Guy good morning and welcome you are watching the pulls. The pulse. Barclays, rbs, city, and jpmorgan are all said to be ready to plead guilty. The link here is fascinating between what happened with ubs and the fx story. Explain the connection. Ubs is being implicated in both the fx and libel scandals. The ebs has good lawyers, or they are good at finding wrongdoing and fessing up quickly. So with libel, they were first to the door and he escaped criminal sanctions. Here we are three years later, yet again they are caught up in the fx thing they were first in the door of the department of justice. Ubs has avoided the scandal. They have not gotten off the hook completely, because the department has turned around and said it you signed a deal. You have not stuck to the terms you committed other crimes, we are going to hit you with a guilty plea and a fine. Guy do they have to keep their nose clean on the fx one . Liam you would think so. I think they have a threeyear probationary. Maybe guy they are under pressure for higher pedestal is. Liam the penalties are going up. One interesting thing is that banks are being forced to take guilty pleas. Before they could take a nonprosecution agreement. That said they would keep their nose clean and avoid any further. This time the department of justice said enough is enough. This time you will have to plead guilty but the irony of the situation is it does not make too much of a difference. In the past if you had to plead guilty, it could have real repercussions for business. For example, you might not be allowed to do business in a certain jurisdiction. Now the banks get waivers. The guilty plea has become a new nonprosecution agreement. I would argue it has not turned out that way. Guy do these institutions now face a risk . Liam this is the worst of it. There is the tail risk of litigation. It could drag on for years and years and cost huge amount of money. Yesterday b South African regulator announced it was launching its own investigation into the Foreign Exchange market. It is different banks, some of the same banks. It is never over. Guy we have always had fx, are we through peak prosecution where are we . Liam i think were through the worst of it. We know about the investigations into the precious metals. Lesson able impacted. I do think as a result of these investigations banks have had to sort their act out. You would hope that the worst is behind us. Guy nice to see you. Lets take a look at what else is on the radar. Japanese growth has beaten expectations. The economy expanded for a Second Straight Quarter growing 2. 4 . The nikkei grew the us it has in years. Suddenly medications sudden link expands. Time warner has received an approach from all sees all tice. Are verywhat else do we have coming up. The bank of england Monetary Policy might reveal clues of whether we can expect a rate increase. We will look at how Marks Spencer has reported its first rise in profits in four years. Then we will speak to the former chairman of the wood group a sirree and would sirree and would. Also coming up, we will talk about greece. The greek conundrum, we will have the latest bailout talks after the break. Guy good morning and welcome back. You are watching the the pulse. The European Central bank policy makers be meeting in frankfurt later today to talk about greece bank aid. The country veers towards a default. This comes after the leaders of a two biggest economies that their date deadlines. Lets go to hans nichols for the latest. Fans, lets talk about the deadlines. Hans we have two stories, the first is from captain nearing they are saying the emergency liquidity assistance they may change the rules on collateral, they may stiffen a little bit that would increase the borrowing costs for greece. They also made the available pool of collateral in the deadline is june 5. We just heard from the parliamentary spokesman in athens, he said june 5 is the day they simply will not be able to make their 305 million euro payment. We have also heard yesterday from merkel, they want to see a deal wrapped up in may. Two other important stories both behind closed doors reporting number one mr. Tsipras is acknowledging to his own parliament, the sales tax proposal will not pass muster. That is important according to a couple of people. Then yesterday, with the cdu meeting here in berlin they dont think greece quite recognizes the predicament they are in. Yes we saw bonds of drop a little bit yesterday after we heard from Christine Lagarde sang some progress was being made i would be skeptical of any talk of real progress. Guy we are certainly seeing uncertainty. Hans 619 job losses a day. They have a study that came out after overnight and they looked at the cost of every day that uncertainty in this market rusher is bringing. 559 please close every day. 613 jobs are lost. 22 Million Euros shaved off of gdp every day. They estimate in order to jumpstart greases economy you need 25 billion euros an infusion of cash, that is a big stimulus package. That is why there is talk of a third a lot package for greece, what that means in terms of debt, and what that means for stimulus. Guy thank you very much. Hans nichols joining us from berlin. The ecb executive board member told guest that the European Central bank will frontload assets asset buying program. The euro dropped sharply when he market found out. Lets talk about whats been want to rate was referring to. Andrew wilson joins us. Guy what is the ecb trying to say at the moment . Will we see fairly big moves in the euro . Andrew i think it was a knowledge and it. We started two weeks ago. Things were down in a single digits. It has been a dramatic move. They were watching this, they were concerned about the move. From their point of view, this is designed to make financial conditions easier. The bounce of the euro is working against the names of qe. It is a reminder that the objective is to get both going. Get more liquidity in the system. Guy do you think the market over red . A lot of people are getting hot under the collar. Do think they were pretty designed to be as provocative as the reaction we saw . Andrew i would guess not. Ecb is trying to think of things they could do, they frontloading of purchases. There were also comments that the qe program could be extended. I think it is some job owning to try to calm down a selloff. I am not sure they have a strong view on a particular level. The speed at which we are moving , i am sure were on their radar. Guy what is the biggest point whether we soar out of the u. S. Economy at the beginning of the year data shows it will bounce back. Q1 was disappointing. To sum it is more than just whether. It is encouraging to see the Housing Market, those numbers he referred to yesterday, those numbers were up. It is a sign that the consumer is coming back. The consumer globally has been disappointing when you consider how much Energy Prices have gone down so disposable income has gone up. Maybe the weather impacts slowed the spending. This is the first and sign the u. S. Consumer is becoming engaged. Andrew the odds are september, if we continue to see strong payroll growth and signs the Housing Market is hotting up, i think the fed will move in september. Guy code do think the ecb could be in danger of frontloading now at the expense of later when we could find ourselves in a situation where the market will you volatile. Andrew it was tightening in september the same time the ecb has frontloaded. There is a risk that we see european bonds rank higher by the move and treasury. Those two Central Banks will be having a tugofwar. Geico guy do think theres enough liquidity in the system because of an event risk over the summer. Andrew i think it was a broad move over european yield. I think it was designed at the overall liquidity and the fact that they are seeing conditions tighten. Guy over the summer what is the trade . Andrew we had consensus of the start of the year that the euro would weaken, then we had the big bounce back, we have consolidated, we have taken out short positions. The next move is for the euro to soften. The message from the ecb is they did not want those conditions to tighten. I think we are likely to see some further weakening over there remainder of the year. I think european stocks, the validation argument is not as compelling, but the evaluation argument is still there. The euro is still helpful for European Companies and over half of the earnings come from outside of the eurozone. That is going to be a tailwind for the remainder of the year. Guy how do you trade that kind of events, talking about greece. How do you position yourself around that . Andrew we are longterm investors. I think we see throughout this whole episode there have been dates and they have come and gone. I think you have to take a longterm picture, are we going to get there or not . Are we going to find a resolution . We still think there is uncertainty. We dont have insight into the political process. You look at the economics of it and it is a tough situation they are in. Guy i talked to people in berlin and they seem to think that they have this one covered. We have qe in place, we have set up all of the mechanisms to make sure we can manage our way through that. I get rumsfeld, but are there unknown unknowns here . Andrew we are in unknown territory. I think it is hard to be too confident and say that we will be fine. We think about the risk of scenarios around it. You think about your downside. What could the outcomes be . It is a hard one to be confident in because there is a broad range of outcomes. We are taking a more cautious stance around greece in part because of that uncertainty. We really dont know how things will play out if we do move to that situation. Guy i want to talk about japan as well. We saw that in the cai ni kkei picking up. Lets talk about that japan rebound. The economy grew for the Second Quarter in a row. Bloombergs chief asia correspondent joins us now for more. Talk us through what the numbers look through look like. Particularly if you can give us a sense of what inventory did for this number . It is a good quarter secondquarter growth. It shows the recovery in japan is on the right path. As you mentioned, some of the positive components came from the company spending. They are setting on record cash piles held by the weaker yen. They are starting to spend now in trickle into the economy. Consumers are spending a little bit more as well. Together it is helping lift things in the right direction. It is a modest recovery. Guy take a step back, what is it say about the wider story this runs words 2 , which looks allusive . Grexit 2 feels a long way off right now. As he mentioned earlier, we had a good Second Quarter, but inventory has made it a big part of that. That is a result of the negative year from last year. Companies are playing catchup. You cannot expect that inventory payoff to continue. Its a modest recovery so far on the right path. Bank of japan meets this week. The forecasts are mixed. In the bigger picture, people are expecting japan they might pull something out of the bag and a month ahead. Guy when do you think that will happen . People up in pushing back when they think stimulus will arrive from the boj. And things are inching in the right direction. We are so far off the target that stimulus cannot be fully ruled out. People are saying later in the second half of the year. They have said before that they have a lot of options. It could be a live one to watch of the next couple of months. Guy thank you ray much. Thank you very much. Lets get Andrew Wilsons take on this. A lot of people can see japan being the bestperforming market area do you agree . Andrew the headline number was much stronger. I would say we feel like japanese growth looks more subdued. The surprise has been that the consumer has not kicked in as much. Energy prices have gone down, i think a lot of it will depend on the weight around in april. We are seeing wage growth, an interesting number out of the gdp is that real wage has declined. You need the consumer to kick in. It has been remarkably stable, the consumer has been stable across the tax hike. You want to see more spending from the consumer to be confident. Guy if you look at most economies around the world, it seems the consumer is taking much longer than we anticipated. You see it here and the states, will you see it in japan . Andrew if you have stimulus is in the back pocket, it is probably a 2016 event. It will depend on if we see massive yen appropriate appreciation. If you have that growth, the wage numbers, the boj is already doing a huge amount of stimulus they would probably rather not do more. If they can, any sense that that momentum is fading, that will bring them back in. We think there is a decent chance they will not need to do more. Japanese equities have done well. Guy and is it builtin there will be more . Andrew there is some expectation there is more to come. More that there is a backstop. If growth does falter, the boj will come in. There is probably a view that it will be fine regardless. I still think theres a lot of optimism around japan. I point guy where would you put in japan across the allocation process. Andrew i would put europe at the top. Spain and italy are strong. The indicators suggest that those countries are doing well. The u. S. Is on a solid growth to trajectory. Japan is not a big buy. We would go to war to where the growth is surprising people outside. For japan it is more steady as she goes. You have positive surprises coming through in europe. A lot of people are paying attention to what is happening in spain and italy. Our own indicators suggest this activity could be in the 3 4 range. Guy if you are to factor those numbers into the equity markets where we stand . Andrew there is an upside to european equities. I still think there is a risk of that European Growth is better than some people think. Guy is there a danger in that scenario . Where does the qb story fit into that . How much is back in already . Do you have to back some of that out if you get some of the numbers you talk about . Andrew i think they are committing to extending this program until september of next year. I think the ecb will carry on. Theres just no signs of that. Unless you saw some big bounce in the energy price, or a really sharp fall in the euro those are the only things that would cause the ecb to back off. Otherwise i think it will be happy for the growth. Guy thank you very much. Up next, bank of england minutes, see you in a moment. Guy welcome back. Youre watching the pulse live from bloombergs london headquarters. Francine is off today. The Interest Rate decision 9 mil. The central view is that slack be fully absorbed within a years. Inflation weakness likely to be temporary and the decision was finally balanced for two m. P. C. Members. Pound up a little bit on the back of this one. Cable rate 1511. Thats where you can see it at the moment. Were joined now by Jennifer Ryan and Melanie Baker. Good morning to you. What is interesting is we have two members saying that the decision is finally balanced for them. There was unanimity. It didnt make sense for anyone to be voting for Interest Rates until you saw what the outcome was. There are still the same inflationary concerns. Guy they are not august about accounts are they . They are not talking about accounts are they . No, no, no. Guy are we going to start to see a dispersion of the members . Well probably start seeing votes to raise rates in the next few months. By august, we expect a vote for a rate rise. Guy they are talking about slack being gone by the end of the year. Can i consider that to be a timeline for rate hikes . We think the first rate rise will probably be the First Quarter of next year. It is very much that were not in a hurry to raise rates and when we do, were probably not going to do very much. Guy what is the bar for getting the rest or at least the majority . We have a downgrading of growth. Inflation is still very, very low. How high is the bar for that next move do you think . Pay growth is going to be a key factor. You mentioned the downgrading of growth. If you see that momentum picks back up in the u. K. Economy, it will be harder to see that there is a cause for weeping keeping rates where they are. They are concerned at the level of inflation and the pound does have an impact there. Guy the last couple of days we started to see a reversal of some of the trends. I get a sense of the sequencing of what they are trying to examine. They are looking at how the it is going to affect oil. But if the pound is one of the movable factors, every time i see the pound strengthen against the euro, are we going to see the bank of england raising rates . The key indicator of underlying inflationary pressure. We have been seeing some encouraging signs in the last couple of guy these two guys have been fairly keen to raise rates for a while. Part of it is down to the fact that i think they want to raise rates which is understandable. And the other is the Economic Outlook in front of them. When you look at the other members, what individual arguments do you think is worth going through . How many of them are focusing on more and different aspects . As you break down this group and you look at them on an individual basis are there any obvious ones that next time around could make the move if a certain piece of data takes over a threshold . Forbes may be another one. Seems sob hawkish side of the m. P. C. Guy how would you break it down . One thing worth looking at is inflation expectations. It has gone negative from the report yesterday. If you start seeing that expectations to get back up to the target are stock marketting to get dislodged, that is going to start to worry m. P. C. Members. Guy thank you very much indeed. Jen ryan and Melanie Baker joining us from morgan stanley. In a moment well be looking at the move to expand in the u. S. First here if europe speculation about a deal between vodafone and Liberty Global. Caroline hyde has details for us. What has Liberty Globals chairman been saying to bloomberg . Caroline the first time in public hes that discussed the potential of joini