and a morning. the ec -- and a warning. the ecb says they must be wary of introducing fresh stimulus, but are they moving closer to draghi's position? we will hear from bundesbank throughout the show. and we've got the imf pushing for bold fiscal action, goldman pushing back on that. where did they see monetary policy in the next? -- in the mix? hans: he says it will be data dependent. normally, the german voice tends to be, well, quantitive easing can be counterproductive. they're specific, saying they won't be for it. i heard a central banker in frankfurt yesterday who was open to the idea of doing something more, but he clearly wants to tweak it. he may be closer to that theater constantia position. he didn't explicitly say it, but he seems to walk up to it. guy: we will talk about that later. --s an i have plenty to h hans and i have plenty to kick around. let's look at what bloomberg is telling us. a fairly positive open -- looks like the risk is creeping back into the service sector data, clearly speaking people. -- clearly spooking people. the euros stocks up around 1%. european stocks look like they are going to open on the front foot. hans: yeah. they seem to be shaking off what is happening with shanghai. take a look at these assets -- the shanghai composite was down almost 6%, and you look at that risk on sentiment, we are seeing a little bit of strengthening, and look at that pound. pound-dollar -- we need that to get to 1.2 around june or july when wimbledon is playing. you will get a lot of americans up there feeling very rich. then we have brent, down a little bit around 34, not a huge story. let's head over to caroline hyde and get the latest for the first word. caroline: emerging-market assets are so cheap that they may be the trade of the decade. that is according to a research affiliate by pimco, one of the world's biggest money managers. they are joining a growing number of money managers who are turning bullish on em after three years of underperformance. meanwhile, the manager of $85 billion at blackrock says the loss of power over markets means oil stock investors can get back into what they do best. afteruying again having 25% of holdings in cash. he says that the turmoil is natural as trade learn how to price riskrs. the south african prime minister says he is confident the country has done enough to preserve its investment-grade credit rating. he spoke to bloomberg after delivering his latest budget. to demonstrate ourselves as south africans that we can put a package together. our plans and financing are terrible, but sustainable, and viable. i think we have managed to do that. caroline: global news, 24 hours a day, powered by 150 news bureaus around the world. ecb needs to be very careful to avoid a counterproductive effects when it decides on what action to take at its march meeting, according to the again governing council member and the president of bundesbank. i spoke to him yesterday, and here's what he said. >> what matters for us is that we don't produce counterproductive. effects we want to have a transmission of our monetary impulses on prices at the end, and if through the effect on the stability of banks our measures produce the opposite of what we want, it what and be smart to break in the first place. hans: let's bring in our guest this morning, the ceo and cio of capon investment, managing more than 2.5 billion pounds in assets. no one to better parse a central banker's words. policy getting ouat at there? >> the issue was because their economy is doing well, they don't really need the very easy monetary policy that we have at the moment. he's presenting germany for the germans. e's not so much more needed and therefore you can argue about inflation not being the biggest issue for the germans at the moment. hans: we've seen the market backing off, expectations lost. what does draghi need to do to counter way that market move? how far can he go? >> i think it is mainly about instilling confidence back into the markets. central banks are still there. the u.s. may have to back off a little bit from the support but the ecb is still there. hans: when we look at this idea of a tiered structure for bank deposits, if you bring that rate lower, more than 10 basis points, do you think the transmission functions available can wall off parts of banks' assets so the banks aren't seeing their earnings evaporate as the ecb try system like the economy? >> i think there's a bit too much focus on the banks earnings. what this next move by the ecb building,s confidence but also making sure that the euro doesn't strengthen any further than it has. that is the big point. we are focusing a lot on the banks, i said for a long time that i am not big banks at this stage, because their earnings are under pressure in a you low yield and -- in a low yield environment, but i think we have seen over the last weeks that there is enough support behind the banks that they will not be one of the major problems. guy: you don't worry that the main credit channel in europe is the banking sector? that the banks are unwilling to lend more money? maybe it is a liquidity drought, maybe we are caught in -- where are we? the banks have got to function. we have got to get this story going. we have to generate growth. >> i'm absolutely with you. it's all about confidence. what we currently have is this chronic confidence deficit, and that is also true in europe. that is why lending isn't going. guy: so is rocky the right person -- is draghi the right person to hit that? should he be out spending money rather -- >> we are pushing on a string. the central banks and monetary policy can only do so much. now we need to get the confidence back into consumers and industry to spend all that money, and yes, there is more to be done on the political side and central-bank side. guy: you'll stay with us. lothar will stay with us. oil reverses yesterday's game as u.s. stockpiles increased by the most since 1930. that story, next. ♪ guy: 7:41 in london. ftse is waking up. a positive start around 1%. let's get the details. here's the bloomberg business flash. caroline: thank you. ab inbev has reported fourth-quarter earnings that missed estimates. adjusted operating income rose on an organic basis. the miss underlines their need to expand in emerging markets. bt must open up its broadband network to rivals and may need to spin off the division. that is the proposal from the u.k. telecom watchdog ofcom. they say they must allow competitors to physically access their underground tunnels, which will allow them to take jerked control of the connection. deutsche telekom has recorded fourth-quarter earnings that beat estimates. it climbed to 5.1 billion euros. won for broadband offerings in germany. shares in sharp have plunged after the announcement of the deal for foxconn taking a majority stake. they will control 65.9% of shares. that's 32% less than yesterday's closing price. that's your bloomberg business flash. hans: caroline, let's get more on that sharp story with our managing editor for asia. peter, thanks for joining us. what is the significance of the sharp deal, and how will foxconn's acquisition work? >> well, this is a big deal for sharp, and is a big deal for japan. it wasn't that long ago that it would be unthinkable for a foreign acquirer to buy one of the icons of japanese business. as this deal is coming together, it looks like there was no chance of foreign bidder would idder,ainst a domestic better but they pulled it out. the chairman was very determined in terms of focusing on this deal. he raised his bed and came to japan several times to press his case. he and it up offering more money. it is interesting to see the share reaction when news of the deal first broke, they went up a fair bit. then when the details came out, looking at what the deal involved, shares plunged quite a bit, closing down 14%. the key thing is that existing shareholders will be diluted. foxconn will put in for a ¥4 billion for new shares and get 2/3 of the company, significantly less than the values yesterday. guy: peter, why is the company worth more together than it would be broken apart? back to the center of it. >> i think the key thing for foxconn is that they are a major supplier to apple. they make iphones and ipads, and they assemble a lot of their factories in china. they're a major supplier of panels for sharp those in tablets. they will be able to get more control over the supply chain as they supply apple and other makers around the world. the ideas that they will be able to use that integration to their advantage and boost profit over the long-term. we will see if it works. guy: thank you. peter olson. let's turned to another corporate story -- a proposed dividend in a move to show up a spanish oil producers price. ryan chilcote is here with more. walks us through this number. this is critical for all oil producers. everyone is watching it carefully to see how the strategy works. some people are boosting their balance sheets, but this is a different story. ryan: at the end of the day, with these earnings, they need to explain to investors have it will protect their credit rating. they have two choices. plan was to cut the dividend. massive. been a lot of pressure to do that. or sell part of their stake in the spanish distribution and retail business. that is something they would only do to protect their investment grade rating. they really didn't want to do that. and as you can see, they have done the first of the two options, cutting some of the proposed dividends. they have the problems that are inherent with all the oil companies, in to sense a very low oil prices. but they also have another issue, which is that they did the second biggest deal in the oil industry after oil prices started tanking. theirthe bg/shell deal, acquisition for $13 billion of talisman energy in canada, that really raised their debt levels, to the highest level in 27 years. they had the same pressure that all the other oil companies had, but because they decided to expand -- and they really did expand, they became a pretty significant international oil -- theyin the north sea got this debt problem. guy: great stuff. ryan, thanks very much. if i'm looking to try and work out what my dv cover is, how nervous should i be of some of these oil companies? they are clearly taking action. dividends very much on the edge? >> i think they are on the edge. only noticed now there was a problem in the oil industry -- guy: people have been holding onto these stocks -- they're big portions of an income portfolio. it's becoming a shrinking pool of assets that payouts at these dividends. >> it's true. but in these environments, in the medium-term outlook, i think it is pretty quick and easy to conclude that this is not going to be sustainable. what i am more concerned about is not just rub salt cutting dividends -- just repsol cutting dividends, but a broader trend of cutting dividends. that's not great for markets. hans: i want to stick with that scene. asset managersd aren't getting dividends from oil companies, not from deutsche bank certainly, what does this do to the insurance companies? are the ones that are under pressure, or is a broader than that? >> i think it is broader. we are in the slow growth, low return environment, and that is the new normal that everybody has to get used to. and yes, insurance companies are one of the sectors that suffer. hans: so it is more than just the insurance companies. do you see anything in terms of regional breakdowns? butany is staying strong, we don't necessarily see that reflected in the dax. is there a regional component to this as well? >> yes, there is, but i suppose the dax at the moment is very much the barometer for the global industrial output, where the dax is telling us that a different story. weird things this in the market -- on stocks, it looks like you will lose yields, treasuries --at i'm getting a small pickup in terms of yields. if you look at the money made in the treasury market, why would you go anywhere else? why would you even worry about stocks? >> if you look at the 30 year historical development, you have been waiting in government bonds all along, and that is exactly the point. we have run out of roads. if the economy picks up just a little bit, the arts desperately overvalued. i've than happy to be overweight with government bonds recently, but that was a little bit cynical to my own mind, because it is the one asset class i am most worried about over the longer term. but it does help us as a shock it' absorber in rough patches. guy: but why should i believe equity markets will outperform, even continuing from here? you hear what is coming out of the imf, a low growth environment, that is not a great environment for stocks. it's a much better environment for bonds. if you think about what you pick up versus the overall story, why would you not do that? >> the story is the relative. are equities going to be great or are they going to better than government bonds that is where i am -- government bonds? that is whaere i am coming from. with inflation being around zero, that is still a good real en interest is not picking up any yields. as the yields fall further, there is not much more room for capital appreciation. guy: the duration story is where you are going. you fall further and further. the japanese yielding less than 1%. >> there is some flattening economy isut the telling me that it is still doing much better than what the stock markets have suggested. guy: thanks very much. let's get to caroline hyde with stocks to watch. we need to talk about lloyds. caroline: indeed, guy. keep an eye on lloyds bank group. we're expecting the stock to pick up 2%, 3%, 4%. lloyds is in the white, vis-a-vis the stoxx 600. their shares have slightly over performed versus the stoxx 600 banking index, which is down more than it has been your today. lloyds coming out with the goods in terms of dividends, a 2.25 dividend, even though they are setting aside another 2.1 billion pounds when it comes to ppi. claims this sold payment production, but nevertheless, capital guidance has impressed when it comes to lloyds pretax profit. we are seeing a pickup -- expect them to pop. we are also expecting bp to drive higher, releasing not as bad as it could have been. remember, this is the first real analysis the watchdog has done on the digital market in a decade, and they awant bt to opn up their network, to be easier for rivals to get broadband into homes, but they are not saying to sell off openreach, and that is crucial. lastly, zodiac -- another profit warning for this company. watch this stock tumble 15%. guy: i think we would have known that would have happened. if you listen to airbus, problems on the ramp-up of that aircraft. emerging markets may be the trade of a decade, according to pimco advisor. let's bring back in the -- the trade of the decade? is that what emerging markets look like? >> right now, probably not. but over the long and medium-term, yes. they are cheap -- undeniably, they are cheap -- but we have to stop looking at emerging markets -- guy: fine. if you're a little more clear on which ones you want to own, why not by some, put them in your in 10 yearsin say time, the payout will be exceptional? they are trading at extreme valuations. >> that's right. that is what we have done in our cour portfolio. in balance portfolios or equity heavy portfolios, it is around 10%, which is more than the industry has. that is because investors are taking a more long-term outlook and we can afford to be in that position. guyhans: so those geographical differences -- are you bearish on emerging markets in southern america, asia? break it down for us. >> more bearish on those that are commodity heavy, and who just got government problems. nigeria, south africa. those are areas i wouldn't be on.keen then the indian, southeast asian markets are far more interesting to us. we' e still quite cautious about china until it matures. i'd much rather play the chinese market through the proxies. guy: thank you very much. coming up, the market open. futures are pointing to a fairly positive picture. london looks like it will open to the upside. futures, fair value up 1.2%. that is the open we are expecting here in europe. plenty more to talk about. that's coming up. ♪ welcome to "on the move." hans nichols is over in berlin. the imf says false start are required for global growth. how much the government actually have? we will have the head of sovereign asking the exact same question. the index tumbled the most in a month. vicki pimco advisor says emerging markets of the trade of the decade. the ecb, council members tell us the central bank must be wary of introducing similar for some busy moving closer to mario draghi? we will year bundesbank president about the show. morning?watching this -- what are we watching this morning? let's get to the open now with caroline hyde. caroline: reverend yesterday, the last hour of trading the u.s. we saw those original raise. we saw the stocks close in the green. i catch of effort is been a --mendous -- tall to us time tumultuous time of trading. leading the charge is the likes miners getting a bit of a pickup today. happen with a bit of risk into the market. up postingthe numbers better than expected. let's move away and get into what is happening. interestingly, the bigger this disruption with oil down but stocks in europe opening higher. we're seeing the correlation down .8%. that is even if -- as we see, once again building in the united states. is there risk aversion when it comes to gold? the correlation is kind of breaking down. we have money moving into equities but into gold as well. bake the daily check on what will happen to the pound. trading basically flat. yesterday we saw it at levels that we haven't seen since 2009. let's have a look at the data market moving into germany. we saw that 40 year japanese debt lower than 1% for the first time. money is going into greece today. let's check in on lloyd's, how is it moving in? we could see it move up 3% or 4%, that is what is being signaled by traders. rise overall. notably, they get that special dividend better than expected. it doesn't have to sell off to reach that yet. having to open up its net worth two rivals. it is not as bad as it could've been after inspected last month. did not live up to market expectations when it comes to beer selling. great stuff, thank you. let's take you to the i mat function. the wheel is green. energy, oil is still trading lower. energy stocks are. up.re also trading higher in paris is the energy sector. despite the fact that we do have oil trading lower. i want to take you to another function. a fantastic blog that we run during key events. i wanted to look ahead to make sure you tune into this. the fourth quarter at 930. that is the function you need to be looking at. 9:30 a.m. is bone will see the number coming through. lloyds banking group reported earnings in line with estimates. a relatively positive european bank story. banks continue to lead declines in european stock. bloomberg's u.k. backing reporter is still with us. send the first one to you. is this latest pbi provision at lloyd's, what will that affect? >> this should be the last ppi charge that lloyd's is going to take. they said they would take 2.1 billion pounds for the fourth quarter. that is because the financial conduct authority has set a time bar for the mid-2018. when that comes, that should be the very end of ppi claims for consumers who were wrongly sold this product over the past decade. therefore, lloyd's should not need to take any more provisions in the future. therefore, the earnings that it is generating can flow back to shareholders by way of increased dividends. >> is this now a dividend stock? i was finally back to a position that we can call lloyd's a dividend stock? richard: absolutely. there was one analyst already calling this the yield a king. this will continue to pay hefty dividends. in the future, their promise to pay out 13%, and equity on the capital ratio. they are at that point right now. 2% inould generate around capital points each year. that will be a nice, healthy dividend going forward if they can maintain that's in the current environment. guy: the stock to is opened up 10%. is that want to having a portfolio? it will drive your portfolio really quite nicely in a way that few can these days. >> for a longer-term than growth portfolios, i have been bearish on bank stocks for a long time. i thought they were a cheap by couple of weeks ago so i turned then. there is a lot of play in the banks. lloyd's will probably be a slightly longer-term story. hans: what a market that shift? was it just what happened with deutsche bank? >> it was scary what happened two weeks ago. the bank stocks just became so when you have a generally positive disposition towards but will happen across the economy, then banks just look to cheap. guy: how does the markets he lloyd's versus barclays? it is really hard to understand as a business, lloyd's is much smaller in so many ways. when you read the analysts notes and compare and contrast, what easy? richard: i think you summed it up perfectly with that barclays is a more complicated stock. the africa operations, the u.s. operations, and the investment banks. they are trying to rationalize the size of that investment. the costs are too high, return it equity isn't good enough. it is much more straightforward. investors are paying for that at the moment. around 95% correlated the u.k. economy. that is a good story as well. >> i'm not really sure what barclays wants to be at the moment. we haven't seen strong leadership there, where they going? >> we hoping have an update on the third of march. the new chairman, john mcfarland, they will set out to their vision for the banks. we have had some exclusive reporting that they're considering what to do. if they sell that, that could bring them down and make them more straightforward. them throughlp their restructuring phase. it is some in the board is still considering. hopefully, that will clean up the story. stock is up the most since 2011 right now. up to this point, there was a complexity. we heard so much, these institutions are too complex to run at certain people's minds. they read that is the barclays problem at the moment. when you invest in a stock like deutsche bank, do you really have an understanding of what you are investing in? in some people's mind, that is abouts so attractive lloyd's. i can understand what is going on. r: when you invest in this companies, it depends whether you have confidence that management really understands what the pieces are and where they are going. it can be complex with the with barclays, africa being a good part of their business and their growth story. if i get a story from the management that they know what they want to be heading, then some complexity doesn't really matter. there is potential in the future. when there isn't, then complexity really does detract from valley. you will be staying with us for the coming hour. we want to give our thanks to richard. a lot of german corporate to talk about. we have earnings from henkel buyer. ♪ guy: welcome back, you're watching "on the move," a lovely morning in london. i suspect there a few champagne corks popping. lloyd's is up 10% this morning after it revealed numbers. overflow is quite high. the stock trading at 67.98. nejra: emerging-market assets are so cheap that they may be the trade of a decade according to research affiliates with pimco, one of the biggest money managers. on e.m. turning bullish after three years of underperformance. banks loss oftral power over market means old-style stock investors can get back to what they do best. he is buying again after having a 21% holding in cash at the end of the of. the turmoil and share markets is natural. trade is numbed by years of stimulus. the south african finance minister says he is confident the country has done enough to preserve its investment credit rating. he spoke to bloomberg after delivering his latest budget. >> we need to demonstrate to ourselves that we can put a package together. in terms of our plans, and financing those plans, that it is sustainable and viable. i think we've managed to do that. global most 24 hours a day powered by more than then 2400 journalists. hans: we have german economist reporting earnings this morning including henkel. sales beat estimates. the ceo spoke to bloomberg earlier. >> there was double-digit growth in revenue. the 20 billion target we set in 2012 along with what we called a 10% eps delivered 11.4%. we are very confident we will hit the 10%. henkel is down in the open this morning. +++ play with the bloomberg up here on the screen. this year is consumer staples. that part of the red appears to be the one part will be have some negativity. in a way, i think the story of germany is look at financials up 1.6%. much or that is a response to what he had to say. we had telecom, also having a bit of a beat. we already knew in some part because a lot of it was coming from the state that they backed a lot of subscribers. there was that buyer as well, of positive.ot it wasn't a terrible story. let's bring in our guest out of london. we talked about the bank stocks, you correctly made the call. what do you make of these financials. do we have something more fundamentally going on here? >> i wouldn't talk about some and fundamental quite yet. i said i was bearish, i was speaking short-term quite bullish moments of the cell of the couple of weeks ago. i would still be somewhat careful now over the next three or four months. ofans: --you make hans: what do you make of henkel? is there something going on we are not picking up? lothar: i think it is a general reflection of global developments. it will not be so great for the near future. lookinghave seen is into the rearview mirror where the stock markets are more looking ahead. and they're pointing to a slowdown. that will have an affect on henkel as well. guy: what kind of companies do you want to own at the moment? look at the big, diversified companies. labor,k at your theoretically safe companies that should pay great numbers. numbers, making it henkel not delivering what some anticipated. are they emerging-market plays? are they place in the service sector in the u.s. slowing down? what are they? a global think it is economic direction play at the moment. that is what henkel is. it is quite difficult at the moment. to bequite unhappy relatively conservative since last year. ican to the point coming when don't want to be in that situation anymore. i have been very happy about the bounce it had. i'm not quite sure whether that is sustainable yet. i am still staying a little bit more on the cautious side. proxies,global growth your word bookable growth. lothar: i think they will be surprised in the not-too-distant future that it is not as bad as they portrayed it. those stocks will become a real buying opportunity. it depends at how long a view you are taking. there may be more pain to come before it actually rebound. guy: why do you think the global economy is going to pick up? there are mixed reviews. this thing to the more hawkish and of the spectrum, there is a reason to raise rates and things don't look so bad. where is the u.s. heading for a recession? where are we with the global growth story? lothar: the u.s. is slowing for many reasons which are a bit too long to discuss here. for me, the important thing, globally the marginal growth contributor is china. the figures have seen out of china particularly around lending and the monetary support that economy is seeing is positive. that will feed through into the global economy. what was subtracting last year should be coming back this year. from that and the, things will be better. if the thing is, the oil story. it does worry us, but the cut in investment has already happened. that happened last year. but that's attractive from global growth should now be priced in. guy: thank you so much for all of your time. up next, a legal battle. how apple's fight with the fbi is affecting the wider tech story. ♪ welcome back, you are watching "on the move." thee ceo believes helping fbi open one iphone would be bad for america. why heained to abc news is fighting the judge's order. tim cook: we know that doing this could expose people to incredible vulnerabilities. this is not something we would create. this would be bad for america. it would set a precedent that i believe many people in america would be offended by. when you think about those which are -- compared to something that might be there. i believe we're making the right choice. it is raising a lot of debate. caroline hyde is here. this is a huge battle. you can understand why it is a huge battle. on the consumer side is pretty freaked out as to whether or not data could go. is ae flipside, terrorism major problem and governments need to figure out a way of dealing with it. andline: the vehement say the words being used are quite phenomenal. the only way to get the information currently demand that is to write software that they view as the software cleveland of cancer. these are the words he's using. the whole of the technology -- software equivalent of cancer. these of the words he is using. executive the chief yesterday he says we have to but the problem is the subtleties are difficult to explain to the public into the government. where it goes a difficult because a live day left to get to eat legal arguments -- their legal arguments in order. of course, tim cook is saying this could be undermining civil liberties. the u.s. is saying this is a one-time request. what about the chinese government, what a but other government saying it might not be a terrorist attack killing 14 it could be something less than that that they demand of the sort of software overrides. seeing, overall, we are the crunch time. friday is what we see what legal arguments apple has versus this call by the u.s. government. something they see as the u.s. government. the first amendment, they are saying code is a freedom of speech. it is quite phenomenal. i am glad you mention other government. when you listen to this comment it almost seems like he's directing that angela merkel and is trying to get her to switch to the iphone. so much of the debate focuses on privacy. we had that big concern about which calls were listened into by the nsa on the merkel private phone. if she wants to switch to the iphone i expect tim cook is trying to make that happen. look at the tech debate, it is night and day from what happened in the states. you have google facing but -- potential investigation. this is one part were finally said the u.s. top company -- tech company playing to an american audience -- excuse me, a european audience not an american court. quitene: it is phenomenal, if you look at some reporting by the new york times they say apple's work even harder to make it impossible to get into the sorts of iphone. they want ad security upgrade that would make with the u.s. government is absolutelythem to do impossible going forward. they're taking an even tougher line. they clearly are backing themselves that this is not a pandora's box. hans: it is a remarkable debate. i don't think we are at the end of it. up next, we speak with maurice cramer, the chief ratings officer about recent market volatility. ♪ v let me show you with the markets are doing in europe. we have a positive picture across the place. the ftse 100 getting close, one of the big factors there. the stoxx 600 is up, let's find out which stock story is moving this market. caroline: all about lloyd's today. it is the best performer on the stoxx 600, dividend a light coming through on this -- and the lights coming through on this. years,t move in five actually if you strip away that 2.1 billion pound ppi protection, that claim they're having to set aside more money against a mis-sold payment protection we are seeing better-than-expected profits. pretext profit rose. boosting that interest as well up by 5% it will continue to grow. the chief executive is standing up and saying it is warmer when it comes to the u.k. economy. performancet to see returns that could keep on coming said the chief executive. meanwhile, one of the best performers in the stoxx 600, it's to have a better-than-expected set of numbers. to be potentially going bought up by silicon insurance. now, operating profit at 40% for rsa insurance with a record numbers. operating profit climbed to 500 million pounds. overall, a good set of numbers. if you have a bad to the numbers, you will be heard at the moment. --iac once again putting it this is the maker of airlines seats saying it will not be able to recover as quickly as it hoped. it will take longer than the 18 months. it will not hit their target of 10%. hans: the international monetary front has called for gold action over concerns the turbulence we've seen could affect the real economy. this is all ahead of the g-20 finance meeting. the chief ratings officer at s&p joins us now. thank you for joining us. i want to take you from frankfurt to london and get your comments on brexit. could this have an effect on britain's a sovereign rating? >> it certainly could. eu, thein leaves the sovereign rating would go down stillleast -- we would rate the u.k. at aaa with a negative outlook. britain has been one of the magnets for inbound investment not only from the rest of the eu budget globally. i believe a big part of this attraction to britain is that it is a member of the eu. it is therefore an integral part of the largest trading area in the world. ans: that is just a single rating downgraded talking about. both -- will look at it in terms of polling? it looks like you might have a vote for the brexit. will that influential rating? moritz: i don't think so. we have had some experience in recent years with poles and the reliability of them. i think we want to see the results. even some information and the fact that we do have this referendum and we did have last year a referendum for the independence of scotland. that seems to suggest some of the stability in the institutions which are still high in the u.k. may be slipping. whether it is one notch or more really depends on the circumstance. it's depends on what would come next. the easy part would be to vote to leave. the difficult part would be to negotiate something else that would come in its place. that could take many, many years. any other agreement needs to be approved by all 28 eu members and approved by referendum at some of the countries. this would become a very arduous process. depending on what the political realities look like, we see a lot of tension in the eu even today. the outcome might be actually worse than a downgrade would suggest. morning, the imf is calling on the g-20 to take bold action. the focus increasingly seems to be shifting away from monetary policy towards fiscal policy. how much fiscal firepower is there out there given current ratings? itz: there is limited firepower for many countries. we compare the debt ratios of governments now with before the crisis, there for men's the increase. that has been during the time the should of them we were creating the asset in order to absorb the demographic .ransition the increasing in pension spending and long-term care spending that we know is coming. overall, the space is quite limited for many if not for most. what you also want to consider, if you were to view the current interest rate environment as exceptional, which i think it is, and assuming the future that cost of government would be more similar to we saw before the crisis. the actual deficit we are serving now would be hugely flattered. deadline deficit calculated as a more realistic rate would be significantly higher between 1% or 2% depending on the country. guy: where do you think the growth comes from? who talk about negative rates and we'll talk about that in a moment. we're looking at a world with monetary policy is getting less bang for the buck. do you think that is true. moritz: the mere fact where have sort of policy mergers like qe for example are clear example that monetary policy has been running out of options. qe is so big because it is not particularly powerful. in order to make any impact it must be fairly sizable. shortestion is how much of a helicopter dropped to monetary policy achieve? in the shortdo term -- letter number monetary policy cannot, under no circumstances, create sustainable growth. that is the task of the government. they need to create the environment that will encourage investment, and employment. that is not the role of the central bank, or the finance ministry. the structural reform is key for the long-term prosperity of the nation. guy: one of the implications of negative rates, are there any? ritz: not for the sovereign's we're clearly recognizing that sovereigns are benefiting a from exceptionally benevolent market environments. sou have almost all the bond issued by the euro zone government are dipping below inflation targets. that is clearly an exceptional circumstance. in terms of direct impact on the sovereign's of negative rates up or down, the rest of impact. hans: overview of how you see the refugee in the potential closing of borders across europe affecting ratings outlooks? moritz: that is quite problematic. it is difficult to encapsulate and have a minute or so. what we are seeing in the refugee crisis is only the most visible symptom -- the eu and the european union project is sort of crumbling on the fringes. the cohesion is giving way before individual national interest solutions. it will become much harder in the future to create cohesive answers to common problems. the refugee crisis, particularly interesting in the euro zone crisis you could still kick the can down the road. refugee crisis is much more immediate. these people are actually standing on our doorstep and decision is required now. europe seems to be mostly unprepared to come up with that solution. we will look at what the fed needs for future financial crisis. is this a signal that the ability to act together in the eu to solve common problems would be hampered? if so, the outlook for ratings could come under pressure. in individual countries, or would it be across the european union? itz: it would probably -- we would have to look individually at each country and what is the impact of these solutions. of course, if you are a country that maybe is in need of financial support, and europe seems to be less able to generate a consensus to do that, then the receiving country is much more vulnerable. from that perspective, portugal could be more vulnerable if it thes support again than netherlands which is quite unlikely to come into that position. you could see that over the longer term the distribution impact of the eu budget might change. look at central and eastern europe were countries like hungary and poland are seeing a huge amount of transfers from the eu budget each year. around 4% of gdp, wants this comes up for renegotiation, given the tension that we see between those countries and the old eu members, this may be subject to revision. then, of course, those countries would feel the pain as well. but the i talk to ongoing link between banks and sovereigns? have severed is that link at the moment? if the deutsche in the building behind you have a problem, is that something we need to be concerned about for the german sovereign? is there an issue currently the jewell loyd about here? -- you are currently worried about here? moritz: that could be a matter of great concern. if the question is what are you expecting that the government would step in and support the bank, i can only look at what is in place right now. in europe, i don't think it would fully address the need of a situation like this. give a smaller midsized bank in an individual country failing. i think this could be captured by having a bank like deutsche bank which, by the way, we're not addicting. should this happen, -- predicting. should this happen, it is hard to see how the resolution mechanism in europe could deal with it alone. the government might have to do a similar stunt financially as , becoming a shareholder. don't get me wrong, you asked me the question, we don't think this is likely to happen. clearly, the institution which is the behind me as having challenges. we think they can be addressed that the taxpayer having to bail out. guy: certainly not trying to put words in your mouth. question, the south african finance minister yesterday saying he felt his budget was credible enough to avoid a downgrade. -- if heis is part writes what he says this budget was credible enough. at the if you look trajectory, you see recovery and growth. you see a reduction in the deficit going beyond last october's medium-term. that will be to the stabilization of the debt. that is all good. the question remains implementation. how can this reinvigoration of growth be achieved? the key problem of south africa is long-standing, slow growth experience. without the growth, it is very hard to consolidate public financing. it might give a boost to business confidences. from here on in, it is really implementation. hans: that was indeed a tour around the world. next, earnings miss estimates. the pressure is on to seal the sab miller deal. ♪ >> i don't think it is over. the expectations are very positive last year. that has been affected by a number of things certainly around the immigration wave. concern about some of our markets. some other emerging economies in brazil are having difficulties. this is all having an impact on germany. we still expect growth to be relatively solid next year. hans: that was the incoming ifo president. we will hear a lot more from him. let's go ahead for our bloomberg business flash. nejra: shares of lloyds banking group have surged after the lender raised its dividends. they also introduced a special payout may have reached the end of charges for wrongly sold protection insurance. the same time, pretax profits and other restructuring costs rose to 8.1 one billion pounds, matching analysts estimates. bev reported earnings it missed analysts estimates. had expected a 9.2% again. this underlines the brewers need to compete -- complete its acquisition of sab miller to expand in emerging markets. shares trading higher over news that it will keep its unit. he did to the telecom group must open up the network -- to network rivals. that is a bloomberg business flash. guy: let's get more on avian there. bev.b inveb duncan, will we have here is a which of market some of are working some of which aren't. that is why we're doing a deal. we need more markets to work. moment, if 60% of sales in brazil. if one of those markets goes wrong, you have a problem. will broaden the whole base. hans: i thought global warming was supposed to be good for beer sales. why is falling down -- volume down? duncan: there are two reasons. one of them is the currencies are hurt. in the developed markets, it is a different issue. all consumers want choice. they're quite prepared to have spirits, beer, and wine. that means that volume is under pressure. hans: aside from currency, and he shifts in the industry? is there a move toward spirits? my the last man standing still ordering a beer? i'm just impressed you are still standing. maybe that is the point you should be raising. duncan: it is just a mainstream. if you look at premium beers, they're doing very well. craft beers are also growing very fast. it is as the mainstream beer. it has gone into the premium market. that should start to help the volumes as they spend more money on the mainstream. guy: is sab a mistake? should they just be quivering up kraft brands -- hoovering up cr aft brands? brands of small regional and turns them into something phenomenal. can you do that with a beer? duncan: you can, it would just take a incredibly long time. abi has huge market shares in these markets. they probably are the biggest craft maker in the u.s. , theave budweiser falling scale of it makes it very difficult to do that. i think it is a scale issue more than it is on spirits. that makes sab more sensible. guy: thank you very much. hans nichols is much more sophisticated. his james bondh martini, i can absolutely assure you of that. look at him, how could he not? up next, we will see what they see about the markets as we look ahead to u.k. gdp. that is coming up in an hour and a half's time. 9:30 u.k. time. you will want to follow that story. ♪ welcome back, you're watching "on the move." european equities are up, what is going to happen the rest of the day? we will be covering that on top alive. make sure you tune back. half an hour later we get euros on final inflation. the other thing to watch out for is this ongoing war of words at the g-20 or around the g-20. interesting out of the u.k., this war of words is fascinating. the imf want some sort of fiscal push to happen. the u.s. and the chinese are kicking up and kicking back of the europeans. it is not looking good or harmonious right now. being made byoint the imf but also by the chinese deputy finance minister saying the west cannot rely just on monetary policy alone. we need fiscal policy to help it. that is a swipe at the europeans, the americans. it's become something that is more important part of the narrative we will be dealing with in the coming weeks and months. it doesn't point to a g-20 meeting where we will have peace and harmony and some coordinated effort to deal of problems at the moment. hans: you follow currencies closely -- more closely than i do. it seems like every time there's a battle for the communicator to figure it will get there first. have you ever seen a communique actually move the fx market? richard: i would say it is a rare thing. these things are well telegraphed. it is not something way gets a massive surprise out of the blue. i say that, and the stomach could get something for a surprising. i don't think it will be a massive market mover. anticipation that the authorities will come to some sort of resolution to try to improve global growth. i think they all tend to agree that is a bit of a drag. guy: richard jones running as from bloomberg's first whether .top now the chairman of rothschild will be joining us from -- the oil for front and center. what is happening in europe, a political push part of the story. that is it for "on the move." ♪ friend i'm volatility returns. the shanghai composite sinks ahead of the g-20 meeting on friday. the imf says they must take bold actions. rise tode inventories the most in 80 years. scaroni aboutolo the future of energy. and economists say a brexit would triple the chance of a downturn. figures outd of gdp this afternoon. welcome to "thpu