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." i'm guy johnson, alongside hans nichols in berlin. what are we watching? willd ra draghi disappointed mat again? investors betting on a deposit breakup, but how will the ecb help the banks? don't that against central bank divergence. goldman sachs is on a different path, seeing oil widen. and the kiwi cut -- new zealand central bank surprises five

lowering central banks. they're blaming the chinese. look at the prices. let's talk about what is going on. it's ecb day; we are counting you down to that decision. my question is, will draghi this a poin disappoint, and how doese helps the banks? hans: those are the key questions -- what does he do, how to see where the two hats? how do they spur growth, what happens if they bring the deposit rate down even further and the banks cry uncle? think weuestion -- i could hijack the rest of the programming so we can talk the whole way through. i know you are excited but we'll try to contain it. guy: five hours, 13 minutes, 24 seconds. we are excited. let's talk about the european open. let's talk about where we think

the open will be. absolutely flat. column is pretty flat. the market is waiting, hans, for what is happening with the ecb later on. hans: i think that is the key question. it's driving a lot of the volatility. we take a look at what is happening with the dollar-yen, you can see good softening -- see the softening yen. euro-dollar, a little more strength this morning, but not a huge move. brent is down but holding onto its games. let's get to the first word with caroline hyde. caroline: thank you. china's consumer prices jumped by the most since mid-2014, driven higher by some costs over the lunar new year. cpi rose 2.3% from a year earlier and food prices surged.

the producer price index fell almost 5%, extending declines. centralzealand bank unexpectedly cut its key interest rate. the governor has come under fire from economists for the surprises. haswhile, the won strengthened after the bank of korea held its interest rate. policy makers were concerned that a cut could aggravate the threat of rising debt and capital outflows. volkswagen led through the emissions scandal has unexpectedly quit. michael horn is said to be leaving by mutual agreement. he became the u.s. ceo in january, 2014. he improved relations so much that when the emissions scandal came to light, independent retailers lobbied for him to stay, saying his removal would be "catastrophic." he will be replaced for now. d atjohn good friend has die

the age of 86. he was proclaimed the king of wall street in 1985. he was the post after 1991 trading scandal. his son said he died in hospital of pneumonia. global news, 24 hours a day. hans. hans: thank you. let's get back to our top story, the ecb rate decision. our central-bank editor joins us now. paul, you have the best assignment today. you are in frankfurt, investors and economists are keyed up. how excited are you? >> [laughter] [applause] of anticipation and then we are starting to get the details. first thing off the books will be an interest rate decision. the market is fully expecting a cut in the deposit rate by at least 10 basis points. then attention turns to whether

there will be more additions to the bond purchase program. maybe 15 billion euros per month. and as you noted, whether meas ures we put in place help the banks -- mario draghi is not concerned about whether banks can turn a profit per se. he's concerned about whether ecb continue to transmit monetary policy to the real economy. in the negative rate, they are squeezing profits and stopping that from lending, that is a problem. we may be seeing some form of tiering system i can japan and switzerland to try to ease the burden, or at least reallocate it. guy: it will be interesting to hear him talk about this conflict a transition mechanism. we heard the g20 in shanghai, monetary policy doing too much. where is the zero bound? how low can we go? if they went, -4%, deal with it. where are we in that spectrum?

>> well, the simple answer is nobody knows. it used to be zero but clearly it's not. there are various surveys out there that show zero or lower bound does exist, whether it is one half a percent, three quarters of a percent, nobody knows. it could be much lower. the key is will it work? there is some concern. the g20 did say that central banks are probably taking up too much of the burden, that governments need to do more. draghi has said that he wants to put through structural reforms so this doesn't remain a cyclical recovery. he's not likely to say that we are done, over to you. he will keep something in the toolbox. guy: before we talk about fiscal policy -- that will be an interesting conversation. paul gordon will have a busy day, as our we. this conflicted transmission

mechanism i still think is absolutely pivotal. the markets were like, yeah, we will get qe, but it is how you solved the riddle of cutting those and making sure the banks can deal with it. hans: the transmitting mechanism is a backdoor. it's like saying i don't care about my postman's health, i just care whether my mail gets delivered, so therefore i will give the postman a warm cup of tea. we're putting this tiered rate in to make things easier on the transmission mechanism, and then they don't get tagged with protecting the banks, just trying to spur growth. guy: let's bring another voice into the conversation. black rock managing director joins us now. good morning. what are the biggest riddles draghi's got to solve today? what's he going to do about the banks? >> good question. today, it is one of those

meetings where they are discussing the permutations -- there are so many combinations. i think the markets were disappointed in december it has it was tilted to the deposit rate cut in didn't change kiwi. -- change qe. because we had that december disappointment, because of the fact that markets are getting more critical about negative reactsnd how the market to the bank of japan, i think i t's important that they don't cut deposit rates. i think it is important that they increase the monthly purchase amount and that they look at further options like credit easing or some other policy, which have been discussed. hans: i will tell you where guy johnson's desk is -- you can steal his press pass and for the frankfurt. we will get you the first question. what will it be? >> what's the first question?

the question would probably be capital key? the if if you buy german bunds here, which are close to the deposit rate in the area up to four years, which of course is a headache for some insurance companies, that will probably be my question. maybe he answers it before i would be able to ask. guy: we will make sure you get the first question. thank you. warning.goldman's why they say bond traders shouldn't bet against the central bankers. that's next. ♪

>> i think to some degree the

expectation is that it is already embedded in the market, whether it is the ecb continuing to move or the fed not to move. you could move the needle in one direction or the other, but i think something in line from the fed, which would be no move, something fairly small, but in the direction of easing. ecb, i would argue, is already priced in. you could surprise the with the direction, which i don't think in.riced hans: that was the chief investment strategist at charles schwab, talking about how the market has already priced in central bank moves. let's get the bloomberg business flash. caroline: hans, thank you. the nasdaq has agreed to buy an international securities exchange for $1.1 billion, forcing it to the top of the u.s. options market. it could help them fund another acquisition, which is in merger talks with the london stock exchange. america,ks outside

including hsbc and deutsche bank, are pushing back against the fed's proposals on implementing rules designed to end too big to fail. they say they are burdensome and unfair for the u.s. units. under the proposal, u.s. units of foreign banks would need an extra year of debt available to be wiped out in a crisis on top of securities qualifying at total loss. and barclays africa says there is no lack of interest for those seeking a stake. it comes after the parent company last week announced plans to reduce its 63% holding to less than 20%. >> we keep emphasizing that there can be a lot in gold, and something regulators will look at is -- is there long-term stability? even if someone is a long-term investor, you have to think of regulators. caroline: we will be speaking live to the barclays chief executive at 12:15. that's your bloomberg business

flash. guy: thank you. goldman sachs is warning bond traders not to that again central-bank policy divergence. goldman is still expecting three fed rate hikes this year. hans, take a look. a fascinating panel i was moderating yesterday and this came up. if you look at inflation swaps, the market is not pricing the ecb hitting its 2% target for 15 years. draghi will be long gone. goldman is saying we think the divergence will be around for quite some time. i think 50 years may be excessive. iss: they could be, but it hard to find a data point or any evidence where you bring it back together, unless you think they will be robust growth. 15 years is a long time, but there are a lot of crazy predictions. how many times have we been hearing about the big one, some big earthquake, hitting in california? it seems obvious and historically likely, but no one

alters their behavior. this is somewhat similar to that. i can't make a case as to why this won't happen, but it doesn't seem like people are prepared to modify their behavior to price in what a long-term divergence means. guy: i think oil prices and energy, the complex, will be fascinating. let's get michael back into the conversation. 15 years. is the market correctly pricing this? >> i obviously think this is a bit too pessimistic, but on the other side, it's that logic we have seen inflation stay so low and not bouncing up in contrast to forecast. people are saying that it is getting more probable, so they are pricing it more. that is why i think they should also look at policy innovations, for example in the previous ecb minutes, when they discussed saying, well, the undershoot, maybe once inflation recovers we

allow it to overshoot a little bit. i think that would help to break this+++ inflation has had such an effect on forward deflation. if you made a rule like that it would not be clear. guy: i think that there are quirks in that. can i ask you about the policy divergence -- it will be here for quite some time, and treats won't price it in. how long is it going to exist for? >> i completely agree. i am also in the camp that we will see policy divergence, more policy divergence and currency pricing. i think people who have a different call -- it is not so much about the ecb side, i haven't seen anyone forecasting a hike, i think it is more about the other side of the equation. some people are more focused on

the narrow. saying maybe they can't hike. but if we look at core inflation of the u.s., it has risen 2%. i would agree that the market is slightly underpriced in the u.s., pricing around two right takes until the end of that -- rate hikes until the end of 2017. profit see that the -- i would expect them to deliver more than two rate hikes until the end of next year, given the robust environment. hans: so the only convergence you see is happening on the fed side, and that could be -- what -- a potential recession, and then they move back toward the zero bound rate? scenario,t's not my but i think that is the scenario for people who say, well, we don't believe in divergence, and to some degree, that was the fear we had at the end of january, beginning of february

when there were many expert panels discussing the probability of a u.s. recession. we probably felt it was like overpriced at that time but i think that is where the market is wrong. if you look at pmi, manufacturing pmi, the very tight manufacturing sector, there are obviously problems coming from the strong u.s. dollar and oil, but that is only a small part of the economy. hans: you will stay with us for a little bit more.we will get more of your insight. minutes away from the open. up next, the potential corporate movers, including the man who makes guy's suits, hugo boss. ♪

guy: seven minutes until the market open. that is new york, still slumbering, but it is time to wake up, because we are four hours away from the ecb rate decision. that is what will dominate the

agenda today on both sides of the atlantic. we are waiting for these markets to open. they will probably watch the ecb as well. let's figure out what we need to know. caroline hyde is here. caroline: i'm going for hugo boss, which hasn't had a luxurious ride in share prices, but today, we could be in the green. 2%, and for once we haven't got a profit warning. the dividend was below forecast and that is something to keep in mind. they did pre-warn, and overall they are sticking to solid sales growth in europe. they expect the slight decline in america and their closing 20 stores in china. they are taking steps to address the distribution and brand perception in the u.s. and china. this could start to see a turnaround. they said bye-bye to their chief executive. now hugo boss is trying to re-orientate the business,

stepping away from china. watch those stocks on the open. another german stock to look at -- a bit of m&a this morning. it will be selling at last it's isa units. this is an international securities exchange. trying to ridn themselves of this asset since 2014. they bought it years ago for $2.8 billion. i'm sure they managed to sweat it overall but they are getting rid of it. they once a little more money, potentially for the merger. lastly, ab inbev -- a corona recall. ab inbev produces corona in the u.s. bottles recalling some because they may contain small pieces of glass. more that you bargained for when you shop that lime wedge ind. -- in. guy: thank you very much. michael is still with us.

guy, butfixed income it has been a year-to-date since draghi launched kiwi and we had almost no effect of the equity market. did qe not work in the way it was intended? >> if you want to look at it from that angle, you could say that of fixed income, because if you look at peripheries, there are equally wide inflation expectations that have not recovered. , would still say that given the environment, probably we would have deteriorated much more than we currently have. that's not a reason not to have done it in the past; it's not a reason not to do it forward. guy: go aggressive. ans: i'm taking a look at great function on the bloomberg terminal -- michael can get out of london at 10:05 and make it

to frankfurt by 12:00. you just needs to steal your press pass. we will have more, coming up. futures pointing up. field and is next. -- the open is next. ♪

guy: welcome, you're watching "on the move." hans nichols is over in berlin. we are moments away from the start of european trading. draghi disappointed the market again. how could ecb help the banks? goldman sachs amy fed is on a different path. cut -- kiwi cut, they're blaming china. look atwill take a

world equities index, clicking the futures value. positive heading out there. just a little bit of negative on the dax. let's go to caroline hyde on the touchscreen. caroline: a second day of gains when it comes to europe. there will be a waiting with baited breath for 12:45 u.k. time when we that announcement from the ecb. all that will be streamed on bloomberg. we will see some risk-taking in asia, shares driving higher in japan. the fact that they held thing stable come with new zealand with a surprise cut. stimulus for a much on the agenda. luxury, but it doesn't seem to be any clear selloff of stocks over all. we see little bit of risk-taking that it comes to european

stocks. we're seeing the euro continuing to drive lower, this is your worst-performing major currency in the past month. on a monthly basis come with basically said in a down to the tune of almost 3%. so much expectation of mario draghi, a cut to deposit rates. of course, will we see an increase to bond buying? will that deposit rate be tiered to protect the banks? oil coming off its previous high. helpwould energy stocks. notably, no risky version traded the moment. money coming out of gold. clearly, the yen has been weakening, gold has been weakening, money is going to other assets and equities. but look at individual stocks. it getting rid of one of

its key assets that has been trying to sell for ages. isa sales to nasdaq, how much of that will go towards the merger? inbev interestingly higher even+++

open. germany was a little bit of a laggard. it doesn't live up to dividend expectation. it is trying to reassert itself in terms of distribution. we haven't had a profit warning. guy: hans nichols is always waiting for hugo boss to open. lets you what is happening with the map this morning. a mixed market, i would argue. we are waiting for clarity and how the rest of the area will develop. the financials are dead flat, waiting for druggie -- draghi. hans: where waiting for a fight between our two guests. we have someone in frankfurt, and berlin. i want to find out where our guests sort of diverged today. it would be the one goldman is talking about. the ecb president mario draghi ultra-loose to have monetary policy as he attempts to stave off inflation in the euro area. joining me, don't know whether they are different but i suspect they might be. we have michael, head of european fixed income and deutsche bank chief european economist stefan. give us a more macro view where you see the world from frankfurt. is anything druggie can do -- draghi can do to stimulate the economy? >> your putting of the dilemma that mario draghi is facing for

submitted competitive if you would feel the situation has improved a little bit. the concerned about imminent u.s. recession are receding. the same could be said about the german economy. in this respect, think the urge to do something big is somewhat lower. also, oil prices have recovered. we have concerns about credit growth. expectations are that druggie must deliver -- mario draghi must deliver something but we don't think it will be a genetic low. hans: can i ask about fiscal policy? we have this migration story of a may add something fiscal impetus. i think people are watching sweden, belgium, to see whether or not this actually works. if it does, then maybe we start to see the german spending a bit more. how much of that will been the ecb's mind?

stefan: that might be a small factor, but if you look the fiscal impulse is we just had that in a few countries because it is not across europe. it might be a quarter of a point in terms of the deficit. in this respect, it will not really be a big impulse. the realt help economy. that is where more people are talking about. look at what the imf has been saying, given the discussion we have in terms of monetary policy. economies ofasing scale. the goal of the bank of settlement has been saying at the last quarterly a port that report. i think there are two major problems. one is the stability, the other is the german chancellor. will i don't think either go anywhere simplest a maybe have some political intel either here or berlin to supersede

that. michael, if i can bring it back to you on this great divergence with talking about. will we continue to see a wall of fixed income money leave europe, head to the states, even though the yield might be going ever so slightly down? is it basically a one-way street? michael: i wouldn't say it is a one-way street, but definitely there are many people that look at a lot of headlines. with yields going more negative in the eurozone, if you look of the fixed income index about 40% of the index is now negative. an update coming u.s. rates look very attractive. but people have to keep in mind that they're basically betting against the u.s. rate path. with a very shallow right path t think making that face of a higher yield is a very smart decision at the moment. guy: what is the right trade?

is it trading divergence, or trading the curve? look at what it's been happening in japan over the past few days in this aggressive back and story. is that the right trade to put on? i agree with both of them. i think the divergence trade is a good trade. we would actually prefer it not only to execute, but if you look at some places like spain, and italy, the cost is more than three times as steep. draghi shouldrio support that, i think that is an attractive proposition for flattening those markets. ist inflation market pessimistic. hans: i want to bring it back with this conversation, partly

because a big he made an important point to say that to see some sort of change on the fiscal front of to be off the imaginative and quite flexible. things -- if fiscal policy is where it is, does that mean monetary policy is the only game in town? how do we square this circle? fan: mario draghi is saying is a kind of mantra that we to carry on reforms in the euro zone, but obviously the progress here has been very limited. mario draghi is facing a problem just by his own policy, the ecb's policy, the pressure. plus, if you look at the political situation in europe, you can start increase and stop at the northern countries. the government are relatively weak. it was no strong commitment to further reform. i'm hoping that the initial idea will pan out that the ecb is

buying time for politicians to reform to get productivity growth going. i think that looks right now pretty elusive. guy: i think a lot of people would go along with that. divergence, policy he will stay with us, michael will leave us now. next, as the ecb is expected to cut deeper below zero, we look at her negative rates impact the banking sector. ♪

guy: that market also absolutely flat overnight. all the main equity markets along the world waiting for the ecb. let's get you caught up what you need to know here is the first word. : china's consumer prices jumped by the most since 2014. that was driven higher by food costs in the new year. food prices surged by 7.3%. fellroducer price index most 5%, extending declines to record 48 months and a row. the new zealand dollar has tumbled after the country central bank unexpectedly cut its key interest rate to a new low of 2.5%. has come under fire for the surprise move. meanwhile, the yuan has

strengthened after the bank of korea held strong for the ninth consecutive month. there were concerns a cut could affect capital outflow. the minute lead volkswagens american business through the scandal has unexpectedly quit. he is had to be leading the mutually grieving. the u.s. ceoecame in 2014 and improve dealer relations so much that when the scandal came to light, independent retailers lobbied for him to stay. he will be replaced. a former salomon brothers boss has died at the age of 86. he was proclaimed the king of wall street in 1985 for turning it from and one of the most profitable business banks. his son said he died in the hospital from pneumonia. in global news, 20 for hours a day, powered by our 2400 around the world.

you can find more stories on the bloomberg at top . convincedstors are that the ecb will cut to deposit rates further below zero today. how does a negative rate environment affected banks? we have been asking our guests. >> it is limited because negative interest rates and because it appears to be relatively flat and will continue to be flat for a long time. that means the margins will be limited. it simply means, to me, that banks are not a bad investment. but let's face it, there a new age with limited ability to increase with the flat yield curve. >> the big question for us is if rates will go more negative, it will be very difficult for us to pass it onto our clients. >> in general, we are used to the low rate environment. and even a negative rates environment, for a while.

we've been taking action over the last couple of years to repriceour services, to the credit side of the equation. hans: st still with us,efan -- stefan is still with us, but guy, is it worse for them than they are saying? guy: the analysis up to now seems that it is not hurting bank profitability that much. at the altar a man almost seemed to be universally saying he would much rather go for the negative. the question is, are we ever going to get to the point where they pass on these negative rates to consumers? hans: or is there a better argument to say this is affecting the transportation mechanism and we can stimulate the economy the way mario draghi wants. is with anan

important bank that is affected by this negative interest rate, how much further negative rates have to go until we actually see something tangible in banks 'earnings, or how we already seen it? i think we've already seen it. that is why we had some concerns at the beginning of the year with respect to banks stability. maybe you have covered the story, there was a story over the weekend that basically had savings banks thinking and considering adjusting in order to avoid the negative deposit rate. we can see the impact and our view is that maybe mario draghi and the ecb will try to square the circle by implementing a two reducesystem which will the part of impact on the banks. on the other hand, it might help carry tradesre

which might weaken the euro. easy is it how going to be to get this right? the laws of unintended consequences seem to be coming into force more and more here. efan: welcome, if you see the the japanese banks to unions negative interest rate they basically want to forgo wage increases. pointsly, there is a where negative rates might really cause money hoarding. that is obviously one factor that banks want to avoid. case, withticular the qb all along that basically is uncharted territory. we have to find out what the responses are. in the ecb has to find that out as well. i think, let's say if we have an average deposit rate if we think

it will be a two-tiered system -50, i thinkowards that might be a threshold where it will be extremely difficult to predict the consequences. ecb has a single mandate, inflation close to 2%. the markets are currently pricing that we won't hit that for 15 years. it is negative rates going to really help the ecb get back towards this mandate? let me say first something about the five-year swaps. i think that is ludicrous to see that as a realistic prediction of what is going to lie ahead. that the swap -- the predictive power -- that has to be concerned even with the ecb about the movement of current oil prices. in this respect, think that is

just that. another proof of the availability that people are just seeing what they say in predicting indefinitely into the future. look at oil prices, then recovered quite a bit. in this respect, we might be surprised if these oil prices maintain that by the end of the year we might see inflation in the eurozone picking up again. i'm probably the only berliner that can conceive of living in frankfurt. describe to me what frankfurt is like after we get a rate decision of this consequence? the teflon basically unwind their trades and had to the bar? or is it even busier the day after? stefan: i guess it will be very busy because -- it might be a foregone conclusion that basically the markets will sell afterwards. dog haseveryone and his

been saying that. i think there is a chance we will look into details but with the ecb is actually delivered. i suspect it could be a two tiered system. look veryve to really carefully in order to find out average deposit rate is going to do. and all the elements draghi -- that is something for economists to scratch their heads about for the next few days. playingot of people are switzerland, and japan, and looking at the swaps there. ther central banks reacted the ecb today? stefan: we have seen the correlation ease a little bit.

the euro has recovered over the last few months. i don't see it is going to be in imminent response from other central banks during the day. hans: thank you very much. give you thursday afternoon off, maybe friday, but you have to parse a different statement on tiered rates. you love a -- you have a very busy the-48 hours ahead of you. we charge way some are not welcoming the prospect of going deeper into negative rates. ♪

guy: you are watching "on the move." markets a pretty flat. all eyes on the ecb today. hyde forng in caroline a chart of the day. this is the mario draghi dilemma today. the impact of the banks it's clear, he needs to break that today. caroline: if you see what he is been doing to force down bank share price is already coming first cut the deposit rate. that's in the share prices with the fall off on the back of that. if you actually dig into the amount of household savings that banks depend upon, in germany it

is about 2 trillion churros -- euros worth. it hurts their overall profitability. the chief executive has the morning about this. this has been priced into their share price for a large extent. decline inwice the the rest of the euro stocks -- the euro stoxx 600 in fact. more pain for the banking industry coming of goldman sachs saying that every 10 basis cut which we are expecting today, for most banks rely on deposit from households in particular, you'll get a 10% hit to earnings-per-share. that will be weighing on the stock prices. the flipside is what is happening in denmark. actually, banks are having their best earnings. guy: i talked to about people about this. the view is what they're doing is simply positing under

corporate clients and putting it up on mortgage numbers. it is an impact on the deposits had with their making it up elsewhere. that is also the mandate from their shareholders. one thing about that goldman note, this clearly near relation, 10 basis point cuts, 10 drop in income. that may be true, but it is also a very neat, elegant argument they can make to try to hit european central bankers by saying we can't do this or we will have real profitability challenges down the line. quick question for you, you seek picked up in 2016 in the banking stock index, is there a sense that we are headed towards a tiered rate? caroline: that is exactly what many are hoping. that is what denmark, in you're seeing fewer bad loans. also this tiered system that denmark and post means the banks only pay interest on a portion over all other central bank

deposits. could that soften the blow? hans: thank you very much was up and during the global market we talk about the best opportunities with a guest who knows a thing or two about investing. ♪

guy: 30 minutes into the equity session here. a fairly flat open. everybody is waiting to see what mario draghi delivers a little bit later on. exciting, and exciting press conference. the to get to our top stories now. let's head out to caroline hyde to see what is happening. i know you're a fan of hugo boss, and it is about to enter the investor market this morning. well, if theretty

dividend is a little of the expectations they're taken the blow already. at this company has ousted their chief executive last month. he has been a be held for eight years. now they get on with the restructuring of this business. say, overall, they're taking steps to address the theribution of hugo boss in united states and indeed in china. the fullest sales growth in europe. they will see a slight decline in america and the asia-pacific. it is the reviewing of planned investments that investors are liking. asres go higher in aviva well. it did very well on its solvency, it's profit, and its dividend. overall, we're seeing the solvency ratio, the new regulations been put in place at 180%.

showing real capital strength for aviva. look out for that stock of this morning. on the downside is like a there radere, the french media company go slower at the moment. its numbers are not living up to expectation. coming in at about half of what the market had wanted to see. the negative impact including one 77 euro restructuring costs. many banks and analysts are cutting their view on this particular stock. barclays cut to that equal weight. hans: financial sanctions are it was ainst iran, now market cap of a $90 billion in tehran. our next guest knows a thing or two about it. is the ceo of turquoise partners, any over 90% of

foreign portfolio investment on the tehran stock exchange. i'm not sure if i'm allowed to invest in iran yet. we have the first question, where do you see the opportunities in tehran equities? guy: but you just made is a really interesting point, it really highlights what is going on in the world. airbus soliton of planes to tehran. here's the problem, when i spoke to the ceo a couple of weeks back and ask if there was any banks lined up to finance, he could name a single bank that was stepping up. your point is a well-made one. the people are still nervous, and a bit unsettled about what is happening. the banks in particular are not stepping up. that is probably a first good question. >> absolutely, you're absolutely right. basically, the sanctions are lifted and implementation -- swift is now working for all of iranian banks. will probablyctor

take some time because of the internal compliance policies. guy: these are u.s. banks and european banks. ramin: i'm talking about large multinationals. the small european and central banks from aman and turkey have started doing business with iran. banking roots are gradually opening. correctly,ioned swift is working but iranian banks the do have correspondence with foreign banks before they can interact. just a few weeks ago, i can tell you these relationships are gradually opening up, starting from the smallest was banks and italian banks and hopefully later on with larger banks. hans: you answered the question i had, that was what is the timeline? d.c. all the sort of settling itself out by 2016?

at what point does the foreign capital flow in as freely as it would into any other emerging market? ramin: i think the flow has already started. our fund is a regulated fund that invests in iran. we are largest foreign investor on the tehran stock market. normalizen markets to , which means you pick up from your local bank and send money back and forth, my expectation is that it probably takes between 6-12 months for that to happen. guy: do you expect that iran will just be another oil proxy? that money will flow in and out depending on the oil price? ramin: the iranian economy is much more diverse than that. it is not saudi arabia. only 10% of our gdp if the oil sector.

only 30% of our annual budget comes from oil income. the economy is probably the most diversified economy because of sanctions. if 37 listed industries on the tehran stock market. we are very active service sector. it is hard to believe but i would keep a few figures -- iran is the world's largest cement exporter, third-largest producer of cement. iran produces more steel than the u.k. does, or france does. it can also produce cars exports regional countries. the economy itself is not oil reliant as much as what you see in saudi arabia, russia, venezuela. having said that, oil does play a major role. 30% is large enough. a lot of the development projects that are financed by government are reliant on oil income. but the story is annoyed -- hans: talk to me about how

tourism plays. you have iranians who can travel abroad much easier now. you also be trying to attract tourists. what does the tourism sector lose? does it increase because guy and i decide to go skiing up north? ramin: iranian tourism is already booming. i'm sure it will grow significantly. one area that has gdp growth in the coming years is the tourism sector. we need a lot of investment in infrastructure. we need more hotels, more ski resorts. what we have today is good enough to attract quite a lot of europeans. the number of figures of -- also business travelers -- are coming to iran. if you go to tehran hotels in is extremely difficult to find empty rooms. we organize investor trips it is

always difficult to get hotel rooms. guy: great stuff, thank you very much. opportunities, we will certainly be talking about that i suspect further down the road. plenty of risk. up next, and the battle of the chart. hans has a good one today. at a think i will beat him. we will see. ♪

guy: new york is still slumbering, waiting to wake up for the day that is dominated by one man -- mario draghi. it is all about the ecb today. they're just over four hours away from that decision. s&p futures pointing towards a moderate session. until we get to that decision, i suspect everybody will just be sitting on their hands. we need to be talking about what he is going to do, what will he do? what is about to come out of the ecb? with the drive equity markets higher? that is one of the big questions. it take you to our battle of the charts. it is one year plus one-day since mario draghi started qe. to be honest, hasn't gone well.

summing significant has happened, the japanese have overtaken. if you look at across europe and look at what is happening at some of these indexes, japan has overtaken europe. japan is the lifeline to the european index. that hasn't happened for quite some time, although it back towards 1995. it is not a big move, but nevertheless you wonder whether or not european equity markets will start to reverse this trend. it is not gone well. i think mario draghi has some beef with what is happened with volkswagen and elsewhere around the world. external factors seem to have thrown him -- his qe policy off course. i think that wins today. hans: you never get it so well. an unintended pun talk on mario draghi driving volkswagen. tickets me to my chart, the

implied volatility. it is even higher than it is now than it was before that last rate decision. it goes all the way up there, almost towards that 16 range. it gives you a sense of how concerned everyone is. it is more proof that i should not be a currency trader. frankly, i don't have the nerves of steel for this. i can't imagine how these guys are spending their morning. they're probably filing down their fingernails making sure they get their trade ready. guy: i think many people do see you as a man with steel hands, that is something we need to discuss later. i think we need to open the telephone lines up and get a viewer on and tell us which one i think is better. but will do maybe in the future going.e we can get an id if you are watching, and think that my chair -- chart is better

than hans, let us now. sides to make a trade. let's get to the bloomberg business flash. has agreed to by the international security exchange for $1.1 billion, catapulting into the top of the u.s. options market. it also help them fund and of the acquisition, the frankfurt-based company is in talks with london stock exchange group. major banks for outside america including hsbc and deutsche banc of pushing back against the fed's proposal of the amended rules designed to end too big to fail. they say it is unfair to the world's biggest funders. for banks affected would need an extra layer of debt to be available on top of securities qualifying. barclays africa says there is no lack of interest from buyers seeking a stake in africa's

third-largest lender. that comes after the parent company announced plans to reduce its 62.3% holding to less than 20%. some of those things we think regulators to look at is the long-term stability measure. company is a long-term investor or a stable investor, that is something we as managers should look at. nejra: we will be speaking love to barclays ceo at 12:15 on bloomberg. that is your bloomberg business flash. hans: the ecb is asking large banks about the risk from a brexit. we asking if one of that as well. i think it is a great paper, gives you a sense of the german industry in the german banking is thinking. this is basically the story -- our banks will be harmed by this. thanks have been telling us -- banks have been telling us every

chance they can that they will be harmed by this. this is coming from germany's official paper for german industry. they say this could cause some problems. to turn arounde and say they aren't asking -- that would be the biggest surprise. they need to make sure they're on board. my question is one of magnitude. yes, there will be an effect. but what is the volatility we are expecting? how extreme, maybe? they worriedss are about being put into the banking system? i guess that is my question. it is a big magnitude move. i think that is newsworthy. hans: it is very hard to judge whether or not the banks are this. wolf on we don't have the latest round of earnings. we will also deal with lagging

data for ecb that is supposed to be looking forward. that really can't influence the ecb right now. you only thing they can look at is that backdoor transition mechanism. that is their way to really cut to make the case that yes, we are doing this with the banks. question, if there's a problem, how does the ecb -- back to brexit, how does the ecb deal with it? does it cut rates further? neither of those stories are having a particularly positive effect on the banking system right now. the normal story would be you get the liquidity ready and if the banking system tightens up -- the banking system is awash with a look at the right now. -- liquidity right now. see with the central bank in particular would do about it. hans: it could depend whether or paired.euro sterling is a brexitere the case,

could help the big industrial bank here in germany. they would be basically printing money as they sell cars much cheaper than their competitiveness. there is so many risks. to get this question facing the u.s. federal reserve, have much policy ammunition do they have left? it is a question none of us really know. guy: we worked kick this around a little for the facet up next, go to trigger a domino effect? we discussed that next. plenty of central banks watching what is happening. ♪

>> we think investors relying on the ecb ends are straight changes -- interest rate changes to fix economic problems to restructure an economy for growth, to get the consumers and businesses spending again is a big mistake. ceo of freds the alga management talking about the ecb. that is altered doing today, talking what the ecb. it is the main event. time,uld talk frankfurt 1:45 frankfurt time we get a decision from the european central bank. that is what we are waiting for.

how will mario draghi ease? online,follow that we're joined now by richard jones. also joining us is christine from bloomberg's first word. ask but if wanted ask all morning, what the traders do this morning? richard: when i was -- [laughter] richard: when i was a trader for many years, the usually had a pretty quiet morning ahead of and ecb decision. i think that is probably the way it will be. everybody anticipating position squaring. you want to have the risk you want, you don't want any stray risk. how will other central banks be watching today? -- may bebe waiting watching this program waiting for the arrival of the ecb

decision? >> there definitely watching this program. as you say, the s&p will be watching today's decision by the ecb closely. their meeting next week, it will it go at the ecb does today and are expected to factor whatever the ecb decides. guy: the s&p is the one you always look at because we all remember what happened at the beginning of last year with a massive move. other central banks as well have similar problems. give me a sense of the degrees by which the central banks are paying attention? they all have their own problems. kristine: the dinner central bank will be watching -- danish central bank will be watching today as well. anything that ecb does today will definitely have an impact. the days will definitely be looking at the ecb. which willen's bank

be watching today. they cut rates last month and as a movepreted that to get ahead of the ecb today. whether we get more depends on what the ecb probably decide. we will see how the swedish policymakers interpret that. hans: i will take this show on the road yet again. there's no place i would rather be when you have all these banks going negative, how much would like to do this from jackson hole in august when they all get together and talk any more relaxed atmosphere? in some ways, right now we have a global conversation between the central banks. last night, we saw what they did in new zealand. they give us a bit of a surprise. our bankers malecki to be watching what other bankers are saying? are obviously watching the show, why wouldn't they? aside, what happens

at the ecb today has broad implications for everybody. i think our bring up, what does it mean for the bank of england? the pound has strengthened quite a bit since a few weeks ago. would beark carney looking great interest today to see what kind of impact mario draghi's actions had. to 77.own getting close carney's come the cheerleader for the anti-negative rates group. he said he is not a big fan of negative rates. -- a banker in the same camp. a we getting divergence in central banks and credit negative rates and nonnegative rates? without the a story we have to watch out for?

kristine: there is still certainly a lot of controversy around negative rates. since japan embarked on their own negative rate strategy earlier this year, it has been a lot of discussion over the impact of this. how will that hurt banks possibilities? at this point, it seems like there is some resistance from some camps that might be adversely affected by it. it is really up in the air what the impact is for stub the subzero, central bankers expected to tread very carefully on this path. and kristina jones ino, richard, give me a final inside. richard: remember we have anybody who interacts doesn't just impact their own economy. it impact of the currencies as well.

who will talk in the radio shortly. the main event comes up later on. ♪

anna: bankers beware. as markets are pricing in further cuts, lenders brace for more pain. the euro in focus. it is the world worst-performing major currency. cease to inflation, chinese consumer prices surged the most since 2014 as food costs merged for the lunar new year. welcome to "the pulse," live from lac