Transcripts For BLOOMBERG Countdown 20160428

Watching over in france, it is just past 7 00 there. Lets get there now, what were hearing from airbus this morning. The airplane maker telling us that First Quarter earnings is coming in at 501 million euros. That is nicely ahead of the estimate of 473 million euros. And they confirmed that the 2016 target, saying theyre going to focus on the program to ramp up, and the transition to some of oaircraft. They see deliveries, cash, earnings loaded to the yearend. And theyre also giving us guidance around cash flows, 2016 is stable. The statement about the neo is interesting, a lot of the focus on the work they are putting into raise production rates of the single engine of the narrow body, and the neo begins production. That is a real focus. Units on the backlog. A nice problem to have. But they did have unit issues, delays in delivery. The company said it was teething problems. More of what that means in terms of delivery, cash and earnings loaded to the yearend. That is what airbus is telling us this morning. Sharel see how the shee price response. We have a busy day, waiting for earnings out of the Banking Sector in many cases this morning. Lets talk about what is happening in the markets. A chart here on the bloomberg which really illustrates the way the markets are caught by surprise by what the bank of japan did not do today. The bank of japan did not increase quantitative easing, not going to be buying more corporate more debt or more equity or more ets than was previously. The market price surprise. Assaw the surge in the yen, a result. We saw the japanese equity Market Selling off. There had been some expectation we might see some stock buying of some variety by the bank of japan. Let us bring up the risk, we have the yen, showing how far we have moved 2. 3 how far it searched. Let us about the new Zealand Dollar as well. That was early in the session, surging as much as 1. 4 . The central bank leaving Interest Rates unchanged. There has been some expectation that we might see a move and Interest Rates coming through from the new zealand central bank, a cut has been expected by some in the markets. Just to round out the picture, talking oil down by 4 10 of 1 . U. S. Above 45 on wit, production dropping to 18 month low. Russian may attend a june opec, meeting reporting by a news agency. Movement risk radar this morning. Let us get the bloomberg first word news with david. David good morning. Thanks, lets talk about earnings for facebook. Sword in extended trading after profits beat sword in extended trading after profits beating estimates. Advertising on the main mobile apps,s firstquarter revenue grew to 58 billion. They are also creating a new class of nonvoting Capital Stock that is still subject to shareholder approval. Ceo will appear before a Senate Committee, admitting that the Pharmaceutical Company got things wrong. They have come under fire for raising drug prices massively. But they are going to try to remedy that. I texted our board chair while i was listening to the hearing of us we have a board call tomorrow to discuss the subject of todays hearing. My recommendation is going to be reduce the prices of those drugs, and with respect to that drug, i think we can make it easy but is giving a 30 blanket price reduction. That way, you have to individually negotiate deals with hospitals. That would be my recommendation. David the ceo of glaxosmithkline has expressed concern about brexit. Bloomberg that if they left the eu, new regulations would be required. And the company would have to adapt. It would have a huge impact on a company like glaxosmithkline. We do about one fourth of our sales in the u. K. Where would have concern is around frankly new regulations, people talk about the regulation of europe. We are talking if the u. K. Left, we would presumably have to work under newly form u. K. Regulations. David the worlds biggest Financial Market has shrunk by 20 during the past year and a half. That is according to data compiled by bloomberg, showing Trading Volume by three of the down byprivatt platforms nearly 69 billion after september 2014. All of this is making bouts of extreme volatility more commonplace. Traders as well finding it hard to enter or exit position without affecting prices. A comical lapse in investment returns mean that people who are 30 years old right now will have to work seven years longer, save almost twice as much to end up with the same nasdaq as those who are roughly same nest and as those who are roughly the same a year ago. A new report arguing that investors of all ages need to resign themselves to diminished gains. Global news 24 hours a day powered by 2400 journalists around the world. You can find more stories on the bloomberg on top. Anna thanks very much, david. Let us get back to europe, the spanish Banking Sector, the bank giving us their firstquarter numbers. Numberlion euros is the there, giving us the net profit for the First Quarter. That is below estimates of 885. Other numbers on your do not look as bad though. The net income for the First Quarter is 4. 1 5 billion. That was against a year earlier 3. 6, and has increased as compared to a number that was dropping at contender yesterday santander yesterday. Versus 5. 4 as reported in december. They are giving us the measure of the strength of their balance 10. 54 ,retty loaded at a little stronger than it was a december at 10. 3 . Santander giving is that yesterday. There was concern amongst the Analyst Community about the barclayse position, talking and jpmorgan talking about Capital Position versus their peers with an ongoing concern about the markets doing enough with the numbers. Let us check in, yen surging at the bank of japan surprised investors. Japan yes, the bank of maintaining stimulus, leaving unchanged. Really does seem to have come as a surprise to the markets worried just take a look at the yen, jumping the most in eight months. Rebounding from the logo we were around 111 before the boj decision. We broke through 110. Not just that, we are at 108. 85, the bestperforming major currency against the greenback today. That is the main reaction there. Also if we look at what is happening in asian stocks, now we were seeing them rise for the first time in five days earlier. They have now reversed of those gains. Unsurprising, it is japanese stocks leading the losses. So surprise decision from the bank of japan, bit of a surprise as well for some from the reserve bank of new zealand. Let us look at how the new Zealand Dollar is reacting. In fact, the key we is the best performer against kiwi is the best performer, up against everything except the yen. The bank of new zealand cap Interest Rates unchanged. Some had been expecting a cut. Of course we are still digesting the news from the Federal Reserve yesterday as well. This did not come as such a surprise. You can see that reflected in volatility. Because we have actually got volatility dropping in both the treasury and the fed, treasury volatility dropping to the lowest in 16 months. Of course the fed keeping rates on hold. That was no surprise. But the statement did also suggest that the fed is less worried about global risks and market turbulence. And was a little optimistic, too, on u. S. Consumer spending and jobs. If we look at the futures, not really changing the expectation for a rate rise in june. That is the around 20 . Mustard. Nks a lets get more perspective on the japanese story. Surged, at the boj maintain records that was. More than half of the economists in a bloomberg story said they will predict more from the boj. On the wrong side of the trade, but the japanese occur t economd are Jodi Schneider joins us. Seeming to surprise some in the markets, survey looking at the currency market and the equity market reaction. Jodi yeah, a big surprise. Though not everyone can we only of a slight majority analysts who resurvey, Bloomberg Survey, thinking there was good the action at this meeting. We will hear more from governor fewda soon, in the next hours. We will know more details them. But this really does appear to be keeping with some of his past stands, as he has been doing this for three years now with the expansion of the monetary stimulus. And he seems to really be saying, wait for the actions to take affect. Let us see what effect they have on the markets. And if they have an effect in terms of moving japan closer to the inflation target. And the negative Interest Rate policy, less than three months ago, in january, when the boj adopted a strategy. Not that long, seeming he wants the markets to see where this is going. To be able to assess the effects of the policy. Anna Jodi Schneider, japanese economy at her. Here in the studio, bob parker at Credit Suisse. A pleasure to see you. Help us work out why the market was caught off guard. Compared to what the economists were expecting, the market reaction, a little bit of a bob i think the expectation the bank of japan was going to take further action, we have seen very weak pmi acting on how well below 50. That downtrend continues. We see weak production and export numbers and consumer demand has also been under pressure. So the expectation that the bank of japan was going to extend qe, and i think the consensus was that there was a hope that the bank of japan would extend the range of asset class purposes, whether more Corporate Bonds or equities. That did not happen, despite the weak data. Quite rightly, the bank of japan says look, we took very serious action on negative Interest Rates early on. We want to pause for a month or two and see the impacts of the action we took earlier in the year. Anna they did say though that they will do more if they need to. And we heard earlier this week from an advisor to Prime Minister abe, calling on the bank of japan to do more. Passing the baton it seems between the government and the boj. Bob that sums it up very well. Policymakers have a number of huge challenges. Number one, the strength of the on thehaving an impact export trend, very clear that they are struggling. I think more importantly, the strength of the yen is having a inflationary expectation. The bank of japan now faces a where despite the recent recovery in commodity prices, inflation is still close to zero. And actually, there is a very interesting sort of research question, which i think needs to be explored further. Which is where you have an aging population, do negative Interest Rates work . If i am a japanese, lettuce a pensioner, and i have negative Interest Rates on my jgbs, is that going to encourage me to spend or encourage me to save more . I think the evidence so far in japan, one actually has question whether you have an aging population, do negative Interest Rates work . Anna a subset, do they work at all . Bob i think there is a risk that might be encouraging saving. Not encouraging consumption. Anna interesting to have a look at this chart, kuroda at a crossroads. Cash infusions not finding a way into the economy, falling multipliers, going back some way. And we have the bank of Japan Monetary basis, timing goes back a few years, this chart bob a very clear expiration for that chart. Number one, japanese corporations are sitting on record level liquidity. They are not investing that liquidity in the real economy. That is reflected in the production and investment data, which remains poor. And i think the second factor is, we are not seeing, as we discussed earlier, the consumer accelerating spending. If anything, the savings ratio appears to be rising further. Why the moneyns multiplier number is trending down. There is not much evidence it will turn around. Anna the question of you can lead a corporation or individual to water, or low Interest Rates, but you cannot make them borrow. This is some that we talk about a lot on the program. It raises the question of where does Monetary Policy come next then . They tried this, will be the next logical step . Bob this applies equally to europe, is monetary action and exhausted . We have negative Interest Rates, a major expansion of quantitative easing. More importantly, i think the range of Asset Classes being purchased by the central bank have been broadened. The bank of japan was one of the leaders on that. And now obviously, the ecb is following with the purchasing of Corporate Bonds. And you have to reach a stage, i suspect, where Monetary Policy loses effectiveness. In fact we are there in japan. Anna hold that thought, we are getting breaking numbers from Deutsche Bank. Firstquarter net profit 214 million euros, that was against millionate of 484. 3 lost when they have managed to turn a profit in the First Quarter. Which was not what analysts had been expecting. The coceo of this company said in march they were not expecting to be profitable in 2016. But i have managed to do that in the First Quarter. Other details here, they have a ratio of 10. 7 . At something talking about tier one capital, 11 going into these numbers. We will see how that goes. That was at the end of third quarter, i should say, the ratio of 10. 7 . A few more details here, the revenue number is 8. 7 billion. That is ahead of the estimate of 7. 6 6 billion. This is a bank as we know, it is facing a number of challenges. John is under pressure to restore confidence. The lowest valued of the major global lenders, eliminating 9 00 jobs, facing mounting costs, past misconduct, rising restructuring charges, Capital Requirements, some of those applying to the sector and some very specific to the comedy. Year today, stock down 26 . Worse than the rest of the an Banking Sector. The u. S. Banks, trading revenues down by 22 . In the most recent quarter. Just looking through any more detail, giving us all kinds of breakdown for the various parts of the bank. Pretax profit came in at 350 million thesus 722 previous time. So a lot more detail coming through. And we will get further analysis of the Deutsche Bank story as we go through the morning. Let us pause for a moment and talk about what lies ahead. On the macro front, we get the latest unemployment figures out of germany. At 10 00 u. K. Time, eurozone consumer confidence. More data from germany with inflation data at 1 p. M. Half an hour later, u. S. Gdp number, expectations are the First Quarter growth was the slowest in a year. Up next on the program, waiting for the green light. The fed holds off on a rate hike, broadly expected. It does indicate they are less worried about global risks than previously. We have more details on that. Welcome back. 1 21 in the afternoon in hong kong. 1 ,hang seng up by 3 10 of a lot better than japan, hurt i was the bank of japan did not do earlier on today. The u. S. Federal reserve has fixed Interest Rates for the Third Straight meeting. But left the door open for action in june. In a statement, they committed previous language that Global Economic Fighter Development continues to pose risk. Instead, saying officials will closely monitor the situation. Some of our guests so far in the u. S. , they reacted to the news. Much ado about nothing. They did downgrade the global condition, i suppose, and they did not mention june. And that has given heart to the long buying in the u. S. By three or four basis points, they did not learn much. The fed really have to keep the eye on the inflation ball. Expectations are very important in terms of the evolution of inflation. And indeed, the fed should not be raising rates, unless they really are confident that inflation is going to rise to the 2 target. That is not at all clear right now. I actually think the emphasis on gradualism and Interest Rate movements is overplayed in the community to medications. I think they should be more willing to be more responsive to perhaps that, and responding aggressively to the data, when it comes along. Anna bob parker from Credit Suisse, is still with us. On the one hand with a remove these references the global concern, at least downplaying the Global Economy concern. But they did not go out to change the markets in june. How do you read this . Bob with respect to the concerns of the Global Economy, let us not forget that since the second week of february, we have had a fairly significant recovery in commodity prices. We have had broad currency stability, with no for example, dollareuro trading merrily in a range of 1. 1 to around 1. 14. And though we saw volatility in the yen today, we know they traded merrily between 1. 07 and 1. 12. I think the Important Note is that since the second week of february, we have seen quite an increase in Global Equity markets. The year to date numbers for msci world is down 14 . Date went year to down only marginally. We have seen that good recovery in Global Equity markets. I think point number one, the removal of concern about global offense is certainly justified. The comments about the u. S. Economy, you know, we are going to get provisional data later today on gdp. And that is going to be a week number. If you look at the data on the u. S. Economy, over the last three or four months, yes, the manufacturing pmi has recovered back above 50. But manufacturing data on trend still remains weak. And what is slightly worrying is that in the fourth quarter, u. S. Economy is driven by the consumer. In february and march, Consumer Spending has stalled. Anna some would suggest janet yellen would look through the weakness of the quarter, strangely blighted by weather recent years. Ble therefore, we can still see a rate hike in june. Do you think so . Bob my view has always been that, sometime in the third quarter, we will get whether it is june or delayed until the third quarter, ive not sure. But i stick to the view that by the end of this year, the fed funds rate will be between 75 basis points and 1 . Get is on the basis that we this rather feeble recovery in the u. S. Economy, with growth struggling to get up to 2 . Having said that, unemployment i think will come down further. And by the third order, we could have headline unemployment number down to 4. 8 . And with headline inflation, i think not being a serious but certainlyear, headline inflation creeping up. We could see the headline Inflation Numbers at 2. 5 in the middle of the year. All of that justifies an increase in Interest Rates. But the process will again be very slow. Anna thank you very much. Bob parker stays with us. When we come back, more details on what Deutsche Bank is saying. Q1 net profits at 241 millions against an estimate of 484. A surprise profit. When we come back and well talk about facebook. Upwardly mobile, how video advertisements have drawn to the core. Iaaem anna welcome back. 6 30ime here in london is in london. Let us get the bloomberg first word news. Thanks, let us have a look at facebook now. The companys stock soared in extended trading, beating estimates that they expect more advertising 80 oh on the main mobile app. Firstquarter revenue grew by 50 , 5. 4 billion. Facebook is also grading a new class of stock, subject to shareholder approval, that will help Ceo Mark Zuckerberg maintain control. And of valeant ceo appeared before a Senate Committee, that the Pharmaceutical Company got things wrong. They have come under fire for raising drug prices massively. But they are trying or going to try to remedy that. Board chair, suggesting we have a call subject to discuss the of todays hearing. And my recommendation is going to be we reduced the prices of those drugs. And in respect to that drug, we can make it easier i just giving a 30 blanket price reduction. That way, we dont have to individually negotiate deals with hospitals. That would be my negotiation. David a coming collapse in investment returns means that people who are 30 years old now will have to work seven years longer, or save twice as much to end up with the same nest egg. Research arm of mckenzie, who says that investors of all ages need to resign themselves to reduced wages. Britishw call for the Broadcasting Corporation be sold off to private investors. Saying that the worlds Oldest National broadcaster is biased in news coverage, too close to the process. The institute of Economic Affairs says that the funding model of the bbc is out of date. And new technology is allowing viewers to watch on the go. And from a variety of devices and increased competition from internet news sites. Global news 24 hours a day powered by 2400 journalists around the world. You can find more stories on the bloomberg on top. Anna david, thank you very much. Let us check out the markets, a lot of news to digest. The bank of japan, fed, surprising investors. Lets get to nejra. Nejra the boj leaving stimulus unchanged does seem to surprise investors. The yen seeing the biggest surge in eight months. This is the white line, dollaryen. It has been rebounding from the lowest. We were around 111 before the decision. 109,ve now broken through and it is the best performing currency against the greenback today. And we have also seen u. S. Futures, the stock Index Futures actually slumping after earlier gains on that news, too. Moving to asian stocks, they were rising for the first time in five days before that decision from the bank of japan. They have now read first game, unsurprisingly it is japanese stocks leading the losses. The bank of japan might come as a surprise. The fed yesterday, not so much. Take a look at volatility, seeing less volatility both in u. S. Stocks as we look at the index, the blue line. Also treasuries, looking at the move index of the white line. Of course, the number came as no surprise. But the statement suggested that the fed was less worried about global risk and market turbulence. Optimism onso some jobs, and the expectation for a june rate rise stay the same around 20 after that decision. I want to show you what is happening in crude oil, holding above 45 a barrel on wti, after crude output dropped for a seventh week. That is the white line, now at a 2014 low. Anna thanks very much. Now the unseasonably cold april stocks, but has lit up national gas prices. Guy johnson is here. Defrostm cross i had to my car again this morning. The central heating is still on. Which is also annoying me and tearing up my wife. Anna as important as the temperature is reasons i did this chart, gas numbers coming out shortly. A huge supplier in the european some goodgoing to be news. It may not get reflected in these numbers. Ryan chilcote will bring them later. But at the one of the warmest winters on record, in which gas prices have completely collapsed we are seeing some the backend season producing good news. Anna all kinds of commodities bouncing as of late. Sustainable, do you think . Ab i think we are reaching temporary ceiling almost commodity prices. One looks for example at iron 60 a range of 70 or ton. I think copper will struggle to get much more above 5,000 a ton. Particularly relevant to the graph, where is the oil price going . One has to recognize that all of this discussion about what is russia going to do, what is saudi arabia going to do, frankly is academic. The real reason we have oil 4647,today, looking at relative to the low of the mid20s, we see a significant cutback in production from the high cost producers. Whether it is american shale, the north sea, deep offshore in the atlantic, i think the big cutback in production is a reason why we have oil prices where they are. If we go to 50 a barrel, which is possible, then the shale industry to move back production very quickly. Anna that was the magic number that bp talked about. Others about about 50. Try to get the magic number, he said there is no magic number. But opec members and nonmembers talking this week, the price get so high that others are encouraged. Be clear about what the freeze means. Saudi arabia is currently producing 10. 2 Million Barrels a day. They say they have a capacity to go above 12 Million Barrels a day. I think quickly, saudi arabia could go up to about 11 Million Barrels a day. If they freeze, they are still freezing above 10 Million Barrels a day. My point, russia is producing 11 Million Barrels a day. Guy are we getting locked into this identity that commodities are low . 50 still feels very low, comparatively, we were up there we cannot believe they could ever come down. Should we ever believe they will go back up again . Bob obviously two major factors the first is the impact of the shale industry on the oil price. I think the mediumterm trend is very clear, the break even point arethe Shale Industries coming down. If we had this conversation two years ago, breakeven was maybe 74 a barrel. Now closer to 50 a barrel. I think it is not unreasonable barrel in two0 a years. I think that is a mediumterm cap. The second factor, one major consumer of oil, which is the auto industry, is going through major change whereby hybrid and electric very productive. Whereas for five years ago, electric cars did not work properly. Anna all of the same time while the saudis prepare for this environment. Bob parker from Credit Suisse, thank you. Guy johnson humming back. Deutsche Bank Reporting net profits for the third quarter, after endless predicted a loss of almost half a billion euros. Let us get more with Elisa Martinuzzi, joins us now from milan. Explained was, how have they managed the prophet, when many analysts had expected a big loss . Eliza bear in mind that the estimates have ranged quite widely. We had asked ms. Ranging from a slight profit to a big loss. And i think that reflects the fact that the company is undergoing deep restructuring in a very difficult environment. Which is left a lot of questions as to how it might reform in a difficult fourth quarter. I think some of the high notes are the revenue number, the figure that is slightly below the last year, but ahead of estimates. And you know, profit around consumers, and the effect of declining costs, that that is having particularly in the trading businesses, where we saw a tree tax profit. Anna talking this morning about this being a peak year for restructuring. We have stories aplenty across the european banking space. Door to Deutsche Bank very much at the heart. Elisa we are seeing that in capital, one area, where the other the bank has official buffers, to be able to take coupons on some of the divestitures. And we see that particular number taking a little bit of a step that, you know, stocks down from last quarter, where the company is looking at one area and investors looking at today. Further costcutting, and the legal settlements and cases of the bank is still remaining in. And chinas bank, remaining committed to resolving most of that this year. Anna Elisa Martinuzzi joining us from milan. Bob parker from Credit Suisse is still here. We have a bit now about the european banks, what are you doing for the sector . Bob i think there are some very clear trends. If you look at Consumer Banking, retail banking, versus Consumer Banking, consumer Numbers Holding up very well. Use of the particularly with the results from wells fargo and jpmorgan. Now Investment Banking clearly remains under pressure. And if you actually look at the sources of revenue for investment banks, whether it is primary or secondary markets, issuance and trading equity both in debt, revenue numbers were highlighted by the Goldman Sachs numbers. I think this divergence between Consumer Banking and Investment Banking continues. Although, i think the major hit to revenue projections on Investment Banking, we are going to be forming a base. What i am saying is that you will not get much worse. That the bad trend really is hitting in the First Quarter of the year. On the european banks, obviously still pressure to raise capital, cut costs. One issue on the european banks is clearly to make increased provisions for nonperforming loans. We had the news a few weeks ago on the italian restructuring of their nonperforming loans, it is very important. But is a sector going to expand significantly in the near term . No. Anna we have lloyds numbers breaking of the top of the hour. Thank you so much for being with us, bob. Bob parker from Credit Suisse. Facebook improved across the board, as a social network got a boost from mobile advertisements and video. Investors liked what they saw, rising 9 after hours. Cory johnson has a breakdown of some impressive numbers. Cory facebook reporting firstquarter results, the number is super strong, 5. 4 billion in revenue, operating profits of 2 billion. Just about every measure from facebook improving. Even as the capacious more towards mobile, this is a business that was mostly desktop. Now most of the users are international, 82 of them are on mobile devices. And yet, revenues per user continue to increase. It was thought that when they moved from desktop to mobile you with you the price come down on advertising. The opposite is true. Per revenue, yes, more users. There continue to add daily active users, up 5 , the fastest growth in a year. So, and acceleration of the metrics of how fast they are adding daily active users. Also more people are not only using facebook every day, the percentage of users every day is up over 66 . 66 of the monthly active users every single day, lots of positive numbers coming out of facebook, reporting firstquarter results. Cory Johnson Bloomberg san francisco. Anna as well is investing heavily in developing Video Marketing tools, facebook has broadened the portfolio with a range of messaging apps. The vp of Global Marketing solution spoke exclusively to bloomberg. We now have instagram as part of our family, reaching or hundred Million People globally. We have messenger as a standalone app at 900 million. We have whats app, and future Investment Opportunities in oculus, and future areas of activity to really help her achieve our mission. Portfolio is change are. Our portfolio is impressive, largely because we stand at the intersection of the dramatic change in can were behavior that has been led by mobile. Anna facebook vp for Global Markets speaking to my colleague Caroline Hyde. Up next, we will be in davos, for the leading Money Managers are gathering for the Wealth Management summit. Stay with us. That conversation, coming up. Welcome back. 1 48 in the morning over in new york. By the time we get u. S. Equities, we could be down 5 10 of 1 in the trading day. The Asian Session has been down, byajk weighed tokyo. As a result, really of what the boj did not do earlier on today. With that in mind, let get the Bloomberg Business flash. Here is david. David lets talk Deutsche Bank, posting firstquarter profits, defying analysts who predicted almost a half a billion euro loss. Net income at two under 14 million, still down 61 from a year ago, amid a slump in trading revenue. The chief executive officer pledging to cut 9000 jobs, upload risky access, and restore market concepts. Airbus reporting at 23 decline in firstquarter earnings this morning. There, andstallings supply issues not being in the handle it. The ceo said that the setbacks should not effect the goal of the company, delivering aircraft this year. Or the forecast, at the least matching last years level. Flow assuringh that they are in good shape. Shares rose, despite a mess on estimates. Accounting in first times that profit actually came in below expectations. And that is your Bloomberg Business flash. Anna david, thank you very much. David in hong kong. The worlds leading Money Managers are gathering in davos, switzerland to discuss the difficult environment. Caroline hyde is there with a gas. Thanks, it is you. Caroline good morning. The sunshine is trying to break through the clouds here, a beautiful davos. I am joined by mark haefele, great to have you here on this cold morning. Mark great to be here. Caroline remind us how much money is gathered here. Mark we are really privileged to bring in people all around the world. We have 12 trillion in assets here today. Just going to talk about the state of the world, how we set out for the back half of 2016. Caroline how does 12 trillion of assets divest what is happening with the bank of japan, fed, no more stimulus. Are you expecting more . And why are we seeing such negative rates in japan . Mark i think you are right to make negative rates a real focus. It is a focused around the world, even driving fed policy to and ask them. We think the bank of japan will have to do more this year, and i will have some impact on the yen. Because the Economic Growth and the inflation targets are not being met. Caroline receiving a significant number . Mark we think so, on the back of further action at some point. Maybe they want to get through a couple of the summits in may and act in june. Caroline what happened . Theyre having similar problems, seeming to be voiced by the ecb, mario draghi as well. It is a need to see fiscal stiglitz as well, ors Monetary Policy really the only bullet that is going to slow economists . Mark i think accommodation of fiscal and monetary is what we are going to need. A lot of monetary stimulus has been put into the system. But that stimulus does continue to work. We believe that equities can still finish the year slightly higher from here. And so we have an overweight in u. S. Equities and overweight in european highyield credits as well. Caroline government bonds . Mark they are very difficult here. They are a stabilizer in portfolios, kind of an insurance. But it is getting expensive. They are at historic lows. When you see negative rates out to five and 10 years in some of these, very difficult to invest in those. Caroline give us a sense, negative rates in other sectors, particularly the Banking Sector Deutsche Bank actually beat estimates. But the big investment banks struggle to know what to do in this environment. Where do you sit . Mark i think that has been a major source of volatility. Particularly when japan introduce negative rates, the concerns about what that would do to the japanese Banking Sector and the profitability there. And banks in europe, that has been a major concern. So if the Banking Sector starts to stabilize little bit, i think that will really help calm the market. Caroline it will stabilize . Mark i think that we see in japan, they have kind of muddled the message when they first came out with negative rates message. Some of these things that have been done like the introduction of the tlpro should help mitigate some of the impact on bank profitability, that has occurred because of negative rates. Caroline time to start buying some of these european or u. S. Banks . Mark of the broad portfolio, we do like u. S. Stocks. Dont think we have specific focus on the Banking Sector. Where again, the rate environment in the regular tory environment are little bit more uncertain then more diversified at this point. Caroline other sectors that you like, it is interesting, i saw a new healthof care focused, seemed to be about social impact as well. About ecology. You are raising significant money in that area, is health care a good sector . Mark it is good for us. We have longerterm trends that we like to play. Aging, population growth, health care plays into that. One of the well, things that got a so interested Oncology Research is that the market is growing about 10 . Oncologyg of drugs in is growing about 10 a year. Immuno drugs areo a 110 billion market. It will only increase as a number of new cancer cases and deaths occur in the emerging world. Caroline emerging geography, time to get into japan, brazil . Have seen an increasing interest in emerging markets from our clients recently. And that is new. Some that we are watching closely. I think the stabilization in china is an important turn for the emerging markets. and that is something we are watching. But we still do not see a lot of profitability yet in the emerging market operation. That gives us pause. Caroline i know you will be discussing so much with 12 million. A lot of money here in switzerland, in general. That was none other than mark us ale, global cio giving perspective on where to be and not to be. Pausing for thoughts when it comes to emerging markets. Anna Caroline Hyde with mark haefele. Great conversation there. A lot of talk about with mark in terms of the negative Interest Rates. The story out of japan, just remind viewers, we saw no action in the sense they did not increase quantitative easing plans. They did not do any more bond buying or buying of equities, there has been some in the market. Just over half of the economists surveyed had expected further action from the bank of japan. The for Exchange Investors and those caught off guard, that is of course after the fed discussing more. When we come back, talking more about bank earningshere in the u k we have numbers from Deutsche Bank. And we get numbers from lloyds. This is britains largest mortgage lender. The ceo is under pressure to intensify costcutting, as the government is the looking to get rid of the business that is still owes. A large part of the financial crisis. There, ast of davos we head to the break. We will be back with those earnings. Reporter the nikkei falls. The central bank wants more time to accept the impact of negative rates. Ellen indicates that are less worried about Global Economic weakness and marke turbulenc. Revenues have slumped. Facebook has had a monster quarter. Welcome to countdown. Im anna edwards. We are waiting for numbers out of some u. K. Corporates. Numbers from lloyds bank are due out this morning. Numbers from wpp, and a slew of other companies. Well the are waiting for that, lets remind you what is happening with the bank of japan. I have a picture here that shows what they did to the yen. Many in the markets where worried that the bank of japan did not take any action to asses using plan. Tative first, lets get to the Lloyds Banking. The underlying pretax pocket is 2. 1 billion pounds. That is ahead of the estimate. They are reporting a charge of 790 Million Pounds in relation to some redemption costs. They are also giving us details of their expenses and various other costs coming through. As i said before the break, the ceo is under pressure to intensify the company. They are still looking to sell the remaining 9. 2 stake in lloyds, after the bank paid a bump of dividends in 2015, signaling the end of charges, which have been blighting the u. K. Baking sector for a number of years. Lets get the thoughts now on the singer credit analyst. Berlin. Us now from great to have you on the program this morning. Lets talk about these lloyds numbers and the u. K. Banking scene. It is better to begin retail than investement baking at the moment, right . Good morning, anna. The lloyds numbers seem ok, especially when you compare with the last quarter, which was a very messy one. I think the question really depends on the direction of travel. Cp1 looks very wellcapitalized. It is probably going to increase. On the other side, investment banks like barclays, we think they are on a good track. Anna the u. K. Government is just over 9 owns just over 9 of the Lloyds Banking group. What do think well move them on this, what will trigger them whether they will sell or not . Does it have to do with the broader equity market volatility . I think it has to do with atlanta. If you see some sort of stimulation, likely as seen over the last two to three weeks, even the government has to consider disposing of it. I think we will see them acting on these share sales. Anna thank you so much, filippo. You are getting other news coming this morning from the advertising business wpp. Sales rise as advertising clients spend more in the u. S. In the u. K. The company, sees more growth from the olympics. They have Revenue Growth of over 3 in 2016. They say the First Quarter as clients spent more in the u. S. , u. K. , and in western europe. It is the Worlds Largest advertising company. The ceo has been expanding into digital operations and has made acquisitions in a bid to outpace rivals. In fact, on the number of deals they have been doing, 62 mma deals in the past year. That is more than publicist. We are getting some numbers through this morning, just common of the relative page. This could be relevant to mma. They are offering to purchase 52. 50 pers for share. They say this is a premium of over 50 for medivation. They say it would be immediately lucrative to earnings. This is the offer on the table. Sanofi is offering to purchase 52. 50 perfor share. Medivation is unwilling to meet, so this seems a hostile offer already. Lets get to the Bloomberg Business. David the yen is surging. Ine than half the economists the Bloomberg Survey had predicted action from the central bank. Meanwhile, poor Consumer Prices last month. This underscored the challenges of inflation. Meanwhile, the u. S. Federal reserve skipped an Interest Rate hike for the Third Straight eating. Third straight meeting. Instead, officials were closely monitor they will situation, they say. Sales and profit beat estimates. Businesses spend more to advertise videos on the social Network Mobile app. First quarter revenue was up 52 , just under 5. 4 billion. Facebook is also creating a new class of stock subject to shareholder approval. Valeant ceo and Phil Ackerman have appeared before a Senate Committee and admitted that they got things wrong. They have come under fire for raising drug prices. They said they were going to try and remedy the situation. Echairexted our for and suggested we have a meeting tomorrow. Our recommendation is that we will reduce the prices of those drugs. Easy bywe can make it just giving a 30 blanket price reduction in that way, we dont have to individually negotiate deals with hospitals. That will be my recommendation. David people who are 30 years old right now will have to work seven years longer. This is tough news for 30 years off. So said the Research Farm of mckenzie in a report that argues investors of all ages need to resign themselves to diminished games. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. You can find more stories on the. Berg at top anna the reshaping of various mining businesses has been the topic of recent years. Moree getting details on the recent reshaping of anglo american. Phosphateelling 1. 5 billion. For the sale of these units is another positive step forward in the strategic reshaping of anglo american. That is what they sent out in february. Lever, in terms of where the features are suggesting we will open on European Equity markets. It seems we will be weaker at the start of trade. Still 50 minutes to go until the get European Equity fund in. The Asian Session was weaker. The nikkei 225 was particularly weak. It looks like u. S. Features are suggesting we will be weaker at the start of the u. S. Trading day. We have an occasion that we will. E down by. 5 lets talk about what the bank of japan did not do overnight. The yen has surged. More than half of bloomberg economists predict more stimulus from the boj. We are now joined from tokyo. There he good to have you on the program. Remind us what the thinking is here. They just want more time to think about what they have done already in them practice . Yes, that seems to be what it is. We will hear from governor within the hour. But this does seem to be in keeping with his last process of taking big action and then letting it settle. The markets were clearly surprised and neither did he prepare the market for this, nor did he in january when the board adopted a negative Interest Rate policy. He seems to be saying to the markets that he is going to go ahead with Monetary Policy without thinking about the effects on the currency or on stocks. He is going to let his Monetary Policy decisions be driven by fundamentals. Anna that is interesting, certainly in the context of the g20 commitments about currency wars. Jodi schneider, thank you. Filippo, still with us. Talking about the Central Banks move to negative rate territory, such as the bank of japan, takes us to a product conversation about the Banking Sector. There have been such headaches for the banks. What easy the pain of this hardest . Bg ar bankscourse, commercial will need time to soften more. Course, for example, if you look at europe and the ecb, they said they want to get the inflation target around 2 . They probably will stay the course. Although, on the fx, i dont think that is what the negative Interest Rate is having that effect. Testimony to this is the actual governor crowder, when they , it was athe target idea fort against the the currency. The commercial bank softened the most. Cannot apply the liabilities with the policy below zero. Anna while you are there, i should ask you about the Deutsche Bank numbers. Do you have interest in the debt story at Deutsche Bank . It is a real restructuring story with the ceo talking about how this will be the worst year, or the biggest amount of restructuring is going to fall this year. How do you make sense of what is happening at Deutsche Bank at the moment . isi think Deutsche Bank definitely one of the biggest restructuring stories not only in europe, but in the western hemisphere. I think it is good what they did this morning. For the first time, they did not pre warn their profit for the last two quarters. They have a very long road. They need to get targeting approved. Is, an order to avoid a very penalizing cash call. They are trying to get the benefits from the restructuring as soon as possible. Anna so, what we have seen so far from the european Banking Sector, do you think that we are done with going to the market to boost Balance Sheets to Balance Sheets. To think the big names in european banking are finished with that . No, i dont think so. There are a couple of names, i set one large spanish bank and one large italian bank, possibly one or two investment banks. They need to do some straightening of the Balance Sheets. I think probably that course of action was impossible in january and february. Today it looks more likely. Good to get your thoughts. Filippo. Very much, 7 15 here in london. Up next, a currency crunch as the worlds biggest Financial Market shrinks. Why investors are less fearing a slash crash could lie ahead. Anna welcome back. This is countdown. Coldis a very sunny, but london morning. The futures are down by. 4 at the open. Lets get to the Bloomberg Business . Bloomberg business flash. David the company is reporting firstquarter sales and profits meeting estimates there, despite intense competiton. Intense competition. Revenue for the period was 2. 54 billion. Paypal says its mobile payments feature has been the most rapidly adopted service in its history. With 21 million customers signing up offense last year. I am checking hardware year. Rst quarter profits have beat estimates. That has capitalized on the new apple product with the release of the galaxy s7 smartphone. Airbus group has reported a 23 decline in firstquarter earnings this morning as an engine glitch caused supply issues. The ceo said the setback should not affect the companys goal of delivering 650 aircrafts for the year, or its forecasts for the earnings matching last years levels. Nsured investorse that ther this will affect the company. This is the first time in five years the prophets came in below expectations. That user Bloomberg Business flash. Anna lets get to tech. Facebooks firstquarter results improved across the board. And investors liked what they saw, with shares rising 9 . Corey johnson has the breakdown of some impressive numbers. Corey facebook reported calendar firstquarter results with the numbers very strong, 5. 4 billion in revenue and an operating profit of 2 billion. And just about every measure you would like to see from facebook is improving. Even as the company is shifting towards mobile. U. S. Back in the then. Now, most are international. On mobilem are devices. You wouldve thought when they moved from desktop to mobile, you would the price is moving down, but it is just the opposite. More mobile users has meant more revenue per user. The company is continuing to add users, this is the fastest growth the company has seen in a year. So, an acceleration of those metrics of how fast they are adding daily active users. O, more people are using facebook every day, but the percentage of users is up 66 . 66 of the monthly active users are on facebook every day. So, a lot of positive numbers coming out of facebook with the report of these firstquarter results. Anna as well as investing heavily in developing video, facebook tools, has broadened its portfolio with a range of messaging app. Vp spokenys to bloomberg about the possibilities that presents. We now have instagram as part of our family, reaching 440 million able globally. Of course, we have some significant investments in future opportunities, like oculus, and areas and connectivity to achieve our mission of connecting the world. The portfolio has changed quite dramatically. Our Growth Continues to be impressive and i think, largely because we sit at the intersection of the dramatic change in Consumer Behavior that has been led by mobile. Anna the worlds biggest Financial Market has shrunk by 22 in the last year and a half. Currency trading by three of the largest platforms fell to 335 billion a day last month. That is down from more than 669 billion in september of 2014. All of this is making bouts of extreme volatility more commonplace. Lets get to richard jones, who joins us on set. Richard, a really fascinating look at what is still the largest Financial Market in the world, fx trading. Richard those numbers are still quite huge, but it is interesting to see that the volume has shrunk a bit. It is interesting to see, looking at it, we were looking at the dollar yen charges before we got on air. And anytime you get a marcus ket surprise, whether it is the bank of japan, you see these really sharp jumps in currency prices or fall and currency prices, and it points to a lack of liquidity, a lack of depth. That the rba concluded this has caused volatility in their currency. With all that this week as you suggested. But this is a broader picture, isnt it. The market is moving out of areas where they are forced by various regulations where, if they want to play, they have to commit more capital. I think this is also a function of clients doing less business and foreignexchange than perhaps they would have been doing. I think many clients who trade in the global macro space are finding it quite difficult. There is a lot of volatility. Price action is very choppy. Likeclients are challenged that, they do less business and are feeds into banks who regulated. They dont have the ability to warehouse risk like they could before. Also, the Risk Appetite is receding as well. It is a perfect storm and it leads to lower volumes in fx. Anna Goldman Sachs has also reported a slowdown. When you look at the Capital Requirements now, it is not surprising perhaps that it is not just in fx, but in other parts Market Makers are pulling back. Thosed it is one of things, as the Regulatory Environment changes, banks are forced to adapt and one of the casualties of that has been any Foreign Exchange space. Anna richard jones, thank you for joining us this morning. Getting some numbers coming through from sony. I will bring those to you. They are releasing their forecasts for the music and financial sectors. Yen, coming through this morning. And for the music sector, that is 63 billion yen. More details to come out this morning. Lets just remind you of the big sonafi story. They went hostile with the bid for medivation. They say the management are unwilling to meet with the sonafi management to discuss that bid. They say they are to surprised at medivations and unwillingness. That will do it for countdown. 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. Show show me more like this. S. 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. Guy welcome to on the move. We are counting you down to the european open. Im guy johnson. The boj is holding it stimulus. The yen is surging. Wants to geturoda into the effects of negative rates, but is he really just assessing the damage . Is basically path unchanged, according to the market, but the fed remains reserved. And deutsche