you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business. guy welcome to: "on the move." we are counting down to the european open. i am guy johnson alongside hans nichols. here is what we are watching. seven years into the third longest rally in history, why do investors hate stocks so much? gundlach says the s&p has 2% upside, 20% downside. why does he think the recent bouts is a bear rally? yields dated bond

slumped to record lows, is the ecb about to make the same thing happen here in europe? good morning, hans nichols. we are seven years into this rally. we have had a decent bounce in the equity markets. my question is, is this recent rally now over? interesting thing about most of their bear markets is they have been preceded by optimism. this time, we have nothing but optimism. still, people are fleeing equity markets, a little bit concerned. it's hard to see if anything is going on behind the calendar. you and i will not talk about sorry itches. anna: you are reading my mind. this bull market is seven-year in. -- seven years in. hans nichols and i, we are at one mind. we are a half hour away from the european open. let's talk about how we think

the story is going to develop today. we go to the terminal, to the bloomberg, wei. the fair value calculation pointing to a mild bounce, but yesterday, we saw aggressive selling in a number of sectors. it looks like we could see a little pop today on that seventh anniversary of this bull market. hans: yeah, we are seeing a little bit of that filter through the currency markets. we've got the dollar-won trading up now. we've got the yen, continued strength in the yen. it's down there at 112. the shanghai composite was down almost 3% earlier. we have brent moving upward, a little bit below the $40 per barrel threshold. let's get the bloomberg first word news from caroline hyde. caroline: bernie sanders has scored an upset win over hillary clinton in michigan's democratic

primary. he overcame a double-digit lead she held in polls. clinton took mississippi. donald trump beat back a barrage and scored major victories over his rivals into primaries. -- in two primaries. bank of england official martin wheels says the be a wii has room to ease policy if the inflation outlook deteriorates, but he added tightening is still more likely. nonetheless, his comments are further sign of shifting debate at the u.k. central-bank with inflation below its 2% goal. the pilot suffered its biggest drop in two weeks yesterday as uncertainty about brexit increa ses. of societe generale has told bloomberg that investors might reconsider investments if britain were to leave the eu. >> brexi would create at period of uncertainty. people would think twice before

making an investment decision that may turn out not to be optimal. the former deputy prime minister nick clegg has rebutted a report by "the sun" that the queen expressed misgivings about the european union. his remarks claimed after the that the queen was concerned about the direction the eu was taken. the tablet cited what it called "highly reliable resources." global news 24 hours a day powered by analysts around the world. that wonwas "the sun" it. itch -- today marks the seventh year anniversary of the s&p 500's bull market. $14 trillion has been restored to stock values after the financial crisis, pushing up the s&p 500 by almost 200%. however, double line capital's

jeffrey gundlach said betting on stocks is a losing proposition, and he's calling the rebound a "bear rally" and said we are going to see banks crashing. he says the s&p has 2% upside, 20% downside, marking a lousy risk-reward trade-off. let's get the views of our guests. we have lucy macdonald. we are seven years in. investors hate stocks. explain. at whereyou look sentiment has been, i agree that investors hate stocks, but if you look at the valuation of markets, and they are not depressed. they are not a loathed asset class. where we have come from, you said, it's been a fantastic run the last seven years, and that has been driven by mainly

than a recovery in earnings. it is mostly been a revaluation and the fact we have had access liquidity. qe,: since the fed ended most asset classes have not had a great time. guy banks are going to crash, 2% upside:. lots of volatility. is he right? lucy: our expectation is you are going to have sideways movement. in a -- weare not are in a mid range -- the u.s. looks overvalued, but the rest of the world doesn't. you've got not much support for evaluation but not excessive overvaluation. you have earnings, which are sort of going sideways now, having had a very good recovery with a little bit of negative from the oil sector, but pretty much going sideways.

guy: yesterday was quite a day, mining stocks getting absolutely battered, down 15%, 16%. did yesterday marked the end -- the mark the end of this rally? lucy: you are talking short-term trade. probably yes. you had a very sharp move in some of these stocks, some of which we own, some of which we don't. it looks as if we did hit excessive pessimism, and then you have had a bounce back. that is often what happens. i think is the most likely outcome is going sideways with big volatility. you've got uncertainty about policy, uncertainty about commodities, uncertainty about chinese currency. you haven't got those big stimulus coming through that we did to lift prices. that is what it looks like.

you are going to have to be active. you are going to have to find the right stocks for the right regions. you're going to have to look to get good returns. guy: you make it sound easy. hans: hans nichols in berlin. i'm going to channel the german view of what could happen tomorrow when we get that rate decision from the ecb. to what extent can they sequester the banks? if they do it. rate, take it lower on the deposit rate, to what extent can as well ashe banks the insurance companies? lucy: draghi has been quite clear. his last speech, he said that they are not -- they don't have bankjective of profitability. they have an objective of getting inflation to their target range. bank profitability is not

something they are directly trying to influence. however, he also said they are very much aware of the since until it -- sensitivity of banks to their positive that policy. they are watching to see if their move with interest rates into negative territory is having a negative impact on the ability of the banking system to work as a mechanism of passing through monetary policy. i think they are experimenting. that is what we saw the fed doing, experimenting. they are trying everything at their disposal to get some growth moving through the system. that is one heck of a however we have heard from the ecb. lucy macdonald, chief investment officer at ollie aunt -- al lianz. mario draghi's credibility is on

the line over his inflation target. can the ecb president convince markets he has enough firepower to reignite growth? we will look ahead at tomorrow's rate decision coming up next. ♪

to "on thelcome back move." let's get the bloomberg business flash. caroline: eon has reported its biggest ever annual loss after writing down the cost of its coal and gas-fired power plants by millions of euros. they missed a full year 6.8 billion euro loss predicted. ix has added stores and expanded online sales. the world's largest clothing retailer said net income rose 15% to 2.9 billion euros.

since its 2001 ipo, the owner of zara has boosted its sales more than sixfold in aggressive expansion of its eight changes -- chain. credit agricole says it aims to boost annual profits to 4.2 billion euros by 2019. france's third-largest bank plans 900 million euros in annual cost savings over the next three years. has become the latest wall street bank to signal a dismal start to the year. shares slid after said it expected income to drop 15% on the year. citi is expecting an even deeper tumble of 25% and investment banking revenue. it cites low interest rates and plunging commodity prices as contributing factors. that was your bloomberg business flash. hans: thank you, caroline. we have a countdown for draghi and markets.

the question isn't whether the ecb will ease but how. former ecb executive board smaghi saidzo bini the central bank is under pressure. willzo: on thursday, they have new forecasts. if the target of inflation is getting further away, they need to do more. i think the market expects them to do more. >> by the end of his 10 your, will he reach the target? lorenzo: i think he will. >> is that 100%? lorenzo: there is no certainty. i think he will do whatever it takes. hans: let's bring in lucy macdonald, the chief investment officer for global equities at nz.ia

i think about the ecb when i am trying to fall asleep. at what point are sleeping pills and negative interest rates the same thing, which is to say you get addicted and their effectiveness begins to wane? lucy: i think he needs to be creative, and they have been looking at the technical aspects of all the different instruments .hey could use i think there are a lot of ways he could present it. he could extend. he could talk about the different asset classes they could think about buying. i think anything he could say about the banking sector and the reforms that have gone through, the fact it is more resilient, i think that will help with overall sentiment. i think he needs to bring out something interesting to get the markets excited. guy: i want to take you to japan and the stag removed we have seen, the back end of the japanese yield curve. this is the japanese 30-year. you can see this precipitous drop. investors have been forced into the back end where the yields go

negative. have a -10-year in japan. i will show you this curve landing. that line is where we were a couple months ago. japanese curve is flattening. are we about to see the same thing happen in europe? lucy: as i said, they are experimenting, and we don't know. i think they are aware of the japanese experience, particularly the experience with the banking system, the fact that you have had zombie banks for decades. that is what you want to avoid. i think they are aware of it. they are watching it. guy: i want to take us back to asked.stion hans if i am john cryer, and im watching this program, and he's looking at the japanese curve , iswill wondering coming that happening to europe, how bad with that before the european banking sector? lucy: it's a negative influence

on the markets clearly. however, they have volume potential growth in various areas. they have feet income they can look to generate. it's not the only source of profit, but it's an important one. guy: something to warn about -- i'm suren draghi he will face many questions. lucy macdonald, she is going to stay with us. hans? hans: i'm looking forward to surprising us. up next, we will look at corporate movers on the day. eon reported its biggest ever annual loss. ♪

guy: good morning. it is 51 minutes past 7:00 in london. the drive in this morning, miserable, rain coming down on the seventh anniversary of the bull market. the ftse 100, called a little

bit higher this morning. it is that time of the day. i think i've got a humdinger today. i think somebody out there has made serious money on this trade. japan.rmany, buy you sell the german 30 and buy the japanese 30. 25 basis points spread, all the way down to -29, but you were down -50 at one point. quite a trade, quite a profit for somebody if they made that right position. hans: you mention john cran watching the show, wondering what was going to happen to japanese bonds or german bonds. look at what germany's economy is doing versus china's economy, this is a fascinating chart, and it shows you how quickly china has been growing and how dependent global economy is on chinese growth. take the orange/yellow. that is the chinese gdp.

it is basically flat with germany. at germany's gdp to china every year, and that shows you china's growth. it's leapfrogging, stepping up. the blue is germany's gdp projection. it gives you an indication of how dependent the world is on china for global growth. it's growing faster than germany. it's heading towards 100 trillion yuan. guy: lucy macdonald is sitting next to me, so i'm sure she's , but let's biased get lucy to decide. which do you take away in terms of the charts? what is the bigger trade? lorenzo: china clearly is something, as far as an equity investor, you are looking for , so the impact of china on growth for all of the

equities that we are looking at is important. the interest rate environment we talked about before, and we have had that big stimulus, how much more we are going to get and whether you are going to get interest to an equity investor, i would say. that's definite you a you, -- definitely you. lucy: lorenzo: hans: hans: she threaded that very nicely. let's get out to caroline hyde. caroline: let's keep it on the equity focus. i want you to keep an eye on credit agricole. higher on thet open, but many question what is coming out of the meeting of investors they've got going on. they are pinpointing that they up 20% through 2019. this is the share price of credit agricole. it's a beaten up stock, but of late, it's got a bit of a pop.

look at this on the bloomberg terminal. i have a look at where earnings estimates are for credit agricole. theke you to 2019 p estimates are for 3.8 5 billion euros. today, at the investor meeting, they are promising 4.2 billion. they are not promising 8% growth . they are promising 20% growth. we are seeing much more than has been factored in by bloomberg. will we see this live up to expectations? let's look at 10 energy. this is going to be a gainer. a volatile stock, but keep an eye as it seems to be doing well in senegal. lastly, eon results. look at how much the share price is down. it could rise even though we have seen a 7 billion euro loss, but they do hold onto that dividend. thank you very much indeed. coming up, the market open, futures pointing higher this morning. this, on the seventh anniversary, the seven-year itch

of this bull market we have been in. the wall of worry continues to be climbed. s&p 500, march the ninth, we are in, and investors aren't convinced they like the rally. the open, next. ♪

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you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business. guy: good morning and welcome to "on the move." right here in london, alongside haunts nichols in berlin. moments away from the start of european trading. here is your morning brief. the firsts into longest rally -- the third longest rally in history. has upside and downside -- what does the recent bounce say? and draghi's long dated bond yields a slump to record lows. is the ecb about to make the same thing happened here in europe, hans? hans: we do have a fair amount of optimism. the dax, cac, the ftse.

let's head out to caroline hyde for the latest. caroline: hans, thank you. the imf has been talking the fragility. is the understatement when it comes to the moments. we see the fragility really plowing into the risk sentiment, and yesterday we wiped off almost $100 billion on the european stock market. we are down to the tune of 112 billion euros. today maybe we will claw back some of those losses. ftse opening flat, as is the cac 40. you know who has been beaten up -- the miners, the autos. china is rattling everyone in terms of the data. we have seen chinese data exports slump, japanese gdp not looking good, all focus on the ecb. will they deliver tomorrow?

the euro is going weaker as we enter all the expectations in deposit rate cuts, 73% of economists we have spoken to think we will see more bond buying. we're seeing a bit of a reprieve elsewhere, oil bouncing back after the biggest selloff in weeks. we are still some $40. we are also seeing a bounce back in copper. we're seeing copper fall the most yesterday since november. goldman sachs thinks this number will go to 4000. looking at gold, risk aversion is not too desperate. down by one quarter of a percent. the puoound had a big selloff yesterday, money going into the dollar in this risk off mode. 1%,ties up for tenths of rising higherara

on the best profit growth in three years. 15% growth for this year already. looks good. well, agricole iis up as boosting profit by 20% in 2019. eon represents a 7 billion euro loss, but they are still managing to maintain dividends. guy: a big story yesterday. caroline, we'll come back to that in a moment. let me show everyone what is happening with the rotation. we have energy stocks in the red, industrials also lower. a much more mixed market today, not really trending in one particular direction. the financials, utilities adding two games today, but

nevertheless, you can see the wheel very much mixed up. this risk on, risk off trade breaking down a little bit in the session. let's get back to the story. it expanded -- online sales, the world's largest clothing retail with net income rising 15% is a few who which ended on champ -- is a purely which ended january 31. let's bring in lizzie mcdonald's back into the conversation. lucy, i want to take you back and show you this chart. this is inditex's decade of our performance. the bottom00 is white line. so much outperformance. my question -- is this didn't hear significant -- is this dip here significant? >> what we need to worry about intdixtex is valuation.

however, the valuation is twice that, so it is sort of priced in, that you only need to worry about that if they don't deliver. guy: is the risk getting bigger? >> valuation is always a risk. the higher your valuation is,. the war risk there is however . however they are still delivering. environment of an awful last six months because of the then concerns about currency, travel affecting the trends. a difficult time for clothing in a difficult industry. hans: lucy, we were talking about consumer sentiment -- i will go ahead and defend consume german consumer

sentiment. i will not defend the german fashion; i will you do that. when you look at id this, what didas, what at the deea is their potential for growth? >> they have been doing relatively well recently. in clothing, they had been doing better. but really, the story has been one of recovery from a very difficult. where they had -- in a very difficult period where they had russian exposure and they are recovering from that now and getting a new, highly respected ceo who we know very well. that's exactly what needs to be done at adidas now. their margins are far lower than nike. you've got potential for continued growth; it's a growing

also youpending, but have got margin potential. it is interesting. some of it is priced in. hans: i think i heard an offense of german fashion. we can talk about that off-line. should we think of adidas as a fashion company as much as an athletic company? >> i think they are both. nike and adidas are very high anhion elements, but it is underlying trend toward healthy living. there's a lot of structural moves there. i draw a line between your top stock holdings? we just talked about inditex, we are starting with fashion. what is it you like at the moment?

is the consumer the only driver? what is it that fills everything together? >> we're looking for anywhere we can find topline growth, particularly structural. why technology -- you have got trends there that are happening with the cloud -- guy: valuations and growth stocks are eye-popping in some instance. >> yes, but in others they are not. particularly with selloffs, we are getting more relative value. guy: where do you think the growth story is undervalued? >> the technology areas i mentioned. good cloudu exposured. -- cloud exposure. relative to inditex, it is not that different. can see difference, you

some potential for upside in medium-term. that is just growth within technology. not all technology. within consumer, we talked about ileisure trend. and people are wanting to travel, particularly in china, now that it is possible. trend, notn ongoing particularly affected by these various trends. looking for where we can find structural growth, it is not particularly affected by tomorrow. it's where we want to the clients money for the long-term. yans: lucy mcdonald, man thanks. up next, miners on a bumpy road. currently they are tanking,. ? what is going on?

we will ask that, coming up. ♪

guy: welcome back. look at london this morning. miserable morning, and the market isn't doing much. 1.25, the seventh year of this bull market rally. 6060 up, everything is unchange. i think maybe there is the possibility that people might

just be waiting for mario draghi, to see what he has to say tomorrow. hans: yeah. there's also the possibility there is no correlation between the weather. it is beautiful here in berlin, and yet there is a huge annual loss after coal-fired power plants were written down. german utility has a net loss of more than double, 7 billion euros. clearly they are not looking at my family's energy bill. ryan chilcote, walk us through it. ryan: we already knew that eon was losing money. it's the size of the loss in terms of net income that these expectations in the sense that it was worse than analysts thought it would be. came in just above 6.4 billion euros. the issue is all about the right coal-fired gas- and

power plants. the second bit of bad news is that the ceo is saying they expect the market to stay worse for longer. he says that will have consequences for free cash flow and investment, and most importantly, that will have consequences for the dividend, which they left as forecast, unchanged for this year. they're not promising that going forward. guy: hans is a glass half-empty guy. give us the good news. ryan: the good news is that the right down effects the german business. eon is a very multinational company. you look at geographic segmentation of where eon generates their sales, and the reality is they get just a little bit less than 1/3 of their sales in germany. some come from other eu

countries; a lot of them come from outside of eu. this is a bit of a contained issue. the second issue is that they did pretty well, writedowns beside. underlying profit was unchanged year on year, which when you think about the price of power are following by 75%, that is pretty extraordinary. sales beat expectations. it is really a story of how they have managed the downturn. if you compare them to your biggest competitor, what you will see is that they have outperformed. you look att year, the stocks down 38%, 38% over the last year versus 53%, last week still better. hans: ryan, i hate to say it, but guy's optimism is being validated by market.

thanks for your review. let's get the first word with nejra cehic. nejra: thanks. bernie sanders has scored an upset win over hillary clinton in the michigan democratic primary, overcoming a double-digit lead. clinton took mississippi. meanwhile, donald trump beat back a barrage of attacks and scored major victories over his leading rival in two primaries and the hawaii caucus, strengthening his bid. the s&p 500 has about 2% upside at 20% downside, making for a lousy risk reward trade-off, according to one money manager. eh say -- he says betting on stocks is a big losing proposition and that the rebound is a bear market rally. bank of england officials say the boe has room to ease policy is the outlook for inflation deteriorates, but he added that tightening is still more likely. nonetheless, his comments are a

further sign of the shifting debate at the u.k. central-bank, where it is still far below its goal global news, 24 hours a day. guy? guy: nejra, banks. -- thanks. miners have seen huge stock moves so far this year. started off badly, radel about what was happening in china. just yesterday, the ftse mining index fell the most in seven years. slackening exports. glencore -- and i can take you to the bloomberg here -- down 16% yesterday, something of a move. we are getting quite used to it. volatility in these stocks is elevated. bloomberg now is our managing editor, will kennedy. that's normal, isn't it? will: these are the kind of moves we are seeing every day. glencore is moving 6%, 10% every

day, and i think what is behind that is a lot of focus on the debt, which magnifies the moves and equities. whenever people get jumpy about what is going on in the commodities market, the story has been and remains the copper market. copperhead a very strong rally, and that has driven enormous gains on glencore. it's up more than 50% this year. guy: and you can see that huge spike we get. had thed yesterday we chinese numbers. copper took a tumble, then there is this outside reaction. hans? hans: oh, sorry -- the translation -- i thought we would have more of a playback. when we take a look at what is happening with oil, do you see that $40 per barrel as a technical level, or is there something else going on? will: $40 is being driven by

optimism that oil producers are getting their act together. we will see more meetings between latin america producers and opec and non-opec later in the month. market is for the oil that once you get to 40/50, some u.s. shale makers will start hedging, and supply coming out will go back in. many people think it will go below that level. guy: we will wrap it up there. thank you. will kennedy on another interesting session for the mining sector. o want to take you t prudential. the pretax profit line looks a little bit light. you can see it at the bottom of the screen. the full-year pretax in british atnds, we have an estimate 3.5 8 billion.

it looks a little bit light. i am trying to run you through the details; dividend up 5%, special dividend poking 10%. that maybe moved to the stock initially, but it is certainly higher now that we have these numbers coming through. 5.6 billion. the stoxkck is moving quite nicely. up next, a story i suspect the boss will pay attention to. the head of the ecb decision, we will charge european stocks with why they faileeel the stimulus effect. ♪

guy: 22 minutes into the equity market session and stocks are flat, waiting for draghi. i want to delve in to the ftse 100. it is something of a reversal underway. yesterday's big loser, glencore, is the big gator today. -- gainer today. burberry is quite interesting down here at the bottom, down by 2.33%. that story is surrounding a po the possibility of a takeover.

we're seeing a little bit of reversal yesterday in terms of what we are seeing. economists are expecting the ecb to cut rates tomorrow and 73% of those surveyed expect more qe. ecb, let'scuss the bring in caroline hyde. caroline: seven years to the day since we started on this rally. one year to the day since the ecb started buying bonds. they bought $20 billion worth. german bonds have fared well, but stocks have not. i want to show you this chart. the ecb has been fighting a few stocks have; weathered the greek exit, china,

volkswagen, all of this playing into this chart. quantitive easing from the ecb has not helped stocks in europe. you have got manufacturing at its weakest, consumer cost down, fighting inflation in negative territory. but if you think that equities should be getting a warm, fuzzy feeling ahead of the qe, you could probably be wrong. hans: and caroline, this is the --ocritippocratical question quantitive easing could hurt the banks. they start converting, they start buying cover bonds, pricing out the market. at what point do we really see a threat to equity because of quantitative easing, at least on the financial side? caroline: perhaps already we have. this chart outlines the banks that have been hit out, and most recently the selloff in february. of coarse, we had citigroup

yesterday saying that this very low interest rate environment is hurting. they are seeing a 15% selloff in their trading unit, the bank selloff coming. that really did plunge. quantitive easing has already started to hurt equities. it ha helpeds german bonds, but not portuguese bonds. so all the assets we thought would benefit the riskier assets, perhaps the living up to the expectations. guy: i would pour cold water on all of this, and here's why. the fed's qe policy drove the equity rally, the seven-year bull market was driven by qe out of the fed. and when the fed stops doing qe, we started to get nervous about equities. so yes, maybe qe hasn't done much for european equity, but it

did a lot for global equity. the problem is that the ecb was late to the party. caroline: very late. maybe it will take years to see the sort of benefits the united states reaped. maybe we will also see the amount that needs to be injected. we are well behind japan and the united states. how much more can monetary policy do, and should it be injecting? if we take the japanese experience, it will force fiscal policy to move. maybe it will have an impact. plenty of things to think about. caroline hyde, thank you. yields, japanese bond have hit record lows, with most of japan's bond market now is zero or negative territory. huge moves on the backend. investors are forced to sell the front and and by the back end. is is about to happen in europe

as well? that is next. ♪

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guy: 8:30 in london. housing shaping up. let me show you have the markets are doing. we've got a fairly flat session, firming in the last few minutes, back up to around one half of 1%. nothing really to get excited about. i would argue we are waiting to see what draghi delivers tomorrow. let's get the top stories of caroline hyde. caroline: i want to get to the top performer. a lot of speculation of m&a swirling around them; they has been building up, trying to push the change in telecom italia. we heard not only from the chief executives from other

companies like orange, coming out and saying that they would potentially be looking at a tie-up. he doesn't think the leaders of telecom italia would go for it. we also heard from francois hollande, saying that the aim of a possible orange-telecom italia merger would have a champion in europe. that was at a conference in venice with none other than his italian friend, matteo renzi. eing telecom italia rising, plenty of talks. meanwhile, look at the page being exerted on restaurant group. this is the owner of frankie and benny's, garfunkel's. the numbers are not backing up. notably, they are talking about a challenging trading condition. this is what sentiment is

like on the ground. weaker overall consumer confidence on the u.k. high street. more challenging trading conditions are here to stay, so says restaurant group. one of the worst performers is g4s, down by 11%, provider of security guards. they too see for your revenue disappointing. have beene estimates for 6 billion pounds but overall it seems many are not liking their earnings. guy: great stuff, thank you. let's turn from equities to the bond market. japanese bond yields have been hitting record lows. take a look at this -- a spectacular few days. you can see this move off, yields coming down, prices coming up. a selloff, a bouncing yield. the flattening we have seen -- let me slide in the wb spread function oand you can see this

spread widening, the curve flattening. that's where we are now. the greenline and that is where we were a couple months ago. that's the effect of negative rates, the huge flattening on the back end. let's talk about what has been going on. bernstein portfolio manager daniel lottiny joins us. what's behind japan? >> i think the coincidence of the bank of japan leading rates into negative territory, effectively the market appreciating that banks will be more aggressive. we have seen a dramatic move beyond that. and coupled with the negative interest rate story, the perception was that the bank was about to increase bonds. of 14have that dynamic yields lower. guy: how much flatter can it get? we did see a bounceback overnight, but how much more

juice is there? >> i think we have seen most of the move. we have blamed the curve flattening position, and we got some last night. i think we're probably seen the main parts of the move. clearly, the bank of japan is moving into new territory. liquidity in the market is very limited. free flow is limited. the best you can get is that it will be sticky, and therefore bouncing around from options, which is a germanic flattening on the curve, driven by a very strong back-up. the market is seeking liquidity, anticipation and action around those points. when you look at how this will work its way through and you look at the volatility we will see, you talk about the positions -- is there a sweet spot in the curve you think will

be best-performing? is there anywhere that is mispriced? only have seen as the front end coming down. where on the curve is the sweet spot? are you doing free trade? priced,probably fairly maybe -30. nc -- you can see more easing. most powerful in the 10-20 years they's. the bank of japan will continue, increasing from 800 to one trillion. that should benefit. you want to be in that 10-20 area. you will get strong role down on the curve. hans: let me break in with breaking news. i have a yen question for you they can have a new

supervisory board chairman. there.ves i don't know if it is unexpected, but we do have so much volatility and so much concerned about the direction of rwe.erman utilities with if i could get back -- we see a flattening in the yen, flattening all across -- the yen has a move that much. rwe. we still have basically a stronger yen than what policymakers want. at what point do we see the yen weaken? at what point does it filter through? get a dealnt can guy on the lexus versus a bmw? >> clearly, the big focus of the bank of japan is the currency. we have seen a very stable environment for the last three to four months. the nikkei is important.

is probablyn further strengthening in the near-term. once you get uncertainty in financial markets, you tend to benefit from the. -- from that. either you will remain in play for quite some time. i wanted to really expect the yen to weaken in any meaningful extent over the next three to six months. hans: i am going to say it means he buys alexis. a lexus.s up next, mario draghi's credibility is on the line over his inflation target. can he give his markets that he has enough firepower to reignite growth? we will look ahead to tomorrow's rate decision, next. ♪

guyhans: welcome back. let's get to the bloomberg business flash. here's nejra cehic. nejra: thanks. inditex has reported its fastest annual profit growth in three years. clothing retailer says net income rose 15% to to 2.8 billion euros. since it's initial public offering, the owner has boosted

its sales more than six full through aggressive expansion. said it wants to boost annual profits in 2019 as it cuts costs. the third-largest bank in france by market value promises annual growth over the next three years. citigroup has become the latest wall street bank to signal a dismal start to the year. shares slid after they expected first-quarter revenue to drop 15% on the year. citi is expecting an even steeper tumble. cites low interest rates and plunging commodity prices. that is your bloomberg business flash. hans: thank you. we should mention that eon is now falling; it was up a little bit, so we will be keeping an eye on it. the question for investors is that whether the european

central bank will be, but how. society general's chair that in former ecb executive board member says that the central bank is under pressure. >> on thursday, they will have new forecasts. 2%the target of inflation of is getting further away, they need to do more. i think the market expects them to do more. guy: by the end us draghi's tenure, will he reach the target? >> i think you will. -- he will. guy: is that 100%? >> he will do whatever it takes. hans: let's get back to daniel lonnie. whe you lookn and listen to the previewing of a rate cut, you speak this market language, what do you hear central bankers saying? >> in respect to what they are

going to do, or? hans: in terms of how far negative -- >> clearly, the meeting tomorrow, they have got 14 basis points, 10 billion increase. mark said a moment ago, he and that is what happened in december. get 20 billion on the program, 20 -- will not be a disappointment. there are a lot of wrinkles around the details, but main focus is on the twoour big numbers. our main focus is on the two big numbers. guy: we talked about japan already.

in, many ways the german curve resembles what is happening in japan. how does that get priced in? extent,, two larger this story is traditionally priced in. any have to look at the delivery on the deposit rate. positive reaction in equity markets. a lot of the focus will be around what he is thinking going forward. a lot of the time, markets don't really react to the announcement; they wait. he gave a dovish constructive message, and the bond markets in equity markets will respond. hans: that point you made on the rhetoric is so important. guy and i will be watching. when you look at potential

forward guidance that he could give -- is that one of his tools? we are so much focus on the negative rate -- what about good old fashion italian german rhetoric? it's -- he's very pragmatic. he is very much influenced at this juncture by where the currency market is and where the equity is. if in a few months it is stable -- if we get volatility, he will talk aggressive. thatbond investor, it's 6-12 months ahead. you are looking at risk assets, banks.nomy, and central the guidance is almost month by month, quarter by quarter. guy: april 21 last year, roughly the same levels.

"bunds are the short of a lifetime." we are back at those levels again. do we have said trade on? been log in our domestic portfolios, long induration. there's no reason to change that view. you really need to change the sentiment to shift the bond market. guy: december was a huge disappointment for the market. we saw the move in the euro, that huge volatility. a similar story. what happens if draghi? disappoints? we have talked about what happens in the outperform her stash what about the underperformers? risks have been disappointing and negatively impacting the market. they're diminished somewhat by the fact that you have china stimulus, the bank of japan, the bank of england. you've got a fed wavering.

the risk to the ecb is less than they were, but still a disappointment. hans: thank you very much for joining us. can follow the ecb press and, sandersmorrow burns clinton in michigan. two more in the latest presidential primaries. we will bring you all the latest u.s. election details, next. ♪

>> that is a big factor. it fuels the uncertainty in this current election environment. we are talking about it with our clients every day. it's impossible to predict what is going to happen, what the outcomes are. ultimately, we go back to diversification. what we are saying today is no different, right? now matter what the outcome. we're just saying, stay diversified. warsonhat was tracy talking risk around the u.s. election. bernie sanders scored a surprise win over hillary clinton in the michigan primary. following results, he told his supporters to expect more

success, but hillary clinton took a different tone. >> what tonight means is that the bernie sanders campaign, the people's revolution that we are talking about, the political revolution that we are talking about, is strong in every part of the country, and frankly, we believe that our strongest areas are yet to happen. >> i am proud of the campaign that senator sanders and i are running. [applause] >> we have our differences, which you can see when we debate, but i will tell you what -- those differences pale in comparison to what is happening on the republican side. [applause] hans: donald trump moved closer to the republican nomination with victories in michigan and mississippi, while his closest competitor won idaho. guy, in some ways, you're more

qualified to talk about this. you have a technical analysis of the campaign. it looks like cruz has in your pocket about him. the question is can donald trump -- does he have in your pocket above his 37% outside the south? and it is hard to see how he gets half the delegates if he doesn't. guy: this became clear a few days back, and you started to look at this story and said, cruz looks like he has -- trump looks like he has a ceiling. does the republican party need to get down to just two candidates? maybe the math starts to change. the question is, does the republican party -- what does it sit on, whether it wants cruz or trump? i'm not sure that is the choice many are willing to make. hans: i think for the establishment, it is a difficult choice. is asard -- the question

it does this less than 50% against trump, if you stay in a three-person race, you can make a case that it does. the technical are fundamentally against trump. if someone drops out and trump goes above the late, the train has left the station and he will be pulling into the columbus ohio victory. guy: what would you put on a trump? sanders run off it is not as if hillary is doing that great. hans: the problem with predictions is that my normal role is the davos wrote. you make a prediction so it you don't put a timestamp on it. i will just hazard a guess -- i think it is too difficult to say. anyone that is covering this, we have never had an election that

has been this volatile, the prospect of having something go down to the wire at the republican convention. a brokered convention will be part of the north american roadshow. we would drive for washington dc to cleveland and we will stop at a lot of barbecue joints along the way. guy: you are driving. hans nichols has a drivers license in the united states. let's talk about the day ahead. norway has the sovereign wealth fund, released a report on the investment funds. then we get u.k. industrials and manufacturing, market not expecting a great deal from a number. noon, of u.s. mortgage applications. then we get a right decision from the bank of canada. all of that, coming up. plenty of coverage coming up on ecb day. stay tuned for first word, joining us now on set. you look at equities today, at the market, a little bit of calm

sleeping in -- creeping in. >> in the currency positioning we of my colleague and i, think that positioning ahead of tomorrow's ecb meeting is much lighter than a was. as a result, should the ecb be more dovish? we could get a big surprise down in the near dollar rate. guy: the market got caught the wrong way round last night. >> correct. positioning was quite heavy, and it is lighter now. if the ecb disappoints -- and i'm notch or how we define disappointment -- you will get the squeeze, but it won't be nearly as vicious. hans: quick question. in december draghi, got a mulligan. he gave a speech, tried to be dovish.

did you get a mulligan this time? >> i think this time the stakes are little bit higher. they are probably happier with where the currency is now. but realistically, they want the currency to settle between 105 and 110. in terms of delivering something to make that a reality, they probably have to err on the dovish side. if they do the same thing they did in december, i am not sure they get the second chance. guy: we will see what the travel department of the ecb is going post press conference. richard jones, joining us from bloomberg first word, thank you. coming up, we have the pulse. plenty more coverage in advance of the ecb meeting, some great guests. big stock stories out there. we are seeing something of a reversal for equity markets.

we are waiting for that ecb decision. as richard said, positioning in currencies, similar story on equities, stay with bloomberg. good afternoon. ♪

francine: asian stocks drop, european markets rise, investors expect more stimulus from the ecb. trump ups the stakes. u.s. moderates are dealt a new blow as donald trump takes two more primaries. bernie sanders defeats hillary clinton in michigan. asia's largest airline almost doubles its profit as fuel costs fall. we speak to the ceo. welcome to "the pulse" live from bloomberg's european headquar