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tv   Countdown  Bloomberg  June 11, 2015 1:00am-3:01am EDT

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anna: the age of irresponsibility is over. mark carney warns city bankers that they will be held to account. >> for those who free ride on your reputation, the age of the responsibility is over. mark: korea cuts the central tank, lowers that interest rates warning that the marburg virus threatens to derail the economic recovery. anna: where there is a will there is a way. angela merkel says the aim is to keep greece and the eurozone. the german chancellor blinks first in her negotiations with athens.
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mark: good morning. anna: welcome to the program. guy: there were a few words ringing in everyone's ears -- the age of the responsibility is over. anna: he talked about them having an ethical drift, and he said that misconduct was happening with depressing frequency. he says it had a material impact on the economy by increasing borrowing costs. these talking about holding to account the city of london. rbs when you talk about george osborne and what he had to say he said that the sale of rbs
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will start in the coming months, and this is fascinating. he is saying that we haven't reached that price, the breakeven price. guy: rothschild is being advised to get on with it. the point has come where this is acting as a drag on the economy. get on with it, deal with it. the opposition will have a great deal of fun with it, because they will be saying -- the taxpayers losing out. it was ultimately, some would say, putting rbs in public hands so the tories can come back. anna: when you have such an overhang on a stock -- 79% owned by the government -- everyone knows it will be sold. question of the day, should they sell rbs? they could make something out of it -- what do you think? tweet us.
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should the u.k. sell rbs at a loss? guy: the korean story is great, because you can look at this and analyze it in a number of different ways. the economy is faltering, the economy is running out of speed but we have analysis that says if you look at where inflation is and where unemployment is the economy doesn't need it. this feels really preemptive in terms of the way they are positioning. anna: the bank of korea they say is an eminent consumption, then you have the kiwi and the new zealand central bank. that was not expected. what's happening to dairy prices is causing some sluggishness in the economy. guy: we don't talk about dairy prices enough. anna: in matters when you work on a breakfast show. [laughter] guy: things we will be talking
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about coming up -- greece. the big question is has merkel blinked? it feels like she has. they have got to keep greece. guy: they have to keep greece in the eurozone. if you are negotiating and one of the threats is we will leave, you have to make sure that doesn't happen. anna: and when you tie that in with what the ecb said with increasing that liquidity ceiling, you think they are catching a bit of a break. guy: we will talk to the agency that made the bank rate later on. we will talk about bmw as well. the new series was revealed last night. anna: i feel like you are more excited about this. guy: i can find balance. dan robinson will be talking us later -- talking to us later. the man who has everything.
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he says armrests are an option. press a button and it parks itself. anna: high imagery by the hand gestures you can use to control volume. i think we should get our friends at bmw to demonstrate. guy: there are interesting hand gestures you can make in a car. let's talk about the market news. we talked a little bit about some of the. we saw a decent rally in stocks. anna: 1% higher on the dow. guy: that is the first time that the european markets rallied. we also saw the chart -- we saw the buntz going up. we aren't actually there at the moment. we did get above 1%.
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this is indicative of what's happening in the market. that is the rally we saw coming through in the last few days. we finally popped a little bit to show you the key -- that is the kiwi dollar. anna and i were just talking about a significant blow. you talk about the bmw seven series -- i am tied as to which one is more exciting. anna: six minutes past 6:00 in london. that is what's happening overnight. the story out of europe, seeing a boost to equity trading. in europe, greek unemployment is out today. this is what's coming up ahead.
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then, 1:30, the focus shifts to the other side of the atlantic as we get u.s. retail sales. guy: the u.s. consumer -- this is one of the big conundrums of the moment. we talk about the conundrum of u.k. productivity and the other is why is the u.s. consumer not spending? why are they saving? that is one of the big themes we will talk about. anna: let's head over to asia, where we see rate cuts coming through in new zealand and south korea. they are both playing into the market. shery ahn is in hong kong. shery: good morning. those rate decisions -- that was a big theme out of asia this morning. asian stocks rose for a second consecutive day, and getting the most in nearly a month. the bank of korea decided to lower their rates to a record low 1.5% up 2/10 of a percent.
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we also had a new zealand rate cut -- quite a surprise there -- to 2.25%, the first rate cut in four years. they are now wrapping up at 9/10 of a percent. we have australian job numbers coming out, better than expected, with unemployment rates dropping to a one-year low in may. the asx is up 1.4%. the shanghai composite is falling for the third consecutive day, moving between gains and losses all morning. there are concerns that there could be a tie up in funds with upcoming ipos. it is worth mentioning that the chinese stocks being traded in hong kong rose from a two-month low after their discount to mainland shares. tothe biggest in six years
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the hang seng indexes up, and the nikkei is up 1.4% the first time it has resident five days. there is more optimism that there will be progress in greece's debt talks. anna: thank you. guy: let's get more on that korean rate cut. let's talk about the interest rate -- a record low. the bank of korea governor called the marburg virus an imminent risk to consumption in the country. let's look at why the decision has been made and what happens next. stuart the latest cut -- not really a surprise. it is interesting that they have done it nevertheless. stuart: to be honest, this has been building for several days. i think the mers outbreak has given -- when you look back to
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the last cut, there was a sense that this cycle would be the end of it but that was also a cut to record lows. since then, what we have seen is that exports continue to decline. you mentioned earlier on the show, some metrics, the economy is looking quite healthy, but it is different to how the economy is seeing domestically. mers was a tipping point for further cuts today. all the statements from the government officials over the last few days after the morning about the impact of mers on consumer spending. it is a very preemptive measure, because there is the context last year, which resulted in a germanic cut in the government is worried that we might see some kind of repeat. anna: and of course they will be thinking about what happened in
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hong kong more than 10 years ago, with sars. what else is the -- what is the latest on the mers outbreak? how extensive is it becoming? stuart: it is interesting because from one perspective we are in a holding pattern. over the weekend, you could say that there was a bit of a spike, but over the last few days it was very much -- if yes, the numbers were taking up, but not dramatically. the argument was that it was under control, that having said that yesterday, there was a scare in hong kong. it proved to be not a case of mers, but it shows how jittery markets are. hong kong suffered badly from the sars outbreak in 2003. i think we are in a position
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where we watch to see how it plays out. guy: great stuff, thanks for the update. anna: negotiations between angela merkel and francois hollande went on into the early hours of the morning, and the greek prime minister struck a positive tone, suggesting it brought the greeks closer to a solution. >> today i have the opportunity to talk with president juncker, chancellor merkel and francois hollande, as we discussed. it was a friendly and constructive discussion as always, and we have decided to intensify our efforts to bridge the remaining gaps. we will move forward towards a solution. i think the political leadership of europe understands that we have to give a solution, a viable solution, and the possibility for greece to return to social
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cohesion, in an effort to give safety and stability not only to greece but also to the rest of europe. guy: what did angela merkel have to say? she said where there is a well, there is a way. has the german chancellor blinked first in the tensed negotiation? hans is in berlin. what are we getting from the german side? hans: according to two people familiar with the position merkel's government may consider the idea of releasing rescue aid if there is a tangible step from the greek side. it was this report that said markets really up into the air yesterday. you saw strong rally across the board. i should add that a government spokesman from the governmen german side said that what they want to do is have a proposal by the european central
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bank, as well as the imf, and they will get behind that. we just heard from the german side -- we didn't hear directly from merkel. of the german side, everyone agrees these talks will take place under higher intensity. it seems like we have been having intense talks for quite some time. there is what merkel said heading into the meeting. "the goal is to keep greece in the euro area." you sold mr. sippers had to say. he seemed to think there was a recognition on the european side that you need to do something more to keep greece and the eurozone. the backdrop to all of this -- downgrades down to negative triple c, been meanwhile, we have a little bit of movement in the ecb. they raised the away up to 83 billion euros. guys?
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anna: it's not june 30 yet so there is perhaps room for more intensity. james, what happened in the meeting? it went on to the small hours. however the creditors going to react to what we heard? james: they described it as a very constructive meeting, and as hansel said, mr. cypres came out optimistic. similar to how he came out of other meetings. going forward, they are going to have to talk about the details. in the meeting last night, it was at the political level, so they didn't talk about the details. what they mostly did was sized up their positions after several proposals had been sent back and forth between brussels and athens about what the final deal may look like. now it is up to the technocrats,
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the deputies to get back to work in figure out the details. guy: thanks very much for the announcements. anna: we will get more on greece's downgrade later in the show. they came down from the s&p, ahead of sovereign ratings. he will be joining us a little bit later on. guy: coming up later on bmw. a member will be talking about their new high-tech product -- the seven series. we will also have more on mark carney. ending the age of the responsibility. we do want to link the car in the age of the responsibility -- "countdown" is back in a couple minutes. ♪
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anna: welcome back.
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we have some stories you need to know. guy: the bank of england used the dinner last night to outline some of their key initiatives for the year ahead. george osborne said they will start sale of rbs in "the coming months." the governor of the bank of england called for a cleanup of the city saying the age of your responsibilities over. anna: the bank of korea lowered its key interest rate to a record low. the central bank cut the seven-day repurchase rate from 1.5% to 1.75%. the mers outbreak has killed and nine people in the country with the number of reported cases rising. guy: the german chancellor angela merkel may be prepared to endorse a greek rescue payment instead of just one reform from the creditors demand, according to people familiar.
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the spokesman denied it, saying germany will only accept proposals made by the european commission, the imf, and the ecb. anna: let's get back to that dinner in the speeches. george osborne said that the government would start divesting its stake in rbs. >> in the coming months, we will begin to sell our stake in rbs. it is the right thing to do for british businesses and taxpayers. we may get a lower price than labor paid for it, but we will get the best possible price. the longer we wait, the higher the price for the whole economy. guy: mark carney also spoke, warning that the bankers need to improve their conduct. let's get more with richard jones and jeremy cook. richard, let's start with mark carney. the age of irresponsibility.
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anna: is that ethical dressed? -- drift? [laughter] guy: this is part of an ongoing process. i thought we were going to hear from the chancellor that it was over. how do we have the age of the responsibility being over, then banker bashing? what is the message? richard: the first thing to say is that carney's speech was interesting for what it left out. what he said last night was consistent with the fair and effective markets review, but a lot of people were thinking that he would address monetary policy last night. if you look at what he said last year, it didn't really surprise me that much. they probably wouldn't be deviating from what they said and low and behold. the bank is going to be more
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concerned in the coming months with its oversight and regulation responsibilities, and monetary policy is going to fall. they said they were comfortable with the market path allowing them to achieve their inflation targets in the next few years. i think they will probably be keeping with the steady as she goes approach. anna: as richard alluded to, you have seen that speech to influence monetary policy -- a caught people by surprise last year. jeremy: we saw a nice run-up in starting parirs. a positive hawkish surprise which they haven't seen. george osborne always announces something to do with egg stakes and selling those off -- with bank stakes and selling those off.
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guy: should the u.k. government be selling rbs at a loss? anna: he says it is good for the overall economy, doesn't he? richard: i think it is good overall. selling it at a loss -- we talked about whether this was the initial part of selling five or six years to finally get rid of the 79%. it had to happen sooner rather than later. i haven't seen the report by rothschild that has been put around as to why they should but if it is a long-term economic plan to finally get some of these taxpayers -- then why not? anna: the rothschild report suggests that you should do it in stages. perhaps that paves the way for
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later on -- you recruit those early losses. they were saying they shouldn't be waiting for the litigation risk to be taken away, because they say that it is all factored in. the rbs plan -- does it make sense to you? richard: at the end of the day, it is never going to be easy and i think it is probably sensible to do it in a slow and measured way. markets are reasonably open to doing that right now. guy: is this part of us moving on from the crisis? it seems to be the trend, that we are getting out of the treasury. we needed to end this idea that the banks need to be punished move on from the stakes that we hold. is this the new tone we are looking at? richard: we see lots of people talking about normalizing interest rate policy, and now it is government policy.
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we are going through a little bit of fiscal retrenchment through this parliament but we have to get back on some form of even keel. not sure how it would work pre-2007. but moving forward, this has to be a broad spread of getting back to how things used to be obviously with a new share of banks. anna: the next headline for the u.k. economy -- the budget coming just next month. jeremy: yeah. i think it will be very simple and relaxed until march of next year. it will be fiscal issues, the next headline -- the budget moving forward, where these cuts are that everyone has been talking about. anna: an extra special budget aren't we lucky? thank you very much.
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jeremy cook and richard jones. guy: coming up, central banks back in action. the rate cuts in south korea and new zealand. ♪
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anna: time now for look at before exchange markets. let us look at new zealand, it is fascinating. almost a five-year low against the u.s. dollar, we look at the last 24 hours -- an unexpected cut in rates from the bank of new zealand. unexpected by many economists, only six out of 16. it explains why we seeing such reaction market, the central bank not only cut rates, they signaled another rate cut might be appropriate. we have seen a slower growth in dairy prices leading to slower
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growth in the economy. inflation is a low target for four straight years now. taking action here, it is in stark contrast to what we are seeing in other parts of the world with what we are seeing in the u.s. when people are wondering when the rates will increase. breaking news on chinese industrial production. guy: the anticipated figure we are looking for is marginally better. we had a whole bunch of other data, rising 10.1% from a year earlier. construction numbers up, as well. up to 5.1%, china doesn't seleka great deal given the amount of money. the headline figure, may industrial output up 6.1% year after year. anna: the bank of korea lowered
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key interest rates, the central bank cut the seven-day purchase rates to 1.75%. the merzs outbreak has killed a lot of people 122. guy: germany's angela merkel -- putting people familiar with the position. a government spokesman denied this, saying germany will only respect proposals from the imf and ucb. ana: the rate was cut to 3.25% the banks forecast assumes one more rate cut by mid-2016. guy: central bankers back and acting, making waves. the kiwis cutting rates, south
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korea also cutting the left-wing for hours. let's talk a little bit about what is happening around the markets. james, senior affects strategists. we should stop thinking about it being multiple policies, we should think about it being currency policies. everybody is trying to have an impact. >> missing the cuts today, they have been the ones very vocal and trying to extend the currency. it is quite interesting in the currency wars, their hiking interest rate. of intervention try to get the currency down. but if we look at what has happened in the last couple of months, we no longer have the dollar. that has changed or shifted to the other central banks, the other banks were getting easy as
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the dollar was spending the currency was dropping. they have to take more action. anna: how we look at these rate cuts? they are driven by the from factors. we have seen to in the last 24 hours, and south korea and new zealand. how we look at those in the lens of what is going on in global interest rates. people are still talking about when the fed is going to increase rates. and we have the world cutting. jane: the common nominator at the moment is geography. the other factors are totally different. the koreans are dealing with mers to how that will impact consumer confidence. that impacted consumer confidence and demand quite a lot. they're trying not to get that same economic impact. that is probably why they decide to go today.
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in terms of new zealand, he made it quite clear a few months ago -- two months ago when they issued a statement which became repeated by the central bank governor. while you correctly quoted the bloomberg server that very same survey said that the consensus was a cut of twice. meetings this year, the majority were expecting two cuts during rest of this year. guy: did the south koreans use mers as a little bit of excuse? analyzing where rates should be using employment and other factors by all estimates, the rate should be 4.2%. they are at 1.5%. that is a 270 spread, way below where the economics should be.
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jane: you could say excuse or valid reason. if you consider that this could key people indoors, from spending, it could conceivably have asked in the second impact. it is not preemptive. in the last few years, we have seen quite a lot of preemptive cuts. you could argue that is the right thing to do. anna: lots of central banks like to tell us against independence. you cannot be -- jane: it depends on which central-bank you are looking for. they did an insurance, there was not a lot of information as to how this would affect the canadian economy. they knew it was going to be bad. compare that to korea significant risks that consumption could demand quite significantly on the outbreak. guy: some would say that opec is
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another central-bank. john joins us now, he is the middle east director. opec is pumping oil saudi's pumping oil, record levels according to the reported a. given that, given what we see in the global economy at the moment, where does the oil price go from here? were they trying to do? john: the saudi's continue to maintain market share. so far, they have been successful. oil went from 40 to 60 something, it will stay around 65. maybe pick up around the second half of the year. and we will see in 2016 or 2017 oil picking up further -- $80 a barrel. i think the saudis are maintaining market share, north america if i market they can sustain because of shale. this is a better policy they did in the 1980's, which was to put out output and for
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scratchesce crashes. aanna: you saying that this isn't partly about getting the dollars, it is about getting in expertise. john: they do not really need the capital. the stock market is about $60 billion plus $70 billion is bigger than russia and indonesia. what they are looking for right now is expertise. they looks for transparency research from the houses that will be based in saudi arabia. capital, they have. what they need is knowledge best practice. guy: it is been talking about mers. the koreans are cutting rates on mers. it originated --what kind of
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impact is that having on the economy of the gulf? the koreans are clearly worried about it. they are taking massive measures to make sure it doesn't have a meaningful impact. john: not really. it is a scary thing. it doesn't have the same impact as people thought initially, that it would have a negative consequence. these economies are doing very well. saudi arabia is spending more than 150 billion dollars a year towards infrastructure spending. that is very important. i think the impact is far less than what we thought initially. anna: what interests you, then, john? are you interested in buying into the growing middle-class? what it is your eye? john: it is more than oil. people think it is just oil in the stock market. i tell people you have a lot of these consumer stories, retell
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stories, health care stories people love to eat and be taken care of. saudi arabia needs a lot of these health care stories, these important private sector clinics and hospitals. the rising middle class is very important. saudi arabia has a per capita income with a lot of purchasing power the makes this story more about just oil. guy: we talked a lot about central banks and what they are doing with policy. with you, is there a way, which is having a bigger effect around the world? jane: it is difficult to know. it has to be that the oil price is a stimulus. we have seen the story creep back in, a lot of that has got to be cheaper oil. we have to be totally sure. there are a lot of questions,
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how much impact is it having? again, very difficult to know for sure. in europe, the inflation story has to be the oil price and the fact of the euro is stronger now than it was a year ago. that could potentially be to a larger part in the eurozone, as well as many parts of the world. anna: you credit the ecb? jane: yeah, this is quite growing. we look at the latest index now, it is a bit higher than anticipating it would go higher. and that seems right. we think about what is driving that, is a base effect. if oil prices are anticipated to be high, by the end of the year, that is cost push inflation, not demand-driven inflation. that means that people have disposable incomes.
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they will have less at the end of the year. that is not necessarily a good thing. guy: what are the possibilities of an oil shock? the region is fighting a fairly aggressive war at the moment. we don't reported a lot, but there are multiple fronts in this war -- syria iran, and you look at the conflict that is in some ways being led by saudi arabia, should i draw a line between the two? should i worry about a significant oil spike that the result? john: the geopolitical premium has disappeared from oil. it is as if it never existed. i wonder sometimes what was happening to the political premium to years ago. i am very surprised that oil is not going higher with what you highlighted. concern any rock, turmoil in syria, yemen there is
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geopolitical risk. on the other side, you have iran and the nuclear agreement will be signing. their concern about the production of crude oil coming online in the coming 6-12 months. i would say that you need to take into account, markets are more important here. they seem to be happening in the middle east, they are probably underscoring rather than over scoring that. anna: john and jane, thank you for joining us. stay with us. guy: be sure to tune in to bloomberg tv. mark barton will be broadcasting from dubai on a special edition of bloomberg agenda for the middle east. anna: you can weigh in on any of the stories on twitter. today's twitter question -- guy: should the u.k. be selling
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the royal bank of scotland at a loss? anna: get in touch with twitter and tell us what you think. coming up, if you thought the car of the future would come free, you have to think again. high-tech product lines, which will be able to decipher your gestures. you do need your hands not necessarily just for driving. it is 6:44 here in london.
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guy: welcome back. here are the stories you need to know about this morning. anna: the governor of the bank of england is using the mansion house to outline key initiatives for the year. in the coming months, at the same event, mark carney called for a cleanup in the city. saying beatrice possibility is over. guy: the threat of mers risk
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derailing economic recovery. interest rates down to 1.75%. the outbreak has killed nine people in the country, the number of reported cases rising to 122. anna: the german government may be prepared to endorse a greek rescue payment. that is according to people familiar with the country's position. a government spokesman denied this, saying that germany will only entertain notions by the imf and ecb. guy: finally returning to normality following the charlie hebdo attacks. they spoke to bloomberg's editor-in-chief, matt winkler. >> right after the attacks, there was quite a significant decrease in tourism.
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true, many people were afraid of traveling. but at the same time, i think it is over. hotels are fully booked. we have roland garros. many events going on right now, activity is back. but we need to be cautious. among others, on the negative view that these terrorists attacks gave abroad. i went to washington, the being invited by the white house. the american media asked if we should be afraid, is the paris jewish committee protected? i did not want to explain what real life in paris was. yes, there were attacks. and yes, there is a terrorist threat. but this threat is everywhere. not only in paris, it hit other cities. i'm thinking of copenhagen.
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but yes, paris is a safe city for visitors. in the jewish community is protected. the french president chose to use significant means for this protection sense for the first time, the army came to paris to protect a certain number of places. i was also afraid of the e image this would give. then again corinthians were extremely -- parisians were extremely supportive. i think it allowed everyone to go back much faster to normal life. to have a normal city, normal economic activity again. today activity is in full
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swing. and we are gettin ready to host the the conference on climate change at the end of the year. many heads of state, business leaders will be present. i think this all shows the dynamics of our city, where activity is fully back to normal. guy: the mayor of paris speaking to matt winkler. lots more came out of it, as well. it is available on the website. jane is still with us, looking at our top stories on bloomberg.com. good morning, p. let's talk about that interview. it does feature on the website prominently. what else can out of it? we heard about charlie hebdo.
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pete: france was the biggest tourist destination in the world. it was honestly hit very hard by the attacks which killed 17 people. the mayor says that tourist numbers are coming back. we are moving on from that. a new survey says that paris is the second-biggest startup in europe, after london. she really wants to focus on that and builds that is a growth, as it has suffered from growth issues. and she sees technology is the next scene. on top of that, she also gave an interview where he talked about childcare. anna: she is making quite a play of this, particularly for paris. in contrast to other capitals. pete: indeed, as we know in london, there is a hot political potato. under the age of three and over the age of three, it is on your
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ability to pay. guy: hot potato, not a great accommodation. anna: let's talk about greece for little bit. you're on greece watch. pete: as we have been hearing it appears there may be an olive branch going on across. the government in germany denies that. secondly, what we have got -- we have taken a look at the tensions in greece itself. we have an interview with the pensioner who talks early retirement pension's when it comes to greece, is one of the key reform areas which seems to have great difficulty moving on. anna: an olive branch, can't believe i missed that one. guy: jump in. i've heard about hackers and
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oil. pete: what comes to global companies, there are two surveys showing that just under 50% of global oil companies gas, and mining suffered major hack attacks. the only percentage higher than that is government. honestly, government is the key want to get into. we think of attacks as breaching of personal data and various things like this. when it comes to industry and in particular oil, gas, and mining so many of the processes are controlled by computers -- they are interconnected. it is possible to get access to these from the outside, and there is great risk that they may be serious damage is done. oil spills, all the sort of stuff can happen. in addition to revenue and earnings. anna: i'm trying to think of a
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segue to foreign exchange markets. i am failing. let's go back. thank you very much pete. for giving us the latest on the website. jane, we have a lot going on today. let's focus on the u.s. we have retail sales me out later. we are talking about how they're disappointed as of late what the u.s. consumer has been spending their money on. jane: this is really interesting. if we look actually at the data, what we are seeing is real demand in the u.s. and a number of countries growing at a much more moderate pace than it was before the crisis. and his weakness in consumption in the u.s. fits into this compartment. that is the bigger element at play here. pushing down demand, we have the income inequality story pushing out, rich people spend much more
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portion of their income. worker incomes not rising there are lots of somatic questions -- lots of somaticthematic questions. guy: do you think that president obama's word about the u.s. dollar right now? he may have said something about it recently. jane: i think he probably is. and he would not be the only one. serving up the only american who is worried. if we look at the results that came out, a number said they were concerned about sales. anna: jane, thank you. senior fx strategist. coming up in the next hour, we will be asking bmw about the new
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7 series launched in munich. guy: another first, we will see you in a moment. ♪
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anna: the age of irresponsibility is over. mark carney warns bankers they will be held to account. >> for those who free ride on your reputation, the age of irresponsibility is over. guy: korea cut the central bank lowers its interest rates. anna: where there is a well, there is a way. angela merkel says the aim is to keep greece in the eurozone. how she blinked first in her negotiations with athens?
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guy: good morning, everybody. you are watching "countdown." anna: it has just gone 7:00 here in london. we heard from george osborne, mark carney, and the governor of the bank of england. interesting we got all of these comments on how the city needs to act more responsibly. they will be held to account. guy: they will be raising a glass to that. a good night it seems at the mansion house last night. rbs, the bigger headline. the government is going to sell rbs at a loss. anna: the breakeven is 400 seven cents per share.
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they have been advised by rothschild they need to get on with it. i am paraphrasing. i'm sure they did not use those exact words. guy: the governor said get on with it responsibly. this is a preemptive move. someone argue you do not need to cut rates in south korea. with mers, this could have a meaningful impact. anna: we saw the bank of new zealand cutting interest rates. not contending with the same issues. guy: we should explain what mers is. this is the virus that has been going round the middle east and has transformed itself into south korea. a lot of people are in quarantine. anna: and then to greece.
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we have to talk about greece every morning, it is compulsory. are we seeing the germans offering and all of branch? -- olive branch? we have all of these reports that angela merkel and team in germany could be prepared to accept a little bit less reform in exchange for some more bailout funds. the german government has denied that. guy: i look forward to that conversation. we also have the m.w.p. as well coming up -- bmw coming up as well. anna: the new 7 series. i am sure i should be blown away by all of the statistics. far more interesting around the
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newsroom, all of the hand gestures you can use to control the scar. or certain -- control the car. or certain aspects of the car. guy: he did armrests -- he did armrests and guess -- just in case your elbow gets a little chilly. anna: let's get you up on some of the market news you might have missed. guy: let's talk about what happened with the kiwi overnight. you can see the impact it has had on the market. let me show you the terminal. we can show you what is going on. this is the kiwi dollar, the market was caught by surprise by this. we had been anticipating it for a while. that was the impact into the korean -- into the kiwi currency. let's show you what has been
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going on. this is the german bund. we have touched 1% for the first time since september. anna: it would be great to get the view on where the bond market is heading. guy: that is the last month for the european story, the stoxx 600. down for over two weeks or nearly two weeks. we finally put in a rally yesterday. anna: the u.s. markets yesterday, more than 1% gain on the dow, the s&p, and the nasdaq. the s&p is training -- trading in its smallest range since 1995. there is a small range between the highest and the lowest point that the s&p has touched so far this year. guy: the vicks had rallied, -- vix had rallied but is selling
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off again. i want to show you this. this is the implied open. this is what you want to pay attention to. the ftse, all lower this morning. not by much. we will continue to update you and make sure you know exactly where those markets are going. anna: this is the data due out later. from europe we will start with greece. unemployment numbers are key to that story. 10:00 london time, we get unemployment numbers. 1:30 p.m. u.k. time, we will get u.s. initial jobless claims. guy: let's talk about the murders story. -- let's talk about the mers
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story. the bank of korea calling the virus and imminent risk to consumption in the country. let's get the latest on this story. not a surprise because most economists had expected this but nevertheless, a significant event. >> i think the context is everything. when the bank of korea last lower the rate about three months ago, there was hope that would be the end of this easing cycle. the economic data has come ensuring there are some structural issues within the economy. exports are still slumping and when we saw with the outbreak, we saw momentum building towards a cut. at this point, it was not unexpected. it was a dramatic step for the bank of korea to use this mechanism to counter the impacts
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of mers on the economy. anna: what is the government doing to stave off the economic impact? stewart: the government talks about the economic impact as much as it talks about the outbreak itself. over the last few days, we have seen officials rolling out packages to help small businesses tax breaks for companies involved in tourism and related industries. even more than that, every official urges people to go about their life normally, to go to baseball games, to go to the movies, to go to the malls. they are concerned about a repeat of the drop in consumption of consumer spending. i think the government is trying to get out in front of that to prevent that from happening
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again in the bank of korea's move is very much within that context as well. anna: two: thank you very much. guy: the greek prime minister struck a positive tone suggesting the meeting brought the group closer to a solution. >> it was a friendly and constructive discussion and we have tried to intensify our efforts to bridge the remaining gaps. we will move forward toward a solution. guy: looking quite chirpy and happy. the german chancellor may have blinked first in these negotiations. we talked about the chancellor offering an olive branch. hans nichols, let's start with you. hans: according to people
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familiar with the matter what the german government is considering is maybe having sort of a step trots. they would -- step tranche. the greeks would take one of the many reforms they initially pledged to in that february document. this is according to people familiar with the plans. the german government has denied this report. they are insisting the only way germany would go forward will include the european union, the ecb, and the imf. it seems like the markets rallied on this report yesterday. there was the s&p downgrade from -- to triple c and i may have the comment going into it where angela merkel seem to be willing to give in, or bend. where there is a will there is a way. the goal is to keep greece and the euro area.
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it seems as though the market really likes that. after the meeting, you had a smiling tsipras. the last time in brussels, he was all smiles and said, don't worry. and of course, they delayed the payment. he said, i think the eu leadership realizes they must agree to a viable solution and the possibility for greece to return to social cohesion's with security and growth and with a sustainable debt. all the action was not in brussels. we also have the ecb all the way up to 83 billion euros. when you look at what the bank how much they had left, the cushion came down to 700 million euros. the ecb giving a little breathing room and now we have talks still taking place. the difference between great
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intensity and higher intensity. anna: it just keeps building. what exactly has happened in the meeting? that is where a lot of the action was last night. what have the creditors been saying? >> they describe this meeting as constructive last night. it happened after the first day close of the summit with latin american leaders in brussels. it went on until early this morning. both sides described it as constructive and said they need to get back to the technical discussions on the program with greater intensity, higher intensity. the deputies, the technicians are going to be going back at it today trying to get closer on
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these several issues that are keeping them apart. at the same time, tsipras is supposed to meet this morning with european commission president. guy: meeting for tea i suspect. hans nichols joining us from berlin. anna: let's get more on greece and the downgrade that we -- the s&p downgrade we heard about last night, happened about 9:00 u.k. time. we will be talking to the head of sovereign ratings. it seems the european commission has a name for what is going on. that is when you are caught in this paper tennis as both sides
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past documents between each other. origami perhaps. do you think the germans are blinking? are we seeing some progress? jane: i am not sure that we are. germany is more of a take it or leave it. that story is interesting because these are elected officials. they have to listen to their electorates. people in germany are running out of patience with the situation in greece. the electorates are running out of patience and the elected officials have to listen to that. that gives more credence to the ticket or leave it story -- take it or leave it story. guy: which way does the euro go
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on this? do we rally? jane: the market is sick and tired of it. even if we got a compromise today or tomorrow, there will be other greek issues further down the line. there will be a cloud over this for a while. if there was an agreement, i think the euro would rally. whether or not that rally was sustain would depend on a host of other factors anna:. thank you so much for joining us. guy: next, a conversation you do not want to miss. the m w launched -- bmw launched the new 7 series last night. we will ask what it means for the bottom line.
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technology is a big part of this car. is it a technology business or a car company? ♪
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anna: it is 19 minutes past 7:00 if you are watching in london. guy: we need to know the u.k. chancellor and the governor of the bank of england used the mansion house to outline their key initiatives. mark carney called for a cleanup of the city. the age of irresponsibility is over. anna: the bank of korea lowered its interest rates to a record low. the central bank cut the repurchase rate to 1.5%. the mers outbreak has killed
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nine people in the country. guy: the central bank of new zealand lowered its interest rates for the first time in four years. the rate cuts takes us to 3.25%. the currency reacted very strongly on the back of that. anna:bn bmw is stepping up its game with top-of-the-line tech. we are joined by the head of sales, ian robinson -- ian robertson in his first interview of the day coming to us live from munich. outline for us how significant to the finance is the launch of this new car is going to be. ian: all of our cars are
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important, but the seven series is the pinnacle of our brand. it brings the innovation it is driven by the opinion leaders and the movers and shakers around the world. this is a proud moment for us. guy: will this help with the battle -- in the battle with audi? ian: we are very successful all around the world. this car will add to momentum as we come out of this year in 2016. i can tell you there are many other cars in the pipeline that will also be launched. i am confident we will continue to see growth around the world with the product lineup during
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2015. anna: this is a car that is full of new technology. electronics are going to be just as important to customers as horsepower and handling. what extent does your business remain a car company? ian: we have always been a technology company. it is part of the dna of bmw. we have always brought innovation and technical positioning moved the business forward. in fact, moved the industry forward. we were the first to bring satellite navigation in a vehicle. today it is commonplace. in this car behind me, you will see many other firsts for the industry. we have gesture control. you can use a signal like this
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to take up the volume on your radio. you can dismiss the phone call or except a phone call -- accept a phone call. you can exit the vehicle, stand beside it, press the key and the car will move into the garage safely. great if you live in an urban environment. that coupled with many other features that bring this car forward in the technological stakes is part of what you would expect from bmw. guy: it also comes with heated armrests. data, we spend so much time talking to companies about the data they collect. what kind of data the you get off of this new series? and what can you do with that data?
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ian: the data is belonging to the car and the customer. there are features, such as the emergency on-call. if an airbag is deployed in an accident, the car will automatically respond to a call center. the call center will call the car. if there is no answer, emergency services are dispatched. there are many core elements that are tailoring the journey to the customers needs. hypothetically the seats have a sensor that says whether this than adult or a child. it programs the airbag that says the air dad deployment -- airbag deployment should be deployed in a certain way. what customers want is a lot more connectivity. connectivity or the downloading
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of apps into a car we have our own app store it is now a possibility. it brings your entertainment and business world into the vehicle. that data is within the vehicle. anna: you demonstrated some of these already. i might ask you to do it again. it comes with a number of hand gestures. remind us the functionalities. [laughter] ian: it is very straightforward. the driver can keep his or her eyes on the road ahead. we were the first to bring up head up displays. you have a head up display. we have added this changing facility. that does mean you can turn the
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volume up without taking her eyes off the road, without touching a button. these are part of the cars features. guy: you did that very well. we believe that for another day. can i talk to you about diesel? i am reading article after article that suggests diesels will be increasingly penalized. will that have a big impact? ian: diesel is a -- diesels are very clean today. our cars come with eu six compliance. particular filters as well as. we are reaching all of the tough standards that are placed on the car industry. anna: thank you so much for
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joining us. guy: this is how you raise the volume. central banks around the world are certainly doing that. ♪
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anna: it is half past 7:00 if you are watching in london. guy: what has happened overnight in new zealand we take ourselves down under. the central bank cut rates unexpectedly. a year ago, the central bank was hiking rates. they have tried all kinds of things. most of the economists did not expect this move.
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the new zealand dollar versus the u.s. dollar, the kiwi dollar coming down sharply. the other decision was the korean decision. this was widely anticipated. if you look at where interest rates should be in korea, some would say they could be higher. this is a concern that has been generated in south korea at the moment. the mers virus impacting people in south korea could have a meaningful impact on consumption. the demand story feeding into this. the market still reasonably well positioned for this. i want to show you another factor. this is the five-year story, which is a little more interesting. let me show you the korean
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currency versus the japanese yen. i have that the wrong way around. let me change that. what this shows you -- there we go. the korean currency has been strengthening against the japanese yen. the korean authorities have really been reacting to this. another rate cut -- i will get this right the next time. anna: the u.k. chancellor and the governor of the bank of england used the mansion houston or to outline their key initiatives -- mansion house dinner to outline their key initiatives. mark carney called for a cleanup of the city. guy: the bank of korea has lowered its key interest rates to a record low as the spread of
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mers risks derailing. it has killed nine people in the country. anna: angela merkel's government may be prepared to endorse a greek rescue payment in return just one reform from the creditors lists of demands. the government spokesman denies it saying germany will only act on a proposal made by the european commission. guy: let's look at what is happening with the markets. let's take a look at where we are standing in terms of the fair value calculations. let me show you what is going on. the ftse 100 expected to open down. the dax showing a little bit better this morning a fairly flat open is what we are looking
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at. slightly to the negative, which continues a trend we have seen of late. yesterday we broke that. this morning, we are expecting a negative open. anna: a look at some of the data you will be watching out for the later on today. we are covering the greek story from all angles, the unemployment numbers at 10:00. at 1:30 p.m., the focus switches to the other side of the atlantic. the u.s. initial jobless claims and resale sales -- retail sales. guy: looking forward to those figures. we have 25 minutes until european equities start trading. our next guest is from j.p.
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morgan. give us a sense of for the equity markets are at the moment. we have had a significant selloff in europe. in terms of where we are positioned, do you think the risk is to the downside? >> you are seeing a repricing of the risk premium. people are looking at what is out there. if it is the fact that people -- you are seeing that being built into the markets. that should start to pull back. it is all about the oil consumption boost to starting to fade off. the euro has moved back up from the parity talks we have seen. those big tailwinds we have seen
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will start to fade and we are looking for the next leg up. a lot of that has to do with improving domestic demand. will it come through from consumer spending or business spending? improvements in the money supply, and we need to see that built more more. it cannot just be about a week euros -- weak euro. analysts are looking for 20% earnings growth this year. is that achievable? potentially. anna: does it feel like it will be a quiet summer? that seems a dangerous thing to say. kerry: even if you get some deal out of greece by the end of june, it will not make the situation go away. any deal will leave it open for
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further scrutiny. until you see a debt reduction the problems will always be there. even if you get a little bit of money in the greece coffers, they have a long way to go to improve the economy. that will put them under the spotlight for a long time to come. guy: the u.s. consumer has not been spending. that has caught a lot of people by surprise. i think the fed has been caught by surprised as well. when do we start to see the consumer starting to spend some money? what is it that is holding not back? kerry: the u.s. consumer has not been spending. if you look at the fact that new
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auto sales a 10 year high, that is a great indicator that the consumer will bounce back in the u.s., but it has taken longer than anticipated. i think it will be a strong signal that you will see those expectations for the next rate hike move much higher. this retail sales number will be key. anna: some people say the inflation environment is just not there. there will not be a rate rise or they do not see a reason for a rate rise from the fed because they do not see the inflation data support it.
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kerry: the core inflation number is at 1.8%, interest on exactly low. it would be so gradual guy:. are we on a predetermined path? central banks tell us they are data dependent. is the fed data dependent? kerry: we need to raise rates and get back on the path. one move they have priced into the market. you will not see anything happen until next year. it provides a bit of productive ability. we know they become more aggressive at the tail end. consider those inflation expectations, look at what the fed is saying, they have not
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changed. it will still be around 2%. we expect the consumer to come through. anna: let's get your take on something that -- a cut by the new zealand central bank. did you see this coming? the move had been flat, but not the timing. kerry: it has been very much a surprise. you had a boost of growth after the earthquake in christchurch. the worsening of the terms of trade. the bank of new zealand started saying, we need to see more growth. what they are doing is saying we think we can get more growth even though it is good.
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whether it is here or new zealand, if they are cutting rates, houses are not cheap in the big cities. any of those rate cuts are about fueling the property room fueling the asset booms. anna: thank you very much for joining us. good to see you. guy: we asked you whether the u.k. government should be selling rbs at a loss. a few answers coming in. that is a sensible answer. if there is no current discount it is a moot point. anna: you will find us on twitter should you wish to seek us out. greece is downgraded after
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failing to make friday's imf payment. we will speak to the man who is in charge of those ratings. that is after the break. ♪
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anna: guy:guy: we have 15 minutes to go until the european equity markets open. anna: the u.k. chancellor and the governor of the bank of england used the annual mansion house dinner to outline banking initiatives for the year ahead. mark carney called for a cleanup of the city saying the age of irresponsibility is over. guy: the bank of korea has lowered its key interest rates.
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the central bank cut the repurchase rate to 1.5%. the mers outbreak has killed nine people in the country. anna: the reserve bank of new england -- new zealand lowered its rates for the first time in four years. the banks forecast assume one more rate cut by mid-2016. guy: standard & poor's has cut greece's credit rating. the agency says last week's delaying of debt payments to the imf. let's find out what is going on. the head of sovereign ratings at standard & poor's. good morning to you. is your expectation now that we will see at some point a miss
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payment to the imf? how would you treat that? >> we already have seen a miss payment last friday. be that as it may, however you want to interpret of when the payment is due, a missed payment is not a default event in the eyes of standard & poor's. the probability of a default on liabilities of the greek government to commercial creditors. we think what we have seen last friday with the imf not being paid is another sign, another indication that liquidity situation is becoming increasingly untenable. anna: why is a missed payment
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not a default? >> the definition is a missed payment on a commercial obligation of a loan. all official debt bilateral loans between governments and from the likes of the world bank have never been part of the definition of default. these financial transactions and contracts tend to have a political rather than commercial element to it as well. our role is to signal to the investors what we think the probability might be that they would not get paid in full and on time. we are not in the business of telling the imf what to expect. that is not the role of rating agencies. guy: is greece's debt
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sustainable at its current levels? maoritz: the debt is high, no doubt about that. extending the maturities, but introducing interest-rate holidays, lowering the interest rates. if we have thought these loans -- every single restructuring would be a default. the result of these changes to the debt profile is the actual service burden is not that high. that is for the short term. in the longer term, you have to ask yourself whether this debt load is sustainable even with all of these concessions. if there is no recovery of
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sustainable growth, the answer is most likely no. it is exactly at this point i believe the creditors and greece are at loggerheads and do not see eye to eye. guy: you talk about the growth element. yes, that is the reason why you would be able to pay the debt. do you think we need a debt restructuring? do we need to restructure the debt? do any to go through it on the public side? moritz: we have been on the public side a couple of times. the restructuring of the official debt a couple of times. these are all restructurings. these are official sector
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involvement, if you like. if you want to go for a haircut, 40%, of the official debt should be cut. in the short term, this would not give greece any meaningful cash flow relief. that is the current problem. the barrel has been scraped and there is nothing left. the debt payments are coming due and that is not enough to pay pensioners and civil servants. it would only benefit greece years down the road. it is here and now where we need a solution. anna: now there is reputational and financial risk for the ecb over the amount of liquidity assistance they are providing to greece. the you see risks such as those
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-- do you see risks such as those for the ecb? >> the real deadline is in july when greece has to pay back the bond the ecb is holding. if they cannot pay their bond, over 3 billion, the money will not be there. if they miss that payment, my expectation would be that it would become impossible for the ecb to continue with emergency liquidity assistance to the greek banking system does that would say they think the greek banks continue to be solvent, although if you subtract the greek government exposure those bakes cold -- banks hold, it is more than questionable. the reputational issues for the ecb will come to the floor and my drive the decisions of the governing board. guy: how close are we to rate
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bank failure in greece -- how close are we to a bank failure in greece? >> we have seen a pretty steady decline in deposits. we have seen -- since the election and the new government a constant need of greek banks for liquidity to supply -- satisfy depositors. the trigger for -- would have to do with a decision to stop emergency liquidity assistance for the banks. that is predicated upon whether there might be a solution or not between athens and the european partners. everything is interlinked. it all ends with the negotiations currently ongoing to find a solution to secure another tranche.
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this is not going to be successful. they cannot square the circle. this downside scenario is something people should be thinking more about. anna: thank you for joining us. guy: we are minutes away from the european market open. >> we have not snapped the losing streak for german bonds. the greek situation is interesting. look at the hard data. the things that we do know. the downgrade, not so much about the downgrade itself, but about the reputational risks for the ecb. guy: european equities are lower. we have talked about this all week. this relationship between bonds
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and equities very much in play at the moment. the yield are rising and the two are hand-in-hand. >> we will break that all down in a few minutes. anna: that is it for "countdown." jonathan ferro will be back for the market open. guy: plenty more to come throughout the day. plenty of coverage over that retail sales number. the market open is coming up next. ♪
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jonathan: welcome to "on the move." moments away from the start of european trading. an incredibly busy day already. the bank of korea lowers interest rates to an all-time low. the spread of mers poses an imminent threat to consumption. the central bank of new zealand cuts rates for the first time in four years to boost inflation. greece gets a downgrade. s&p says the government is prioritizing domestic spending over debt obligations. rbs on sale, george osborne says
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he will start returning rbs to private ownership. ahead of the open, dax futures up, we snap that losing streak on the stoxx 600. let's get the latest from our bloomberg team. caroline hyde is here in london. caroline: it looks like this not backfire we had yesterday might be short-lived. 1.8% is what we saw added to the stoxx 600 yesterday. we saw that surge higher. today, a little more tentative. similar moves in france and germany. where do we look? who do we believe when it comes to

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