Power struggle with the president. The market is about to open in istanbul. Things willyou how set up. Half an hour from European Equity trading. Lets take you to the calculations. The ftse 100, a bunch of stocks. Ep the main one to keep an eye on. We need to show you the aussie dollar. Clearly, the change at the rba is one of the talking points. Rates are at a record low. Keep an eye on the lira. That is what is happening. A massive move yesterday. We have a press conference at 11 00. Trading up 2 . The hang seng down. His market, just opening. Ahead of the press conference. We will be covering the story throughout the morning. We will come back to that. Lets get you your news. Juliette optimism still outranks pessimists. Earlier, the China Council meeting said more needed to be done to prevent promote private investment growth. Investorsys have been piling into futures, pushing up prices and volumes. The tightening of rules and in some cases, the cutting of trading hours. The brazilian president has suffered a new blow after Senate Committee recommended impeachment proceedings. Global news 24 hours a day, powered by our journalist in more than 150 news bureaus around the world. You can find more stories. Guy thank you. A couple of things. First, i want to show you what is happening in istanbul. The market down over 2 . We await news later in the day as to what is happening. We have the news we have a new boss. The deputy is going to step up. What do we need to know . What is going on behind the scenes here . Good morning. The change is anticipated. The incumbent will be stepping down at the end of his term in september. His deputy will be stepping up. A couple of things about this change. Beautiful isand the term they wanted to use. It is also what the market would welcome any sense of a clean, orderly secession plan. Expert on Interest Rates in lowinflation environments. An incredible mind. The market rates this man incredibly. Also won the medal for economics at new south wales. A few some intellect. If there is anybody in this type he certainly has all of those markers. Australia, bank of job is wellwritten enumerated. That is certainly what the market is expecting. Business as usual. His insights will take on more weight. Thank you very much indeed. Appreciate it. Joining us out of sydney. Joining us now, patrick armstrong. Sounds like we have the man for the job. A record low environment with us for some time. Reassesshaving to their view of the world and the kind of specialities they have. Continuity, status quo. That is what is going to be put in place. Reporter australia continues to be a bet on china. We saw, driven by Commodity Prices. The economy does well. Guy what kind of job is he going to do . Is too much of an inventory overhang. We have seen a real rally. Speculatively purchasing those. Record inventories. Copper, record inventories. It is hard to see a sustained rally. Guy we need to talk about what is happening with the feds. We are putting a lot of people back to work. Growth overall isnt climbing very fast. That implies we may be in for a Slower Growth time in the future and we dont fully understand why that is. How much is noise in the data. Guy what could change that . Donald could potential he. Jeffrey good whack says we should prepare for a donald Trump Presidency. Said ify manager trouble wins the white house, the ratio of public debt to gdp will rise. Patrickt back to armstrong. Should we be preparing for that . To bek weve got prepared. I dont do get is a likely outcome. The support for trump is 30 percent. Guy six months to go. This time last year, i would have said zero chance. At a riskhave to look premium. Upcoming decisions. The u. S. , youve got donald trump, the fed itching to raise Interest Rates. Selloff, could be a later, those are risks and new leader, those are risks. You are putting a positive thing but that will be more than offset by the negative. Moving away from global trade, you cant offset that. That will only go so far. Guy how far would rates go in a Trump Presidency . Driven, a guy comfortable with that sitting in the white house . He builds of debt and goes bankrupt. It is hard for a but maybe he will try. The fed, i dont know what they are going to think. Guy if the spread between trump closing, what is the signal . A biggerk equity is risk. A risk of higher debts and defaults. Risk premium on volatile statements. The market sells off. A slow, steady guiding hand. Guy checks and balances. Had agendas he wanted to push through. Guy no government is Good Government . You could almost argue that. Having a leader with the house behind him, you can get things done but it would be hard for him to do things except for soundbites. Guy the u. S. Economy, the consumer, they are the drivers. He is building not a literal wall, but figurative walls. Pulling america back. Making statements that isolate china, japan. O, every country basically. Those will hamper global trade. It will deter investment decisions. It is a real risk. At the glassoking half empty side of things. Rather than a consumption boom field by debts. Guy patrick is going to stay with us. Lets get you caught up. Respole russ paul beat analyst estimates. 570 millioned to euros. Worst performing european oil stock over the past year. A fourthquarter profits that beat estimates. Says. K. s former monopoly earnings rose 14 . Includes two months of results from the british Largest Mobile Network which bt acquired. Credit suisse is carrying out a fresh round of cuts. Two people familiar with the innder c jobs are going the trading unit. Another round of cuts is planned for next month. Would suisse said they eliminate jobs. The taz list ceo has set the company the most ambitious automotive timeline something model t ford. They plan to produce 500,000 electric cars in 2018. 10 times the amount they produced last year. That news came as tesla announced a firstquarter loss. The surprise super hero hit dead pool may have saved the quarter for 20 century fox. 751 million in global ticket sales. Businessour bloomberg flash. Guy thank you very much. The turkish Prime Minister is expected to step down within the month. The turmoil has sent markets plunging. Joined in istanbul. The markets have opened. Looks pretty soft. Reporter that is right. A political power struggle by the president and Prime Minister has set markets into a downward spiral. Market has opened a few minutes ago. Down 2 . Headed towards the fifth they of losses. The lira is appreciating against the dollar somewhat after sliding 4 yesterday. 10 yeard on turkeys bond is on the rise. That guy he said he does not see early elections coming through. What does what is the political directory tradeking he look like . What does the political trajectory look like . Meeting, after the there was no official statement. The Prime Minister plans to have a Party Convention in the next 15 days. There, he will not be a candidate. 9 00 a. M. Speaking at london time. He could possibly bow out his plan further then. Who could replace him as the new Prime Minister. Ministerbe the justice or the soninlaw who is the minister. Guy thank you. You look at risk right now, youve got brazil, south africa, turkey. Some ways, these are the times to invest. You see decent returns. Does it work in south africa . What is going on . You need to have a weak u. S. Dollar and Commodity Prices. I dont think that is in the cards right now. I think the dollar begins to strengthen. They are not saying we are staying at zero for ever where is the rest of the world has that few. That translates into a stronger dollar. You dont get demand going into the levels of production right now. Those things are going to come together. Guy we dont know how much pressure he is going to put on the central bank governor. Do you stay away . That reason, i would stay away and would not want to be long. Guy what about brazil . You have had your move in that. If i am wrong on the dollar and commodity, brazil will do well. How easy is it for you to look at your investment portfolio and see how Political Risk gets overlaid . Patrick it is not just where the risks are, where the market is going to punish. It is the narrative pushing the market in one direction or another. It is difficult. There is a range of risks. The real risk for me is policy mistakes. The central bank likely to do that is the u. S. Hiking rates too early. It is very difficult to know when. Guy june is early. Patrick 100 that would be too early. I think it would be unlikely but the narrative is we are keen to raise rates. If we have better than Consensus Economic growth, two might be fine. If that is the narrative, i think the markets can handle that. Be too early. Ould you might get around 200. June, there will be a discussion. The governors are saying june should be on the table. I would be surprised. Is going to stay with us. Up next, expansion in the service sector. How markets reacted. In europe,rket open it is going to be the hottest day of the year in london. 21 degrees. Summer is here. Lets see what is going on in asia. Juliette 21 degrees, we call that winter in hong kong. Comingseeing gains through in the last part of the trade. The shanghai composite positive by zero point 1 . Hong kong still flat but things looking better than they were an hour ago. The pickup coming through. Giving more of a boost to the region. It has been an interesting day. Japan will not reopen in till tomorrow. We had korea closed. Markett a damper on the in terms of the regional benchmark index. Flat at the moment but negative territory. The seventh session of losses, the largest losing streak since december last year. Mining stocks coming under pressure. Financials getting a boost. Consumer goods looking strong all morning, coming through. We have been watching in the currency markets, the story of the dollar, the bloomberg dollar index eating stronger. A rate increase on the cars. Ringgit down by 0. 2 . March. Est level since the aussie dollar, a new head. 75 spots to attain. Guy this is as good as it is going to get. Profits that beat analyst estimates. Performance compensating for low oil prices. I have heard that before. Performing over the last year. Open. Like equities will armstrong, still with us. How worried are you some of dividends will still be there . Patrick they are not sustainable with oil prices the way they are. They should go higher as the higher cost production comes offline. The canadian shale, some of that will cease. Dividends are not sustainable. With 60 oil, i think they are probably sustainable. Guy we are five minutes away from the european open. Weeed to tell you about how are probably going to open. Ofa has had seven days selling, but it looks like europe will bounce back. Futures in london, in terms of featuresee, keep the box. Looks like we are going to be seeing the market this morning. London up 0. 5 . Dax looks like it is going to be opening into positive territory, 0. 7 percent. Looks like europe is going to be on the front foot for plenty of action, still to come. Particularly in turkey. 9 00. A key press conference coming up. Higher. Equities are the warmest date of the year in london. Watchingome, youre on the move. Let me give you your morning brief. There is a new governor of the rba, Glenn Stevens will step aside in september. Are you ready for trump . Investors should prepare for a debt driven donald presidency. He loses hiss power struggle with the president. Themwill be opening hide we have softened up into the open. Maybe just a touch higher as we get into the numbers. Remember, you can to them going dividend in london. Lets find out what this thursday morning is going to bring. Nejra we saw losses in asia, excluding japan. Market still closed. Up and down for a seventh day, its longest losing streak this year. On content of a Global Growth after those adp jobs numbers. Openingdata from china, up in europe, these are the sectors on the stoxx 600. Largely in the grin, that matches with the future markets were showing. We were ahead of the open. If you look at the sectors, a lot of it is pretty much flat. They areooking like the weakest, followed by industrials. Lets move on and look at the currency that is very much in focus today. We have the announcement of a change of governor at the reserve bank of australia. That is not move the currency too much. The games that i have been on retail sales eating estimates. The aussie dollar is the best performing against the greenback, gaining against its peers. Falling off slightly, but so up still up. 5 . Gaining for a second day after u. S. Crude production fell the most in eight months posted lets move to the top stocks we are watching today. This is the worst performing major european oil stock over the past year. Analysts has beat estimate with its firstquarter adjusted net income. This is the performance of the refining and chemicals position. Just waiting for that to open. I will move on to bt group after it reported fourthquarter profit that beat estimates. It was bolstered by the acquisition, it does include results from that which bt acquired at the end of january. Sticking with another u. K. Stock, morrison up 1. 1 percent. It reported a second consecutive quarter of sales growth that signals a change made by the ceo really have stabilized in the business after a fouryear slump. Still waiting for repsol to op en. Guy let me take you to the market open and show you what is happening. The ftse 100 is up i. 5 . 2 . Still waiting for the dax to open. Lets see how europe fully opens for me get that dax price through. The cac is down. Patrick armstrong is still with me. Are long european equities, short the food and beverage companies. Because it is too expensive . Patrick the most crowded part of that is you have risks in europe by the best companies in europe which is nestle, the beer companies. Noncyclical, and analysts have profit margin growing year after year because their Commodity Prices falling for the last five years improving growth margin. I think that has run its course. Any precipitous falls, i dont think it will spike higher. But analysts have consensus seven. Rom 55 to over four times book value, it is a very expensive quality play right now. Guy dax just opened up. 2 . Talk to me help him be this summer will be for europe. What is the story there . Patrick we are short euro stocks righ tnt now. There is risk there. When everyone is hedging one clear risk you have to pay a lot. It is very elevated. Guy where are we . Resident 17 right now, not quite double but it is getting close. Things are pretty good in the u. S. , and pretty terrible in europe. It is not the case if you look at the manufacturing production in europe, it is not different from where we are the u. S. Right now. People take a pessimistic view of europe because invest appointed for so long and an optimistic view of the u. S. Because they out delivered. Guy what will it take for u. S. Investors to wake up and smell that yuan . Higher Interest Rate is probably the clear catalyst. The other area we are short is canadian equities, not very patriotic for me. Timesan banks are 1. 8 book value. They sailed through the financial crisis with conservative management. It was in opposition to get to the next crisis because people are worried about bad debt coming from the Energy Sector or depressing valuations. It is the canadian banks that have more exposure. That is more than coming from oil and gas. The canadian banks could be really hit if you do certain see that unwind. That is been placed into european and american banks, but not canadian. Guy it is a tough week for european banks. Were not seeing the light at the end of the tunnel. Patrick in five years time i think they are all 50 higher. The earnings and ram it will change. We love a steeper yield and the interest marginal come back through. It will be a wild to play that out. Guy talk about the Interest Rate curve, talking in new york at think it was yesterday betting against the european bonds being the widow maker trade of the year. Patrick if he short a bond and it costs you. 2 ay ear, it will not kill you. I dont know if that is the right word for it. Guy he talks with the 30 year japanese, being the most overpriced security on the face of the earth. Patrick i dont see how you can say that european debt is a widow maker than japanese debt they are yielding not terribly dissimilar numbers. Overvalued right now. Were in a very risk averse environment. We are rotating towards the safest insurance. At think they will prove as safe. I think you will see a slow grind higher in the coming years. Guy right now, short term, this push toward the back end of the curve, does that carry on . Patrick estimate, there are a lot of artificial forces pushing Interest Rates. It is part of the ecb and the feds policies. Eventually, inflation will we are its head again. Just 12 months ago, the market really moved sharply where yields shot up ever because there were glimmers. There is no inflation priced in anywhere right now. That could start to emerge of these policy start to take effect. Guy for your policy, you need these two steep enough, right . Patrick eventually, they will. There is no earnings. Many people just use the Deutsche Bank model. You cant lend the money out so you buy back your own debt. Cane are ways that they artificially get some earnings right now. It makes entity can borrow money for free and the market saying your bonds are worth a lot less. Much, backyou very with patrick very shortly. Up next, lets talk about the car sector and elon musk. He is working overtime, apparently enough keeps a sleeping bag in the office. What will it take to produce production in two years . Guy lets find out what is going on. We are long european equities this morning. E is climbing as well. E cac just up. 1 . The Energy Sectors on the front foot as well. Italy, italian banks and focus on the downside. I want to check on the dividend. Lancaster holding, Elian Schneider all your losers in europe this morning. Phillip lowe will replace Gl