the german parliament is expected to vote on the greek bailout extension this morning. in 30 minutes we will speak to the former ecb president jean-claude trouche. that is something you don't want to mess -- miss. european futures up by a couple points, dax futures up by 12 points. can we extend the highs? manus: record after record the question is, is my pension fund fully invested? global stocks at an all-time high. 10 straight games. the u.k. is still the laggard and has always been the laggard. the unwanted child in terms of the new records and tallies. down in the periphery you have

the ibex up 7% but when it came to the storming triumphant return it was the greek market 25%. the dollar-russian index was up 22%. in terms of individual names willie walsh quite happy at ied. their stock up 5%. operating profit up 81%. north america doing quite nicely. caroline will break these numbers down. lloyds has the first dividend since the crisis again. they missed on their overall headline numbers but a dividend of .57 tenths. they had more people he i hundred million pounds. cells be -- now, that is how

the equity markets performed. i will use of mark's stats. if you use a bar chart stat you are usually in safe territory. 9.3% is where we are in terms of yield. the best performing bond market on the global basis. if you had any mind at all, some would say that you would have cut and run. if you had proverbial nerves of steel you would've been handsomely rewarded for the month of february, 14% return on greek bond investments. a market for the brave. jonathan: looking at some breaking data out of spain this morning. the cpi year on year coming in

at -1.1%. the survey was for 1.5% so better than expected that by all means, not very good. we will get germany numbers a little bit later. germany is focused now and it vote today on the four months extension of the greek bailout. hans nichols joins us now from berlin. hans, this is expected to pass despite growing concerns in berlin, how does this play out not just today but for the months to come? hans: it is expected to pass because there has been a straw poll and it will be 22 members of miracles block who will defect. that is nine more than last time but her block has 311 members and you combine that with the spd where there is no one who will defect. these lawmakers are feeling the heat from alternative for deutsche land.

this is the anti-euro party. and many ways it is just about the expected fight. it may happen if and when greece needs more money. there is a lot of talk about a 20 billion bailout -- package. since we are talking about the press we can do my favorite thing the front page of the build. i don't think there is nudity on the front page today. they ran a big campaign they want everyone to take a selfie with "nein" on there. everyone is sending it in saying no to the bailout package. there is the inside spread, we have to do the nudity check but that gives a sense of how strong public opinion is against a potential third bailout. today the vote is a pre-run prelude to what could be a much bigger fight. jonathan. johnny boy -- jonathan: that is

the situation in berlin. all is well in greece. the eu commissioner says he does not consider a greek exit an option. francine lacqua spoke with the economic commissioner yesterday. >> there is no problem economically with greece. let's not try to raise the constants which has nothing to do with the present situation. nobody feels that and the presence is strong in the euro area. everybody feels that we are looking for a solution to invest in a calm way that we are doing that strongly. i see no movement at all of panic. jonathan: an optimistic person.

no panic and no fear, some might disagree. i what to bring up a chart to take it back to the 1930's in the u.s.. here is a chart of the post crisis growth compared to the great depression. greek growth is still 23% from a crisis high. he's with the chief investment officer out of london in capital. powell, you thought the depression was bad even worse than greek it seems. >> it will get worse. what we are witnessing is theater and a tragedy. everything that we thought of with the greek theater was all about. it is really quite incredible. how things go further the greek situation is getting worse and worse. but the commissioner was saying all things were good but things will be extremely dangerous.

the greek bargaining position is as weak as it will ever be. jonathan: we are seen the chart there and that gives a pretty good read, how bad could things get financially? >> the greek banks have no way of financing themselves so the greek government has no way of paying for critical surgery or critical removal. this is quite serious and just because there is a lot of theater around of scenes and everybody is playing a public game, the reality is the greeks have got nothing out of the agreement, they voted for the relative calm in exchange there is an extremely weak set of cards from the negotiation in june. in the eurogroup, i am shocked that anybody is questioning,

this is as bad as germany can get. the greeks will have no bargaining power at all. >> you look at the situation right now, how much will they need in june? >> 6'7" billion dollars immediately. -- $6.7 billion immediately. the greeks are now running a significant ribary budget which isn't sustainable in a country with a 25% unemployment and 50% youth unemployment. it doesn't make any sense. when we hear -- will greece be forced to precipitate an asset or will we want to see some kind of haircut -- it is inevitable. it is one of the other. while it you think that the only two possible scenarios is a scenario where greece grows at 4% and as a primary budget surplus for 15 years at 5%?

where are the unicorns, it is incredible what is going on. this is what worries me about the market. what worries me is that the european markets and greece markets in general don't price perfection but price for the white unicorn scenario where everybody will build to run a surplus of 5%. they will build to grow at 3% with this employment, it doesn't make sense. >> you and i will talk about the bond market after the break but for now we talk about political theater. let's stricken out -- strip out greece from the equation as well. some are saying that pmi is picking up have a week euro and lower energy prices as well. why? >> unfortunately if we strip out politicians wear leveling the fundamental of the economy and the market wouldn't be trading at what they are trading.

the markets would be trading a lot lower. it's because of this political theater or banks are not as independent as they should be. the danger that the eurozone is growing a little bit but the eurozone structurally is all wrong. you have monetary union without fiscal union and regions moving at a very different pace. you're a sense that there is no shoulder burdening of responsibilities. you have a country like spain which has the kind of structural problems they greece had five years ago that is not going to be receiving to help it needs from the north. it's not possible to sweep that out and yet the pmi numbers are positive. quite frankly it's -- we know things are still bad but to have a forward-looking implied growth of 1% we are happy but it

doesn't leave a lot of room to maneuver. jonathan: up next we will talk about the bond markets. to get everything you thought you knew about the bond market you need to pay a little bit of attention to the eurozone and sovereign debt. we talk about this bizarre bond market as the search for yield goes deep into the red. ♪

jonathan: good morning and welcome back to "on the move." let's check in on time of the top stories. everest earnings beating estimates. you can see the stock up 6% as i speak. iag is also flying high. the stock on the move by 4.2% and lloyds, the bank swings back to black and they revise dividends for countries. the stock is up 1.75%. it is not just the equity market index is breaking record highs but the bond markets as well. record after record in the european bond market. the yield on the portuguese tenure dropped below 2%. for the first time ever, in germany the seven year marched into negative territory.

about one third of euro's sovereign debt carries a negative yield. you're paying for the privilege to lend to these governments. that chart courtesy of rbs. let's bring back the cio at london and capital. in a word, it is insane, do you agree? >> in 20 years there will be many phd's writing about how everybody sensed the perspective was lost and have central banks with smoke and mirrors have created an environment where people are willing to put on a trade with a limited upside and the potential for significant downside. what is happening on europe is unfortunately a combination were on one side there are artificially low yields and on the other side there are low

yields in court european countries that are becoming japanese by the minute. jonathan: i can bring up another chart that says how much debt as negative yield and in germany it is way above 50%. for the ecb if they don't want to bite negative yield that strips out the sovereign debt. you factor in that there might be people who don't want to sell, we are questioning whether they can buy enough. guest: the problem with the ecb is they have a mandate to do what they do. and these biases and the range of choices. as i said, the ecb is really beginning to do what the bank of japan has been doing and look where they are. jonathan: when you looked at the bond market inflation still has

a real yield with inflation running way below zero. it just makes a little bit of sense but i would ask the question at what point does inflation become so entrenched that we start to question the sustainability of these peripheral nations and when to the sovereign debt loads start to trade like credit again? guest: the problem is this sort of shift where people say when a minute, there is a reason people are the way they are. you said people were very happy because this is leveling slightly, low interest incredible. we are saving rates at historical minimums which are seeing prices falling. what are they going to do tomorrow? they won't by today because they're waiting to buy tomorrow. this is a bad situation but just because you can justify it doesn't mean that once used that back and wait up the next day

you can say, wait what is going on? mi really expecting for this to continue to trade just on technicals -- am i really expecting this to trade just on technicals? jonathan: here is the question for you. i had a question with someone yesterday who compared the moves right now to the tech bubble. not because it was a bubble because if you didn't buy into this you missed out on a substantial rally. is that a reason to buy into this? guest: there are plenty of other places whereby you are still indirectly writing this underlying theme but actually getting compensated a little bit more. there is a fair amount of financial bond people which is indirectly linked to what yields are doing and yields are also falling indirectly in this

systemically important financial situation which is a preserved species by the system is still becoming safer and safer. if there is some lesson the politicians learned to make sure the next crisis does not come from the source of the previous one. things that are going on in europe smells like another round of disappointment. certainly they will make sure that banks are not the culprit this time, so why not buy the debt which is safer? why focus on the stock? don't go for the unit -- liability of these banks which are becoming more like utilities. europe is getting more than the pathetic yields we getting from these government bonds. jonathan: before modulation relative calm in europe. the eye of the storm, thank you very much. the german finance minister speaking right now and the

german parliament, urging parliament to approve the greece extension period in pau's words why wouldn't i improve it? -- the approve it.? ♪

jonathan: good morning and

welcome back. stocks are pretty flat. japan's industrial output jumped the most in three years but retail sales and inflation slowed underscoring their strength and industries but weak domestic demand. china is said to plan to collect the capital gains taxes from the foreign money managers who invested in the mainland markets. according to people with knowledge of the matter the government plans to collect a 10% tax on certain funds and the move could call back more than $1 trillion to pay authorities. and kyiv hopes the latest peace effort in the ukraine is taking hold. they say it is stabilizing and is withdrawing from the military. there have been no breaches since late wednesday night.

in the u.k. we have had a wave of banking earnings and breaking news this week. we have the biggest mortgage -- biggest mortgage lender now. here is caroline hyde. it significant. caroline: the first in five years and the first dividend in six years. sure, if you're looking at the net income number four lloyds it missed because once again you have a huge working break provision for ppi. one hell of a missile, 12 billion pounds are now set aside. but by the by, underlying profits of 26%. yes antonio had to make big changes one billion pounds of cost to strip out and we are

starting to see them make some symbolic gestures. two the rest of the investor base because we get a dividend token. symbolic developments, that is what they say in their own earning statement. they recognize the importance of growing this number in this in the bank plans to have 50% of an earnings dividend going forward. this is investors starting to reap some reward. jonathan: as you say george osborne and the government -- lloyds for george osborne, finally putting this back into private hands. >> they have been setting down their stake. they managed to get rid of another 1% without the market even knowing. that was back since december,

they sold 500 million pounds worth but the share price is still rising in lloyds. they are set to get rid of their entire stake by the first of the year. this is why george osmond is crowing saying look at the profits, this is good news because he wants to get lloyds fully back into private investors hands. they have to offload the rest of it in the first half of the year as i say and this is monumental. this is a rescue they made in 2008 so the fact we are getting the first dividend and a fact we are starting to see the share price continue to be about that rate for lloyds is notable. interesting also is people working at lloyds are getting or money. rbs has to cut their payloads and they're saying remuneration is responsible and prudent. jonathan: investors seem to like what they see this morning. after the break we will take you straight back to europe and all

things greek. we speak exclusively to the former president of the ecb, jean-claude trish a -- trichet. ♪

jonathan: welcome back to "on the move." equities doing pretty much nothing but the headline is in the bond market. the spread between the german and the italian 10 year has dropped low for the first time since 2010. record a bond yields but not so much in greece. a greek exit for the eurozone. is it still as safe now as it would've been three years ago? let's put that in the former president of the ecb jean-claude trichet. i am pleased to say he joins us now from paris. great to have you with us this

morning. i want to start by talking a little about contagion risk. this is a general of and let's call it a consensus. grexit has imposed the same risks as it did in 2011 or 2012 is that something you agree with? >> first i would say grexit would be a catastrophe for the greek people. that is the first point, second i would say certainly it would be something which would be very bad for the area as a whole. that is why i trust there will not be a grexit, neither now or in the previous years that you mentioned. >> when you look at the situation the reason people think there is a contagion risk is because the bond market is so insulated. i would say to you, why would it

be a catastrophe for the rest of the eurozone, what would be the transmission channel? >> first of all my working assumption is that the grexit will not materialize. second i will say of course it is true that the euro area is in a much better situation. for instance all the countries have no balance or surplus. so in that sense you can say the system is more resilient than it was. on the other hand, the credibility of the euro area has been constantly reinforced by the fact that in the worst crisis ever since world war ii trope, it was resilient. -- will more two -- world war ii, it was resilient.

so we are 19 when we were 15. this resilience is adding to the credibility of the euro area. it seems to me it would be a mistake to underestimate what it is bringing about for europe as a whole. mr. trichet, one of the risks remains firmly in the banking sector particularly for greece. take me inside the ecb, how does one make the decision that a a bank is insolvent and be it is time to switch off to emergency liquidity? guest: it is something which is a judgment which has been made and which was made and has to be made by the governing council itself with all of its dimensions but it is absolutely clear that when the emergency liquidity assistance takes an enormous dimension and when it is absolutely clear that the

level of the euro area as a whole, we have an abnormal phenomenon in terms of monetary financing then the governing council has to step up and take the appropriate decision. it's not easy to take but it has to be taken. jonathan: how close are we to that situation right now? guest: i would not say. what is important in greece today of course is that the new program which will have been discussed between or during the months and weeks to come between the government and the friends, namely the commission and the friendly countries of europe and also the imf, this program has to be given the stamp of confidence by the international community and that is extremely important for greece if we went confidence to be backed as well and actively as possible because

confidence is the key for everything growth and job creation and four an active economy which would be absolutely of the essence. jonathan: when it comes to the ecb's role when it comes to providing liquidity how big should they be in providing specific governments with how they should clean up their act and tying that to a provision of emergency liquidity assistance? should they have a role in telling governments what to do? guest: the ecb has to make a judgment on the basis of its own monetary responsibility. they are responsible for the demand and policy of the euro area as a whole and this is its own legitimacy. on the other hand you have the commission and the eurogroup on the one hand to make a judgment on the program of grace from the overhaul macroeconomic --

program of greece from the overhaul macroeconomic standpoint. of course without the extent of the international community there is no stability. jonathan: let's talk about that about substituting the eurogroup . you say that ecb should not substitute the eurogroup. i take it back to the 19th of november 2010 when you wrote the position of the governing council is only if we received in writing a commitment from the irish government vis-a-vis the euro system on the four following points we can authorize for the provisions. the first point is that the irish government shall send a request for financial support to the eurogroup to carry on receiving liquidity. you say the ecb shouldn't substitute the eurogroup that

when you were in charge, those waters got murky, what you think of that? guest: as you see we were in a totally different situation. in terms of greece, greece has a program and it is whether or not the program goes on which is essential. in the case you are just mentioning there was no program and we were looking at an enormous amount of financing going through the central bank which was the highest that we ever embarked on so it was gigantic. it was our sentiment and together i have to say with the government and minister of finance of ireland that a u-turn had to take place as we got macro policy but again, we are never dictating any position just mentioning the fact that we were pertaining levels of financing that were gigantic and

were necessary to have some kind of recovery adjustment program with the stamp of europe. jonathan: john claude it pretty clear in this letter that you did tie the provision of further liquidity to irish banks to them taking on a program. is it fair to say the ecb did put pressure on governments to take a bailout, get involved in a program and that the ecb is putting a lot of political pressure on governments when it isn't their role? guest: no, i do not say so. i would say it is our role and it is extremely important that the ecb convey to all others concerned its own appreciation of the situation. in the case you just mentioned, we were in an absolutely extraordinary situation where the overall financing of the country was close to 100% of the

gdp so was absolutely gigantic. it was absolutely necessary for us to pass messages -- which we by the way received by the minister as something important the exchange of letters has been published and it is clear on the frenzied relationship we had. i also sent letters in spain and italy at a very crucial moment in 2011. it was never to negotiate, never pro-quote but just to convey -- never quid pro quo, but just to convey our own assessment and our own vision which was a pan-european vision and a global vision. jonathan: let's move it on and talk about monetary policy. very different now to when you

were in charge. there is a bond by program in the shape of qe, but at that time could you ever imagine a bond market in europe where a third of sovereign debt is now carrying negative yield? guest: i have to say that of course in all the advanced economy constituency we're still in a very special condition. we are now fixtures after the start of the crisis and still we have a monetary policy that is totally accommodating. the main weaponry of the ecb until the recent qe was balance sheet commitments, the full allotment at fixed rate for all banks in europe was introduced at my time at the start of the crisis and is an enormous

off-balance sheet because any banks can ask for all the amount of liquidity it once provided it has appropriate collateral. then we had the s&p and the omt, the program to purchase treasuries. this is also a gigantic off-balance-sheet commitment which has been considered a surge by the market. you remember the impact of the omt in 12. so those two off-balance-sheet commitments are very powerful and even before the qe you had in differential interest rates between the u.s. and europe and it was around 114 is this points. a very big differential that you can attribute to the monetary policy of the ecb. on top of that you had qe and qe is a way for the ecb to tell all

partners, we did all that we could to avoid being in a situation of low inflation. with a threat of destabilization of the inflation expectation. that is of course a good way for the ecb to put the bowl in the cap -- bull in the camp of the governments and the social partners. jonathan: as you say, omt, a huge balance sheet commitment, unquantifiable. yields to journey -- germany with record lows across the eurozone. the ecb haven't even bought a bond yet. guest: again, as i said the off-balance-sheet commitments

were so important because qe was not something which is in my opinion so important with the u.s. because there was no previous off-balance-sheet commitment in those economies and countries. that being said it is extremely important that for the euro area as a whole, we have an increase of inflation and that depends very much on the countries that have room for maneuvering that have a big surplus and a high level of competitiveness. that is the reason why i was mentioning the fact that the bull ins in the camp of the countries concerned. not only the executive branches but the social partners. jonathan: i want to wrap up

talking about not just europe but the whole world and global economy. the federal reserve and the bank of england are possibly going to be hiking rates later this year. in your experience when you were worried about inflation being too high in your experience, was that a mistake given what you know now and be is there a lesson we can learn -- a was that a mistake given what you know now and b, was that a mistake -- what can we learn? guest: in line with the definition of price stability which is the sane now in all four central banks of the countries that are issuing the basket currencies, all have 2%

as the definition of price stability. it is important that you anchored solidly without inflation and thout deflation and deflation is the threat. unfortunately it doesn't matter yet but it is a threat. provided that you anchored solidly inflation expectations which obviously was the case in the period you are mentioning we had the mixed anchoring of expectations. that is really the judge. in monetary policy constituency, i would say you are judged on the basis of what you deliver. that is important. in my opinion we should always be very clear on having inflation expectations solidly anchored without deflation and we have to embark on non-conditional -- intentional

measures -- nonconventional measures which should be exactly commensurate to the value in the financial world. and at the moment it is still demanding that in all countries in the u.s., japan and u.k. -- that is something which is very sad because we have a lot of time in since the start of the crisis in 07. jonathan: a real pleasure speaking to you this morning thank you for joining us. the former ecb resident. after the break we bring it back to the u.k.. we will talk the election and the u.k. economy. ♪

jonathan: good morning and welcome back, i am jonathan ferro joining you live "on the move." let's talk about europe. kevin daly joins us now. great to have you with us. we have been so pessimistic on europe, credit conditions starting to turn somewhat. you have low oil prices, a week euro and goldman sachs saying we are more optimistic. guest: we revised our forecast

for the euro area growth higher. 1.6 to 1.7 dear -- next year. the first time we've had euro area growth since the crisis. four reasons why we see that. the first is oil prices have fallen 35% in euro terms which is enough on its own to boost growth around 1.5% over two years. second, the euro has fallen by more than 10% and that is also enough to add an additional 1% to the level of euro area gdp. throw into that mix, credit conditions are improving on the periphery and last but not least you have the pace of fiscal consolidation slowing. these four factors which are fueling euro area growth has us more optimistic.

jonathan: credit conditions. the data we had this week, optimists say it is less bad and the pessimists say it is a false dawn, what is really encouraging you? guest: the main thing is to you have the fragmentation of the euro system after the crisis. when you had that easing policy in the strongest countries ironically. the countries that needed the transition of easing monetary policy so the periphery got very tight monetary policy. so really and is been an true effect and a call in propagating the euro area crisis. what encourages me now is the evidence that euro area credit conditions particularly in the periphery are easing. so you see bank lending and borrowing costs falling to corporate quite significantly and also more recently in italy.

you are seeing credit supply surveys showing an improvement and credit itself is slowly beginning to turn around. we will need to look at the tally of the data. jonathan: record low bond yields and record high equity market. the dominating factor seems to be politics. the biggest risk to europe right now. guest: for us it is by far the biggest risk. obviously the greek situation is the most obvious example of that risk. we have had a resolution of sorts but the point we would make is greece is really symptomatic of a much wider issue. populations have reached the point that they are not prepared to sustain any more austerity.

they are not prepared to sustain any more structural reforms. i look at my own country of ireland with a fantastic turnaround story and even in ireland, populist parties are gaining and have gained a lot of support at the expense of mainstream partisan -- for ireland it really does give concerns for the greeks. jonathan: i want to talk to you about that because we talked about european politics so much at the start of the year syriza and what is happening to them now, is there a message here? you will not get much in terms of a concession from europe. guest: there have been some concessions from europe and over time there will be entering accommodation and one will be needed with as this process -- protest moves across europe.

these are the tensions going forward that will cause the many crises in the future. in the near term i think the momentum is likely to supply the upside for european growth but further out there are worries about the political situation. jonathan: it's funny that we were so worried in the u.k. and the administration that makes the most noise about a grexit wasn't in the eurozone, the chancellor george osborne and the governor in the u.k. talking about contingency planning, why is the u.k. so worried? guest: there is a little bit of politics there as well. for the european leaders they were worried about grexit but could not acknowledge it in their negotiations with greek authorities. they had to at least maintain

the view that now we are prepared to let you go if you don't adhere to the strictures of maintaining within the euro area. for the u.k. they have almost the opposite incentive. they want to talk about the threat of debt and excessive spending for slightly political reasons. jonathan: in a couple seconds. you upgraded european gdp, does that bring you in line with the u.k.? do you upgrade the u.k. gdp as well? guest: we have been above consensus already. we expect 3% this year and consensus of 2.5%. one of the reasons we have not upgraded further is the exchange rate is going in the opposite direction. as much as oil prices have been a big support and have let us be above consensus on growth, you

have an true exchange rate tightening and financial conditions. jonathan: kevin daly, thank you very much for joining us. "the pulse" is coming up at the top of the hour. we are joined by guy johnson who is in munich. what are you up to? guy: we are here at the airbus rest conference. a couple quick headlines, they are studying the idea of making 63 -- 60 ac320's per year. in 20 minutes, i will be talking to the head of strategy and he is behind a lot of the big change is that airbus is making that is coming up later on. later on in surveillance i will be talking to tom enders himself about the impact of that strong

dollar on boeing. jonathan: really looking forward to the show. thank you very much. that is it for "on the move." wrapping up record-breaking weeks. good luck to the rest of your day. ♪

francine: airbus takes off. the company posts a 15% gain in profit and shares jump on the news. we speak to ceo tom enders first on bloomberg. all data created equally. galatians stop companies from slowing down certain online traffic. voting on greek aid. welcome to "the pulse "the pulse " live from london. i'm francine lacqua. guy johnson is in munich talking to a