pacific map showing you where industry groups are falling. we are down 8/10 of 1%. coming off of those lows, interestingly, after the breaking news that the central bank of china will rain back some of the reserve requirement ratios, raising the capital needed. but overall, still sing a down day -- down 8/10 of 1%. the lagging energy, of course, why? because of this -- oil. prices continue to sink. showrude, but i want to you the supply side of the equation. this is what is sending oil lower today, manus. we see wti trading at some $33, and the pickup and supply is significant. we are seeing it ramped up. u.s. stockholders currently at the highest in 86 years. seeing asymmetric arise. 504 million, half a billion basically. thatrms of how many amount we have. the largest in 86 years, as we said. manus: caroline, thank you very much. hi with the latest on the markets and world news. as get into some of the news getting on the terminal. we have numbers from the luxury global player. they say they break their brands down. they are actually saying that overall sales are led higher by gucci and buying yves st. l aurent. breaking these numbers down is andrea elstad. looking at the numbers, kering has gucci. break it down for me. looks like gucci is invigorating. seeming to come to the four. andrea: that was the key thing, they had a new designer. there is a big buzz about gucci. lots of celebrities have been wearing it. this is the key test of whether that translates to the shop. it is fine for harry styles to be wearing a red, floral gucci suit. but they are not selling. manus: i think what is fascinating, you have yves st. l aurent. and the other great debate, the other luxury businesses, are harming ahead. puma has turned around, as well. we see a little bit of a rally. december, so since many concerns about the health of the world. and this stock is beating the trend. andrea: that is right. the outlook for luxury is still uncertain, very little luxury growth this year. it is just like being on the high street. youour market is not going, will not have business from your neighbor. if you have a turnaround story like gucci, shoppers are going to buy a gucci back rather than a prada. and that is really a good thing to have in this market. manus: it is always liked central-bank policy. excuse me from going to handbags to negative rates. but in terms of the whole luxury exposure, there are two key things that play. one is confluence, the other is currency. saker: and also the split in society. it is very clear that the people he cannot afford a gucci are quite separate from the rest of the economy. some of them are being hit because the markets are now volatile. that obviously affects them. and of course for the far east is normally the ultimate buyer of luxury goods. they are seeing uncertainty. but i think because of the disconnect between the luxury sector and the confidence in the rest of the world. manasquan you think that disconnect will continue? saker: if you keep interest rates very, very low, and you can see that the continuation will go for a while. because those that have a higher income have continued to keep it. and asia continues to be a buyer of luxury custom, and have more money to spend. manus: backing it up for us, it is going to be the neighbor and luxury. is trueand whether that of having a buzzing new designer y, a great digital strateg it is all about stealing sales and a low growth market. manus: ok, thank you very much. andrea breaking down the kerring numbers. saker stays with us. three years ago, the bank of japan surprise the market by joining switzerland and sweden -- reducing the rate to below zero. how effective has the policy been? we spoke to 63 economist. we asked them their views. jeff black joins me from frankfurt. jeff, negative rates work better for some countries. and some central banks. , than others. jeff: good morning. yet, what we find is that if you're a small central-bank trying to manage your currency rates, with the negative they can certainly be a very useful tool for you to do that. our survey gave 90% approval rating to the danish central bank for its negative strategy. if you're a large central-bank managing a big economy and reserve currency, not so much. we got negative ratings for the ecb. and for the bank of japan. manus: and they were also asked about how much lower this lower bond rate could go, and for how much longer. what came through their? re? jeff: right, we are stretching into 2018 and negative rates. for the major economies. and we're going down as far as minus one for the swiss central bank. it probably has to go to the lowest depth because it is surrounded by the euro area, the kind of dead weight of the euro area. that will be continuing to ease. manus: jeff, thanks for that sort of fairly fascinating read. one of the main stories, most read stories on the bloomberg terminal today. jeff, thank you very much in frankfurt. now we go to saker from her mes. 63 economist miami, they are slamming this view. we will get to 2% inflation. ker: a just tells you that the central banks have reached the end of what they can do. and you can bring in interest rates to zero, but it is questionably by some economists, whether the interest rates follow orlene economy. let us assume they lead the economy. but you come to zero, what do you do? it is clearly not working. and it shows come to my mind, desperation in action. manus: desperation and instruction are they weapons? saker: not yet. what they're trying to do is convince people to spend the economy in the bank, that is the whole point. happy percent is not enough. if they really, really want to spend money, which is what they are trying to do to get inflation back up again, have to do it much bigger negative rates. which is an experiment that is still done -- never done. manus: you see, i actually fundamentally disagree with you. i think society is so scarred from 2007-2008, i challenge the fact that would even work. saker: i think you are exactly right. this is still 2008 working its way through. we have not come out of the crisis. we solve the short term but we have not come up of this crisis. and we have a lower growth economy structure. we have to get used to it. coming in, listing to the radio before i came to you, all of the talk is about the ecb prediction. 3% is still good growth. 2% of u.s. gdp is still good growth. inflation is not going to go up. deflation is more normal in human history than not. and central banks have got to realize that they cannot control economies as much as they think. that is it. it is going to be tough. sorry. manus: ok, that is the news. we talked a little bit about the negative rates going lower. these are some of the 10-year government auctions, which are all subzero. i'm talking about germany, whate banks. the subzero -- the negative rate. and the convertible. will you have any banks? that: we have some banks we have bought. but we are very careful. we are very nervous about this. manus: in terms of the negative bond rate story, do you agree or do you buy into the theory of recession? there is a debate here at bloomberg we haven't looking at the united states. we have been saying, essentially, they are inverted. do the business models still work, are to we have to throw them out and be happy with doing a half percent growth? saker: that assumes a relationship between bond yields and equity. that is where you get that from. it assumes a relationship between the risk on those two elements. and what is clear is, whether you bring them down to zero, the model to start working great you might have a recession, you might not. all that we can tell is that the u.s. economy has had a reasonably good run for 4-5 years. particularly, it must become into a slowdown. it is has to be. we know that the chinese economy has slowed down. and the european economists are at the break. manus: when you sat down with me just under an hour ago, you said run me through the allianz numbers. they missed net income. there is no sign of share buybacks. you paused? i was looking at the consensus, doing my homework for the interview. manus: i am a pussycat. saker: the consensus was the market has upgraded. they had assumed that the asset management business, but in the tourism business, it is done well. therefore, a dividend would be maintained. the fact that they have not beaten, and they have not in fact cut, is worrying. they maybe have a bigger problem than we thought. manus: i have up to speak to the cfo. let us ask him. what would be your first question, i will ask him. saker: is it to do with the asset management business? manus: that will be question one. i hope he is tuned in. saker, always good to have you here in the chair. the asset management ceo. up next, we will have that conversation from the allianz c eo. wemmer joins me. coming up, question one, from hermes. ♪ manus: it is 6:48 in london. let us get the bloomberg business flash with caroline hyde. caroline: apple is getting more time to argue against a court order that would force it to break into the iphone of one of the san bernardino shooters. the company is pushing to detect privacy against the u.s. government's efforts. the judge says apple will fight the court order. 27% to $60eo says million last year, that is as it was boosting profits as part of the stress test grade and reversal from the failures a year earlier. a bloomberg source says digital has cut about 15 investment vessels from one of the stock trading units. that is after the main hedge fund lost 6.5%. meanwhile, citadels billionaire founder is set to pay more than $500 for two paintings in more are one of the largest deals ever varied he bought a willem de kooning from david geffen. manus: caroline, thank you very much. saker is still with us from hermes. let's talk about global markets. ssaker, we were talking about in the break their this move that went into bear market. but it did not correct. what protects you? skaer; if you look at it from about the 20 second of make a we saw the klein, expecting the normal decline. historically, declines in bear markets are about 45%. there is no major disruption in the developed world. it hit 20% and bounced back up again. manus: and that just shows you the hopes of more stimulus. saker: when you cannot just -- that is simply more into the bubble. which eventually cracks. and it gets worse. and that volatility, it has gone up. it is very disturbing, again. so we're looking at this market, and as i sent you earlier in the program, we think there is a divorcing from the fundamental. they do what they do. we are investors. what we are doing is buying the debt. and emerging markets, we are buying debt. we are beginning to buy particularly in china. and developed markets, we think there will be surprised. it should correct itself at some stage to more reasonable valuation. manus: i'm just pulling up the emerging market data. world is so utterly perplexed by the china did. there is the one-year. let's go back to five years. what do you need to see? saker: and people were buying it, they were not buying it at the bottle. that is what i am saying. you know what mr. buffett said about buying when it goes down. going to your favorite store when there's a discount. manus: on that note, thank you very much. we will finish our conversation here. thank you very much for joining us this morning. saker, ceo at hermes. let us turn our attention to allians. z. that missed estimates, and the company ceo joins me from the offices in munich. great to have you with me this morning. first of all, take me through why you have missed. is this to do with why you have the asset management business, give us reasons? dieter: good morning, manus. no, i think the pretext profit clearly hit analyst expectations. and 10.8 between 10.7 billion operating profit spirit and that is more than expected. and we have written down some goodwill for asian life businesses in the first quarter. bit ins created a little our net income. however, we are increasing our dividends to 730 euros per share. i think that is a great dividend yield. equal to our 50% payout ratio policy. so i think everybody should be very happy with those results today. that, and thatt is an increase. but again, according to the bloomberg investment, there is no share buyback. are we going to get a share buyback from allianz? is that part of the plan in 2015. the people i spoke to said they are expecting these guys to go with a share buyback. you have a target of 5% return there. is that part of the agenda? announcedll, we have last november, a two-year strategic plan. finishing 2018. i think 2015 result was a great starting point for our journey to the 2018 strategic target. and one of the targets is a 5% growth over the three-year. and i believe that we will be 15% higher in our 2018 him and that is exactly our contacts. manasquan: you talked about a plan?b buyback dieter: we have not talked about that because we deliver 50% over the three years. and we will figure out in details how exactly we are doing this over three years. i think there might be opportunities in the market. there might be excess capital to be given back to the shareholders. but to precise lee after the question as to what will be the long-term of our shareholders are we will find out. manus on the part of that is your asset management building at pimco. of neth streak redemption. that ended in december. but we did see a little bit of outflow in january. how is february looking? are we, can we, will you form a trough in terms of the total return fund and the exodus of funds, post growth? answer well, to to this. i believe the total return fund had a very good return in 2015. so the investors have probably missed some good performance. and secondly, our net outflows, that means we have actually quite some inflows in other fund families, but the net outflow is $11 billion in the fourth quarter. q3.ared to $16 billion in we are moving in the right direction. and when you look at the total asset management industry, our $11 billion is probably pretty much in line currently with the market. so i would say that the effect of the change at the helm of the organization is over. and we are just moving with all of the challenges in the asset management industry. manus: part of those challenges were to circle the staff, to bring the family closer to the fence. and that involved a bonus program, to under 25 million euros. paid out over 30 months. my question to you, is the bonus expanded? are you adding to that? as her been any change to the bonus and remuneration structure to retain? that is the key to delivering stability. dieter: i think we have a very good offer to retain the talents, but it is not expanding to the program over and above what we announced a year ago. that is a short and precise answer to regeneration. let us see what the market makes of the dividend and of the rise in profit. but it is a mess. dieter wemmer. will david get a deal? coming down to the wire for prime minister cameron. the question that everyone is asking, what is the friction level in brussels? our man on the ground or ryan chilcote, yet the story, right here on bloomberg on countdown. ♪ choose world. choose, choose, choose. but at bedtime... ...why settle for this? enter sleep number and the ultimate sleep number event going on now. sleepiq technology tells you how well you slept and what adjustments you can make. you like the bed soft. he's more hardcore. so your sleep goes from good to great to wow! only at a sleep number store, all beds on sale right now save 50% on the ultimate limited edition bed. know better sleep with sleep number. manus: going to the wide, david cameron's negotiations goes into a second day. a plea for a deal for you came ownership. pboc springs to action. china's central bank is set to raise requirements for lenders. increased credit to fast. a double negative finds most economists don't make subzero rates. ♪ manus: welcome to "countdown." i am manus cranny. let's check in on european equity futures. we are rising. the brussels leaders are gathering to decide what to do with the u.k. we got an undecided loading -- undecided opening. london open. you see money going into the yen. you're seeing china taking exuberantrhaps over lending going on. about .25%. dollar yen has given back some of its gains. the yen given back some of its gain. money flowing into the yen. probably the biggest month and seven years in terms of money going into the yen. all of this is an 86 year high. this is your risk radar. we've heard from the pboc governor talking about the need for the fact the world has existed on monetary policy. dipped about .33%. wall street has boosted its holdings to the highest level in two years. as far as risk and reward, other people are selling. gold is trading at $1226. gold has risen for six straight sessions. still in this very difficult risk environment. they are concerned about this disjointed miss between markets and fundamentals. oil supply at levels they have not seen since the 1930's. -- he may need to use the nations oil income. that may have ramifications. let's talk about world news. caroline hyde is here. caroline: david cameron's negotiation with fellow eu leaders has spilled into a second day. mr. cameron is facing resistance over demands for more welfare cuts on nonparticipants. financial the industry in the city of london. people that's people's bank of china -- may increase lending to quickly. regional lenders are among those expected by the increase. the move by the pboc comes after data shows the country extended a record 2.5 trillion and loans. with the p test with the boj following the pboc into negative rates. say 27% of respondents negative rates will help governor kuroda. meanwhile, only 42% say the policy is succeeding in the euro area. in nine -- a $9 billion fund manager is pessimistic. -- he has 60% of its funds in cash. with all of the recent turmoil, he says he has no plans to buy shares. secretary says the biggest house to the u.s. economy is getting the inflation to move toward the goal. he says the fed should hold off on further rate hikes. we're in a world where the challenge is not inflation. the challenge is getting inflation off to 2%. markets are saying that is not going to happen in many -- in any major place over the next decade. caroline: donald trump has described pope francis as "his "disgraceful."s the front runner once a wall along the mix can border to combat illegal immigration. he says it is disgraceful for religious leaders to question someone say. global news, 24 hours a day. manus? manus: let's get out to zeb eckert. as we wrap up the week, the yuan has had a fairly good run. we've had the chinese equity markets for the week ramp up and not too bad shape. zeb: certainly has. it has been a seesaw session in some of these markets. if you look at the trend lower across the asia-pacific. the regional benchmark is trading lower it shanghai and hong kong down but not significantly to the real news that the pboc has what raised the reserve requirements for regional lenders who have doled out loans at too fast of a pace in january. record lending in january. a key concern is demand. will these loans go sour? is this the break of a banking crisis? this has not been confirmed by the pboc. it would add to the concerns of the market that banks have overextended themselves. not necessarily the big chinese banks, it is the small regional lenders. the biggest acts have lost market share in the new loan race. let's take a look at what is moving in hong kong. any financials are being caught up in this news. a short while ago, about 20 minutes ago, no banks moving significantly at the moment. we're seeing property related shares doing well, up 3%. china having- sans a tough run because the tourist numbers are not there. we have mgm overnight reporting a decline in its numbers from macau. stripstrips the las vegas in terms of visitor numbers. it is a down day in south asia for the most part. japan nikkei 225 lower because the yen strengthening on risk aversion. check this out, index, another oil price has pulled back it easy oil producers following -- down about 10%. a lot of moves here, manus. the pboc course of action is what we need to watch every closely. manus: zeb, thank you. wrapping up all of the action in hong kong. no deal yet. that is the newsline for david cameron. the ukip prime minister eu renegotiation proposal was met with resistance from france and other european states. left a brussels where the summit is taking place. ryan chilcote is our man on the ground. how are we looking in terms of a deal? are we passed the 50-50 bridge. do you think they will get their brexit? ryan: i don't know. it took a whole hour before it sank in. that was a big in our last conversation when you mentioned whether i have another shirt to wear for the following day? you probably figured i wore the same shirt as it were yesterday. no, i do not have another shirt. we spoke with the italian prime minister as he left and he says he is less confident than he was coming in to the summit that there will be a u.k. deal is the reason is simple. i would give you an example. imagine you have negotiated a one million pounds contract with the bosses. in the draft agreement between it'snd the boss, it says got a four-year term. you think you've got it in the back or if the boss is resistant at the last minute, they are feigning it for theater. you go in there and say you want a 13 year deal. that's what david cameron did. with this so-called emergency brake. worked from eu would have to wait before they are entitled to benefits. it said four years in the draft. now it -- now he wants 13. seven years less to year possible extension. he started the negotiation saying he had taken the draft agreement home and it had not gone down well. he needs the eu support and for them to back him up without watering down the 13 year idea in order to win the referendum. boy, did it sour the atmosphere. talk to some of the delegates, they were all in bad moods. eastern european countries wondering how they would explain this to their constituencies back home. it did not go very far. it went until 3:00 in the morning and that was the beginning of the problem. i'm not sure we're going to get a deal by noontime. manus? ryan, -- stay tuned. ryan chilcote our man on the ground in brussels. let's bring in florent brones. we have a french man in the studio on the day we are trying to tell down issues in europe just trying to tie down issues in europe. when we talk about brexit, left a look at it from a different perspective. the advises that talk to the clients, what is that conversation? are they at first? are they making maneuvers at the consequence of the risk that may come in june, if june is when we have the brexit referendum? florent: there are so many uncertainties about this question that because of that, the markets are already pricing in the risk. u.k. assets are underperforming. neutral abovee the u.k. markets. u.k. equity markets. not because of that question of referendum. we have seen that there are better opportunities. journey. a negative it is a positive one for the country. manus: on that basis, where are the other bigger opportunities? we will talk about china. we've seen news from the peter c raising the reserve -- from the tbl see raising the reserve. florent: in equity markets. markets and the japanese markets, so we know of quest volatility is here. we know we have seen a big decline in equity markets. we want to use those declines. we want to use volatility as an opportunity to increase positions. it is not a short-term call. it is a long-term question how to manage wealth with this low yield environment. manus: picking on those two exposures that the european exposure and japanese exposure, i am wondering he said it is long-term. if -- is any of it predicated on further moves in terms of interest rates? or indeed currency moves, because a lot of it, the japanese equity moves were predicated on the economics would work. florent: right. we are sure that the monetary policies in europe and japan will continue to do there is no question about that, because we are still facing the threat of efficient forces. because of that, monetary policies continue to be extremely well received in japan. that is one of the reasons why we don't want to fight the central banks, because always they win. they would realize the deficient markets is not here to stay. actually, there is a correlation between the declining oil prices and declining expectations of inflation. the correlation is extremely high. the headline inflation is close to zero. as pessimist not gone the inflation as many of the others. are you telling that to clients? how are they positioning it for that? are you seeing a base in terms of oil prices -- excuse me -- or commodity prices? florent: oil prices and commodity prices are done sharply. clearly headline inflation has not been impacted by that it having said so, well on a means we haves -- to take more risks. or we accept that the return will be lower. it is the situation we have if we hold bonds today, or we take more risks. manus: it is a very tough call. we have that story in terms of fund manager putting more into cash. he said that is an example where to push the market forward. hold that thought on negative rates. that pmb part of what management. keep back here on bloomberg. we'll be speaking with roger carr. all things brexit. 9:30, retail sales in the u.k. have been expanding this afternoon. get a reading from the united states of america. eurozone consumer confidence at three clock p.m. credit crackdown, people's bank of china is excited to come down on lending. the latest action. ♪ manus: it is 7:19 in london. let's can to bloomberg's business flash. caroline hyde is here. caroline: for the quick profit lowered 60%. those short of estimates. europe's biggest insurer says claims of national catastrophes. malicious rates. apple is getting -- a court order that would -- the standoff is putting the company's push to protect customers against desk customer possible privacy against -- apple will fight the court order. -- $60.5 million last year. the lender of the profits and passed the stress tests. a reversal from its failure a year earlier. since dell has cut 50 investment specialists in one of its stock training units. the hedge fund lost 65% in the first three weeks of the year. -- one of the last private art deals. ken griffin what works by jackson pollock. that is your bloomberg business flash. manus: the people's michael china increased lending -- the peoples bank of china increased lending -- let's go out to bloomberg'sthat is your market. let -- how do you interpret this move? >> it seems to be a macro prudential move. remember yesterday the pboc guided money market rates lower. they have this new corridor system they seem to be trying out. bank,day they said to the we are going to lower the amount we are going to charge you for these medium-term lending facilities. easing atmonetary this money market level. today, and more macro prudential move. some of the smaller banks that have been lending to quickly in january. so here we go, we're going to put a brake on that and ask you to put aside more reserves going for. -- going forward. manus: what does it tell us about pboc's priorities right now? open pandora's communication box. malcolm: it seems to be that way. he had a long interview last week. that is after months where the man was missing in action. stock markets in china were going up and down. we didn't hear much from. all of a sudden we're hearing a lot from justin chon. it is not so much what he said but that he was speaking at all. global markets are well acquainted with him. he is been around for 13 years. he was in the government back with alan greenspan was the fed. speaking and juggling these balls. it wants the economy to keep humming but it doesn't want to turn it to quickly. manus: a wonderful saying when we stick a lot on a friday night which is saying you here, i will change the gears. that is what the pboc needs. malcolm, thank you very much. all ofalk more about these things in terms of markets and the impact. just lebron as joins us --rent brones joins us florent brones joins us. one of the great debates is we are running up to g-20 next week. the pboc guiding the yuan, setting the rates higher, bringing stability. that really is what they want to try that they want to try and achieve ahead of next week. the one has had the biggest weekly advance in a year. the stock market has had the biggest weekly advance in two months. my question to you is do you think we asked the worst -- we have passed the worst? china can cause for us -- we're already at a hard landing. we're already at 2.5%. florent: in terms of equity markets, we could shrink in chinese equities. the currency -- that is a good move. we were watching carefully what happened after the chinese vacation. clearly we are in the right direction. think't believe -- we authorities have a lot of insurance. they are paying those admissions very nicely to stabilize the market. we have to watch is the reserve currencies, how they are moving? how the markets are betting against the currencies or not. it is going in the right direction for sure. all of the markets are stimulating, thanks to the chinese. the chinese were part of the question six months ago. ifus: with that stability, that is a term we can use, you have quite a contrary view. you have heard me have the same view as you which is by this opportunity. why are you so convinced of that? florent: the sentiment today is extremely negative. the reality is not as dark. as a matter fact, the forecast in terms of gdp will continue to have moderate growth and maturity economies. there are strong domestic commands. ism a macro perspective, it cursing power injections -- purchasing power injections. we believe it will continue to be quite -- the earliest thatcations, because of the discrepancy between a negative sentiment on the market and relatively solid domestic demand, we believe it is an opportunity. manus: this is s&p earnings. commodities, if you read about oil producers, profits so far this quarter, if you were the big disturbers which is energy, and you read about those industrials and you begin to think there is a probable earning cycle so far. this is where we are misjudging the disconnect between reality. in 30 seconds. florent: the to percent incline on 10% of the u.s. market means -5%. the total earnings attrition in the u.s. is not so bad. the evaluation improved. -- if you want to , you haveur capital to take more risks. manus: take risks. from florentessage bronze. on the move is up next. it is a delicate opening for london. manus: welcome to on the -- guy: welcome to on the move. i'm guy johnson. here's your morning brief. sleep deprived men and women are deciding the future of europe right now. negotiations continue in brussels. what will these men and women the able to achieve? what will business play in the story? we will talk to sir roger carr from bea systems -- b ae systems. the pboc is getting nervous. this is a great blue book story. and world economists are negative on