manus: welcome to "on the move." we are counting you down to the european open. i am guy johnson, along with hans nichols over in berlin. how many hike? four or is it three? the markets are looking for clarity from the fed. deutsche boerse and the lse agreed to a merger of equals, but who is getting the better deal? we will speak to deutsche boerse 's ceo, karsten kengeter. rumpis a clinton-t

contest locked in? and let's talk about this merger of equals. it's ultimately, never quite worked out that way. hans: we will not say anything about whether this is a merger of equals, but it does seem to me that when london goes against any german city, london gets the upper hand. it seems to be structured in willny's favor, but we have to see what the details say and importantly, what the ceo says. guy: i think it is a brave move before the brexit, but maybe they are taking the risk. we will find out how those stocks open a little bit later on. we are 30 minutes away from the european open. we have the politics story to talk about, as well as china, and the fed. cautious is probably the phrase in advance of the fed.

we're waiting to see exactly what janet yellen says a little bit later. my massive move this morning. -- not a massive move this morning. : it seems we have a couple things on deck. when we look at the assets, it does seem we have some weakness in the u.n., which is not surprising after what happened overnight. you of also have to take a look at what is happening in that treasury. and then, we have nymex crude around 36. that was below 39 to couple seconds ago, but now let's get to the bloomberg first world news. reporter: u.s. presidential hopeful hillary clinton has tightened her grip on the democratic primary nomination with sweeping wins florida, northillinois, and

carolina. donald trump secured a victory in florida, illinois, and north carolina, but was blocked in ohio by governor john kasich. senator marco rubio suspended his campaign after losing in his home state of florida. premier league says china's economic performance is diverging across provinces as challenges rise and global growth slows. at the his conference end of the national people's conference. while he says there will be ups and downs, beijing will employ innovative means to support the economy. the bank of japan says it has room to lower interest rates further. governor kuroda told parliament that theoretically, the bank to cut interest rates to -.05%. japan remains far from the bank's 2% inflation target. analysts see additional stimulus

ahead. global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. you can find more stories on bloomberg at top go. guy: markets are pricing in a 4% chance of a move today. there is an 8% chance that we could see a rate hike by the end of the year. we're going to talk about the dot plot. "go" button, which tracks fed projections. joining us now from new york to give us something of a preview of what we can expect is mr. jonathan ferro. let's discuss what happens. you said you could come on tv at 3:30 a.m. in new york and discuss the dot plot. i thought, you know what, i can't miss out on that. now. is the story thi we are all looking for this to

be resolved today and i don't see it coming down to the market in a very fast way. if you look at the comments vice chairom fed's thatey fischer, who thinks inflation is beginning to start, that doesn't sound like demand capitulated on his call for fed hikes this year. that gap between the federal reserve and the market is expected to come down, but just a little and not a lot. hans: are we missing the divergent stories? it seems even if the fed does not live now, they could move in april. the underlying data -- which you are so good at -- why are we not talking about policy divergence? jonathan: i think we stopped because they can't happen in the way people thought it would happen. the idea that the fed is going to go on a aggressive tightening cycle while the ecb goes on an aggressive easing cycle is not feasible at this point. what i see happening at the moment is we were told that the federal reserve was data dependent.

unemployment and the labor market, which is anding pretty solid, inflation, which is still ticking higher, but data -- and they are data dependent -- is still ok. but we know that is not the entire story. the story has been about tightening financial conditions. they have used somewhat in -- they have eased somewhat in the last couple months. the last couple months might have scared the fmoc a little bit. realized that it is ok, but what about the expected data? does the last three months change anything as far as the markets are concerned for the expected data to come? guy: it is interesting because you get this divergence a, what people say in new york and what people say in the rest of the world. it goes back a little bit to the divergent story. what are analysts saying over there that you feel is different? what is different in terms of the language and the way people

see this conundrum? jonathan: i don't think much has changed. i don't think there is much of a difference between the analysts in the u.s. and analysts in europe. there is a general acceptance that the federal reserve will not be able to fit four rate hikes in the rest of the gear. there is an election of the back end of the year. how are they going to get in all of those hikes before that happens. morgan stanley is one of the latest banks to come out and say, we were expecting three rate hikes. i think it is going to be very difficult for the federal reserve to achieve what they want to do. it is globally accepted they at they won't be able to get four rate hikes this year. that i think it will come down gradually. most people think we might come down by one. i think what is really important, looking back at the last three months, despite the huge amount of market volatility we have had, the fed has kept

very tightlipped about their intentions. about tday is all eaming up. guy: politics and economics interacting. i did not catch that at the beginning. that is quiteink important because the time difference is only four hours. it ain't five anymore. don't eat dinner at 6:00 because that is when the decision comes out. and don't eat dinner at 6:30. you are going to want to watch janet yellen in the exciting news conference. guy: you read my mind. stay with bloomberg television throughout the day. we have a special coverage at 6:00 p.m. u.k. time. here's the critical thing you have to do. when you are not eating at dinner, go to top live and check it out. the commentary is fantastic. you will see exactly what you need to know in terms of the

commentary surrounding that decision. let's carry on the conversation and talk about central banks. good morning. we have talked about the fed a little bit. is very similar in many ways, but the political story and the economic backdrop is slightly different. talk me through the compare and contrast between the bank of england and where the fed is right now? it will take a lot more to get inflation higher in the u.k. growth has slowed down, but it is still one of the highest in the g7. wages have not really taken off. guy: that sounds remarkably similar to what the states are looking at. >> i think the bank of england will be more wary about raising interest rates. we still think they could do something by the end of this year, but between now and then politics could intervene. we have a brexit referendum. the big question is, what will be the outcome after that? i am sure the bank of england will be setting policy a bit looser.

the bank of england could be looking at stronger data. investment might come back during the time of uncertainty for the vote. there are many reasons to think growth could improve during the second part of the year. guy: we will talk about that in more detail. does fiscal policy mean monetary policy for longer? keep inis important to mind is the chancellor has already told us he is tightening is good policy by 1% of gdp each year. i don't think that is going to change. all he is doing is putting flesh on those bones. he is telling us how he is going to achieve that 1% cut. and the way he is going to do that, he is already talking -- i possibly pensions doubt there will be anything major on pensions. during this budget. there are many things he can do to bring cash into the coffers to me that target of 1%. hans: it is certainly ambitious, george buckley.

you will be staying with us throughout this morning. up next, we will talk business and budget ahead of that george osborne's budget. that is coming up next. ♪

hans: welcome back to "on the move. let's get to the bloomberg business flash. reporter: hedge funds in asia have had their worst start on record this year. whichsian hedge funds, outperformed their european and american counterparts in 2015, te.e lost 6.6% year to da morgan stanley has lost three emerging markets bond traders to competitors, according to people with knowledge of the matter. traders sometimes leave in the week after getting their bonuses

in the hopes of finding better pay elsewhere. compensation at morgan stanley declined 10% last year to $16 billion. deutsche boerse and lse have agreed on terms for "a merger of equals. under the agreement, deutsche boerse shareholders will hold just under 55% of the new company and lse holders will own just under 45%. stay with bloomberg on more of that story. we will speak to the deutsche karsten kengeter. sharp shares have slumped more after a further delay of the final takeover agreement. month to ad last $5.3 billion bid from foxconn, but that was immediately delayed from what foxconn said was the information about sharp's

liabilities. that is your bloomberg business flash. guy: the u.k. chancellor, george osborne, delivers his budget this afternoon. aet's get to annn edwards in westminster. chancellor will speak at 12:30 and deliver his budget. what do businesses want to see from him. we are joined this morning in the cold. it is good to see you this morning. we have talked to a couple of businesses this morning. some are saying, we have had a lot of fiscal events since this parliament started. don't change anything. what is your message? >> it is probably very much the second one. basically, he has had four fiscal events and 12 months. they have had a huge amount of change to go with and a huge amount of new taxes and costs,

which is unusual for a chancellor to introduce, particularly at a time when the economy is softening. this has hit business is pretty hard. we want no more business taxes or costs. leave us alone if you want us to get on. anna: infrastructure seems to be a big word. it looks like we will get confirmation regarding various infrastructure projects. what they say and to us is, those projects have to be delivered. they need a real timeline and real financial commitments to get delivered. i think we will be signals today from the chancellor, some scoping studies, so money to get the prep work done for many projects. that is very positive, but for businesses, it only becomes real when using those projects open. we want to see a real, hard and fast commitment. anna: you recently cut your

forecasts for the u.k. economy? what are your members telling you about what they see? >> everything is suffering a little bit. the global environment we find yourselves in is causing many companies to say, our expectations are not as good as they were. we cut our forecasts from two point 4%. we do need to see action from the chancellor and if he can hold the line of business taxes and costs, that is the biggest thing he can do at a time when the economy is not as strong as it could be. anna: let's talk about the brexit because the vote looms and it is something that has already resulted in a change of leadership at your organization. is this something businesses universally feel passionate about? or are some sanguine about the outcome? >> there are different attitudes and it is precisely for that reason that you see a business community divided.

there is 60% for remain, 10% for fore, and the remainder undecided. when you look at the smaller businesses, it is a lot closer. the survey shows a business community that is divided. when you look at different places around the company as well, you can see different attitudes. they are playing very close attention to the subject, but they are still making up their minds and i think every single business will have an opinion -- and every single employee as well. anna: why not campaign to remain in the eu? why not say, the majority of our businesses want this to happen? >> be could never campaign when you have your owners telling you, we talked to businesses on the ground and they are divided on this subject. it is an emotional subject and ultimately, a decision for the british people. we need to remain neutral, but we need to get the information business people need to make their own decision. and right now, i think the

information is in short supply from both campaigns. we will be pressing them both hard to tell businesses exactly what they think the impact will be. anna: do businesses feel free to speak openly on this subject? >> certainly, and the calls i have been making they do. i have talked to various businesses and nobody is shy. i can certainly put it that way. businesses do want to talk about the subject, but overwhelmingly what they say to us is, more "re mation please from "leave.d more from anna: joining us here, 12:30, i know you will be watching, guy. that is when we will hear from the chancellor. guy: check that out on the budget story. anna, thank you very much indeed. torch bunkley is still with us. -- george buckley is still with us. "leave.

anna: joining us here, my queste live in a bubble in the city of london in the financial community about what is happening with the brexit? this might be a fact-based question, but anecdotally, many people have told me they are going to leave. >> when you look at surveys of people, based on the online surveys and polls, it is 20% undecided. when you look at the telephone poles, it is 50% who want to stay in. some parts of the country want in and other parts in london are very much in favor of leaving both are very much in favor of leaving. the central belt in the middle wants to remain in. it depends on how you ask that question of. hans: hans here in berlin. walk me through when the pound tinunes into this story.

to what extent is currency always watching this and to what extent is it event driven? >> you would expect, that you would have a very sizable foreign currency, not least because he would expect overseas investors to be more nervous about investing in the u.k. before knowing what the final outcome of the deal to leave the eu might be, not knowing whether we will be in a single market, not knowing about the passport issue of the financial sector. it is understandable why you might see a lot less money flowing into the u.k. that could have a large impact potentially, on the currency. we think it will perform sharply against the u.s. dollar. we think the euro might fall sharply against the u.s. dollar because it raises existential risks. it is such a large and systemically importing country. hugethe u.k. runs a current-account deficit. how much can monetary policy do?

we can do much on cutting rates and the qe story, we locked the door on that one they while ago. walk me through the monthly policy reaction. current account issue. that is one of the reasons we are bearish on the currency, even if we remain in the eu. in terms of the monetary policy reaction, if we were to exit the eu, i expect the bank of england to set policy much looser. hans: how would that actually work? negative rates are being used in the eurozone and in japan. you need to attract a certain flow into the u.k. negative rates therefore, what have a very different effect than it would in other regions. >> there is more than one way to encourage flows into britain. course, interest rates are only one. guy: what are the others? >> the performance of sterling

will be the big one. if the sterling falls, it will make u.k. assets look more attractive. it is a rebalancing. one of the things that would happen is you would see a sharp rise in inflation. ofhink the bank england will do precisely what it did back in 2011, when you had 5% inflation. guy: so you are saying the bank of england would like to do on the, just drely drop in sterling to get the economy moving again? >> i think a lot of it would depend on what stage we are at in the economic story. if the global recovery in the uk's doing quite well, then yes it would be dampened by brexit. then, they would not raise interest rates as quickly. they could also cut interest rates and do a lot more qe. guy: so, we basically don't

know. i am trying to figure out how you would price that in. it is very hard to call, what the reaction function will look like. >> relative to what we would have had, the bank of england will keep focusing on the economic growth stories and the lower sterling story. guy: great to see you this morning, george. thank you 30 much indeed. ed.thank you very much inde the market is pointing to a flat open. that is unsurprising considering it is fed day. we are waiting and watching very carefully to see what comes out of the fomc. though.sh open, at the moment, it looks like we have a call for the ftse 100 to open 4/10 of 1% higher in the dax opening 2/10 of 1% higher as well. the miners might see a little

bit of a bounceback from the oil stocks as well. we will be back in a couple minutes. the market open is coming up in a few minutes. ♪

guy: good morning. you are watching on the move. i am a guy johnson. now from thes away trading.european here is your morning brief. how many hikes. for? or three? who is getting the better end of the stick on this one. clinton-trump contest locked in? john kasich still when the revolution ticket? hans: shaking off the losses we saw in europe.

that is what we are watching it take a look at those features but let's head out to nejra cehic at the touchscreen. nejra: futures were pointing higher. osborne.e budget from of course it is fed day in the u.s.. we look at these markets. not much moving. you might see some gains did we go to ftse 100 opening flat. we're still waiting for the dax and cac 40 to open. let me show you some of the movement in the currency market. ahead of that yuki budget, we are seeing the pound down against the dollar. this is for the third day. we are very much focusing on the dollar. fed policymakers discussed the strength of the green back during their meeting in the past 12 months. it is given more scoped to raise rates. we have seen a repricing over the past three days. the bloomberg dollar index is up

for a third day. news.of i will get on to the m&a in a second. coulter, we are seeing that up after the world's biggest brewer unveils its strategy. it will look to pay half its earnings in the form of dividends. the shares getting on that. london stock exchange, we seeing these stocks move higher after they agreed to merge. they call this a merger of equals. when we are going to see is over --ares holding stockholders getting the remainder 54.4%. and doesn't look like quite a merger of equals good -- it doesn't look like quite a merger of equals. let's see if we are seeing any movement in the european equity markets. dax up .5%. guy? guy: let me take you to the terminal for the bloomberg.

a little bit -- and unsurprising giving the fact that it is fed day. most sectors are high. what has happened is you saw the api data yesterday. the ep data today. what you are seeing is the death is beginning to change a little bit on the inventory. slowing down a little bit. interesting to see how the financials opening. we will last that. energy and materials bouncing back after a difficult couple of sessions. it is all about the fed day. what will yellen take into consideration when planning the coming of the next hike. that she says the global economy -- he says the global economy looks like it is attracting japanese style inflation.

we've had steven major on. i am beginning to understand why now. >> he always gives us the strong impression of optimism. guy: you call it realism. why the take this slightly different take? >> we got down there but it is bad. when you look at what is happened to growth and inflation , not just in the u.s. but across the whole western world. the kind of them would surprise has been remarkably smoother than what we have seen in japan. the benefits of hindsight, we all know what happens to japan. it was blindingly obvious. if you look the forecasting community at the time, the consensus is clay said at the time don't worry, go back to normal. inflation will return to normal. it never did. eraou look the error that's

-- era and italy and spain. both growth and inflation have come in lower than expected. i think what they are discovering, there can test they can hike much slower. be -- should they be hiking at all? you've got a week china. exports markets, u.s. performing quite poorly. consumption is not doing too badly but consumption is not good enough to drive the u.s. economy forward. the real data will get softer. a little bit data higher over the course of the last month. we're seeing inflation is surprisingly on the downside.

what they will see in the economy and what is actually coming through are two different things. what they are doing in some ways is compounding of repeating the error made in japan in the 1990's. a discovery after the event that in fact things have not returned to normal after all. that if you're suggesting deception clouds reality, i do not want to go ahead with this conversation. i wanted to talk about something. helicopter money. if things are as dire as forecasters are as cloudy as hsbc thinks, at what point do they guess of the helicopters and start spreading that money around? it is better to talk about helicopter money japan than anywhere else. people describe it as a free

lunch. you print money and away you go. the way that helicopter money is most likely to work is through significantly raising inflation. you raise inflation, it equals real that. what you are doing is taking money away from creditors and giving it to debtors. it is a political decision rather than an economic decision. helicopter money is no more than a wealth tax and heavy disguise. disguise.heavy the last thing they want to see is higher inflation. there are those who will say helicopter money will work without higher inflation. but somehow i doubt it. it will come back to a qb story -- qe story. hans: the transmission mechanism for helicopter money is not helicopters. it is actually an essential wealth transfer from savers, on

to other folks. that is going to be politically untenable for japan. significantly dynamic for europe. i agree with you. everything you said previously was that it looks like we are going to do something drastic because we have such negative clouds on the horizon. thehen: bear in mind stories i am talking about is not so much a deep recession. rather the fact that growth and inflation -- look at japan over the last 25 years. equity investor in it -- in japan is a poor story. in terms of the performance for economy, it is made gains. slower than people would have liked to have seen 25 years ago. about at just a story macroeconomic quickfix. supply andry about

performance. the need for restructure in some way. to sibley say you can stick with this by doing a little tweak of interest rates or a flight of -- flight of helicopters is getting too much. guy: we are done with monetary policy? stephen: i think draghi is indicating that -- you can buy more and more assets. no limit as to how many assets they could buy. the problem with asset purchases is it slowly, you are nationalizing the financial markets. if financial markets do anything useful, it is an attempt to allocate capital. guy: you remove the market mechanism from the economy. stephen: that meets the capital markets cannot work successfully. one potential consequence is productivity growth weaker than

it does weaker than you would like it to be -- weaker than you would like it to be. guy: we have done japan. kuroda is talking about negative rates. the markets looking the wrong way, right? stephen: markets are focused on what central bankers are doing. the problem is the disconnect in the markets and the economy. what you have seen over recent years is a successful attempt to push equity prices much higher than back in 2009. equity prices have not been matched by gains in terms of normal gdp. you have a gap between financial hope and equity reality. guy: we work our way through and we will talk about hedge prices as well. that talksess plan about dividends. will it hold up to its -- will it hold up to inspection?

next. ♪

guy: welcome back. 12 minutes into the equity markets session. the story across europe. energy is leading it oil bouncing back overnight. we are seeing health care one of the areas where we are seeing rotation now. the busiest trading $61.68.

here's the first word news with come with that mom and often. hastha: hillary clinton tightened her grip on the democratic primary nomination with sweeping wins in florida, ohio, and of carolina good donald trump security victory in florida, illinois and north carolina. he was blocked in ohio by governor john kasich. senator marco rubio suspended his campaign after losing in his home state of florida. performance isc diverging across provinces as challenges arise. lee held his conference of the --r to end the national

most analysts see --global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. hans. hans: the world's fourth-largest brewer crawls berg -- it involves paying out half its earnings and dividends. also thing with this, stephen king, senior economic adviser. duncan, run through this with us here and try not to do any drinking jokes because guy and his guests have already started. keep it clean. is quite simply what you expect them to do.

great assets around the world good -- around the world. they are making sure -- within those areas. essentially the dividend is a case of making sure you stay with the company as they go through that restructuring process. guy: great businesses but in the wrong place, right? they've got problems at the moment in terms of inflation. they have had the regulation on beer as well here it they've got about 38% market share. you want to develop that. guy: in the meantime, you got a nice evident being kicked out. duncan fox joining us. the ruble has been the world's best-performing currency. volatile but over the last month it has performed quite well. the head of russia's largest ryansays it is about --

chilcote asked him why he thinks that is likely to happen. russian exports -- very good. [indiscernible] a lot of different technologies. some -- strong currency can help it. strong currencies and the investment cycle and production currency.export weak we need to find the right balance between these two different problems. it will be more convenient for budget fornd state the old layers.

ryan: you would like to see the ruble strengthen? is too weak.nk 70 ryan: give us your forecast. stable.more goesxample, the oil price higher than $50. [indiscernible] it will be liquid. ryan: if you are a foreigner, now is a good time to invest in russia. .uy: ryan chilcote talking let's bring back in stephen king. that is an oil trade, the ruble going higher. oil prices going up, the ruble goes up. do you buy the recent bounce in the oil story guy: stephen: -- the oil story? steven: not the big surprise

that ever happened. the path for oil prices has been lower and lower, a trend basis for the last couple of years. before that, parts of the world that has been doing well economically have been slowing down all the way through the last two years. those of the parts that consume large amounts of oil. -- they happened is want to say more supply is great news. what we've seen is a mix of some supply which is the sale story in the u.s. alongside weaker china. when you have had is a strange mix of low oil prices but also a declining world trade. normally think about low oil prices stimulating investments, trade, boosting the global economy. we've seen the exact opposite. the world trading disappointingly weak.

we're suggesting that part of what is going on is weaker demand rather than stronger than some -- rather than strong supply. hans: how do you get out of the cycle? clear monetary stimulus is not out of ammunition, getting close to it here how do you reverse the cycle to do something on the demand side? stephen: we've seen steadily over the last three or four years, china has gradually come to terms with slower growth. , all of then europe military ammunitions being use, growth has been accepted as a lower number. it wasn't a growing acceptance. if there were to be another deep recession over the next year or two, let's imagine there is a big shock somewhere in the world and the recession is a consequence, i think you do not

see a big shift toward focus on's physical rather than monetary policy -- focus on physical rather than monetary policy. if it turns you have another recession, monetary policy, you have to do something. there are two options. first is the fiscal option. second is each individual a nationalay go down narrative. collectively but something that deserves a worrying trend here it guy: monetary policy is on the rise. we are in a low growth trajectory. it doesn't spark the kind of structural reform that we need to see to get the economy moving again. therefore we need governments to wake up and smell the coffee. the only that happens is with a recession. yeah, the chance of

seeing a major fiscal push without recession is pretty low. the government is trying to balance the books and stabilize debt. reluctant offers. guy: is george osborne going to say the wrong -- going to say the wrong thing today? stephen: there would have to admit that the forecast is lower than admitted previously. guy: he said get up and say we can borrow at a very cheap rate. stephen: he will say that anyway. -- if things continue , he left to say more of the stuff. he will say we have a little bit of money in the kitty we can use to fund the beginnings of -- it

will not be a major infrastructure build but it will be an indicator that if it has to go down that rout it will go down that rout in the future. stephen king stays with us from hsbc. up next, a merger of equals. that story next here on on the move. ♪

guy: welcome back to "on the move." i am hans nichols in berlin. let's bring back in our guest stephen king. we have taken a tour around the world. you have been mostly pessimistic. here behind me is the brandenburg gate it is any place stephen:ptimistic guy: -- optimistic? stephen: germany has done rather well. germany has fared a bit better. the growth of the inflation has been that encouraging. there are encouraging signs in india. it has been an upside surprise. has not done as badly as other countries in europe. rather like germany

[indiscernible] nevertheless, the broader global story is one where surprising down growth and inflation. major, he's got 1.5 and treasuries. why are they wrong guy: and you are right? >> i think the point i would emphasize is looking at forecast errors and the way in which the world is involving impaired to what people expected, the persistent downward surprise and growth are factors that are drivingly yields lower in your -- are driving yields lower and lower. what is to -- what is taking place in japan, germany. -- theeasury real deal u.s. treasury yield. investors will be looking if they have to invest in bonds to buy treasuries.

hans: thank you very much indeed. up next,omic advisor. we're going to talk refugees. that story next here on "on the move." ♪

guy: welcome back. 8:30 in london. 30 minutes into the trading session. let me show you how these markets are performing. fed. waiting for the equity markets in europe are bouncing back, after having fallen in the dax. oil stocks bouncing as well, interesting given the recovery overnight. they're bouncing back. watch the data a little later on. let's get behind the markets of nejra cehic. nejra: thanks. i'm watching the london stock exchange today; these are not by any means the biggest movers on stoxx 600. we saw the lsc move higher in is

now coming off, edging into negative territory. this is after the two companies announced a merger of equals. they called it a merger of equals, but in fact nsc shareholders will own 45.6% of the combined group, with the other giving 54.4%. this is an all share merger, with a combined market cap of $30.5 billion. this comes after a lot of speculation. no word yet from intercontinentalexchange, or whether we will see a rival bid. msci at 2904p at the moment. bloomberg did a survey and analysts said that lsc could be worth as much as 3203p per share in the event of a bidding war. we aren't seeing it yet. so far it is a merger of equals. it will create a european titan in the exchanges business.

is the biggest decline right now, after it said it won't pay a dividend after net losses widen sevenfold. this is a german builder preparing for a costly reorganization and divestment plan. thanhares have fallen more 50% since their high in april, 2014. hans: thank you. let's turn back to europe and the refugee crisis gripping the conversation, especially in berlin. they say they will not accept the opening of new chapters for refugees. i am joined live. thank you for being here. it is clear with your position is and it is clear what angela merkel wants to do. will you make it any easier for her to cut a deal with turkey? >> let me say that there are the efforts of the european union to cut a deal with turkey.

to europe, we say yes. the question is that, suddenly, turkey came up asking for the opening . all the rest are free to be open. and demanding this while at the same time defining this timeline where we are close to resolving the problem, according to his assessment. let me say, since he are very close, do we take a few months to resolve the problem? this will automatically mean the lifting of any objections from any chapter. on the course of turkey from the european union. then why does he want this to be done up front, which will damage the efforts for the negotiation's to resolve the problem? either way you go it will be wrong. we say no to turkey, yes to

europe. hans: the answer from angela merkel's office, i suspect, would be that europe doesn't have to months for turkey to work out this issue. >> no, europe doesn't have. hishe can start arrangement with the european union; he can welcome them. the last time comes where we will resolve, finally, the problem, which will be also for europe, because it will relieve europe from many problems, then what he is asking will be filled. hans: but you are saying that it can't be fulfilled into your resolve the cyprus side, that you can't allow -- >> the issues of the chapters. we have to protect the process of peace. onee not going to ruin process for the sake of another.

hansguy: minister, if i can aska question from london -- if you were sitting down face-to-face with him right now, web deal would you be able to work out? if you are to find a way around this, what would it look like? >> well, i afraid that we are in a difficult position here. who we'd be sitting face-to-face president, whoy was going to deal with the matter himself. i'm giving you what is our time. at this present hans: there is a great deal of pressure on tsipras across europe. who was pressing you here time. in germany? >> let me tell you -- i don't feel a particular pressure from germany, bulimia tell you something. a few years ago, he was in a

similar situation. now graduated from this program of economic assistance. we have been a success story in surplus,out growth, all the necessary things that somebody could imagine, and now again, to be at the center of pressure, no. seem to have -- i want to come back to the point that i mentioned earlier. clearly, europe has a problem that needs to be fixed. this is something that needs to be fixed, that needs to be done very, very quickly. you talk about the fact that you are not feeling political pressure. should you be feeling political pressure? the time issue on this 1 -- we are coming toward the summer, as a result of which the

migration story will be very important for an awful lot of people. how do you think cyprus will be viewed in all of this? how do you think cyprus will end up being seen? having just been on the receiving end of a financial story, what do you think your country's reputation will end up looking like? >> our country's reputation a few years ago was very bad, yes? guy: no, it has been good. but europe is desperate for a solution, and you have made it clear --> -- >> that's what i mean. our country's reputation a few years ago was very bad. perhaps it will be bad this time, but it is about time that small countries stand up to these kinds of levels. hans: sir, if i can follow up -- you are prepared to stand up for your country, for the sake of

this peace process that you think is two months away -- >> i don't know how many months it is a way, but turkey knows far better than we do, because they are the ones that have something in their sleeve, which they will throw on the table, and the problem can be resolved quickly. get's up to them -- why is it up to cyprus? hans: give us your best case scenario for how the situation with turkey is resolved. >> turkey will take stock of everything that the european union is offering to them. it begin supplementing what they have agreed. in the meantime, with their help, the problem of cyprus is satisfactory. the result is they will get their chapters as well. they will not get them tomorrow anyhow. hans: ok. but before you see that affirmative action from turkey, you will never allow the refugee deal that angela merkel will try to conclude in brussels -- you will not allow it to go forward. >> is turkey going to refuse any

deal because of the chapter? andre the 300 billion another 300 billion? ignore everything else on offer in favor of turkey is of the chapters? hans: so you're saying it is easy for them to compromise. >> they should compromise. they should also make their part in this deal. it cannot only be the small countries -- cyprus is manageable, and will do it. hans: sir, thank you very much. he really clarified the situation. the minister of foreign affairs from cyprus. we thank you. -- upas super tuesday next, it was super tuesday, a suite for hillary clinton, but not for donald trump. where everyone stands, coming up. >> to the great, we can't be small.

we can't lose what made america great in the first place. and this isn't just about donald trump. all of us have to do our part. ♪

guy: welcome back. london is looking lovely this morning. the market up by 1/3 of 1%. equity markets are doing very much. the reason -- there are a number of reasons. the biggest is we have the fed later on, after which, you don't

want to put the big trades off. i'm going to show you this fantastic new function and show you what has been moving over the last 24 hours. you can see equities on the far side. moving, the market and equity moving. that's a reasonably big move, 3.5%. the japanese five-year is on the move as well, affecting five years at the front end of the curve. you could see rates going negative, down to around .5%. there is room to move on the downside. -- it is a fantastic function. great for the first thing in the morning. talking of things going on around the world, let's hear your thoughts with a bloomberg business flash. kumutha: asian hedge

funds will outperform their european and american counterparts in 2015 and have lost 6.6% today as the region's stock market plunged. morgan stanley has lost three emerging-market bond traders to competitors, according to people with with knowledge of the matter. aders sometimes leave in the weeks after getting a bonuses in the hopes of finding better pay elsewhere. compensation declined 10% last year to $60 billion. haver vorster and lsc agreed on terms for a merger of equals. shareholders will hold under 55% for moore t deutsch of oyster. we'll snake to the ceo in a bloomberg first at 11:00.

moody's has said that loans will rise over the next 12 to 18 months because of low oil prices and a decline in government spending. nonperforming loans will rise to about 2.5% of total loans over the period. that's your bloomberg business/. hans? hans: it was a ignited the u.s. presidential race. hillary clinton went five for five. on the republican side, donald trump won all except for the state of ohio, which went to governor john kasich. here's what the candidates have been saying. >> our next president has to be ready to face three big tests. first, can you make positive differences in people's lives? second, can you keep a safe? third, can you bring our country together again?

>> the fact is, we have to bring our party together. we have a great opportunity, and for people that are voting for democrats coming in, independence coming in, and importantly, people that never voted before. it's an incredible sight. >> this is all i got, ok? this is all i got. and all i can say is thank you from the bottom of my heart. but i want you to know something. we're going to go all the way to cleveland and security republican nomination. hans: guy, we are going to end up doing our north american road trip, by which i mean our ohio valley road trip. looks at things are heading to ohio, to cleveland, for a contested convention. we haven't had that in some time . guy, i will make you -- guy: backup. you went from our road trip, which sounds like fun, to my road trip, to your road trip,

which doesn't sound like fun. ohio. over to you. hans: i think we are joined by someone who is more immediate. our d.c. bureau chief is joining us. while we banter on who is going to drive -- and we both know who is the better driver -- give us your sense on how things look right now. is the ted cruz story that he came in at a strong second? is it being underplayed? is ted cruz the one playing the long game? >> i don't think the ted cruz story is being underplayed. i don't think he had a great night. misery is close to donald trump. he wanted to surprise; he wanted to do better in north carolina, for example. going forward, what we need to see is what you are talking -- will we see the contested convention, the great political white whale? it's almost mythical. whether or not these two guys, john kasich and ted cruz, can block donald trump from getting the delegates he needs to win with either a combined strategy

of plucking delegates going forward. again, donald trump had a great night. he would have loved to win ohio, but his margin in florida was huge. he's still going to be difficult to stop. i'm not sure we will get to a contested convention; we will have to see what happens. guy: megan, what message with a contestant contest send about the republican party right now to voters? is there some sort of map that says, trump was the guy, it is hard to argue, and as a result, that is the track we should be taking. >> that is exactly the debate. both the establishment level and across the party. taking it to a contested convention risks fracturing the republican party for years, if not a decade to come, especially when they have everything like the senate, and house, the governorship on the line in 2016 and 2018. it's a big risk to do.

it will be seen by some regardless as undermining the will of voters, undermining the democratic process we value and that the republican party values. there will be elements within the party that's a, look, hold our noses, let's go with trump, he is the man who has attracted people, he is the man whose message is resonating, and that is what we should coalesce behind. at the same time, people like john kasich, who now live to fight another day, although it is almost mathematically impossible for him to win outright, and ted cruz, will say we are the ones who can stop donald trump. we are the only options. pretend a lot of times to understand the technical levels on air pockets and euro-dollar. help me understand in terms of donald trump. is there any way that trump can get above 50%, or is there an air pocket of 48%, and will he go to 55%?

i think that margin in florida, the fact that his overall numbers are getting closer to that 50%, is troubling for the public establishment. >> absolutely. and look at his numbers in illinois tonight, also very strong. those are two big, diverse states. he need to take 6 in 10 of the remaining states to win this outright and get to the magic number. any time people have said -- river how people said he had a ceiling of 35? he is way higher in florida. a flood of people will be taking a look at what you are saying. is there a ceiling, or as rubio drops out, do voters move not to ted cruz or john kasich but to donald trump? hans: it will be fascinating. we will talk to you more on wednesday. thank you very much for staying up for us. that's megan murphy. up next, we will look ahead at the u.k. chancellor's budget. it's fed day in the usa -- so

much news to digest. we will be discussing what message policymakers are likely to send out. ♪

guy: welcome back. remember, the time difference between the united states and europe at the moment is four or five hours depending on where you are. less than it normally is. i bring it up because it is fed day, and you will want to know the number, because when the number comes out you will want

to react. frigid joins jones is now -- bridget jones joins us now. you get this on your screen. my question is simple -- what is wrong with this picture? >> i think the problem with that picture is that the market still does not believe the fed's upbeat assessment from december. that this connect has been the source of a fair bit of volatility and the interesting thing for me tonight will be, if the dots change -- hans: iguy: if they come down -- does away withd a cautious language in january february and reverts back to december, and the dots being equally as hawkish. hans: so the most optimistic move if you want to see more rate tightening is if the fed gives us a striptease of april. is this a strong hint that april

is the date for the next rise? >> i think probably june is more realistic. april was probably a little too soon, given the volatility. that i wouldn't be surprised if that is the way they want to go. guy: what would stop them? what would the reason for not doing that -- you look at the global economy, it is not as bad as we thought it was, but it is not great. what it is that will keep them away from hiking? he's talking about inflation, but there is not much inflation of their. -- out there. what will stop them? >> it comes to their assessment. what to they believe? if you look at what has happened since february 11 -- equities on a tear, oil off its lows, the dollar weakened. financial conditions have loosened in that time. now, it had tightened up until then, so we can see what the fed backed off.

but over the past month or so, that has changed. are they reacting to short-term moves? guy: it doesn't sell my kuwait to run an economy. >> or are they reverting back to december, saying it was just a blip, but we hold to the optimism? guy: interesting to see the metrics. richard, thank you. stay with bloomberg television. "surveillance" is. up next. plus, the british budget. a former greek finance minister, yanis varoufakis, will be joining us. goldman sachs is global head of currencies will be joining us to. a conversation you want to be listening to. oil is a little bit higher, equities reasonably flat, we are waiting for the fed. i want to bring up this time difference.

make sure you don't miss this later on. we have great coverage coming up, live from new york later today and in washington as well. that is the story. ♪

francine: stocks up, dollar strengthened oil rebounds. we will look at inflation in the u.s. as governor kuroda says he can go for negative territory. a trading tighten for europe. lsc and deutsche boerse say they will merge. and trump and clinton tighten their grip on the nomination. marco rubio drops out of the race. this is "surveillance." tom, we have a very busy day. the fed, kuroda -- i would argue that