You are watching the pulse in london. I am guy johnson. France being not here today. Francine not here today. Lets talk about the day after draghi. The president of the central bank outlined the timeline for his 1 trillion euro q. E. Program. The central bank will stop eyeing bonds on march 9. Buying bonds on march 9. Draghi at this point in time, we see absolutely no reason to think or plan or act in any different way from what we planned, namely purchasing of 60 billion euros a month of securities on till september 2016. Or beyond if needed. Guy mario draghi also announced that the ecb had extended emergency funding to greek banks by 500 million euros. And stood ready to resume by greek debt by july if greece repays bonds due by then. The political pressure from the euro Group Members shows no sign of easing. Yesterday i spoke to the maltese Prime Minister. He is insisted the country wont take a haircut on the first greek bailout. Prime minister of malta we are the biggest contributor to the bailout so we had some red lines. One is definitely that we would not accept any sort of hair c ut. So, we want our money back, but to get our money back we need greece not to default. We need greece to stay in the eurozone. We need it to grow. Guy the maltese Prime Minister speaking yesterday. Lets take a look at how euro dollar is trading. The euro on offer. A 1. 09 handle. Trading softer. 1. 0997. Down by 1 3 ofn on the session. Lets get some analysis. Ebschief economist joins us. Good morning. What was the read from draghi . Guest we were such we were relief to such a confident display. We felt the new ecb Economic Forecast painted a confident picture of the economic recovery in the eurozone going forward. Those holds for both the gdp and Inflation Numbers. Guy the Inflation Numbers are getting back to target. If they can do that, does that mean that a 2016 close of q. E. Is the most likely outcome . Mr. Chursese the 2107 inflation forecast is 1. 8 slightly below the target of close to below 2 . At first sight it might seem the ecb would like to keep the door open to extend q. E. Beyond 2016. However, in the forecast the ecb argued that expects the output to be close over the course of the forecast horizon. By 2017 they expect the output gap to be closed, and that was a just we cannot conclude that q. E. Will run the on september 2016. Guy i saw this. I was thinking we have mass unemployment across europe. Youth unemployment, headline unemployment. We are closing the output gap by that date. That requires an awful love people to find jobs. Mr. Cluse the unappointed numbers according to new ecb forecast have been brought lower. There is some improvement expected. However, you should keep in mind that europe has not invested for a number of years. So the productive capacity of the capital stocks is not rising very sharply. So that has to be taken into consideration when it comes to an evaluation of the likely development of the output gap. Guy he has given greece a lifelike. How do you see it working . Is it enough to stave off immediate default . A few humps coming up in terms of repayment. What does the 500 lend . Mr. Cluse we did not expect the ecb the reinstate sovereign greek debt calendrical. Collateral. There want to have a better idea that the negotiations between greece and International Institutions are in a good way. Banks remain dependent on the emergency liquidity assistance. The ecb in the meantime will have to be ready to raise the limit further. Guy do you think that happens . Mr. Cluse that could well happen as long as mr. Draghi stressed yesterday there is a perception that greek banks are solvent which they are. But we need a construction environment a destructive environment for negotiations. Guy when you put this in aggregate, is the euro trading at the right place below 1. 10. We are at 1. 09 at the moment. Mr. Cluse at ubs, we do not see further downside. We have a forecast of 1. 10 by the end of next year. We think most of the depreciation of the euro has run its course but the Economic Impact will come, of course. Guy yeah. Talking to big firms. I was talking to airbus this time last week. He told me they will not feel the effects of this until next year. Are we going to get a bigger feedthrough from the lower euro towards the back end of this year . Mr. Cluse it tends to take for ur to six quarters pretty economic headwind is still to come. Sorry. Guy so do you agree with it gdp revisions they were posting . Mr. Cluse the risk to the forecast is to the upside. That has to do with the weaker euro, Lower Oil Prices. We see that bank lending in europe is is improving. We have had the asset quality stress tests late last year. As a result, the recapitalization of banks in europe is now proceeding. That means the ability of ranks to give credit again is improving. Guy do you think that is going to continue, that will be a story we can watch and respect to improve on an ongoing basis . Mr. Cluse it will be a slow process. We come from a low base but gradually over time, i think as the ability of banks to give credit improves and the demand for credit gradually improves as a, the should imply the credit growth in europe is gradually coming back as well. Guy how will that story fit together with the Bond Purchasing Program . Because i am a bank. I do not want to lend out more money. I have got a Balance Sheet balancing act i need to perform with that. And that means i probably need to hold more bonds. Yet, those bonds are in demand by the ecb. I was talking to one of the biggest reinsurers. I do not want to give my bonds to the ecb. How is that going to work . Themr cluse the e released how they wanted tocbs proceed with the qe program. They need flexibility. All the banks might want to sell the bonds. The ecb is aware. Overall, i think it does fit together. If banks and asset managers, severn wealth funds, sell their bonds, this opens up more liquidity to be graduate offered to the real economy to households so that it should help the economic recovery. But i would assume the Exchange Rate impact is the most important. Guy that is the biggest channel. But you have got a target of 1. 10. The lag effect is still to be felt. A great pleasure speaking with you this morning. Thank you for your time. Mr. Cluse the chief economist at ubs. The fed tests show the biggest lenders met capital targets. We will break down the numbers predicted the big day comes tuesday. Another Big Bank Reach a settlement with the u. S. Government. How Morgan Stanley is expected to pay up. Guy good morning everybody. You are watching the pulse. Lets see was happening with the euro. Post yesterdays announcement we have continued to watch it. Though this morning we have taken a lead lower. Down by. 4 . We are trading sub 1. 10. An 11 year low you are looking up had1. 0983 is where we are positioning ourselves. It looks like the pressure to the downside is continuing. It was sue it happens when the book attended over to this date. Payrolls coming up later on. A strong payrolls number, life could get interesting for this pair. The other top stories we are watching. George osborne has told the Financial Times he has made a mistake not restructuring the statecontrolled royal bank of scotland in 2010. On orton said he would like to move quickly to go osborne said he would like to get rid of it if conservatives move to are in power. Commerzbank will pay that it violated u. S. Sanchez lost. The settlement may come as soon as this month. It is the first prosecution agreement that would resolve a separate Money Laundering matter. The accord is is a later settlement with a bank dealing with iran and sudan. The actor Harrison Ford as recovering in half itll after the single engined vintage playing he was flying crash landed. On a california golf course. Ford is said to be in stable condition with moderate injuries. Fords son tweeted that his father was battered by ok. The plane looks a little bit more battered, i have to say. Europes Biggest Software company, sap is cutting 2000 jobs in the second big playoff round under ists ceo Bill Mcdermott. Lets get more on the story from aaron taylor who broke the story. Spoke to sap stephan reese. What is the rationale between the latest cut . Aaron i talked to the head of h. R. At sap. A big Supper Company that supplies Corporate Software t a big software company. They are doing a second round of job cuts eliminating 3 of the workforce, 3 of their 74,000 people. 2200 people this year. And its the second round of cuts Bill Mcdermott has done. He did get something similar last year. Sap is trying to get more competitive in this new paradigm called cloud computing. That is the rationale, anyway. Guy lets talk about cloud computing. Does this also markets and the get shift in the Business Model in terms of the way that sap has traditionally operated . Aaron sure. There are big see changes going on underneath sap now, all Enterprise Software companies. The way you did this was sap for 40 years was you sold big, complex Software Packages every few years. They got installed on corporations computers. He brought in an army of consultant. Sap got paid a very large modern money. Kept the annual fees to make it work together. What is happening now is companies are increasingly for more functions, not everything, but more are wanted to rent software by the month or year. It also squeeze on profits. That is part of what is happening. Guy so, this is the second big round of playoffs. More to come . Aaron this is what sap has announced for this year. Unlike in america where i used to work at bloomberg, it is harder to do this in germany. There is a Works Council of employee representatives. This all needds s to be negotiated with. It is hard to sack employees. Sap has to find new positions. So, they communicated a big restructuring last may. This is the one for this year. You are seeing an old line Enterprise Software and Hardware Companies microsoft, hewlettpackard, ibm cisco they have chopped tens of thousands of jobs in recent years. Guy this early have. Thank you very much. They certainly have. Lets move on and a marked improvement in the dark days of the financial crisis number 31 major banks objected to the Federal Reserve stress test have shown they have capital to whether a big financial downturn. Here with more is caroline hyde. So, the first hurdle has been passed. Recent decelerate . Caroline first went through. First time in six tests. This has been going on since 2009. This is the first time all banks past initial test weathering what would be a nightmare scenario in the United States. House prices plunging by 25 , the stock market crashing by 60 . Every be bank, five of which are european, all of them have passed the stress tests that they would manage to have the necessary capital buffer of 8 . So, they will be able to weather storm. They would see losses to the tune of 490 million, but still they would be able to keep on lending to the consumer. Its there they would feel the most pain, consumer lending. Guy this was the easy bit. What happens tuesday . Caroline this is why champagne should be on ice. Next is to whether or not their capital plants get the thumbs up from the Federal Reserve. Whether they can pay dividends whether they can do the vivax. Give do the five x. The buybacks. The banks already know whether their plans are getting the thumbs up. We will not find out until the 11th. Then there is the quality aspect here yes, from a quantity perspective, these banks past the 8 threshold, but qualitatively last year citigroup did not seem to get through the stress tests as hard as the Federal Reserve wanted them to. Citi group actually fail. We we see that happen again . Guy that they are paying a great deal of attention. Caroline keep an eye on Goldman Sachs. It just past by the skin of its teeth. 8. 1 . Guy that is going to hurt. Caroline hyde. Right. The weaker euros impact on business. We will hear why the current level is causing headwinds at the. At luftthansa. Guy good morning, everybody to you are watching the pulse live on bloomberg tv. On the radio and streaming on your tablet, your phone, and on bloomberg. Com. The all new bloomberg. Com. In an exhibit of you, lufthansa an exclusive interview lufthansas ceo talked about the airlines growing presence in asia. Guest in general, if you are the number one Aviation Group of the world as lufthansa is, of course, the most in any part of the worlds key for us. We are operating 240 flights here every week. At the same time the technique is a big fire. Big power. This is 240 flights, which include swiss, austrian. Host how is the competition with the gulf, the emirates . Mr. Spohr when it comes to quality, are nonstop offer and are free airfares businessclass we are going well there. In my opinion, which is what counts. Host what happens next . Do you think you play on a level field with those carries . Mr. Sporhhr we do not we have discussed this for many years. Now the americans are pitching in with their arguments. Basically, there needs to be a relationship between how open tray can be and how fair trade can be. Host i you saying there unfair . Why . Mr. Spohr it is not fair enough for the level of openness. Usually the wto will take care of the relationship. Bilateral relationship have to take host why is it asymmetric . Mr. Spohr the markets have different sides and rules to p lay by. Host is the competition from them tougher this year than last year . Mr. Spohr their rate of growths getting tougher every year. The market is growing. A big market share growth operating out of the gulf. Host the big moon in the last six months have done the oil prices. The big boon has been the fall in oil prices. When do anticipate the oil prices will get you in the blood . Mr. Spohr we made 1 billion euro profit last year. It is not about getting back in the black. It is getting more int he black. The weak euro is giving up some headwinds. Is giving us some headwinds. Host the euro gives with one hand and takes with the other. Themr. Spohr the weak euro hurts us on oil prices. It creates higher expenditure for the same level in dollars. Guy lufthansas ceo begin to Rishaad Salamat in ashad. One of the in asia. One of the key questions is what is happening with the euro dollar. Lets see what is happening with a single currency this morning. We have found it interim flaw but sub 1. 10. Down by half of 1 on the morning. Fairly significant drop coming through. Were watching payrolls. You get a strong number, the weather a factor. That is going to be meaningful for the currency markets later on. After the break, we are core to talk about what is happening with mr. Putin. The whole of the kremlin taking a 10 pay cut. What does that mean . What is he saying to the russian people . Hes out there. Theres a guy out there whose making a name for himself in a sport where your name and maybe a number are what define you. Somewhere in that pack is a driver that can intimidate the intimidator. A guy that can take the king 7 and make it 8. Heck. Maybe even 9. Make no mistake about it. Theyre out there. I guarantee it. Welcome to the Nascar Xfinity series. Guy good morning. Welcome back. You are watching the pulse in london. Francine lacqua is off today. Let me run you through the top headlines. The Federal Reserve has said all 31 big banks have ghe e climates necessary to absorb losses during a shop and prolonged economic downturn. It is the First Time Since the fed started conducting stress test in 2009 that no firm fell below any of the main capital threshold. Banks were tested on their ability to survive nine quarters , including a decline in the stock market and gdp and the price of oil rising to 110 a barrel. America is scheduled to issue its Monthly Employment numbers. A survey of economist reject the 12 consecutive months of job games above job gains above 200,000. And European UnionForeign Ministers are gathering in latvia today to review the ceasefire in ukraine. The meeting comes as ukraine struggles to cope with the economic follow from 11 months of fighting. The country signed an International Rescue to stay afloat and start to overhaul spending to satisfy its creditors. We had some moves in the markets this morning. Manus cranny standing by with details. Manus equity markets seem to be trying to build on the seven year high that some say is priced into the market. London is the only dip in the markets. Citi raise their view on this. The stoxx 600 will rate will trade up to 450 by the end of this year. 550 in 2016. Ironically in london, they have a target of 7700 for the london market. Get this. Citi are calling the ftse 100 40 higher going into 2016. Why . Because it is going to be a dividend story galore. All around the european map. That seems to be the rerating for them. Bond markets continue to see their yields decline. As i suppose the enthusiasm for marriott draghis conviction that came through yesterday trades to the markets. U. S. Treasury bonds, however, it is job state. That jobs days. 235,000. Average hourly earnings. Are we beginning to see the beginnings of Wage Inflation . At 12 months of job creation above 200,000. That is the kind of pace of job creation in the United States