>> u.s. treasury secretary jack lew's take on the treasury secretary. as a central bank governors prepare to me. manus: oil swings between gains and losses, and expanding crude inventory keep supplies at the highest level in more than eight decades. anna: and a sharp pain, shares plunge on the news that it will take a controlling stake. ♪ manus: welcome to countdown. anna: welcome to the program, everybody. 6:00 in the morning.

breaking news coming through. a little bit early, it seems. manus: never too early for a glass. organic revenue growth 7.7 percent. one of them will have to divest, what are the rules and regulation? revenue growth 7.7%. that is the top line revenue. but the volume, the volume of shipping, ab inbev is declining year on year. the episode was for flat line. coming in at 4.3 one billion. it is a mess. they have beaten on the top line revenue, missing on volume. the dividend will be paid out at two euros per share. anna, that is a bit of a mixed result. dividend in line, their missing on earnings numbers. anna: the megadeal eclipsing everything else in the industry. caroline hyde is with us, back

from the mobile world congress in barcelona. the results from us. caroline: this time, we are seeing deutsche telekom numbers coming in ahead of numbers. netre actually seeing income more than doubled in the fourth quarter at 959 million euros. you are seeing sales just ahead of estimates, 17.9 billion. that is a rise of more than 9%. and it is giving back to the shareholder, raising the dividend by 10%. that is also ahead of forecast, giving back $.55 on the euro. overall, they say cash flow forecasting to continue to increase. strong increase in u.s. revenue. we actually got key mobile numbers broken down last week. they were really impressive. straightn, a sixth quarter adding a million users. the overallhelping

revenue grade earnings up over 6%, a slight increase in germany. very focused on germany, the analysts for deutsche bank have been expecting no fireworks in the fourth quarter. just delivery on guidance. they deliver. better than expected on more revenue than expected. that is deutsche telekom. anna: you had interesting discussion in barcelona. thanks, caroline. we have numbers coming through from the insurance market. seeming toing 12%, drive that move. the net income number coming in ahead of estimates at 5.6 2 billion euros, after an estimate of 5.39. that is detracting from the fact that sales look to be broadly in line for 98.5 billion euros against the estimate of 98.9. this business, of course based in france, does a lot of business in the u.k. ofxit will be a topic discussion when we speak to the

deputy ceo, who joins us here on countdown at 10 minutes past 7:00 u.k. time. manus, let's take a moment to talk about the markets. what has happened overnight? when this coming through on the chinese market, particularly in the asian session. particularly, some of the small cap companies. that sets us up nicely for conversations running up to the g-20. jack lew really limiting expectations about what the g-20 can do. , dou.s. treasury secretary not look for emergency responses. this is not an emergency. manus: it is that kind of rhetoric, you mentioned jack lew, we will have -- it is too soon to talk about negative interest rates. warye will hear about the of fresh stimulus. there seems to be a hesitancy and we are not in a crisis. the talking it. however, the chinese -- all about their reputation. and they go into the g-20, let us check in. i love the story on the term of this morning talking about the

msci emerging markets. this is a pimco advisor. saying the gauge trades at 1.3 times the lowest in seven years. these guys are advisors to pimco. thus the reason why it is worth mentioning. you think about china, emerging markets, they say the market is exceptionally cheap. the msci is trading at 30%. declining by 30% over the last three years. whether that is useful or not, that fell to 10 in january. and the previous six occasions of a back up she went. by 188%. quite a few voices talking about the emerging markets. we will pick up that with our guest later on the program. a stop about the other moves in the last 24 hours, checking on asset prices. this is what is happening on oil, both of those maybe a little bit stronger this morning after some weakness in yesterday's session.

we have that stockpile data out of the u.s.. they are volatile this morning. in terms of what is happening on the japanese currency, 112.46. that is where we are. in the battle of volatility outlook, it seems the yen is being the town. more volatility ahead, than they do for the u.k. pound. which is interesting. speaking of the pound? manus: all down to the brexit nasa nations over the next four months. anna: here is nejra cehic. nejra: oil is fluctuating between gains and losses after expanding u.s. crude inventories cap supplies at the highest level in more than eight decades. stockpiles increased for a second decade, the most since 1930. that came as mexico's energy minister told a conference in houston that prices will not recover until the second half of next year, at the earliest. finance ministers and central bank governors will meet in

shanghai later this month, ahead of the gathering. expectew told us not to a remark to global turbulence. jacob: you will not see individual companies make the specific commitments that have been made in some other context, that have been marked by real crisis. this is not a crisis. this is a moment of where you have real economy's doing better than markets think, you know, in some cases. nejra: emerging-market assets are so cheap they may be the trade of the decade. that is according to research affiliates for pimco, one of the world's biggest money managers. they are drawing goldman sachs, who are turning bullish on the yen after underperformance. meanwhile, managing $85 million means the old, style stock investors can get

back to what they do best. he is buying again after having 21% in cash at the end of last year. he says the turmoil in share markets is natural as traders are numbed by stimulus, how. to relearn the south african finance ministers says he is confident the country has done enough to preserve the credit rating. he spoke to bloomberg after delivering his latest budget. acrosseed to demonstrate south africa that we can put a package together. but in terms of our plan and the financing, they are terrible. they are sustainable, and viable. but i think we have managed to do that. nejra: global news 24 hours a day, powered by 2400 journalists and more than 150 euros around the world. manus: let us get up to speed, haidi lun is standing by. the and i were going by chinese markets, the raising of the actual lending rate

overnight. we had the g-20 coming. they are just fiddling ahead of the g-20. and it will be the potential big mover, a lot of people are saying it could be the pcob speaking tomorrow morning at 9:30 shanghai time. and that will really give an indication of whether he can install confidence into the market. given idea of how steep the china's slowdown is, and whatever talks the central bank has there in the toolbox to get things going again. so ahead of that, do have fairly steep declines. shanghai is actually pretty close to the session low at the down by about 4%. when it comes to the small cap, the overnight rate putting pressure on some of his coming. having said that, though, some analysts saying we will see a ramp up in chinese equities over the past month or so. about 10% it come to the shanghai gauge, from the january

low. a bit of profit taking nerves ahead of the speech from the pc of the chief tomorrow. asia is high.oss getting close to four-year highs in terms of that 30-day volatility gauge. also around the region, a bit of a mixed picture. closing 3/10 of 1% from quite a jittery session down under, despite that bounce in oil prices. a lot of earnings come through, mixed a cure. down by -- rather up by 10% of the point. dominating markets, certain of japanese markets, has been sharp. take a look at the share price. it has been all over the place. a bit of a communication issue, because around 10:00 year, we had the worst media report that that had been interrupted. and then it was suspended from of the regular preannouncement. and then it plunged as much as 22%. managing to close, still down close to 15%. certainly, investors were

expecting a premium to come out of those discussions when it finally opted for the default -- they would have been disappointed. but it is a huge milestone for corporate japan. this will be the biggest foreign acquisition in the very insular, closely held tech space in history. anna: thank you. haidi reporting from hong kong. president saided the markets are focused to much on interest rate hikes. he is a voting member, and told audience in new york that decisions should be data-dependent and the fed should not give a prescribed path. >> maybe we should get away from manyg to telling them how hikes will be in the year, and get two more of a system where we say it is going to depend on the data. and we will take each meeting one meeting at a time. me, i think you would like to move on good news about the u.s. economy. but i don't think we have to give a prescribed path because that is being interpreted in

financial markets as a commitment to raise rates independently of the data. manus: let us bring into the conversation, for the next hour, a guest host, chief economist neil williams. very warm welcome to the show. a lot to contend with. we listen to james bullard. too much talk about negative rates. he is concerned about declining inflation. i have been saying let us have a thorough conversation. but the whole world is getting ready for the g-20. where are we in the debate? our policy makers holding back, trying to talk us back off the cliff? i think that reflects the uncertainty that we are all feeling. i have to say that by not having change my overall view much and last summer, when china finally started to do something with their currency, i am standing out as the optimists. which feels very odd, indeed. i was pretty downbeat then. the danger i think for markets is when the reaction becomes

bigger than the reason. and the reason, surely, all roads therefore lead to china. but what gives me some comfort about china at least is that they had this big dashboard of policy options in front of them, buttons they can press. but they are doing so quite slowly. at least they have the ammunition to minimize the downside. china should be soft, rather than hard. i suspect that what is officials have. anna: expectations about what the g-20 will deliver, do not expect an emergency response. this is not an emergency. what should we look for for policymakers? somethinglook for fiscal from china, if that were the focus is going up to the weekend? neil: i doubt china will admit that this weekend. they will seem to be coerced into it. this weekend, it is probably more about rhetoric. then action. running a bitns too high. i have heard talk of a accord,

were the dollar is pushed out or at least stabilized in this sort of negative interest rate. i think the first step is going to be admission rather than the nile, that we are in a different days, central banks will have to take even smaller baby steps to moving rates upwards. meeting the fed and bank of england year. manus: you are saying it will be a softer landing in china that perhaps we originally thought. and we see vice finance ministers saying do not rely or should not rely on monetary policy alone, the fiscal policy should play a role. this is the yuan. this is what the chinese are doing with the currency, inch by inch, devaluing the yuan. the dollar rising, the yuan falling. will that just gradually continue? by the way, the shanghai composite, which it is now down by some 5%. thesee the small caps, and

equity markets under pressure in terms of the chinese composite down 5%. sorry, neil, i interrupted. is in theirrrency toolbox. and no doubt, the yuan will be pushed down further. but it will be a drip, not a one-off move downward. why is that? because the chinese authorities know that if they were to come out with, let us say, a one off 10% devaluation overnight, and the external debt is going to be whacked. and looking back to last summer, i suspect that was one reason while they came out with a fairly puny 3% devaluation, rather than a big move in one go. i am old enough to remember the start of 1994. anna, you are going to say you do not remember. but i know you do. income you may remember back 1994, china devalued by one third. but once greenspan hit the brakes much you could tell he was not going to come and europe was groggy. all assets got battered. and i suspect markets are currently thinking we are close

to a 1994. but it is very different now. fewer emerging markets have fixed currencies to protect, china included. back then, they were overheated. manus: 1994, yes, greenspan went on to do 25. the whole way through. but communication is totally different now. neil: we did not even know when the fat was meeting. [laughter] so i am told. but a critical difference really this time around, is that the central banks that were included now have skin in the game because of the balance sheet, which are massive through qe. the fed is holding $4.4 trillion. they could get hurt. anna: we will no doubt pick up the conversation later. there will be a lot of suggestions, just how creative central banks need to be as we deal with the world as it is now. neil williams, thank you very much. have delivery of

fourth-quarter gdp out of the united kingdom. that will hit at 9:30 gmt. half an hour later, final inflation data for january. anna: then at 1:30, jobless claims. that weekly check in on how the job situation in the u.s. is going. wrestle withill canadian acquisitions, will it be the talent they are looking for? we preview the earnings for the worst performing european oil major. let us look at that. ♪

anna: welcome back. 6:20 in london. let us get the bloomberg business flash. e shares have plunged after it was announced that fox will take a majority stake in the company. it is reportedly worth about $6.2 billion. the japanese innovation fund. the apple ceo tim cook leaves helping the u.s. government to unlock an iphone used by one of the san bernardino shooters

would be bad for america. he explained to abc news why he was fighting the judge's order. tim: we know that doing this could expose people to incredible homer abilities. this is not something that we would create. this would be bad for america. it would also set a precedent, that i believe many people in america would be offended by. and so, when you think about those which are known, compared to something that might be there, i believe we are making the right choice. inbev has reported fourth-quarter earnings that missed estimates, adjusted operating income rose 6.6% on an organic basis. analysts had expected 9.2%. it underlines what the brewery would need to complete the acquisition of sab miller to expand in emerging markets. manus, anna?

manus: thank you very much. let us talk about one of the oil companies, the worst performing european oil major in the last year. set to record fourth-quarter numbers for the opening of trade. get ryan chilcote in the hot seat. it is hot around this table. ryan: around 7:00, because they never happen on the nose. and the big news that we are looking for is, what are they going to do to protect their credit rating? to protect their balance sheet? they have a story out today saying they're going to sell part of their state, that is the spanish gas distribution and retail business. that is something that they have said they will only do, if they have to, to defend their investment grade. it is part of the company's plan to sell over 6 billion euro worth of assets by 2020. and the problem here is that

they did the second-biggest deal in the industry after the rice started slumping 2014. that was the acquisition of talisman energy. does bode well for the future, or has a proven ominous? it was not a great thing for them. investors are concerned about what was basically a $13 billion deal. it raised the debt levels to levels not seen for 27 years. and you look at that year price, manus, we're talking about it there. worst performer amongst the sixth biggest oil companies in europe, over the last year. as for the actual earnings themselves, i mean, some of the news is out of the bag. january 28, they said they would take a 2.9 billion euro charge which would lead to a 1.2 billion euro loss for the year. anna: a lot of question to businesses that did deals for the price to answer. what about that price slump that we have been pushing around? that is the stock price, isn't it? what about the extent of the

rice crop, one of the drivers there of course is the supply glut. ryan: we got supplied numbers from the energy information agency. yes, we got through that. and what we learned is that the glut just continues. u.s. inventories rose by about three and a half million barrels. that which is in close to 508 million barrels. and we say this every week because they're so elevated, one of the highest levels we have seen since 1930. in a nutshell, you know, the glut continues. last week, they rose. this week, they rose. it is a little bit too early to say the shale producers are out of the game. manus: overnight, mexico saying get ready for no recovery until the second highest of 2017. but also, we have caldwell saying he would be prepared to talk. what would it really take to ship the game of oil?

neil: it will talk more than just talk. it became clear the last week or so that the most we can hope for the next few months is a price freeze, or rather an output freeze. or increase, the saudi's made that pretty clear. it seems to me, that there are two parts in the jigsaw. one is the supply glut, as mentioned. and the other bit of, was concerned that the world was going down the pan, not least because of china. it is that second part of the jigsaw that demands, in my view, that fears about that should begin to erode, living supply side. there is no coincidence that the oil price has fallen just around the same time as the u.s. became self-sufficient. through shale. so the u.s. is now a price setter rather than a taker. it has taken on a big chunk of demand. we have to get used to this new normal. anna: does it all happened too fast, too quick? therefore, something was lost in

the sea of the market moves? neal: if we had it at a different time, we would've been a bit more gung ho about it. given usg, it would've a bit more money in our pockets, an increase consumption, as it always has. this time around, it has been caught up in this wind from china. and from other factors, such as the u.s. slowing, because it raised aggressive 25 points. men is going on bloomberg.com, we have something called sooner than you think. it is called electric cars, they will be about $35,000 in the next two years. ma have grown by 60% in the last year. is that momentum? it is the equivalent of 2 million barrels. our electric cars at risk? ryan: opec says they will be at 1% of all cars by 2060. so the whole question, does opec have it right?

quite possibly, no. anna: ryan, thank you. neil williams, chief economist at hermes stays with us. earnings frome germany, we break the numbers down. and the impact on the german economy. ♪

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so your business can get back to business. sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. manus: 6:30 in london. let us get the bloomberg first word news. nejra: oil is fluctuating, after expanding u.s. crude inventories cap supplies at the highest level in more than eight decades. stockpiles increased for a second week to 507 6 million barrels, the most since 1930. that came as mexico's energy minister told a conference in houston to prices will not recover under the second half of next year, at the earliest. and finance ministers central bank governors will meet in shanghai later this week, ahead of the gathering. secretary jacob lew said not to expect a

remarkable response to global turbulence. jacob: i do not think there will be a time when you see individual countries make the kind of specific commitments that have been made in some other context. that have been marked by real prices. this is not a moment of crisis. this is a moment where, you know, you have real economies doing better than markets think, you know, in some cases. nejra: emerging-market assets are so cheap that they may be the trade of a decade. that is according to research affiliates for pimco, one of the world's biggest money managers. ofy are drawing a number companies, including goldman sachs, who are coming in after three years of underperforming. a man who manages $85 billion for blackrock says central banks loss of power means all style stock investors can get back to what they do best. he is buying again, after having 21% of holdings in cash after last year. he's of the turmoil in share

markets is natural, as traders numbed by years of stimulus learn how to price risk. global news 24 hours a day, powered by 2400 journalists around the world. manus: thank you very much. let us bring you breaking news, the beauty products. as well as products, this is a multi--par business. fourth quarter organic sales coming in at 2.9%. the market was expected and organic growth level of 2.5%. topline beat on the organic growth level for henkel. as you break the business down, beauty was quite a big beat -- 1.9%. with the estimate, we come in at 2.4%. and also at a become a 2.3%. that is doing better, in terms of the adjusted operating profit. that is just a very, very slight miss on the estimate. 670 million after the dividend

out there. 1.45. ordinary shares, the estimate was for 1.43. to the gains are on emerging markets growth. that is an interesting story. of course, we will be speaking to the outgoing ceo. those are the key brands. anna: that video there. 's ceo to talk;' about the numbers. let us talk about germany's second-largest business by value. yesterday, we heard about the change at the top of the business. the ceo on his way out little bit earlier than people thought. and before the special items came in, 1.9 billion euros. it gives us an estimate of 2.4 billion, little bit shy. as they see growth in sales and in sales earnings were there talking about the outlook, including the plastics part of the business, as sales of more

than 47 billion euros corresponding to low single-digit adjusted basis. that is the outlook coming through from the business. they're talking about forecast data on the new organizational structure, introduced with effects on january 1. we also had earnings from going telecom, which beat analysts earnings. hans nichols them. he is in berlin. like a lot ofs people are watching a lot of clothing. we always like looking at henkel, because it gives us broad consumer sentiment. it is almost the reverse of that, buyer flipping through here. not seeing any where they actually beat on estimate. and in the deutsche telekom story, you always have to figure out what is going on domestically and then flip that between a landline in the wireless services. and as well, take a look at what is happening in the states on both accounts. it looks like they are adding customers in the wireless side

of things. we knew that because deutsche telekom, their share at t-mobile reported earlier in the week. we are really seeing growth on the german side as well. so my overall take on this, buyer down. germans are clearly spending a lot on beauty products. doing a little washing, i know no one in london does the washing in your household. people are spending more time on her mobile phone. it is my quick take. it could be wrong, give or take on a few rents and repeats cycles. manus: let me assure you, there is no one doing the washing in my house. anna: hans, thank you. you caught up with the private sector there. well, we actually did not get him to weigh in on whether he does the washing in his home. that might be inappropriate for a central bank or of his stature. sense do was get a decent of where he thinks the debate should go. theerms of ecb, lowering

deposit rate. he clearly wants an open discussion. who usually expresses some sort of skepticism on the quantitative easing, he wants to take a look at a medium-term goals. he is very much data-dependent. and when i asked him sort of about what the overall effects could and should be coming your was his answer. jens: is that we do not produce counterproductive effects. we do want to have a transmission of our monetary policy on prices at the end. on,if through the effect the stability of things from our measures produce the opposite of what we want, it would be smart to embrace them in the first place. hans: that is the german central banker dipping his toe into the debate on the ecb as to whether having a further cut into negative rates is actually hurting banks like deutsche bank, hurting their ability to

actually have a profit throughout way 16-2017. the key, there from him, he does not want to become productive. i may be reading a little bit too much into it, that indicates the central banker is open to this idea of a tiered system, or you could have some kind of negative rate decrease -- maybe 10 basis points or more. when you need to make sure you do not harm the banks. that is my read from it. obviously, he did not say that expressly. by central banker is open to playing with the levers of bank policy. manus: hans, thank you. a pretty balanced discussion and terms of the negative feedback loop. let us bring in hermes chief economist neil williams. when you listen to jens' interpretation of that conversation, the ecb must be weakenat stimulus could the transmission of policy to the real economy. surely, that has already happened. neil: to some extent, it has. i could see jens weidmann's point.

the first thing is, it is all interest rateske negative. surely, banks just pass that on to consumers. the second thing, qe is making money available, but can force nobody tomorrow. as a result, it is not going to be the end. it is a means to the end. you get growth because qe keeps interest rates down even longer. we have seen that in japan for the last 18 years. thathat great hope is that low interest rate will force companies to borrow not so much the charge on banks. trading forelow 1%, the first time in history. what you make of the concept of negative rates, then? you referenced what jens weidmann said. the japanese taking measures to alleviate that. are they still that it is still a path of policy that is still worth doing, or do you think we need something new, something different, something more creative?

neil: what that could be is difficult to answer. but i think negative interest rates are a reflection of how empty the toolbox is for central banks. they happen before, of course. akin the early 1980's, switzerland ran negative interest rate. in our van. i doubt it will work now. but the great hope in the eurozone, which is very sensitive to long interest rates, by purchasing government bonds down to a yield equivalent of the interest rate with at least give some stimulus. i have no doubt they will take the rate even further into negative territory. in march 1. manus: bloomberg intelligence wrote a piece. i want to show you the chart. this is the actual weighted cost of loans out there in the system. and it actually shows that the weighted average of lending bloombergpanies, intelligence numbers, found at 2.4%. what you have got is the market charges the banks, to anna and

me and you, around 2.4%. happen,really want to the banks want to take the money away from the ecb and actually get to work in the market. that is the paradigm shift. but it has not happened yet. the risk is at zero. and i am paying 2.4%. i will not borrow them. it is just not working. neal: yes, and there is no quick fix. negative interest rates forces nobody to go out and buy -- to use cosmical examples -- washing machines. what does is when a stick at the bank who no doubt pass that on to consumers. as the chart sort of suggested, that borrowing costs are not going down community going up. but secondly, that if the ecb continues to purchase government bond yields come and currently i there is about $7 trillion worth of negative yielding government bonds out there, at the sovereign local we

have a third of the world's total. that will go north. and that will give some hope that ultimately, companies will invest and will borrow. but in my experience, companies only spend on things when they are sure of demand. and on how radical should banks be? setting up some kind of interest rate fund, delivering some helicopter money. all of these have been discussed quite sensibly, actually, of the last few days on this set and elsewhere. are these things things which we talked about? the timeis a sign of that seven years after the low hopefullyhe crisis, the low point, again talking about helicopter money. but the problem with friedman's helicopter money, any money that falls to us, we pick up and put our pockets. cannot pass it on. we are worried about jobs and inflation. what economists like to call the velocity of circulation. we need to pass it on to make it inflationary. that other economist, john

maynard keynes, said that interest rates have no impact. we are about jobs and inflation. so the cash we get we keep. and unfortunately, we're at that point. anna: nice little economics lesson. knee williams stays on the program. we will play that later. manus: let us get up to speed on the market, some vicious moves as shanghai down 5.8%. caroline is here with the details. caroline: mixed signals and data, and a poor performance from china at the moment. as you say, worries about liquidity, worries about banks lending to one another. see the cost overall of lending to overall, starting to spike back up. overnight, up 16 basis points to 2.2%. clearly, we're starting to see the selloff continue. shanghai composite down more than 5% now. we are referring to see a battering of the worst move for chinese stocks in a month. but, depending on the high side. we have hope building in japan.

japanese stocks up about 4%. this is the in ky index currently trading higher, as there seems to be reports in the press that we could see more government spending in japan. many expecting about ¥5 trillion to be added. that is being reported by the tv station. what a picture, a dismal data being pictured in the u.s. yesterday. we had of course the worst reading and services since 2013. new home sales falling. a bit of worry and a bit of volatility out there. let us check out the 30-day volatility msci volatility on global stocks. creeping higher. we are going up and up. meanwhile, more oil remains on the downside. trading up to $32 a barrel at the moment. of volatility picking up as oil continues to trade lower. no surprise we are getting such mixed messages on the stock market overall. and of course, what a loop backwards that we saw yesterday. the u.s. managing to pick itself

up from those losses, down 1.6%. green, to close in the all trading higher. we are talking volatility. anna, you mentioned earlier today, interesting that we are seeing such pressure on the british pound at the moment. concerns about the referendum of course building. will we see a brexit? actually, not as much volatility implied as on the yen. traders think it will be much more volatile than the pound. we are seeing about a 3% uptick in volatility on the yen overall. we are trading at about 12.6%, and this is the implied volatility. actually higher than the town, fascinating overall the charts that you can go in and plug-in on the bloomberg at the moment. you will see that people are not quite so worried about the pound. you will see gold continue to be in vouge. monthn track for his best in four years. back to you guys.

anna: caroline, thank you. china high down 6.6% right now. manus: shares plunge on news that stocks will take a controlling space. the latest from tokyo. ♪

anna: welcome back. 7:48 in paris. it is in the bloomberg business flash. ab inbev has reported fourth-quarter earnings that missed estimates, rising 6.6% on an organic basis. analysts had inspected 9.2%. it underlines the fact that the brewers need to make the emerging market. deutsche telekom has reported fourth-quarter telecom earnings that were 16% from five one one billion euros. that is after gaining viewers

and way more customers for broadband in germany. apple ceo tim cook believes helping the u.s. government unlock an iphone use by one of the san bernardino shooters would be bad for america. he explained to abc news why he was fighting the judge's order. tim: we know that doing this could expose people to incredible former abilities. incredible former abilities. this will be bad for america. it was senate president that many people in america would be offended by. so when you think about those which are known, compared to some things that might be there, i believe we are making the right choice. hapre shares have plunged after it was announced that foxconn will take a majority stake in the company. it was are poorly worth about $6.2 billion. foxconn beat out the innovation network fun. and that is your bloomberg business flash.

manus: thank you very much. acta the 1980's with anna, talking about more of that in a moment. we have our asia energy are here. and he is in tokyo. peter, put it in context for us. is a big deal. it was not that long ago that it would really be unthinkable for a foreign acquirer to come in and purchase one of the major names in japan. it is unusual that they were able to come in and beat out a local bitter. corporationetwork of japan, which is a government-backed fund that offered financing for the deal. but foxconn, the taiwanese company, they were a major supplier to apple of course. and they offered a bigger financial package, and the board voted in favor of the foxconn deal. there is still details to work out. but the board has so far sighted with foxconn. anna: how will the foxconn acquisition actually work peter

peter: foxconn is offering to pay about ¥660 billion. they are going to put ¥484 billion into the company through the acquisition of additional shares. you mentioned earlier the share movement today. it was interesting. when news of the deal first broke, shares rose on the deal. the details came out with a felt quite a bit. and a closing down about 14%. the reason is that existing shareholders are going to face quite a bit of delusion. foxconn is putting on 484 billion for roughly two thirds of the company. it means the rest of the company is only worth about ¥222 billion, which is where it is below now. getting new capital, getting some new financial support. and of course, foxconn will become the controlling shareholder. but overall, they are getting diluted a fair bit. and getting this deal wrapped up, what is going to take to actually wrap up the deal? said thatl, sharp has

they still need to be voted on at their shareholders meeting in june. there are still some final details the need be worked out. there certainly moving in that direction but there are a few steps they need to overcome. the innovation network corporation japan came out and said they thought the process was fair, essentially stepping aside to this point. we need to wrap up a few details. looks like there will be a press conference tomorrow to talk to the final details of this. but we are moving in a direction. anna: peter, thank you very much. warning us with the latest on that story. it is talk about the u.k.. economist saying voting to leave the european union would dramatically increase the chances of recession, as britons are prepared to vote on membership, respondents to a bloomberg survey said that ability of a slump spike to 40% in the event of the brexit. manus: that is the 13% risk that was predicted in the recent

poll. let us bring in william from hermes. let us about this. we have four months of fear and loathing. and a great deal of messaging going on. that risk of recession, how me youru -- give perspective on the risk of recession, if we both to leave? neal: four u.k. assets, it is really borrowing a phrase that's the sort of known unknown. but the macro benefit and cost can be argued ad infinitum. the chance for recession is a strong one. should we leave, not least because of distancing ourselves in the short-term from our biggest trading partner. but thereafter in the longer term we would find a way to get through. the bottom line is that, were the brexit to occur, the u.k. economy would survive. the problem for the markets is that would be a long, drawnout process. a big can of worms. and the only president we have

goes back to the mid-80's, again. as you alluded to earlier, the small country -- greenland. he took three years between the referendum and the final exit. and they were really negotiating one thing. on the basis of the u.k., it is a bit bigger than greenland. 43 years later. bit have been married a longer. and it seems the separation will be a bit messy, taking much longer. and without the result, financial markets would be hit quite hard. what is it me of the end of the day? jumpuld probably want to back in and become an associate number. another example is norway. sorry to pick on them but they did pretty much that. but norway still contributes to the eu budget. anna: you are modeling hard exit and soft departure. and staying in. you referenced in the 1980's, and there is so much about the story that seems to go back to the 1980's. manus has another chart which to the last time that the u.k. economy managed to fund itself, without having to rely on foreign money coming in, your

chart shows that was during the 1980's. manus: for those of you who remember david bowie, he was playing let's dance. and this is in 1983. we earnede last time -- i'm sorry that we consumed less than we earned. this is the deficit. this is the market risk in orange. and you can go to ecw be. click on that. is what the central bank governor, mark carney, has referred to in the past. the vulnerability of funding that currency at 4% plus gdp. neil: and going back to the mid-1980's, that is also the time i have been told, i cannot remember of course, that when the pound-dollar was reaching parity. so we may be heading towards that again, if brexit of course does occur. manus: we were quite -- the bloomberg poll was one dollar 35

on parity. you think there could be a possibility? neal: logic would prevail and we do not get a brexit. let us face it, we would be distancing ourselves from our biggest trading partner. rightly or wrongly, we would be risking the biggest foreign investment we have from the euro and the rest of the world. and politically, the u.s. quite likes us to be at the center of things in europe. but if there is a risk of brexit, no doubt, the pound will be hit. we have seen it already, as the initial presser relief, equities will be effective. and i think the more interesting one is the impact on u.k. guilds. if there is a risk of recession, as you mentioned, guilds might actually like that. getting pushed back even further. once the dust settles, who is going to buy them? a third of them are internationally bought by investors who care about the pound and care about that. anna: thank you very much for joining us. the to have you on the program this morning. neil williams, chief economist at hermes.

manus: up next, life to berlin. here in london, we get a couple of things. fromn numbers out confidence. and lloyds banking group. and some cracking interviews in the next 30 minutes. ♪

manus: u.s. treasury secretary jack lew takes on the turbulence as g20 finance ministers and central bank governors prepare to meet. anna: oil swings between gains and losses as expanding u.s. crude keep supplies at the highest levels in more than eight decades. manus: sharp pain. shares of the electronics maker plunge on the news that foxconn is to take a controlling stake. it's "countdown."

anna: it's 7:00 here in london, 8:00 in germany. i mention that because we start the show with german consumer confidence numbers, which seem to be ahead of estimates. the estimate was for 9.3, and it is 9.5. hugs nichols has more to add on the german picture today. we have corporate earnings galore from germany. hans: yeah. we have a mix of data coming in across germany. it looks like the date of the last couple days have been on the positive side. deutsche telekom numbers are positive, and now german consumer numbers are positive. there has been so much talk here, january and february, about what is happening in china and what that will do to consumer spending. it looks like it is holding up. remember, consumer spending here doesn't drive the economy the same way it does in the state.

-- in the states. you have the revised, final gdp figures. we saw the exports and imports down in germany. in general, i am going to call not just, mixed, and because of what is happening outside with the snow turning to rain. we have a lot of data that haven't quite decided whether or not it wants to be snow or rain. please make fun of me for that analogy. it is far too early. anna: [laughter] i would, but i don't have time. thanks. manus: [laughter] [laughter] q4 numbers coming from rexall, adjusted profit at 461 million euros against 451 million estimate, so that is better than expected. but in terms of dividends, that is where a lot of the focus is going to be. they cut their proposed dividends to .3 cents per share.

they're bringing it down, after seeing so many oil majors bring down their dividend payments this morning. we have numbers from the banking sector. manus: we have. this is the other side of the coin, which is lloyd's. they're paying a dividend of 2.25 pence , a special dividend of .5 p. this is a big turnaround story. oyd's, which went through a great deal of turbulence. fourth quarter ppi comes in at 2.1 billion. that is the full year for lloyd's. the key is on the dividend. there was a special dividend on lloyd's. they're talking about a targeted return on equity. net interest income rises by 5%, 11.5 billion in at

pounds impairments. they have dropped by 48%, anna, to 568 million pounds. impairments are down, special dividends, net interest income, pretext profit. -- pretax profit. anna: let's get the telecoms. the office of communications in the u.k., they say that bt must open up their network. they'll be required to open up telegraph to overhaul governance. they're saying they want to make digital communication work for all. these are the initial conclusions coming through. this is a once in a 10 year strategic review that ofcom has been conducting, and in particular, open reach, which is this real cash cow around penreach andt owns o

there have been questions about whether it would have to -- manus: that's the interesting part. anna: indeed. it looks like what they are talking about is opening up bt and allowing it to work for other people, but they will consult on how to make it easier to switch providers. we're not seeing words like full structural celebration, and that was the big question. they are trying to increase competition in the market, but it doesn't look like a full structural separation. manus: i can only imagine what they will come back with. they will probably say that they've invested 20 billion, the whole discussion is about a level playing field. i wonder if that will -- anna: we'll hear as the day goes on, no doubt. let's talk about futures. it's a mixed picture. manus: that's europe is doing -- they're playing the magnificent catch-up game. and shanghailly,

is down by 5%, u.s. equity futures shy coming off the top. u.s. equity futures just a little bit lower, off 61 points, 20 on the nasdaq. lets us see whether the shine fades in the european session. we are set at this chuck schumer about too, talking early to tell negative young rates, wary of stimulus. anna: let's talk about how this is playing out in the asian session. real weakness in the chinese market -- let's get to haidi lun. haidi: that's right. things went from pretty bad to really terrible for the chinese markets. when i last spoke to you, shanghai closed by 6.4%, dropping the most in more than a month. this on account of that spike in overnight lending. this comes at a time when

open market operations are draining from the market following a chinese new year, when they added so much into the market. banks are being forced to put aside more cash, which is weighing on equities. that's how china is feeling. hong kong is doing slightly better, still down 1.5%. elsewhere, a pretty mixed picture. 1%,ey closing by 1/10 of and in tokyo, the nikkei 225 seeing a good rally. there was one major loser when it comes to the japanese market. and you guys will cover it in greater detail, but investors want it back into trading after that regulatory announcement; that plunged. pointdown by 22% at one before recouping some of those losses, then closing down by 14 $%.

it's a $6.2 billion offer that has been accepted, and is still subject to regulatory approval. shareholders will have to vote on it come june, but in the broader context, obviously they were displeased that they didn't get more of a premium. this is a significant milestone. pleading toeally open up to the world with international m&a. this is really the biggest step we have seen being taken, because this will be the biggest foreign institution in japan ever. it's a closely held, super insular industry, so stocks climbed. this is a four-year deal in the making, a pretty big day for sharp. manus: haidi, thank you very

much. haidi lun, wrapping up the asian trading day. let's talk about one of the biggest companies in germany. consumer industrial producer -- an 11% rise in the fourth quarter. the company raise the dividend by 12% to on .4 seven cents per share. let's get straight to duesseldorf. the ceo joins us now. great to have you with us. this will be one of your last sets of numbers before you depart, but let's talk about this set of numbers. the goal you set was 20 billion revenue for this fiscal year. given what you have said -- great set of numbers, great set of numbers -- what you said if you expected 2.4% growth from last year's revenue. mathematically, that takes it to 18.8 billion. how do you get there? how will you square the difference? target 20, 18 .8 on the numbers? there is a gap.

we double-digit growth in revenue, earnings per share and share price. we are guarding our 2%-4%. 2012 alongwe set in the primaryytag, target is the eps an we are confidentd we will hit it. on the current outlook, it will be a stretch to get to the 20 million. there's organic and inorganic and we only guide on inorganic. we'll get to the 18.8, but our primary target is the 10% to live up to that. anna: does that mean that you will have to do m&a to try and get to $20 billion? i don't think any ceo should try to do anything to get to a number. i think what he should do is manage the business, and do the right thing.

we have an absent number was 20 epsion, and the 10%, and is what articulates growth to shareholders. that's what we are primarily managing. we shouldn't try to buy something to reach something; we should do it because it is correct. we will continue to put the balance sheet to work to become a bigger company, but it is expanding profitability. of the notes i read -- there is a heavy expectation that you, your business will be able to expand its margins by nearly 2% by 2020. you just use the term stretch in terms of revenue target. is the revenue expecting too much margin expansion as a result of the deflationary fears? is 200 basis points achievable by 2020 in terms of margin expansion? >> i think we have to be clear

on what we are guarding. we are guarding a 30 basis point expansion by the end of 2016, an d we will articulate our new strategy for 2020. the number you are articulating is not something -- over the last eight years, we 16.5,aken it from 10 to but we need to find the right balance between growth and margin expansion. we have seen a lot of the growth continue to come out in emerging markets. china continues to be a good growth strategy for us. we will continue to get the right balance the between growth and expense. anna: can i ask you about the chinese business? i understand it is around 9% of your business. industries have been building up, and people are looking ahead to when we get more normal market conditions. how normal are conditions for

you in china at the moment? year, we saw last growth in our industrial business in the first half and negative growth in the second half. we saw a lot of the inventory build off taking place. in second half, we expect some to take place, but overall, as a market, it was good for us with slow growth in industrial and strong double-digit growth in consumer. we expect a certain amount of immature build off, but one war was that the german automakers had growth in china in the first half. we are starting to see some of the first early signs, but it will take a while to get the inventory out of the supply chain. -- youthe other thing have a big exposure to emerging markets, it's a huge part of your strategy. what is this right in emerging markets look like?

i did a piece that said emerging markets offer the best value opportunity in many years. give me your take on emerging markets. are we being overly negative on emerging markets, as a result of what is going on in the rest of the world? i've had that position for a well, and i will continue to believe that the emerging markets will continue to drive above rates in the future. i think china is very strong, mexico is very strong. we're growing mid-single digits despite war and unrest. we are growing high single digits in eastern europe. despite all the "noise" in the market, i still believe a long-term strategy that is focused on expanding the position of the emerging markets is the right one for many reasons. right now, there is something against it that will normalize, and most companies will continue

to see 2/3 of their growth rates coming out of emerging markets. anna: i was interested to read analysis by bmp. they say you have a cultlike following. you are taking it through another business, to adidas. do you have any comments on how the strategy at henkel is going to change or stay the same under the new management? and advice? think the new management needs any advice. that 10% eps and i'm confident we will get there. the new ceo will announce a new strategy in november, and i am confident it will be a good one for the company and shareholders. i think the management knows what to do. anna: thank you. too modest a comment on his cultlike status. ankle ceo, joining us from germany -- henkel ceo, joining us from germany. manus: a 12% rise in profits for

2016, helped by higher life insurance sales in europe and asia, but the stock fell 23% this year, i'll amid concerns that china and plunging oil prices. we've got the deputy ceo. monsieur, good morning. we're looking at your numbers. do you know what went through my mind when i was thinking about this? this company has built its future on asia and china. we have had the most atrocious reports from standard chartered, hsbc, that built their future on asia and china. they built up bad loans. are you building up a drop of demand? >> we had a phenomenal year in china in 2015, both on property-casualty and asset management. on the life side, while new business grew by 60% last year, on property casualty we had a

drop of 34%. they hadmanagements, more than 30 billion. focusing on asset management, we had two months of outflows despite the difficult market. for the full year, we had more than 30 billion of inflows. china has been extremely strong and remained strong. anna: that's interesting -- that takes us halfway to the answer, because that is the backward looking bit. of the forward-looking bit remains a strong. are you saying that despite the focus on slower growth in china, you're confident? how sustainable is that chinese performance? >> you have to keep in mind that china is a huge market that continues to grow. yes, slower growth in previous years, but it is still decent growth. insurance, likfe

we continue to be extremely strong. the biggeste -- bank in the world has more than 20,000 branches, we distribute to more than half of that. the growth will be very strong. yes, there is a slowdown in car sales, but they are still adding close to 20 million new cars every year, so the market keeps expanding. savings rates remain very strong, which is good for asset management. we remain optimistic about china. vive: vive the chinese, the car, eh? let's talk about investments. everybody has had pressure in terms of emerging market doubt. what the market wants to know -- have you had to mark down any of your debt? have you had to take any losses in terms of your exposure there? how is the investment framework looking? given the fact that we are originally a western company

with our assets in europe and the u.s., the weight of emerging market assets is quite small, and we do have to take any significant impairments during the year to our emerging-market exposures. we realize that there are 430 million euros of capital gains, and this is net of 300 million euros of impairment. these impairments were not permanently on emerging markets. anna: can i ask for your thoughts on brexit? hot topic of conversation in this part of the world. as you can imagine. you're a french business, but you operate globally. you have arms that reach across the channel. what are your thoughts on the u.k. and its future within europe? on there very clear u.k., expressing themselves very

clearly on the support that we put on the u.k. state in the euro. you believe it will be negative for the u.k. and negative for the eurozone if the u.k. was leaving the euro. the britishbe for people to decide what they want to do, but clearly we support keeping the u.k. in europe. t's talk about investment again -- the banking world, the insurance yo world. many of the major central banks are going more negative. the ecb is expected, likewise with the bank of japan. how would you describe negative interest rates? are they weapons of value destruction for investment? they are, perhaps -- where would they rank in terms of your challenges? one of our top three

challenges. our top three challenges are very low interest rates and expanded regulation across the world on many friends. -- many fronts. the third is the digital revolution. those are the three major challenges of the company. in terms of the low interest rates, to answer your question, this is a challenge for us every day. we reinvest at lower rates than maturing investments. an2016, our portfolio needed average 6.2%, 10 basis points lower than the previous year. we hold our assets for a longer view of time, matching assets and liabilities, and we bring it at 2.1%. this is an ongoing challenge for us, which we manage with a strong discipline. we have spoken to a

number of insurers who look for infrastructure investment -- where is it pushing the investment strategy? what are the consequences? we are not taking more investment risk than before, because we are in the world since the beginning of the year and we have been preparing for the last decade, which means that we are managing to risk budget which is fairly constant. we are not taking more risk. we are investing in slightly less liquid assets, in search for yield, but we also have to match long-term liabilities, so we invest more in the asset-based securities, in real estate, but we are not taking more investment risk because we are managing a specific risk budget. london,eep investing in especially london properties.

anna: [laughter] manus: great to speak to you. anna: we have some news coming through from the french energy world. areva is delaying their year-end closing; they reached an agreement for a bridging loan. they are delaying their results by 24 hours as they tried to get the bridging loan and finalize the technical documentation. business that offers electricity and gas services over and friends, some news on that business as well. the power generation asset sales will cut debt by 5.5 billion euros. manus: that is your breaking news. let's get up to speed with the bloomberg business flash. caroline hyde is here. welcome back. caroline: thank you. bp must open up its broadband networks to rivals including

skye mentor talk. that's the proposal from the u.k. telecommunication watchdog ofcom. they also say they must allow competitors to physically access their telegraph pole and underground tunnels, which would allow them to take control of the connections. ab inbev has reported numbers that missed estimates. it underlines their need to compete its acquisition to expand in emerging markets. aftershares have plunged it was announced that foxconn is to take a majority stake in the company. the innovationck network fund. that is the bloomberg business flash. anna: thanks very much, caroline. we had earnings from repsol earlier, cutting its proposed

dividend to 0.3 euros, from 50. ryan chilcote has more. that was one of the things you look out for. ryan: absolutely. these earnings were always going to be about what they are doing to protect the balance sheet, to protect their investment-grade credit rating, and here we have it, voila, they cut the dividend. interesting, given the fact that we had that report in the spanish newspaper saying that they were going to sell part of their stake in the spanish gas distribution business. is that true? hard to imagine, if they are cutting the dividend. you think that might be either/or. they haven't said anything -- no confirmation. that is subbing to watch as the day progresses. the other thing, the big take away from these earnings, which are less about the earnings and more about what is going on in terms of having are positioning

themselves given the oil prices is that they have reduced their breakeven price for oil production to $40 per barrel. the only problem with that is that it's closer to $32 per barrel, but maybe things will improve, as many are expecting. manus: the mexicans. they're talking about talking. ryan ryan: yes. everybody is talking about talking. it's a safe thing to say. i'll loan you $1 million if he does as well. anna: [laughter] an easy claim for me to make. the mexicans are as concerned as anybody about the oil price. it is a non-opec producer, and you know they are not part of opec, so they would like to see a big deal, but they have to trust everybody else out there in order to do that. anna: ryan on the oil markets. the futures markets here in europe are higher, and in the

u.s., shares are lower. we have a bit of catch up to play in europe. team: the "on the move" are up next. it will take you through this rocky opening. ♪

guy: welcome to "on the move." we're counting you down to the european open. i'm guy johnson alongside hans nichols in berlin. this is what we are watching. a call to action. the imf says bold steps are required to avoid weaker global growth, but how is fiscal firepower really helping? you ask the head of sovereign ratings. shanghai slump. the index tumbles the most in a month as investors dump assets, but i keep can co-advisors say key markets arbitrated the decade. who is right on that