manus: a dollar awakening. on asianomments way markets and commodities as the greenback gains ground. says theremier league currency remains the top priority but promise not to devalue the yuan. italian banks agreed to merge forging the third-largest lender in italy. a warm welcome to "countdown"

this thursday morning. somebody flicked the switch at the fed, from the most dovish central-bank meeting of the 21st century, according to goldman sachs. the tone has changed. the rollcall of hawkish voices rolls on. bullard questions the very validity of the dot. a cacophony of voices. bullard, evans from chicago, lacquered from richard and lockhart. market is beginning to be blindsided. they are necessarily underweight. says, is a pimco currency risk. goldman sachs, good old goldman sachs, will keep the dollar bulls happy. goldman says, stop worrying.

value the dollar is already in the price. let's see how the strength of the dollar is pervading across markets. you are seeing a dropout of some of the commodity plays. you have oil coming back off of its recent highs. timesories are three what were projected. volume study percent below the overall average. you are back below $40. the psychology of breaking markets. it into perspective for you, gold is at a one-month low. emerging markets are also lower. the glory is fading in this global equity market rally. before easter, will we be bull or bear.

yvonne? yvonne: really good morning to you. we are seeing optimism after the premier's speech. that resurgent dollar really weighing on asian markets. we are seeing energy and financial shares tracking down the market. china's stocks dropping the most in two weeks. we did get some earnings that were pretty weak. the theme seems to be low commodity prices. we did see that the small cap stocks entered into the bull market yesterday. we also heard from the premier reiterating its commitment of growth in the next five years. shares down 6.5% in shanghai -- 0.6% in shanghai. fluctuating between gains and losses but down 6% in tokyo.

comments from the bank of japan governor, kuroda, the impact he had was short-lived. he talked about negative rates and said he believed that the impact will eventually be felt in the real economy and does not see it happening in the next meeting when it comes to keeping this type of policy. it looks like we are back on the way down. japan's second-largest trading house. first profit losses in modern history. mining and mitsui os k lines all falling and dragging down the index. earningsith the other as well. petro china falling 4.3%. 2015 profit, 5% gain.

lower than estimated. the loss in resources overshadowed the revenue from financial services. debt they said that bad charges will be at least $75 million higher than previously forecast. manus: a great round of their from yvonne man in hong kong. reporter: two days after the islamic state attacks on interior,uropean ministers meet in the belgian capital to assess counterterrorism and airport security measures. the continue their search for perpetrators at the subway station of the 230 people -- 33 people dead and 200 others injured. face questions about last week's budgets.

his testimony followed yesterday by boris johnson, a leading proponent. youviewers, we will bring george osborne's appearance before the treasury committee. +++ merge and a deal that will

create the third largest bank in italy. banko populair will on shares in both banks. the ceo of -- after the firm's investment and troubled drugmaker, valiant, damaged the reputation. global news 24 hours a day, powered by our 24 hundred journalists and more than 150 news bureaus around the world. can find more stories around the world. manus: there has been is the weeks as awn in two drag on profits. the premier says he will not weaken the currency to reduce exports. he was upbeat about the future and described asia as the growth engine of the world. economyrowth of asian was faster than the global average and the total share in the world economy continues to grow. for one third of the global -- asia has become the most dynamic region in the world. manus: joining us now is stephen

engle who is live. obviously a really reassuring message there from one of the most interesting words, we will not devalue the yuan to reduce exports. -- fib,able, or playing fable, or playing to the gallery? >> i have been asking this a lot around china. the currency markets in the stock markets have been seeing a lot of volatility and i would have to say the chinese leadership is learning a lesson that they do need to convey their message more clearly and more readily to the investment community around the world because of that volatility. had all of those bets against the yuan thinking that the chinese had to devalue. message even though

some say, the chief strategist at goldman sachs told me earlier this morning that china would be served well by devaluing the currency. least rest of it they will keep that relatively stable. there were two other risks on the table today highlighted by goldman sachs and the property market rebound. goodman addressed boast -- both of those as well. he said the fiscal deficit is not too high at this moment and he would like to see steady development and avoid major fluctuations in the property market.

so far, so good. wass looking better than it a few months ago. lee said that he is improving and that is the message they are sticking by right now. manus: great job, great coverage. enjoy the rest of the day. thank you for taking the time. joining me now on set, it is the global head of microstrategy at state street global markets. as stephen was speaking and you were listening, there is a great debate. devalue toe won't reduce our exports. the markets are saying seven different. do you join that? how are you positioned in the yuan? take the lid off. >> the thing that we are interested in is the comment about what is fair for the

world. we have collected a lot of retail prices from online, in china and the u.s., and created a very large pdp basket. the interesting thing it is suggesting now is that the chinese currency is more than 15% overvalued. idea, that ithe would be beneficial to china to allow it to weaken further is true. for the rest of the world, for market sentiment, i think the comment from chinese policymakers are very important. they are as important as the measures we have seen from the bank of japan, or the ecb. they are as important as whatever it was that the fed has done. in terms of removing tail risk, that is what we have had in the last six weeks to two months. policymakers responded to the panic and they have taken the tail risk away or diminished it

significantly. manus: 15% overvalued is a fairly significant call. if you look, the fed raised rates, and they nudged it by an enth, but they did raise the rates. there was the lid taken off this repressed volatility. this says that these are so inefficient, distorted, and dirty that they will not be able momentum ofmong the the fed. >> the next couple of weeks will be interesting if the fed commentary continues in the current vein. the reality is that most people, --werees included, we so so surprised at how dovish the dots were. seeing the commentary from the fed that maybe the market over read the dots, that they did not intend to be that dovish -- if you take a side the kind of

financial dislocations, the u.s. economy is sending a clear signal. core inflation is above 2%, the labor market has tightened, the fed does need to tighten. the uncertainty is how much weight should the fed be putting off? manus: part of the shifting in -- if you have a pboc which has determined not to let the currency drop out of the sky, how are you positioned in terms of chinese currency exposure? according to the nice chart here, we are running out of steam. fibonaccis is the resistance line. those are the things i want to try to get a grip on. >> on the first point, i think

,t is sensible that ultimately china will have a weaker currency. however, they are going to control it. there was a period at the start where, perhaps they were concerned about it weakening too quickly. manus: a higher deficit in a different currency in the region. >> i think that is right. the market has been there and tried it. the central bank has reasserted itself. there have been a lot of comments about the efficacy of policy, and policymakers losing their grip. the answer is, no they are not. china should be able to manage its exchange rate. if they cannot manage it, no one can. manus: what about a tobin tax? how disconcerting would that be? >> i think that in general,

anything that hinders markets in that way would be concerning. i think that is true. i would argue that the central bank has enough reserve firepower to maintain exchange rate stability, without resorting to other kinds of measures. manus: i want to bring you a few headlines before we get you up to speed. this is from credit suisse. they are confident that they will deliver on its target by afterd of 2018 yesterday's huge groundbreaking news about the bank restructuring and our exclusive interview where he said, we were surprised by some of the positions. people were building positions for revenue rather than profitability. shares are worth 14.3 million swiss francs.

the chairman will stand for reelection. less than his counterpart across the road at ubs. here is your day ahead. starting with germany, we have the consumer confidence numbers at 7:00 a.m. including the u.k., we have u.k. and retail sales. later, the performance of the week. it depends how you spar against boris johnson. george osborne will be quizzed on britain's eu membership and the cost of an impact on brexit. decision fromate turkey and this afternoon, our attention turns stateside. set your clocks. pmi's willome visit be the dictator of the help. we will dive deeper into the fed reserves.

what will happen in april? the cacophony of voices. the hawks are rising.

manus: you are looking at a shot there of hong kong. the hang seng is down over 1.25%. what happens next has an impact for everybody. that's get an update on the business flash. a company has agreed to pay 12 $5 million to settle a claim that the drugmaker paid bribes to china from 2009-2013. $2pany payments include million in penalties and $1.7 million in interest. is said to seek

the removal of the yahoo! board and will nominate nine directors to the board, according to a report in the wall street journal. there said to include star board 's ceo. cites a street journal starboard letter as its source. kenneth coke is said to have left goldman sachs this month. according to people familiar, he will join the hong kong exchange as head of the cash trading unit. it includes the china connect program which will link it to the shanghai stock -- stock exchange. descendents of john d rockefeller sold their exxon mobil stock and plan to dump all shares.ssil fuel stayingd there is no rationale for copies to explore

for oil as companies contemplate cracking down on carbon emissions. goldman sachs remained the largest bank by commodities. company madebased the most money from rom at your real's for the second consecutive year. that is -- the most money from commodities for the second consecutive year. kumutha, thank you very much. un-changedd that the economic outlook among goldman sachs and his colleagues should lead able to consider a rate hike. >> you could argue mobile risk lower, outlook is maybe but another strong jobs report, labor markets are improving. you could make the case. metcalf is the global head of macro strategy and state street global markets.

he rejoins us for this. there is a shift. goldman sachs has maintained that last week, we had one of the most dovish fed moments in the 21st century. they say that your only trumped by forward guidance since 2011, september 2013, when they missed the taper. this has been a dramatic fed meeting, a dramatically dovish moment. there is a cacophony of voices shifting out of the shadows to change our mind. >> the one thing that i would say about the dots. way of veryone numerical part of forward guidance. history of to the central banks that have tried to forecast their own rate, the riksbank have done this the longest, they are not that good at forecasting where they will move the policy rate that they set.

just like central banks can missed forecast growth and inflation, they can missed forecast their own policies. there is perhaps a precision in the dots that is not really warranted in forward guidance. i think that the dovish nature of the fed was all about the deterioration of financial conditions. if you look at some of the measures of financial stress the the kansas fed measures or the cleveland fed measures, if you look at the level of those indices, they spiked a lot in february and have come back, but not all the way back. it is sensible in that regard for the fed to take the foot off the pedal a little bit. to say, let's wait and see what happens. but the economy is clear, core inflation is above 2%, the labor

market is strong, they should be tightening. manus: that is your base case. let's get very bloomberg about it. how many hikes about it? this is what i really fascinated about. the market position, long dollar positions down by 80%, the markets are the least long since june 2014. is that a golden opportunity to add to your fingernail long positions? >> you say fingernail. i hung onto that dollar long. manus: we are not liquidating! >> we will stay for the dollar long. part of it was about the ecb. i did not think the fed would turnaround so quickly, but the market powers undereimated how europe.ltr is in sticking with the dollar, because the economy is strong, and we believe that financial conditions will normalize, it is clear that the fed goes at least

twice, perhaps three times. you could get some upsize surpses and even more than that. the interestinthing about the market is that thefed has come to the market. manus: the fed is trying to correct this dovishness. >> here is the interesting part. the market has been ahead of the dot all this time. bequestion is, can the data strong enough for the market to get ahead of the fed, or at least ahead of the dots. manus: that would involve a complete capitulation, wouldn't it? >> i think it would be the market pricing in where the economy is. manus: we should probably cheer that, rather than necessarily see it as something negative. we have a lot more to go, global equities to get into. metcalfe,chael global static -- strategist at

state street global markets. find out what happened when the mayor of london faced lawmakers to make his case for bringing the u.k. out of the eu.

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follow every pitch, every play and every win. change the way you experience tv with x1 from xfinity. manus: 6:30 in london and 7:30 and brussels. nejra is here. we have been talking about the value of the dollar and its relationship. it is pervasive. putting a cap on these risk markets. nejra: it seems the dollar is driving everything today. i have tracked it against the msci, all country world energy syntax. bloomberg commodity tracks returns. you can see as the dollar heads higher, commodity stocks head lower.

the dollar is on five days of gains. the longest winning streak in almost two months. gaining ground versus all of its g10 peers. oilourse, we have also seen holding its biggest loss in six weeks. that is that relationship. look at the dollar versus gold. re you can see the inverse relationshipd. gold falling to its lowest in almost a month. this week it dropped 3% heading for its worst weekly drop since november. they are dropping for a second day, but currencies are falling as well. they're heading for the biggest a client in almost two weeks. i will show you what is happening in the jgb and u.s.

treasury market. they're proving no deterrent for investors. manus: let's get you up to speed here with kumutha. kumutha: europe's interior ministers meet to talk about counterterrorism and airport security measures. they consider their hunt for the perpetrators of the explosions at the airport in a subway dead andhat left 270 injured. osborne testified before law measures on britain's measures

and that you. his testimony follows yesterday's by boris johnson, a leading proponent to leave the eu. they will bring you george osborne's appearance before the treasury committee. goldman sachs says the effect of the strong dollar on inflation is limited. he suggests that it poses little threats to inflation goals, challenging comments by policymakers. the report argues that a strong dollar is not translating into significantly cheaper import prices. goldman also says that the central bank faces fewer headwinds than markets are pricing in. the ceo of one, could offend goldfarb are comanager -- the sequoia and goldfarb.

goldfarb will take over as lead manager and the company ceo. the offshore yuan dropped to a one-week low after china's central-bank weakened its daily fixing. pimco says that it sees further depreciation of the currency. the people's bank of china anered its -- after overnight advance and the dollar on comments from federal reserve officials about possibility of an interest rate increase as soon as april. popolare dibanks, milano and banco popolare will create a merger. shares in both banks were suspended yesterday pending an announcement. global news, 12 four hours a day powered by 2400 journalists and more than 100 news bureaus around the world. you can find more stories around

the world. guy, take us to this chart. japan's currency is shedding, potentially, some of its haven appeal. guy: for the last few months we have had risk on, risk off. is that beginning to break down? maybe that chart takes you to the idea. the yen weighted index and the e.m. index. look how tight those lines are. into the big selloff, january is the big selloff. you start to get these lines blowing out a little bit. you can see the inverse correlation beginning to break down a little bit. the point here is, you have had this very strong period of risk

on, risk off. which the market has weathered. are we starting to see more volatility creeping in? that is something that investors will pay attention to. the other thing to note is, if you extrapolate what the yen has done this year, and work it through to the rest of the year, you could end up with a strong yen this year which is something that mr. abe and mr. kuroda are not keen on. but taking it back to the correlation that some of those will break down even further. manus: this has been a headache for corona. -- kuroda. when we asked you last week you said, my long dollar prediction is based on the assumption that the bank of japan will do more. how does this factor in? >> it is a very interesting analysis. i think one of the things that

is beginning to change is investor holdings and positioning's. andainly in december january, in general investors were underweight. guy: it has been for a while. >> all the way through abenomics, it has been underweight, the young. -- the yen. so he had a safe haven asset that was undervalued. so in february, brilliant. the perfect asset to go into. puzzles,of the investors seem to be building an overweight in the yen. given that risk is coming back on, and the position is being unwound, it seems to make sense that some of that tie will start to break. now that the risk is back on, should dollar-yen start to trend

higher, we can say that april is back on. it may break even further. manus: perhaps one of the strongest ones that we may see flip around. as you said, positioning is so skewed. manus: thank you very much. guy johnson will be back with "on the move" in just under one hour. let's talk about london in the finance world. mightily" ifurish britain votes to leave the eu that is according to the mayor boris johnson. in a series of increasingly charged exchanges with the treasury committee chairman, they played his impatience with johnsons'approach. >> what i am trying to elicit from you is a much more narrow question. >> i am afraid that i must respectfully disagree. >> i have been through quite a

list there. requirehings would quite a list of qualifications to understand. i think a reasonable man would say you either exaggerated or misrepresented. >> i failed utterly in your experiment. somethinge out with which you claim to be hot from the press but you do not know what it consists of. >> some of my views have been critiqued. i'm grateful to you for the opportunity, earlier in this hearing, to set straight some of the gross misrepresentations that have been made -- >> that is enough of that come a boris. it would help if you do try to address the question that was asked. >> i have answered all of the questions that have been asked so far. reading some of the stuff from the remain cap, they should get their facts straight. >> what we are trying to do is get rhonda -- get around the misrepresentation. manus: getting beyond the

misrepresentation. there is a challenge in politics, globally. the u.k. chancellor osborne is up next. it is his turn to testify before lawmakers on britain's membership of the eu. face also likely to questions after last week's budgets bond the conservative risk. for u.k. viewers, we will bring you osborne's appearance before the treasury committee live at 10:30 a.m. the treasuryt of select committee. the mayor of london. osborne to go there today. let's not leave the politics aside, but we try to understand risk. what we have got is the mayor warning -- i want your opinion, that the city of london would flourish, that stirring would be strong and robust outside of the eu. do you agree or disagree?

>> i think the first point to note is that sterling seems to be the main financial vehicle by which markets are racing in the brexit risk. we have seen a massive spike in sterling volatility. manus: this is volatility. three-month volatility. we have written a couple of stories this week. financial crisis of recession fears, back at the height of the crisis. the green. is euro area crisis. scottish referendum. that is practically perpendicular in terms of momentum. $16 billion worth of debt. but the market only thinks that cable was dropped to 135. that is nothing. >> a couple things on the volatility chart. the first is that it could get worse. it is high, but it could get worse. the other point to note, the

skew is very clearly favoring sterling weakness. you have a massive premium for sterling downside. in terms of the size, part of the issue is that sterling has weakened quite substantially against the u.s. dollar. one thing that i would say is, we have some interesting real-time ppp readings. collect these prices from the internet and matched prices against goods in the u.k. it is a bigger big mac. the interesting thing is that suggests that fair value for the pound is around 1.37. sterling has weakened a lot against the dollar already, but it has only recently gotten to that fair value. it could weaken significantly further if you got a vote to leave. manus: from an equity point of view, you have the argument of hugely overseas owned stocks

that could come under pressure. u.s. bonds did not like the stocks in the prices, they fled, and they were slow to come back. companiesese ftse 250 -- that is where we are seeing meteoric shifts and ownership. global investors have cut their ownership of u.k. equities. are you adjusting? >> i think in general, most of the adjustment so far has come in the currency. what we have observed really is that the underlying asset flows have not really changed. guilt or equities is not significantly lower. what they seem to be doing is hedging the currency risk more. they want to hold on to the underlying asset but it seems sensible to hedge the currency risk. that is what we observed. the only market really to

discount any chance of it is the currency market. u.k. equities have performed really well. manus: the best-performing equity index in europe. -- hugeion, as a hedge fund manager, you are not adjusting. look at that. that is monumental. opinion inewed your terms of taking any protection on u.k. equity exposure? this isi would argue is what investors are doing as a group. that is a premium to buy the downside protection. what it would seem to suggest is , the market thinks there is a risk if we leave sharply. that is the hedge. is, ifey are not doing you do get such a big sterling move, what does it mean for u.k. inflation and guilts. manus: what does it mean in your

opinion then? >> it could be quite bad. we are at an inflection point. u.k. inflation is turning higher. the bank of england forecasts modest pickup in inflation. if you get that level of sterling weakness, we will get a higher inflation rate. manus: which means the market is potentially way behind the curve? >> yes. the gilt market has been very high about the possibility of inflation and what that would mean. manus: risks are rising, michael metcalfe. thank you very much. productivity, you want to understand productivity, come meet the guests. the german carmaker has to submit plans today on how it intends to fix its tainted u.s. diesel cars. can it reach a last-minute deal?

manus: welcome back. downutures are indicated 0.8% at 2025. let's talk cars. it is the deadline for vw and volkswagen. they have to present a solution for the tainted diesel vehicles in the net it states. if the carmaker -- in the united states. if the carmaker cannot strike a deal, they could hit fines. let's go to our european transport reporter. good morning to you. vw is expected to meet or miss the deadline? reporter: they are expected to miss the deadline.

they have not come far enough in the negotiations with u.s. authorities to reach an agreement today. they will end up going to the court empty-handed. talks will continue to the deadline. there could be a last-minute deal, but we are not expecting that at this point. manus: what can the court do. just run me through the reparations they can make. how much would it cost to take those cars off the road. 600,000? it must be a nightmare, logistically. talk to me about the finances. financialthe implications for volkswagen are bad matter what. if they have to take the cars off the road, there are estimates that that alone will cost them $9.4 billion. in the civil case, the doj is one of the plaintiffs in the case. you do not want to mess around with the doj. the worst-case scenario penalty

for volkswagen is $46 billion. there is a lot riding for volkswagen on the stocks. they will probably not reach a deal today. they will probably tell the judge, we have made some progress and we need more time. the judge sent this deadline a month ago. whether he gets time, how much, and if he says, if you do not reach this time, you will start paying this. get ready for a big bill. it is quite a crucial hearing rum volkswagen today. one has to consider that this has been going on for six months, and before it became public, they have been dealing with u.s. authorities for the better part of the year. patients is running out and there is quite a high degree of frustration on the u.s. side to get this settled. manus: incredible frustration all the way around. a bit of breaking news. if you are an investor in banco poplare dir

milano. they had their share suspension lifted. they will resume trading. this is a deal where you will theit creating third-biggest bank in italy. a raising of capital. banco poplare will raise one billion euros before this merger. you're seeing those two stocks resume trading today. consolidation is the name of the game in the italian banks. a lot of people had presumed that this would come to pass. what happens next and more deals in italy is the key question. in the wake of the terror attack, the republican presidential front runner has taken aim at president obama. the u.s. commander in chief should have come back to washington, rather than continue his visit to china -- to cuba.

mr. trump: i watched president obama land in cuba with nobody to greet him, in particular castro. i thought that was terrible. i watched them at a press conference yesterday. it looked like he was a baby. castro was the boss. i watched him today, sitting at a baseball game in cuba, while people with body parts are laying all over the place with threats to us and everybody else. i am watching him in the sun watching a baseball game. i think it looked so bad. he could've left cuba and said, this is an emergency. he should be back in washington in the white house where the president should be at a time like this. it looks so bad. hitting some fairly rotten nerves there in terms of the subject matter he has covered. donald trump with "with all due respect." he is hitting some rotten nerves

in terms of what obama -- some pretty raw nerves there in terms of what obama should have done. every time there is a crisis moment, trump seems to be on it in terms of no fear in sending it the way that he sees it. market impact the of this stuff, there is one part of the rhetoric, i wonder at what point the market continues to discount it as a possibility, like he says all of these things about the iranian oil deal. manus: is he ready to roll that back? but he also wants to send all mexicans home and build a wall. >> it is difficult to tell what is noise and if he got in, what would be policy. financial markets that are for discounting mechanisms, at some point if there is a chance of his election, the oil market might look at that and say, we factored all of this supply coming back in our line. it is obviously continuing to

build. maybe we should not factor that in as much. manus: it depends where he shifts his rhetoric. i want to get a bit of a global perspective. we wrote a great article yesterday. 14 equity markets with a total value of $27 trillion. this is the start of the year. we had conversations about it. indices have aor combined value of $28.5 trillion. let's bring it up. what you are seeing is a big resurgence. back in a bull market. that is the point. the yellow indicated there. do you buy into this rally? the dollar is on a ramp, oil coming off its highs. i am a skeptic. which can't are you in? there are another 10 markets set to join. are you a buyer, are you adding

money, are you skeptical? >> sentiment is improving. i think that it is improving for real reasons. we had a storm. policymakers have responded. they have taken away a lot of the tail risks. because of that, the panic is easing. sentiment is improving. it is improving from a point where sentiment was very weak. manus: profitability is 15% below the level in two dozen seven. -- in 2007. >> fundamentals need to continue to improve. so far, policymakers remove the tail risk. markets are on data watch. if the data continues to be good, the rally continues. manus: great to get your input. thank you for getting up early to join the countdown team. that is michael metcalfe, global head of market strategy at state

street. a cacophony of voices which are changing the dial and the perspective of where the fed does. popolare purchase. ♪

hawkish commets from fed president that weights on markets. growth, china's premier says the economy remained a top priority but promises not to devalue the yuan to boost exports. they agree to merge, forming the third largest lender in italy. ♪

manus: welcome to "countdown." equity markets are lower. somebody flipped a switch at the fed and said get out there and under the most dovish tightening in the 21st century. joining this, it was mr. bullard will raise skepticism over even having -- the dollar is higher. the commodityf markets, oil is lower. there has been a shifting of gears. they think there is still room for the fed to do at least two, possibly three hikes in 2016. in china, said it will not devalue the yuan, but equity market are a bit skeptical. we've had a rollicking ride on these equity markets. by half of a percent in london, 8/10 of 1% in paris. u.s. equity futures are also of

the lighter. the dollar is set for its best week of 2016. we have seen broad-based buying, that is what our sources are telling us amid thin liquidity. the gears have shifted. goldman sachs had a message on the fed. they say stop worrying so much about the stronger dollar, it is already in your inflation data. volumesropping by 4%, are meager. only 19% the average. crude stockpiles are back. gold drops by half of 1%. gold was at a one-month low. let's bring you some breaking news up next, if you buy your clothes there, you're adding to

these numbers. full-year revenue for print one 15 billion -- $4. billion. the market was looking for 4 .14, but the actual number was arit's these .1's that brandede sales growth of three point 7% for your operating profit. that was a little bit below the operating side. dividend, ordinary dividend, dividends are one of those values that are becoming a little bit more scarce in these markets. let's change the agenda and get out to asia and talk about the msci, under pressure there.

we see shaft -- shifts in the yuan. >> i wore the right color to work today. we are seeing a broad-based selloff. we are wrapping up this week in the red. one play and 6% down and shanghai, the hang seng down about one and a half percent -- shanghia, the hang seng down about one and a half percent. miners,producers, the as the banks falling at a 1% in sydney. the regional benchmark 30 much with losses at about 1%.

we did hear from the bank of japan governor talking about negative rates. same the impact of this, he thinks will really trickle down eventually into the real economy. he doesn't see sense in keeping this is a policy. we did see the yen weaken. yen holding onto those losses. you mentioned that dollar continuing through during the asian trade. the em, as well as the major peers, continue to see declines. we did to the pboc yeezus by a third of 1%. that is the most we have seen since january 7 -- ease by more than one a third of one percent. that is the most intense january 7.

they said they were not devalue to boost exports. pboc advisor saint are pressures for the yen to devalue. those two exist. he doesn't see that exchange being stable. it will basically remain pretty well within range as long as the economy stays it sound. a very lucky color is what you are wearing. have a great easter and thanks for wrapping up the markets. let's get to the bloomberg first news. after islamic attack a state on brussels, there assessing counterterrorism measures and airport security. the belgian police continue their hunt for the surviving perpetrators of the explosion at the airport and a subway station that left 31 people dead. the u.k. chancellor testify

before lawmakers on britain's the eu today. he is lucky to face questions about the budget after it sparked a public risk in the conservative party. his testimony follows yesterday's by london mayor boris johnson, a leading proponent of the campaign to leave the eu. robert goldfarb, and the comanager of the sequoia fund is retiring. that is after the investment valeant drugmaker experience problems. goldfarb will take over as the manager and the companies's ceo. global the 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. thank you very much.

let's talk about italy. buy, and itreed to is an all stock deal. it makes it italy's third largest lender. jeff, welcome. is this mario draghi waking up a perfect scenario. this is what he wanted, and the italians are playing ball. caroline: this article tackle what has been a significant amount of bad loans. see m&a and bernstein calling this a few days ago. this deal has been brewing. they say this is an iconic deal. remember, 25% of deposits are actually controlled by the so-called smaller banks. there are dozens of them, really.

to actually buy up even though last year there was a ruling that lifted restrictions on ownership of voting rights. that shouldn't make this easier. now we are starting to see that build. third biggest italian bank being created. this is 5.7 billion euros of market value when you bring the two banks together. sell poplare is going to some shares. manus: we have a softer opening in europe, waiting to see what happens. a billion euros in capital raising, that will be put through the market. is there a sense this will be a ecb's in terms of the perspective? many feeling that nothing has changed within the italian banking system throughout the crisis. the ecb will be a real litmus

test. this is the first deal, the first merger that they're looking over as the regulator since they have become the single supervisory mechanism. this will be a key test to see how this merger progresses. also, when will they see the hoops they want to jump through. this has been brewing for several days, and weeks. ecb needed to tic the boxes. that is why we are seeing that coming from banco poplare. is what the ecb wants to see. this is about the credibility. were channeling mario draghi, let's bring jeff into the conversation. it fully manager over at -- that is the chorus line of this piece of theater. we have the ecb, providing more the quiddity, more targeted uidity. -- more liq

there is a lifeline for spain and the italian banks. this will be good news for the ecb in terms of getting this consolidated. inf: the banking system europe is under a lot of pressure but ecb putting for the negative rates up there. is an abilitytro for the banks to have a lifeline particularly for those peripheral banks. i think deals like this are the sort of thing we would expect to see more of going forward for consolidation to strengthen. manus: what does it do in terms of bank debt? going to say it was going to be through equity, maybe before. it is going to be a higher of the two. there was a huge moment in contingent convertibles back

when the whole world by the liquidity in the banking system was under huge pressure. we have moved on. what has happened in your space. we have seen the equity markets recover. jeff: the focus we have is on the global high-yield market. what we have seen since oil came is risk assets. the high-yield market has rallied by 220 basis points. the global market around 200 basis points. a real compression in spreads. februarycome off those lows. ,anus: what would you favor given those kinds of moves? jeff: we have seen big moves.

when you do see the sort of big moves, it is's for thought. if we look at the performance month to date, we are on pace for our best month in 2011. movement.ious thank you very much. let's see how the stocks are at the open. jeff will stay with me. a little bit of breaking news now, coming from brussels. a national broadcaster, rtbf, is a second man accompanied the suicide bomber at brussels metro. this is potentially a second person accompanying the metro bomber. interior ministers are meeting today to discuss counterterrorism and security measures. that is the most recent breaking

headlines now on the alert in brussels. ♪

a live shot of the city of london. indicated,utures are .6% lower. there is a shift in these markets after oil comes off of a high. as agreed to pay the settlor u.s. sec case that claims the drugmaker paid bribes to help professionals in china. the company's payment includes $2 million in civil penalties in interest.lion

the issues predict new compliance measures. the hedge fund star board will seek the removal of the abu board and will nominate non-directors to the board according to a report in the wall street journal. starbminees will include ard's ceo and could start proxy fight. goldman sachs remain to largest a bank by commodities in 2015. of the top 12, investment banks the company made the most money for vomit. as for second consecutive year according to reports by an analytics from. j.p. morgan chase and citigroup were joint second. manus: a little bit of breaking news coming through on the bloomberg channel, this is their electric cars. they will recall 10,000 electric

cars that were built between the -- thef the 12 and 2014 years of 2012 and 2014. 10,000 cars are to be recalled, it is a brake test. this coming through on the bloomberg terminal. car hasn'tctric caused -- this is important -- the electric car has not caused any accidents. in theses the byword recalls. we will bring that to you when we get more detail. let's shift our attention back to the united kingdom. the theater of parliament in many ways, some people say it is a spectator sport. he testified before lawmakers on

the uk's membership of the eu. questionsght fetch about his budget from last week which sparked a public risk in the conservative party. we are getting up-to-date in should expect.e always to get you -- good to get you out of the palace. splitss some mighty thearing even among conservatives. >> the focus will be on the budget. that was when the trouble began. there was a 4 billion pound hold because he had to drop a plan cuts to disability benefits. the whe issue sparked the resignation of a cabinet minister. --y say it was modified motivated by brexit and they wish to destabilize the

government. be that as it may, the problem they have now is that the party is split. are agitatinge for brexit. the chancellor will certainly be asked about what his case is for britain to stay in. manus: if we look at the whole argument, yesterday was about boris johnson. they question osborne. that committee is trying to get past the hubris in terms of the in and the out. how aggressive do you think they will be with osborne today? budget aggressive on the front. the focus was originally going to be on the eu, it has now

shifted slightly. there is a problem. pluggingas delayed that 4.4 billion pound whole until next year. so far, he is gotten away with it because the opposition has missed a few opportunities to really hold the government into account. they have indeed. thank you for a much. let's see what today's theater brings in. it want to bring you back into the conversation. speedday, you got full boris johnson. today, it is the chancellor's opportunity. you can check that out at 10:30 london time. we will bring that to you right here on bloomberg television. global high-yield for the --we haveeff, we know had these conversations -- that hte risk in these markets is

through the fx lens. this is a nice display. this is the three-month implied volatility for dollar sterling. look at this, practically vertical. it has gone off the scale. there could be an awful lot more to come. we believeton-vance we will. in sterling, with seen in volatility creep in. it is mostly been confined to the fx market with the have seen that. this will focus on fear. the next few months will be very much fear-based pandering to people to figure out which way they should vote. the campaign is very concerned about if we stay in the european union, what does that mean for the migrant crisis. what does that mean for u.k. sovereignty? that will focus on the fears

that if we leave, what does that mean for -- manus: the great unknown. view, positioning pointed i want to understand this. i understand the fx story, the isee month, you know, it shifting. and equities, as i said to michael metcalf, the u.k. market is one of the best equity markets and western europe. take me through the high yield. take me to the bond market perspective. it is the differential on which we benchmark all of these bonds. it has seen very little movement. with that.ld agree that is the case. mainly confined to the fx in terms of individual bond movement. sterling bond on the accounts for about 3.5% of the global yield market. some technical

weakness, but not the kind we have in the fx market. not the kind we would expect if we do good on the path and that uncertainty increases. the one thing that fear brings is uncertainty, and that will eventually lead to further weakness. we have been reducing our sterling exposure. as we move closer to the referendum they we believe these risks will be expanding into sterling asset weaken us. -- weakness. manus: this reach for yield and negative rates, how is that going to rebalance itself? jeff: this is the sort of thing we are concerned about our global mandates. what we need to focus on is what does it actually need? you alluded to some hawkish

comments. as inflation rises, we saw it above, we are starting to see that momentum is picking up. u said most likely wants to move. what is the theory within eaton vance? whole dovish fed, to a host of voices shifting the dial. how many do you think they will do this year? when you look at the rhetoric, it is her different depending on which party you are looking at. alluding to the fact that inflation is higher but we need to see more of that coming through me have reach the employment targets we are looking for. she also recognize that we can to view this in just a vacuum. cognizant of global risk and with other central banks are doing.

that divergent and monetary policy is something more difficult to achieve than first thought. manus: always great to get the input from eaton vance on countdown. equities open lower across the european equity space. ♪

♪ welcome to "on the move," cap to get down to the european open. fedbuck is back, and the shouldn't be worried. i goldman sachs doesn't think the dollar poses a good thread to inflation goals. eu referendum is all political, will the chancellor make an economic argument? brexit, one fund manager says we're missing the elephant in the room.