We are live from bloombergs European Headquarters in london. Im guy johnson. Francine lacqua is not here today. Lets start with some big market news. At the end of the first trading our this monday morning, that act in germany the dax in germany has hit an alltime high. We are through 12,000. We are up nearly 1 . European equities are largely money continuing to move into the european space. The gap between u. S. Equities in valuation terms and u. S. Equities, european equities, absolutely massive. How long before we see that starting to compress . Oil is the flip side of all this. 2009 lows is where we are. We are down by nearly a percent this morning. Nymex over in the states trading at 44. 46, down 0. 8 . Big event of the week we all know what it is. The fed, is that language going to be changed . How significantly will it be changed . Anyway lets figure all that out. Lets get some context from hans nichols. Hans, i guess it was an inevitability. With the euro doing what it is doing and money looking for a home, the dax is going to go through this level. A significant day. Hans we will see whether or not it is a significantly technical day, whether or not pushing through 12,000 opens an air pocket about that. There have been a lot of debate about what will happen when europe undertakes quantitative easing. We saw that over the weekend with master varoufakis. Except on the point of whether it will of what it will do to the equity markets. They are both united. It is going to lead to a boom. Look at what the s p did in the states after the third round of unabated easing. They got their Balance Sheet to 4. 3. We will see whether or not the run in the dax and other european indices are as high and as fast as what happened with the s p and other indices in north america. Also take a look at borrowing costs. We were talking about this a few minutes ago. The sevenyear, pretty much close to zero. That is a good indication of what the borrowing costs are going to do. When we get to the valuation section, we have to see what corporate earnings will be, how much benefit is there going to be from a weaker euro. It is going to help the companies. How much is it going to help the export driven countries . Guy i think what is going to be really interesting is to talk about the wealth effect. One of the reasons the fed decided to pump up asset prices was because of the wealth effect. It is unlikely to have anything like a meaningful impact in germany. Hans the important thing about what the fed did, is they bought a lot of Mortgage Backed securities. It wasnt all sovereign debt. They want to play in the Housing Market as well. When you look at the ratios, what draghi is trying to do is more on the sovereign side. Are you going to be able to get banks to start moaning to small and mediumsize businesses so they start hiring people . Not just in germany, but in the southern states. In some ways, we are in uncharted territory. In some ways, we are not because we have the fed example. The fed example was a booming stock market, rising inequality Lower Borrowing costs, and a downtick in unemployment. Guy hans, thank you very much indeed. The dax through 12,000. The European UnionsForeign Ministers are meeting today in brussels. The issues most likely to top the agenda ukraine and sanctions on russia. For more, lets go to brussels. Walk us through what the goals are for todays meeting. The Foreign Ministers, it will be there latest meeting on the russian sanctions and the situation in ukraine. They face a complex situation. On the one hand, the situation in Eastern Ukraine seems to have stabilized a little bit. The ceasefire seems to be holding. That is the main criteria that they are looking at in terms of whether or not to the five the sanctions or lessen the sanctions. They have to be looking at all that including what mr. Putin had to say yesterday, saying how crimea, he orchestrated the annexation of crimea ahead of time. These are his strongest words yet on russias participation in that. This week is the First Anniversary of that annexation. The Foreign Ministers in brussels are going to have to look at the whole situation and try to get an idea of what is going on. Guy it was interesting, talking about the Nuclear Element to it. Talking of another Nuclear Element, in terms of priorities today we are also needing to talk about iran. Jones iran is a side issue for the Foreign Ministers. The Iranian Foreign minister is going to be in town and have meetings with the eu germany france, and the u. K. After the regular Foreign Ministers meeting. They are trying to get a Framework Agreement before the end of this month. At this point, it is unclear how much progress is going to be made. The u. S. s kerry is trying to push these talks forward, but we are getting mixed signals from the u. S. And the eu Foreign Ministers are trying to coordinate their approach with the u. S. Guy jones, thank you very much for that update. And, one of the stories we are focusing on, mr. Putin. Russias president , Vladimir Putin has been front and center in the press over the last few days, but not physically. Putin disappearing from public view. He hasnt made an appearance since talks with the italian prime minister, matteo renzi, back on march 5. Theres been a great deal of gossip about his whereabouts, speculation about his health. The kremlin has put out a schedule for the week. It starts today. Putin apparently is set to meet with the president of cars a stand. We are waiting to see if it is going to actually turn out to be a reality. Let us know what you think. The very simple twitter question of the day, where do you think Vladimir Putin is . Some say hes got the flu. Some say there are other things going on in his life. Where do you think he is . Let us know. This is what else is on our radar. Oil has extended its collapse to the lowest price since march 2009. The fall comes amid speculation record u. S. Supply may start to strain storage capacity. The International Energy agency predicted u. S. Crude tanks may fill up the cubs we are seeing are failing to stem the amount of oil flowing. Chinese stocks rose today after premier li pledged to take action if Economic Growth slows too much. Li says the government will take additional steps in chinas growth, which the government is targeting around 7 . The shanghai composite closed 2. 3 higher. Israelis cast their vote tomorrow. Final opinion polls show the opposition led by isaac herzog with a minor lead over Benjamin Netanyahu. Polls also show netanyahu having a better chance of pulling together a coalition with parties who share his wariness of making further concessions to the palestinians. Coming up, u. K. Cancer George Osborne says they are watching any giveaways and his budget. We will have a preview of wednesdays announcement. Plus, victoria beckham. We will talk to the Fashion Designer about her big plans in asia. More on that story. Visit bloomberg. Com. A weaker euro of course helps exporting firms and helps exporting firms in italy. It helps other countries. This is good for everybody in the euro area. This generates additional growth momentum which has to be strengthened by further measures in the country as well. Not just exports. Guy that was the italian finance minister speaking to us in cernobbio over the weekend. This morning, we continue to see it being pushed ever lower. 12year lows, trading a little bit off a little north of 1. 05. We are off by thre by 0. 3 . What is going to happen with the fed . We cant ignore what is happening with greece. Lets talk about all this. Lets talk to bnps head of fx strategy. Good morning, stephen. Wednesday is the big event, isnt it . The fed, if we start to see the language changing significantly, how much more is priced in . This is the key event of the week. The markets are still pricing in, if you look at twoyear yields in the u. S. , plenty of potential for them to rise. From that perspective, you could see the dollar continued to do more. We think the key point is going to be we think that that will probably tweak it by saying this doesnt mean we honor tightening. They want to maintain flexibility. We think september is the timing, but we wouldnt rule out june just yet. Guy my sense is, and this is only anecdotal, that there is a belated realization that this is going to happen. I dont know if it is muscle memory or whatever it is, after such a long time with weights with rates where they are people cant believe that it is going to happen. Steven i think that is a fair point. The key focus is the low level of headline inflation. What the fed has told us is, they are willing to look through that headline inflation and look at where inflation is going. If you are a central bank are, you dont really care about inflation. It is where inflation is going. I think from that perspective the fed will hike. As far as the market being positioned for it, i think the key focus here is what is priced in as far as the dollars concerned. We have our own proprietary positioning indicator. It tells us that the market was longer dollars in january than right now according to our perspective. We think there could be further to go. I would say maybe dollaryen and dollarswiss could be the ones to play catchup right now. The dollar has gone up against the euro. Guy did the speed of the euro move catch you by surprise . We read some analysis talking about, if it continues to move at this pace, the germans are going to be saying, we cant do qe. How critical is the pace of change here . Steven i think it caught everybody by surprise. Going back to the positioning, our view would be that the market wasnt positioned for eurozone qe in january. I think it was on the skids as her whether it would be introduced. As far as the impact on ecb qe our view is that they are going to stick with their guns. They are going to stay with the september 2016 end date for qe. I think the key focus is credibility. They need to maintain the credibility. You mentioned germany during that is a good one. The point we would make is, German Growth is likely to pick up. You can see it already. I would draw a comparison with japan. When we had qe in japan, what did it do, boost the nikkei and weaken the yen. Our view is that we will see a similar pattern in the eurozone. Guy stay with us steven. I want to talk about the u. K. In a few minutes time. After the break, we will be talking about victoria beckham. She is looking east. We will hear from the british Fashion Designer about her hands in hong kong her plans in hong kong. Guy welcome back. We are gearing up for the u. K. Budget this week. With less than seven weeks to go the general election. George osborne has told the bbc there will be no gimmicks on wednesday. Lets get more on what we can expect. What can we expect . What are the headlines . We know a few things. The personal allowance is going to be raised. Pension reforms are going to be extended. What we can expect is a surprise of some kind. He doesnt have much room, but he has some. This is his last chance. Guy it is difficult because of the way he cant actually legislate anything to make it stick. To what extent is he going to leave things out of the budget and have them more as an Election Campaign rather than announcing them today . Is there a political debate happening about what he can and cannot do with the budget . Svenja yes, there is. He is still in a coalition. The lib dems have to sign off. Any short terms will be signed off by the liberal democrats. We might get a few Little Things here. We might get things that look big but when you get into them they dont cost the taxpayer that much. What we are certainly going to get is a sense of austerity paying off in the future. So promises that the years of pain will be worth it. Subtext will be, if you elect us, which many feel they need to hear. Guy stephen, lets bring you into the conversation. Is it more of a prelude to what we can expect in terms of the general election . Steven i think as far as the fx markets, the election is the story and particularly whether there will be a referendum on the eu. As far as the budget is concerned, a key point here is what is going to be the impact on rate hikes in the u. K. Our view is february for the timing of the first rate hike. If we have a loosening of fiscal policy, it could make that earlier. From ours active, that is the key driver of the pound. Weve got qe in the eurozone very loose policy. The eu the u. K. , like the u. S. , set to tighten policy. Sterling against the euro has come a long way. It has come from a low level. Eurosterling was trading at 6065. We are still only at 71. We think over the mediumterm there is a lot further to go. Guy it is interesting he brings up the issue of this referendum. Over the weekend, we had this whole by ukip. How does that actually stack up politically . Svenja well osborne dismissed this yesterday. It is going to be very, very hard to hold a referendum before 2017. The promise that was made is, we will get a referendum by the end of 2017. Theres been talk of a possible plan for 2016. What youve got to remember is that cameron will be campaigning for britain to stay in the eu. It is in his interest to have as much time as possible to get the reforms he wants before he puts into a national vote. Guy how does this all play out . We are in a scenario right now where we dont know if it is going to be 2015 2016, 2017 for a referendum. How do you price in the risk . Steven i think this is a tricky one. That is why the election is so important. It is the conservatives that pledged the referendum on the eu. I would argue a conservative victory may actually create uncertainty as far as sterling is concerned. You could see a spike on a conservative outcome. If it is a labor victory, or labor has a cast of form a government, i think theres less fallout as well as as far as sterling is concerned. The bottom line is, the market has to compare this nearterm volatility with the fact that we are going to get a rate hike. I think the way to play this is probably position longer sterling towards yearend, maybe by a little protection around the election. Guy svenja, give us the inside track as to what people are saying in westminster. Weve got a budget coming up. We are into what feels like the final phases of the election. It starts to get sticky from here on in. What is the gossip . What are the key things people are focusing on . The inside track is often different to the one that we see. Svenja i would love to say that everyone is making predictions. This election is really quite astonishing in the fact that even the most seasoned political commentator has no clue what is going to happen on may 7. The talk is all about political scenarios. What you can say is that nothing is off the table until you get that vote. Any kind of coalition or possibly the tories making a deal with ukip cannot be completely ruled out. Thats why senior politicians have been careful not to do so. Guy how critical is this week . How critical is the budget . If peoples a rabbit out of the hat, how critical could that be . Svenja theres some debate over preelection budgets. I think the data has been behind him. I think the tories have certainly come across as being the most trustworthy. What theyve also got to show is that they are not just positioned for the wealthy. Guy thank you very much indeed. We will take a break. Back in a couple of minutes. Guy good morning, youre watching the pulse live from European Headquarters. Were in london. Im guy johnson. Lets get some of bloombergs top stories now. More than a Million People took to the streets of cities across brazil to protest government corruption. Some called for the impeachment of president rusef embroiled in a corruption firm called petrobrass. And his ratings plummet after he won an election last november. They plan prescription measures in response to the protests. The government has declared a nationwide state of emergency after cyclone pam tore through archipelago. At least eight people were killed and communications with remote islands have been cut off. Aid has already begun arriving. But president baldwin says the president has quite wiped out development on the island. And in moscow, a fire has broken out in the bell tower of the novodevichy convent. It dates from the 17th century and is a unesco World Heritage site. 24 hours to go until the israelis vote in their election. Points for a win for the Zionist Union but doesnt mean it will form the next government. Our editor explains. Elliot after the government imploded two years before time, israelis will vote for a new one march 17. Up for grabs, 120 seats in israels 20th knesset or parliament and the chance to be israels 19th prime minister. No party has ever won a majority. Coalition is inevitable and where things get interested. Of the 26 parties running fewer than half are expected to get more than 3. 25 of the vote, the minimum needed to win a seat. Those that do may find themselves as kingmakers either in a right wing government led by Benjamin Netanyahu or by a Coalition Led by isaac herzog who leads the Zionist Union. It there is one possibility they join forces to form a government of national unity. In israeli politics you never know. Bloomberg, tel aviv. Guy for more on the israeli election and how results could impact the countrys business climate. Lets go live to elliot who is in tel aviv. Elliot thank you, guy joining us from the Tel Aviv Stock Exchange and joined by the c. E. O. Of the exchange to discuss how these elections are affecting business here in israel. Great to have yo