I am manus cranny. Cut to junk is the verdict from standard and poor, the first time in a decade it has dipped that low. Russia expert Ryan Chilcote is here with us. Along with stephen king will be with us, the chief economist at hsbc. Great to have you with us stephen. Ryan, was this something we thought were coming . One person said we have not then asked in terms of the centralbank. It was widely anticipated and came a bit earlier and s p said it would, by the end of the month and the results of the review. It was not entirely priced in. I doubt i thought the head of Sovereign Rating and defended his decision to effectively junk russia and he made the call. In responding to some the russian criticism saying he was overly pessimistic a he said, no, i have a more optimistic view of russian growth than the kremlin itself. How can i be too pessimistic . Hes at one of the problems russia is facing is the socalled rainy day funds and reserve fund and welfare fund are not as big as people inc. Have a listen. It has been built up during the Oil Boom Years we are feeling as if the build up of assets rainy day funds, if you like probably around one of the interesting things we have seen is the ruble totaling yesterday. You have to ask yourself is the centralbank spending 379 billion in reserves at 300 billion in yesterday and thats a different pocket of money. The answer is we will not find out until tomorrow. You do not get the information until the next day. The ruble is stable again but at a more elevated rates. s season, stephen what is your take . Currency crisis since 1998, what do you make of it . It is a quite deep trouble. In our forecast around the world, russia is about the week as we have got shrinking this year and 2016. Is about the weakest we got shrinking this year and 2016. The oil and gas prices are high, russia is ok and if they collapse, russia is in big difficulty. That lack of diversification has revealed the problems it has got as a result of these much lower oil and oil gas prices. They seemed to stumble from one problem to another. Where is the new normal for oil . Usually dictates where the ruble goes . Nobody has forecast a oil prices protect really over the past few months. Does particularly over the past few months. Changing attitudes toward being a swing producer and worried about oil prices being too high and encouraging alternatives. The saudi reserves of the next few decades is one factor. The second fast factor is faster demand is softer than expected especially emerging market demand and everybody is talking about the u. S. Being result up to the rest is darkness rather than life and true in the emerging markets and consumers over the past few years and that story has gone wrong. There is a double edged sword and your place like turkey and india that could benefit from the lower oil prices. It is not all not all in are facing the same difficulties. Latin america, countries in many cases in recession. The bric dynamic. Not quite the powerhouse he saw three or four years ago. Russia has been improving on moving along for a year. A year ago, it was moving into International Markets and that has not been the case. Do you see a point more recently where russia begins to sort of move International Markets are again or is it a contained crisis . Russia in the first half of last year, a sense with the Russia Ukraine story kicking off breakout oil prices higher. We are seeing more fundamental factors coming through, the impact of saudi and emerging markets more generally not withstanding and so, russia has the capacity to have influence. And have a huge influence. Thank you very much. Stephen, you will stay with me. Breaking news for our viewers. Yanis varoufakis will be the next greek finance minister. He spoke to him yesterday. Lets get straight out to greece. Guy johnson and the beginnings of what we understand who will run the finances in degrees. I . It has come out on the personal blog. Let me read to you what he said. It will be more infrequent and shorter but i hope they compensate with a juicy your views, comments, and insights. Carry on his blo now that he has been named finance ministerg. He calls himself the accidental economist. It is interesting, the greek press reporting that Yanis Varoufakis have if i can get my pronunciation right had spoken yesterday after the eurogroup at meetings and maybe that is an indication of the conversation is already started between greece and the rest of the eurozone about what happens next with the debt load. He is going to be the finance minister and he has done so on his personal blog. We spoke to him yesterday on air and he talked about how the negotiations were to go. I spoke to him last night as he was walking out of the Athens Plaza Hotel on the other side of the square. He seemed in good spirits and maybe he already knew the news after that point after mr. Tsipras was sworn in as he calls himself the accidental economist. I think he will try to avoid an accident in his relation with the eurozone once the negotiations start. One gets the feeling the voices from europe, the imf, are quite embracing of the opportunity to speak with the new government. What do you make of the comments so far . Fairly mixed so far. Mr. Hollande has invited mr. Tsipras to paris. And he is invited to brussels. The tone out of the capital may be a little bit more circumspect making it clear there is a desire to seize the greek agreements made by the Previous Administration of mr. Samaras. A story and the present going around which is entitled he is under the doormat and the fact that mr. Samaras was not there to greet mr. Tsipras and the places effectively bare. A very clean handover. They have been Spring Cleaning and maybe a sense of the tone of one government from the other. Maybe thats something brussels should look that to expect to see the greeks carry on and the commitments made by the Previous Administration. The fact that mr. Tsipras party has gone in with the independent greeks making it clear that a harder line is going to be taken up by athens despite the fact that the greeks have very few solid cards to play. We will see how it comes to bear to see how they get the funding. Guy johnson in athens. Stephen king is still with me, chief economist at hsbc. An accidental economist. I think a professional economist. Exactly. Its a good we have somebody with a sense of humor . It is always good in these areas. Stephen, how strong is his hand at the negotiating table . It is the strongest hand simply won his election with a great deal of success and the greek people have spoken and they want a new deal with the rest of your and do not want to leave the euro or the eu. They want different terms. Greece and self has been through a depression which is similar to what we saw in the United States in the 1930s. Greece is an exceptional story where it was hit very hard by the policies we have seen. In a democratic sense greece has a voice. In the negotiating cents, it is a degree of difficulty. It can determine whether it stays in the euro or support banks or Financial System. All of these are still issues. Walking on eggshells. Walking on action and not tripping over one another. On eggshells and not tripping over one another. I had an interview this morning that said he europe would be a stronger place without greece. Discussed in this morning. That is very impressive. Would be stronger in greece left . It would be stronger if greece was not a member in the first place. There is a whole i think greece was in a weaker position. The issue now is if it were to leave open of the departure door for other countries to leave or the markets to speculate a leaving. The whole part of the euro is once you are in you are supposedly in forever. That is a powerful firewall their protected the other countries. A departure could create difficulties. And people tend to assume the greek exit would be a disaster for greece. The banking could be a serious trouble, etc. There is one possibility that the departure which is a major decline in greece might make greek chief for incoming Foreign Investors from china, russia the americas and so on. Suddenly, the money pouring in and begins to change and revitalize the Greek Economy. And the last thing the rest of europe want is the resurgence of a tiger is a consequence doing well and portugal and spain, why havent we thought of this if greece can do well. Help me. The hellenic tiger. They do not have resources. They do not have what argentina has. Retrospective, people are looking at Structural Reforms is stepping that austerity but they do not have the resources basis to give them a boost. How could a tiger be born . It was a tiger because it attractive for an investment from other parts in the world american investment, british investment. A huge amount, abundance of resources and Human Capital perhaps but not necessarily natural resources. In greeces case a position in europe which is intriguing, a gateway of the middle east. It is certainly by russia. More influence than it does. I am not saying it is a good but maybe incentives for other countries to invest in greece. No guarantee by departing there are opportunities that my come from investors and maybe greece is transformed. We will pick it up again. We were talking, are the firewalls in europe strong to withstand a grexit . There is no political consensus in europe on how the euro should develop over the next few years. Draghi talks about all of the time. It is politics between northern and Southern Europe and how you work out who pays the bills. Until that is resolved, fundamental difficulties are likely to continue. A very abridged aversion. Stephen, thank you so much for you will stay with me. Coming up countdown to the u. K. Elections. The numbers out in 15 minutes. We will explore what it will mean in a runup to a general election. That sap action has an impact on novartis but we are a very Large International company and happen to be headquartered here in switzerland. Because of that action and 15 depreciation of the swiss franc were taking a look to look at ways to reduce cost and looking at cost across the company. Again, the underlying growth of this company is what is important. That was the ceo of novartis speaking to me earlier about the impact of the decision to lift the cap on the frank on his business. For a little bit more, a chief economist, stephen king from hsbc. Brave move by the swiss liberating them from having to keep on intervening in the market . Are they that in the market . They do not like it is the euro. Not surprising. I think Central Banks in one sense, it is like a vegetarian tiger. They have a bite but they claim they will not invite over deflation and concerns over lack of growth. The Swiss National bank has proved it is not a vegetarian tiger but a proper tiger and they promise a will keep the frank constitute the euro and everyone planned or business as subtly, it turns out this vegetarian tiger has a real bite and that is what were seeing. I think that is being very generous to them. No, personally, these guys wiping the floor in terms of reading the Foreign Exchange market and destroy value. Bear in mind, in one sense, the s p is behaving as if those not part of the euro. Snp said we are not a great with quantitative easing. We would rather be away from it and were happy to stick with the euro as long as the europeans are not doing qe. They are doing qe of this the dollar in every other currency. Of course, the problem is when you move from one regime to another, it creates enormous shock waves and thats what we of seeing over the course of the past few days for it promises to be a vegetarian tiger and we should a look at them and they have claws and teeth, they are a tiger. You know from i suppose a short a shark. Slightly different. They show themselves to be decked areas and not conforming. Dexterity in not conforming. Canada and the combination of Falling Energy prices and moo towardd a loose monetary decisions. To what extent do any of these qe policies are working . Currency wars of countries trying to sort out to their deflation somewhere else through a Weaker Exchange rate . What europeans have tried to do the japanese have done in the past is weaken your currency and try to lift your domestic inflation because you created devaluation elsewhere which shifts yours to other countries. Chris is the ecb a tiger is the ecb a tiger or a waking giant . It was always it was quite a tiger, conservative. One reason for doing qe is everybody is not conservative and basically printing money. And the risk of your currency ends up stronger and stronger and that is where we were much earlier last year. Strong currency alongside domestic and i would argue it would create a Strong Economy and what they are trying to do is the Downside Risk and try to show they are not particularly conservative. You go back to the 1990s and japan made a major mistake and boj was conservative and the more it depreciated the worst it became. Hold those thoughts, we are more to get through. We have the vegetarian central bankers, what will be the next race . The u. K. Elections is next on the agenda. Stay with us for that. You are welcome back to the pulse. Still with me is hsbc chief economist stephen king. We are going to get a little bit of the Fourth Quarter. Some other survey to data is a little bit softer, wasnt it . Rhetoric feel your phase rather peculiar phase and we will see where we get in the Fourth Quarter. A mixed story. Investment is softer perhaps, consumption ok. Retail sales are probably up. Weaknesses here that are over 6 of gdp is not a where you want to be in one year of recovery. I perhaps think cameron will make it about recovery and we will get the message is to look at the data stephen. Stick around. Lets check in on dollars sterling. That is where we are at the moment. As we head into the numbers, we estimate we see around 0. 6 in the u. K. A very initial of what is going on and the u. K. And stay with us. Some breaking data in the u. K. , we are seeing they u. K. Economy grow at a 0. 5 . 01 lower than the consensus estimate we had out there for the Fourth Quarter. This is not the full picture but lets bring in hsbcs stephen king. A little bit of a miss there. The flash estimate. Not all that surprised . No ours was 0. 6. There have been much bigger errors than that. Trading the currency and looking at the currency, 150 for cash. We are seeing sterling drop here. Where are we in this debate . A little bit of a slow down and inflation heading towards zero, some people have said. Where does it put mark carney and his cohorts . The gdp up in the quarter not Strong Enough to tell you it is a robust economy. Inflation is a remarkably low rate. The bank of england has lots and lots of time of how to normalize policy. Think about earlier last year and raising rates in november of 2014 and asked not looking like they will raise rates until 2016 at the earliest. Inflation collapsing at the moment all which points to a buying more and more time and Continuous ZeroInterest Rate for a very long period of time. Can anybody raise rates in this year . Every time i look at the statistics for the fed and the stats looking at possibly 30 of our poll in september. Can anybody raise rates this year as the fed . The Federal Reserve is the most likely and even their there are difficulties given the eurozone use of qe and the dollar on the back of that. And tracking down effect of term of u. S. Inflation and you have oil prices. It is likely to be down to zero and even possibly lower than zero. Although the u. S. Growth in numbers are ok lingering suspicion that the rest of the world being weak could drag the rest could drag the u. S. Back down. Can it sustain that it through this year if the rest of the world is soft . A matters most to the u. S. Growth story . Christine lagarde was on a panel with francine and she made a very clear there is one bright spot in the world. That is what is going on. You can see who it is, track of them. [laughter] that is the absence of our concern, isnt it . Lowlevel a level oil prices will boost a real wages a real profits in europe and japan and later in the year. After this precise moment, only the u. S. Is doing the type. The u. S. Is going up the mountain with all of the other countries attached to it by ropes in the u. S. Is better in every time one of the other countries falls down, it brings the u. S. Back down. It is not Strong Enough to provide the engine of Global Growth. There are other countries that are being they used to be dynamic that are softer and dragon down the overall Global Growth rate. For us in the United Kingdom that relationship with europe is presumably one of the biggest issues. We have a strong currency against the euro and it is one of the main export markets are the you pay and it is one the main exports for the u. K. Currency on one side and oil on the other which is coming down and doesnt have the same impact are those the key issues . What happens to the eurozone growth rate given the trading partner of the u. K. . The u. K. s own forecasters they are sent 3 4 per year. Recovery in the eurozone. If they eurozone outgrows it is very difficult to see how the u. K. Can grow indefinitely without running a massive imbalance. Other countries end up in that position facing some kind of crisis. If you have not got this growth and investments, you will ultimately be constrained by the performance of your their neighbors and trading partners. Unfortunately for the u. K. The euro is not the best trading partner and is still very, very weak. And i have read recentl