♪ 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.

brexit, one fund manager says were missing the elephant in the room. one fund manager talks about pricing in donald trump. back, and i will tell you what is happening where half an hour away the european open. we should get a fairly negative start to the day as we head into the long weekend. it is the long weekend. the second thing is, we probably have light volume today. light volume has been a feature all week. i expected a it'll be more exacerbated. i want to show you what is going on around the world to give you an idea of what is important and what is moving in terms of equity markets in latin america trading to the downside yesterday. that was the story overnight. we are seeing that in terms of -- canadian 10 year, pay attention to that. oil, big move.

the first thing you look at when you get your desk. let's catch up with what you need to know. days after islamic state attacks, your interior ministers meet in the belgian capital to discuss counterterrorism measures. they continue their hunt for the surviving perpetrators of the explosion. u.k. chancellor george osborne testifies before lawmakers on britain's membership of the eu today. he is also likely to face questions about last week's budget after it sparked a public risk in the conservative party. his testimony follows yesterday's by london mayor boris johnson, a leading provider of the campaign to leave the eu. we will bring you george osborne's appearance before the treasury committee live from 10:30 a.m. poplareian bank banco

the merge to create third-largest bank in italy. shares of both banks were suspended yesterday pending announcement. , and comanager of the sequoia fund is retiring. that is after the firm's investment in trouble drugmaker valiant damaged the fund's reputation. company will get in the ceo. guy: thank you very much. saying ite premier has the tools to handle any challenges and meet growth targets.

he was speaking at a forum where goingoc governor is still to comment later on. joining us now from beijing is kevin hamlin. what was the message, the communication that is coming out of this meeting? does it differ from what we've had over the last few weeks? we've had a series of high-level meetings recently in which top chinese leaders have spoken. the narrative is a pretty familiar. they're getting is a reassuring message. they're saying the 6.5% growth target for the next five years that they said recently is achievable. it is not too big of a stretch. they're the fiscal space to support the growth, and they are aware of debt problems that have been building up in the economy. but those are being managed, and that at the same time they're working on revving up new growth drivers weather in services,

technology, finance, that will help pick up some of the flack from the old economy that is slowing down. it is basically nothing to worry about according to them. guy: the chinese market down the most in two weeks today. our investors buying this calming message? : not really, there are a lot of skeptical investors out there. fundamentally, they feel that the 6.5% growth target for the next five years will require a lot more stimulus to achieve. that will cause the debt trajectory to continue to rise. basically, it is a school of thought that says that china is just kicking the can down the road and potentially storing up bigger problems that will be harder to handle in the future. guy: thank you very much for the update. beijing, weut of

now go to the ceo and founding partner of asset management, good morning. the chinese said it will not the value, do you believe them? >> i suspect they won't need to because we are seeing dollar weakness anyway. it's a looking quite robust now with all the things coming up. growth has to be financed in china, it is not a freebie. it's typically financed by spending, which is on the increase. and we just saw that bank lending will resume. this is all positive news. an exportition from led grown economy to a domestic led economy. guy: your premise is the don't have to do that because the dollar will stay down, right? yes, this yogesh: will help china. guy: the market listens to the fed, and they are beginning to take the view that maybe we can take all of the cuts of the

table this you. in your bookikes right now. the dollar is starting to come up, goldman sachs saying the fed shouldn't worry about the inflationary forces of a stronger dollar because it is largely armored he happened. it clears the path for them to start hiking. if you get that wrong, how much is the rest of what you are saying start to crack? sh: it will crack at the dollar starts to strengthen a little bit. 11 impact on price, and global growth which is quite robust at 2.4%. back in december, the market was expecting four rate hikes, now the possibility of around 40% by year-end. over theghtly higher last few days. guy: let's assume that they do

one, is that enough? e, and: one is fin, appropriate. the concept of two or three doesn't make sense to us. guy: april looks like it is off the table, but we are up 70% by the year-end. higher after the hawkish comments. i suspect there is anxiety in the marketplace over the last few days. guy: we will come back, plenty more to discuss. he will stay with us. up, volkswagen may miss a deadline for fixing over half a million cars. what does that mean for the company? ♪

guy: here's the bloomberg

business flash. may face the toughest year since 2008. sales of goods at full price will be in a range down 1% to up 4%. that compares the forecast of the third of the year for growth of 1% towards the 6%. vartis has agreed to settle u.s. sec case that claims the drugmaker paid bribes to help professionals in china from 2009 towards 2013. the company's payment includes $2 million in civil penalties. said the issues raised predate new compliance measures. the hedge fund star board the sick the removal of the yahoo! board and will today nominate nine directors to the board. that is according to a report to me not -- wall street journal. it is said to be the set of a proxy fight over concerns about

yahoo!'s sales profit. that is your bloomberg business flash. for a much.ou volkswagen is in the spotlight once again over its emissions scandal. it could risk missing a court deadline set in the united states. bloomberg's european transport commuter that reporter joins us now. what are the chances of this deadline to be hit today? >> next to zero, i would say. the most likely outcome i suppose at today's hearing will thatme kind of progress volkswagen will reassure the judge that they have made progress with u.s. authorities. it will try to lay out some broad guidelines about the state of the discussions. it is unlikely we have an actual agreement today. guy: no agreement, i'm the

judge, what will i do about it? eitherwell, he could give volkswagen more time -- probably the most likely outcome. he set this deadline about one month ago. want to give volkswagen a pretty clear indication of what he can do, and what he will do, they don't meet this next deadline. that involves measures including forcing the cars off the road. can take away their registration, that they can no longer drive on the road. volkswagen for everyday day the don't come up with an agreement. i think the judge has pretty clear words last time, pretty harsh words about folks like an and its efforts so far. i don't think you'll have a lot of patience today. guy: thank you for the update. yogesh, vw has an interesting

point. u.s. investors have fallen out of love with european stocks, and u.s. carmakers may be worried about what is happening with vw. get u.s. it take to investors back engage with european investors? it'll have to be earnings numbers. they're driven by earnings, and cost. earnings season is soon to kick off. everybody will focus on what the numbers will produce. much widening can we get there? : the u.s. looks like it is in reasonably good shape. look at the weaker dollar, lower oil prices, share buybacks. this is all good for the domestic u.s. economy.

, and the contrast, has struggled. but we have a positive thing for equity share prices. the revenue story is a bit subdued, the cost-cutting we are positive for earnings generating. that will help small markets. guy: that could carry on, that should encourage u.s. investors to seek -- completely. we are expecting to see dollar weakness going forward. remember, the u.s. dollar is massively overvalued on the purchasing power basis. it's about 70% out of value versus the euro, about 6% or 7% against the yen. youview is directionally, should see dollar weakness. this is not just good for u.s. exports, also really good for emerging markets. that is real positive in this -- guy: will i get more bang for my buck in emerging markets? downh: it all comes back

to the u.s. dollar. if you think it will weaken, this is good for global equity markets and for commodities going forward. also good for emerging markets going forward. this could be translated in the numbers we're seeing here today. there is a number of little factors when it comes to the emerging markets to think about. brazil is the best, falling market year to date so far. this seems to be a lot of political factors around the emerging markets right now. does that cloud the water of little bit? events arepolitical always an issue. the market was so beaten up in terms of what was going on with the emerging markets. i buying am emerging-market equities when i can get emerging-market bonds? the end of the day,

if you're of the view that emerging markets will do better, you can buy both asset classes. at the best returns will be equity markets going forward. guy: back again to the dollar story, thank you very much. away, 12 minutes away from european equity market open. we look at potential corporate movers. the markets will be opening in 11 minutes time. focus onave much more the italian stocks. ♪

caroline hyde come over to you. caroline: let's talk about the banks that it might spark and m&a raise. olare, this is a

merger. it was somewhat outperformed over the last 12 months. these companies together are among the italian lenders that the ecb has been very worried about. to ecb has been wanting drive consolidation. they wanted strong capital. popolare,for banco they will be raising four point 8 billion euros. we will see how that dictates the share price move on the open. could this spark a consolidation? cutting its four-year forecast, this will face the toughest year since 2008. this is insignificant concerned over the past 12 months to see a downgrade after downgrade over the u.k. sentiment and how this company could perform. a check it out on a five-year basis. look how it is outperforming the index. 100 and is the ftse

significantly outperformed over five years. 100 andentered the ftse has significantly outperformed over five years. clearly some concerns about sentiment. overall, the outlook for consumer spending does not look as benign as it did this time last year. burberry, there is reports that they were ahead and not interested in burberry. could we see a little bit of a fallout in the stock price? guy: thank you very much. yogesh is still with us. you talk about getting the dollar rising is critical. this is a interesting chart. ducks but negative correlation between the yen and em. there is a tight story here the correlation negative started to broaden out a little bit. what do you think is happening here?

it is beginning to evaporate. ye -- the yen should be much weaker than it is with all the quantitative easing. what has been happening is that the world and you political events have been taking over. people have been going out and buying the yen as a safe haven. the problem you have with the yen and japan, it is so reliant on china. guy: you think china is ok. looks ok, but there is massive amount of volatility. also perseveres in that and joint in that journey as well. of course, when you look at china, it is tied to the u.s. dollar again. wonder if it is really a yen dollar correlation. the reality is, the japan yen is

still seen as a safe trade. plenty more that when you talk to you about. talk about the global economy in more detail. let's talk a little bit now about what we think this open is going to look like. as we head into what will be a long weekend, we could see very light volume today. see a little more volatility creeping into the market. you want to make you aware of, we came back after the christmas holidays, number the volatility be had. i'm curious to see exactly how this market story develops over the next few days. come back after the holiday, will people reposition into the summer? i think it will be a very interesting story. he will show you what is happening here, and give you an idea for we think the futures are taking us this morning. just to give you a quick heads-up at the moment. it could see a fairly negative story.

the dax is now down around .1%. look at the cac as well. we could see a negative open here as we head into this thursday. the final trading session before the holiday. ♪

guy: good morning and welcome. we're here in london, moments away from the start of european trading. here is your morning brief. worried --uldn't be why goldman sachs thinks the dollar doesn't pose a big threat to inflation goals. osborne says the eu referendum is all political. willa chancellor make the argument he cannot? one manager says we are missing the elephant in the room. we discuss pricing in this man, donald trump. let's talk about where we think is markets will open. negative foot this morning, cac down around 9/10 of 1%.

remember that we are just in front of a fairly large holiday. today could see light volumes. let's go to caroline hyde. caroline: looks like we are set to follow asia lower. we are expecting a downward day when it comes to equities across the board; miners will be in focus as they dip. ftse opening lower, not one stock on the upside. it's the minors -- glencore, rio tinto on the downside. we're seeing you had to do to the commodities asked version. cac 40 off, only one stock rising -- lvmh. up-area miners and the of booze seems to be on the agenda. let's dig in to some of the other asset classes.

dollar is in vogue, currently up point.a percentage we could see a rate hike as soon as april, the u.s. dollar back on the agenda. seeing oil on a downward trajectory. bread and wti sub $40, as we seek concerns of the supply side of the equation, inventory building in the united states, and dollar getting stronger. euro -- keep an eye on the euro. german sentiment today. and the pound has george osborne in front of the treasury, and retail sales were off by 3/10 of 1% as the u.s. dollar trumps the m all. let's have a look at what is moving in terms of equity. ulare willf pop

take 54% of the combined bank, a merger -- a wave of mergers. it's a credibility test for the ecb, the first measure we have seen with the ecb as a regulator, the first biggest deal since 2007. next, we wait for the open on next. sentiment is not good on the high street. they downgraded their four-year sales forecast to a growth of 4%. guy: thank you very much. we'll let the market makers open up and bring you the next prices as soon as they open. action, all athe an index level right now. but is are interesting think the sector stories were fascinating.

we have seen a rotation trade over the last few days. health care, utilities, telco has been where the market is rotating back into. quite interesting to look at the correlation between the sectors and what draghi's trying to do. that's an interesting story, that rotation back to where we were. i want to take you to the gmm. the argentinian, latin american markets sold off overnight so pay attention to that,. the brazilian market down 2.5%. the yen has been an interesting trade as well, beginning to come back. it's going to be interesting to see what the european curve does. some of the peripheral markets are moving off a little bit. pay attention to that because it is all coming back to what is happening with the fed, with the dollar. are sounding slightly less dovish this week; i think

that is a nuance that has been sending the dollar higher and erasing some of the losses in the last meeting. that's the week chart; quite a nice lineup. pollardterview, jim says there is a case for a hike in april and gave an outlook for where u.s. inflation is having. -- is heading. >> i think we are going to end up overshooting inflation; we have had that is part of our forecast for a while, that is what is going to happen. if you look at the dow inflation rate year-over-year, it is 1.9% and moving up. i think always inflation managers, they are all moving up and they will probably come over 2% by the time we get to 2017. guy: it's a goldman story today as well; look for it on bloomberg. they believe that the imported inflation you've seen from a stronger dollar and lower

inflation has largely run its course. we will talk about that later on. joining us is james formerly, still with us. morning.od you just published your quarterly outlook, and to be honest, it is quite unexciting. given the market volatility we have seen, your point is that we are doing much. >> exactly. at the start of the year we had markets down a long way, but in terms of the economic volatility, not much has changed. some of the manufacturing pmi's were weaker, trade gator is weaker, but on the whole, it isn't doing too badly. equally, now that we have rebounded, we aren't too excited. it's more of the same -- this study, slow growth stretch . it means we have low-inflation pretty much everywhere and loose central banks. that is a story that has been

stored for the last two or three years, one we don't see changing this year. guy: more volatility in the feds 's outlook and yours -- why is that? >> the u.s. domestic economy and the international picture -- it includes financial markets. they have to be aware of what is happening in financial markets, whereas we are similar looking at the economic data. we are seeing reasonably strong payrolls, reasonably strong consumer data, the domestic economy doing ok, and we can be reasonably comfortable with the steady growth rate going forward. guy: the economic outlook looks ok. it's not disappointing, it's ok. that sounds like a reason for the fed to normalize. >> economic data is looking ok. but economic data doesn't drive share prices higher; it's earnings. the lack of good economic data and good earnings numbers could be as long as 12 months. i would go right back to earnings.

focus on the environment for earnings, look at the guidance we get, look at the cost-cutting, look at the share buybacks, look at the impact of oil weaker dollar, of prices. the other thing to take into account his momentum. you look at the markets and what is happening -- you are up 2.5% but we were down some 15% at the lows in february. there is a lot of short covering traders and speculators -- guy: the data underlying it -- >> looking robust. it will vary, but it takes 6-12 months for it to feed through, and it earningss that drive share price. guy: james, we have seen a lot of volatility in the doll ar. why's that volatility not feeding into the economic world data? if getting the dollar right is critical, why am i not seeing

that feeding through? >> we have seen it in some of the u.s. data. that would bebits most affected by the stronger dollar and volatility in the dollar. you're on your terms, we won't see much. that will have an impact on inflation data. this year, inflation will stay pretty low, but if you see the dollar stabilize, weaken, for the oil price come back, that will help inflation. it gives the fed a reason to raise rates. guy: what about the idea that the fed shouldn't be worried about the rising dollar, a rising dollar, because we have already seen the impact into the imported prices channel, largely already factored in? >> yeah. i would say that the dollar bull run is over. and actually, the core inflation of the u.s. is above 2%. core pc is 1.7%.

these will probably come back, but they are pretty close to the fed's target. tbeing pretty close is impressive in this environment, especially when oil prices are where they are, core inflation around europe is stuck at 0%. the fed should be reasonably impressed by how the u.s. economy continued to generate inflation. we still believe we will get to rate rises. we think the domestic economy is suitable. guy: how does that fit with stephen major's call which was quite downbeat, on treasury yields? >> it's largely due to a variety of factors, but it is one of the very low nominal growth, which is in our forecast. we have low-inflation, low growth. it's supporting fixed-income assets. guy: thanks very much. james will stay with us. up next, sterling strengthens

s as they discuss leaving the eu. we discussed, next. ♪

guy: welcome back. london looking lovely this morning. the weather won't be great over the weekend, so enjoy it while it lasts. the ftse is down; i wonder how many trading desks are actually occupied. i think volumes are fairly light and i suspect they will get later throughout the trading

day. let's get you caught up on what you need to know. here's the first word. kumutha: thank you. two days after islamic state attacks on brussels, the europe interior ministers will meet to assess counterterrorism. belgian police continue the hunt for the surviving perpetrators of the explosions at the airport in subway station that left 31 people dead and 270 injured. have agreed toks merge in a deal that will make the third-largest bank in italy. investors will own 54% of the new company; shares in both banks were suspended yesterday pending an announcement. they traded yen this morning. goldfarb isuan and retiring after the firm's investment, valeant, damage their reputation. he comanage the $5.6 billion

fund and will take over as lead manager. day,l news, 24 hours a powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories at top . guy: thank you. boris johnson said yesterday that bankers he has spoken to build see a brexit hurting the financial sector. >> what struck me in private conversations that i occasionally have with leading bankers is how finely balanced they need to be. don't believe they can do any damage to london's position as the world's leading financial sector. guy: boris was speaking to a parliamentary committee, which is currently assessing britain's membership of the eu. he added that he thought the

pound will remain robust if the u.k. votes to quit. >> the pound will be as strong and as robust as the u.k. economy. my view is that the risks are in remaining in the eu. why should we remain tethered -- things -- the markets are not so convinced on what he is postulating. take a look at what is happening within the pound. a number of useful instruments have start to become available to us. this is the three-month implied volatility, the highest level since 2010. we're not as high as we were in the financial crisis, but this bike has been fairly sharp. that's an interesting indicator of what is happening. i also want to give you a directional trade as well. this is the three-month cable risk reversal, which is skewed

on either side. you can see that we are in the three month range, a sharp move to the downside, and the market is definitely pricing in the possibility of more sterling weakness. james pomeroy still with us. james, your base case is that the u.k. remains, and that seems to largely be the base case of most people at this desk as they come through. nevertheless, the market is becoming increasingly nervous, and sterling seems to be taking the hit. what are the implications of it? >> a weaker currency should help exports and inflation -- guy: carney is loving this. >> possibly. sentimentre seeing is -- we saw this in the surveys beginning this year, ignoring what the outcome of brexit is, it's the volatility. is the unknowns that are hurting the sentiment, hurting investment, and we could lower

the u.k. gdp forecast and that is why. guy: if we were to leave, how much lower what ago? >> impossible to say, i'm afraid. estimatesst at hsbc that the u.k. does leave 10%, 20% lower. guy: this is sterling. what about the economy? >> down. guy: what i thought was interesting yesterday was that doriboris said it is not a political argument, and many struggling to is make conclusions about what a post brexit world looks like. >> we have no idea what the deal looks like. as it gets priced in, you know they will go down. but the markets are telling you very clearly that brexit is not going to happen. you have flat equity markets year-to-date; you have sterling at fair value.

the markets are telling you that perhaps -- guy: this is predicted that over the next few months it will drop sharply. yes, you were overvalued but you come down. the market is signaling some risk. >> absolutely. but at the moment we are at 142. we're at fair market value on the currency basis. yesterday's volatility -- it can't we can anyway. brexit, as far as we are concerned, is a nonissue. i almost want to say it's nonsense. there's clearly a risk, and i listened to what boris said quite carefully, but the reality is if we were to leave, it would have a massive impact on the import/export and financial services around europe. the assailant have no impact is this guided. -- is misguided. guy: let's look at the immediate story, james.

we are seeing an effect on the u.k. economy right now. can that be recovered from reasonably quickly, where your base case to work its way through? is some of this growth gone, or is a recoverable? >> it depends. where we see this most is the sentiment. you would imagine that when the volatility disappears -- we're basically seeing, once volatility dissipates, maybe the optimism can come back, but it depends on how things look in july. guy: absolutely. i'm trying to understand how investors are looking at the story. the economic data are showing some effect. the financial markets have certainly priced some of the story in, i'd argue. the pound has come down. it's come back down, and so

there has been some degree of erosion. when i look at the next few months, are we at the beginning of a process? does growth slow into it? how do we work our way through the next three months? are people saying, as the closer to it, the potential to get worse or better is there? >> it's hard to tell, but we are seeing investment surveys as we go along. surveys, a good barometer of business sentiment that may have been due to financial market volatility, or fears of the referendum. they will be interesting to see pmi next week, if they rebound. therey rebound, maybe will be a financial market shock rather than a continued worry. the growth data have been

weaker. it's slowing, but at the moment it doesn't look to be too bad. guy: right. >> as a cfo, why would you make any decisions in the run-up to referendum? guy: you have to make the decision -- >> you don't need to take the risk; just hold on. i don't think it will change business significantly. but as an investor, which is different, you would look at opportunities of volatility and measuring points, if you believe markets will be higher at the end of the year than they are today. remember, markets are lower than they were 12 months ago, and we have already had a significant rally from the lows in february. we're of the view that any volatility we see is a great injury point two build on the exposure for post 23rd of june, when we think things will look much clearer. guy: we have to leave you there, but thank you for spending time with us. james pomeroy will stay with us.

it's u.k. chancellor george osborne's turn to testify for lawmakers. next, his questions about the public risk from the conservative party. we will bring you coverage of the chancellor's testimony live at 10:30 a.m. japaneseyields in bonds. see the evidence in our chart of the hour, up next. ♪

guy: welcome back. 24 minutes into the equity market session. we are selling material stocks and energy stocks, the dollar is kicking higher. that is what you are seeing the rotation of the equity market story. nejra cehic has her chart of the hour, with james pomeroy. talk to me. nejra: this is about japan rising. negative you in japan -- negative yields are proving no deterrent. japan saw her have returned 5.8% over the past six months. this is the most among 26 developed markets tracked by bloomberg, and double the return from treasuries. you can see the divergence in two lines. this is not normalized but if it were the disparity would be greater. there is a difference in demand for the kind of bombs, because what the bank of japan policy is doing is driving frenzied demand for the longer end of the curve.

basically, investors have been avoiding the negative yields, and hanging onto that debt. the boj is finding it hard to press on. just today, in the midst of that concern that the boj can't buy enough bonds, we heard they reduced the side of a buying operation which sent it to its biggest decline in almost two weeks. about the great story full lines in the jgb market. the stress is multiplying; the inverted yield curve, the thin trading among the risks. all that market disruption is raising concerns that the boj is hearing the limits of its stimulus, and that is even as the central bank can do more, and as analysts are expecting additional stimulus by the end of july. guy: can we do more? >> another rate cut in the second half of the year, we think they are likely to do more to keep the currency week. but, really isn't going to work?

-- but really, is it going to work? we just have to lower our japanese forecast again. it's not working. guy: we will leave it on that note. ♪

guy: welcome back. you are watching "on the move." 30 minutes into the trading day. here is a picture of the market for you; we are largely lower this morning, but on fairly light volume. down by around 9/10 of 1% across iece, beating out the negative sentiment out of asia. it's also dollar related, i would argue. we are seeing some of the metal stocks, the energy stocks weakening up. let's talk about the stocks. caroline hyde is here. caroline: let's stick with mining. miners are the worst performers this morning, down from 2% on an industry group basis, anglo-american the worst performer, down 6%.

we know it is a volatile stock that it does seem to have dollar strength pushing down commodities, pushing down the ners. meanwhile, next. big move. since 2008.e most they predicted 2016 will be as bad as 2015, off by 8%. it's a big online presence in home goods and clothing, and they are seeing the chief executive warning about a less than nine environment. he warns about a real ability to spend abroad. the chief executive is saying that the outlook is not as benign as last year. employment rates are high, but notably, real earnings slowed markedly since september. they downgrade their full-year forecast.

we are going to see a drop of 1% to an increase of 4%. is really feeling the pain. meanwhile, popolare. at while pointed have followed more than 4% and now it is up, back to active trading. ais as we see an m&a deal, growth merger between them and popolare di milano. they have got to raise one billion euros to do this deal. the ecb, the first time we see a merger of banks under the ecb. they want to see capital straight. one billion euros will be sold and converted. guy: thank you very much. we'll certainly continue to follow the italian begging story. breaking news out of taiwan. most of the economists we pulled did anticipate -- taiwan has cut

rates to 1.5%, another central-bank lowering rates. the fed continues to talk about the possibility of raising rates, i'll be a gently. -- albeit gently. turkey central bank is expected to stay on hold. that's the 13th consecutive month it would do so, and may be the last for the current governor, whose term officially ends next month. let's put it this way -- he hasn't had the greatest relationship with the government over the last few years. there is a lack of clarity over who might succeed him. erdogan would like to see rates come down. justin kerrigan joins us now from dubai. what does it mean for turkey in terms of how the central-bank is going to deal with it and how markets may react to the uncertainty over who takes over? decision today is a

red herring, to some extent, because most economists think that the turkish central bank will leave interest rates on hold, but it is a big question, whether bashi, whose term expires next month, will continue his role are not. if president erdogan would have gis way, the likely ithin is that he would be removed and some other policymaker more aligned to erdogan's view would be put in his place. where he would like to see, by all accounts, is lower interest rates, to revise the economy. inis on record saying, an unorthodox way, that high interest rates are causing inflation. so thereme off a bit,

may be the possibility for interest rate cuts, at least one of the interest rates, just to complicate matters in turkey. that the moment, that is an outside possibility. guy: let's talk about what is happening elsewhere. again, political upheaval, political relationships between the economy and central banks. fascinating and so many other places. brazil -- what is happening there? south africa? we talked a lot about -- it has gone quiet, what is going on? justin: yes. well, it has gone quiet. we have seen markets take a bit of a breather, certainly in brazil yesterday, when it was down more than 2% after a great run. it is still the best performing equity market anywhere in the world this year. we're in a lull as far as brazil is concerned; we are waiting for clarity about how likely this

impeachment progress will unfold. in south africa, more political shenanigans, if you like, with jacob zuma and the finance minister, mr. gordon. still unsettling to a large degree. there are a lot of similarities between south africa and brazil, where you have presidents whore are perhaps in their unorthodox ways, unsettling the markets. turkey is a little different. turkey has a different story, because erdogan it is very much in control, whereas brazil and south africa are more democratic. but some very interesting comparisons there a lot of those three economies. guy: thank you very much. great stuff. some of the points justin makes i reallybring -- this

like. this is a great shot. as just inside, brazil is the best equity market performance year to date, but here's the thing. this is the average change in terms of the week. the biggest change in terms of when there is talk of impeachment in the news. these are the weeks when you get the most, this big upside move. if you get fewer impeachment conversations, you get this moved to the downside. it is amazingly driven by news flow. it's largely global investors making this, a fascinating story in terms of the impact of the news flow. look that one up on the terminal. i also want to bring up this great story -- this correlation between the yen and what is happening with emerging markets. breakdown of the inverse

correlation, , largely a positioning start. james pomeroy is still with us. it is so hard to filter out the noise. i think that chart is interesting about the political story. on, you've got the risk risk off trade, and then you have the dollar. the emerging markets -- the performance of the equities are coming back. when i look at what is happening, is that dollar driven? what is moving this story right now? >> market side, you would have to say valuation. economic side, you haven't seen a big improvement. some of the data is bottoming out, but not really improving. we aren't upgrading forecasts in the emerging world. all these problems are still there. it has to be market pricing rather than the underlying economics. there are some signs that the data are bottoming out, not getting any worse. we won't be revising our

forecast across latin america -- guy: so jthere is a sentiment element, but is there a dollar element? >> i mean, that is going to help. it will hurt emerging markets, especially those with foreign denominated debt. a lot of emerging markets are directly exposed to commodities, and even those that aren't, the trading partners are commodity exposures. with all of that combined, it helps to figure probability to the market story. guy: if the emerging market data are starting to stabilize, does that make the fed's? jo job easier? >> it means i can focus on the domestic economy. if the international situation is stable, or more stable, it means they can go back to focusing on the domestic economy, and the u.s. consumer is doing pretty well. the underlying growth is ok.

guy: so, net, that is more hawkish. >> yeah. that is in line with our forecast. ok;u.s. economy is doing some stabilization the rest of the world. guy: market pricing -- >> yes, but it was zero not long ago. guy: i agree we are moving in that direction, but i've the market is pricing back in the possibility of hikes, what is that due to financial conditions? >> it will probably tighten them. it will probably lead to dollar strength. it will be negative u.s. equities, so there are risks involved, but the u.s. economy is doing pretty ok. even with the tight financial conditions we saw in february, strongill a relatively dollar. u.s. data haven't collapsed; we

are still seeing strong consumer confidence, which should drive the economy forward. we're also a long way from recession. guy: i don't ask you a direct political question, but in brazil and south africa and turkey and china, how much of the political -- how are the politics influencing the data? >> you see this in sentiment. i was just saying about brexit -- anything that can make people concerned, put off investment, volatility is no different. that's not going to be a good thing for growth. you are seeing the sentiment data, it was at the very bottom of the market. march pmi is interesting. it will give us a good indication of where are we in terms of the data. that is what we will be watching to tell us what's going on. guy: james pomeroy. up next, investors should be concerned about donald trump.

we will discuss one fund manager's concern about pricing in trump. 's next. -- that's next. ♪

guy: 44 minutes into the equity market session. london starting to look great. ftse down. light volume is a feature. the dollar is higher, sending a number of key sectors down. let me show you some of those key sectors. basic resources trading down.

that is something we need to pay attention to. nymex crude trading lower. the top number there is down 1.22%. health care seeing rotation, not enough to compensate for the drop. let's catch up with all the news you need to know with the bloomberg business flash. kumutha: thank you. shares index has fallen sharp -- shares in next have fallen sharply after they lower their sales forecast, saying it may be the toughest years since 2008. sales will be in the range of down to 1% to up 4%, compared with a forecast at the start of the year for growth of 1% to 6%. novartis has agreed to pay $25 billion to settle a case that claimed the drugmaker paid bribes to help professionals in china from 2009 to 2013.

millionent includes $2 and $1.47 million in interest. novartis says the issues raised predate new compliance measures. the hedge fund star board is set to seek the removal of the yahoo! board, and will today nominate nine directors to the board, according to a report from "the wall street journal." the nominees are said to include the starport ceo. the move is to be the start over a proxy fight over yahoo! sale profits. descendents of john d rockefeller sold their exxon mobil stocks and all other fossil fuel investments in the latest move against the industry that made their fortune. the rockefeller family fund concluded their "rationalno sane rationale" -- and that is your bloomberg business/.

-- your bloomberg business flash. guy: let's turn to the u.s. presidential race and donald trump's possibility of the nomination. how will markets price that potential in? we sat down with the presidential hopeful in the wake of the attacks in brussels. >> i think every time we had a it'sem in this world -- not that i -- i would rather not have any problem. i'd rather have no problems, but i think every time we have a problem -- you have seen that. whenever there is a big problem, i go up. people viewed me as much stronger, and they actually think that i am more competent. guy: trump making some interesting points. the fund manager at energy ors should be less concerned with the eu referendum

and be more focused on donald trump. the likely impact will be noise and uncertainty, that although brexit years are likely to cause volatility, of far more important political issue is the u.s. election." james pomeroy joins us. it is an interesting point, isn't it? you wonder where the brexit is a warm-up act. we already talked about the wetiment, that brexit -- as work our way toward november, and the market has to come to terms with the reality of a trump presidency, what is the sentiment likely to be in the united states? >> hard to tell. you will see it in consumer confidence. you have to look at the subcomponents. what is the political impact? as we said this morning, the u.s. economy is doing reasonably well. if you have a strong jobs market, it might be hard to pick out what is the actual impact of trump on confidence. you will see mostly consumer confidence, business confidence, those sorts of things.

that is the data we will see. it will be interesting to monitor over the next few months. post brexit, this jumps to the top of everyone's mind. guy: do you think -- you talked about the two fed hikes you have penciled in. it's hard to model, to plug these things and. as you look at those indicators, could a change the thinking? >> it's unlikely. i think the u.s. consumer has enough going their way at the moment in terms of a strong labor market, lower commodity prices. these are quite good things, so the consumer story would be hard to derail by a drop in sentiment. reasonably confident that the u.s. consumer will stay strong, which means that the fed can keep raising rates, because the u.s. domestic economy is ok. guy: brexit, u.s. election, france, germany. when you build your models and try to figure out what is going to happen, what is the plus or

minus on politics? i can't elaborate period when politics was having such an influence. >> it's hard. you have to talk about the risks. you have to have a base case and think about the risks. some are positive and some are negative, and you have to have a broad spectrum. guy: are the tails and distributions becoming bigger? >> possibly. it's hard to tell. we don't know until the outcomes come through. on some of these things, they can be quite large. it's hard to say until you get to the event. guy: yeah. >> until you get close to the event, it is hard to see what the extremes can be. guy: great to see you. thank you. james pomeroy. up next, it has been a week for fed speak. we'll wrap up all the comments from the world central banks as the dollar marches higher and higher. ♪

>> despite these low andreessen inflation readings, we see that participants generally expected to rise back to 2% over the medium-term. >> there is sufficient momentum, evidence by the economic data to justify a further step at one of the coming meetings, a further step in raising rates at one of the coming meetings, possibly as early as the meetings scheduled

for the end of april. >> you could argue about global risk, about gdp growth, outlook is lower. report, in a strong labor markets are improving. guy: it was a week of fedspeak in san francisco. april and june are both possibilities. not at all unreasonable. the dollar index has been rising over the last five days. it has formed a straight line. we are up by over 1.5% over the last week, trading at $1.48. it has been an interesting week, and maybe it has turned things around. let's get a view of affect strategies with mr. jones. the dollar suddenly got stronger this week. you feel like maybe the market is going to have to move from zero to one, which we have done.

maybe towards two. richard: well if you look at my favorite function, the market isn't buying us at all. there is no chance of a hike priced into the futures curve for april, minimal chance for june. the market is saying we will get one this year, probably after the election. the move has been interesting, but we haven't retraced all the move we saw from the heights before the fomc meeting. there has been a bounce, but the actual interest rate curve is telling us that investors are buying it. guy: what would it take for them to buy it? richard: they would need a consistently strong run of additional data. we need to get pc, nonfarm payrolls. it they start getting investors thinking -- maybe more than one hike this year. by the end of april it will take an awful lot to shift to

something reasonable. guy: quick comment on what is happening in the sterling. the move seven spectacular. we are back to levels we haven't seen since 2014. take a look at this chart, with what is happening with the referendum, then you look at this risk reversal, the market is pointing that sterling got sharply lower. richard: the market is really getting concerned about the uncertainty from the brexit vote. i think the resignation of duncan smith over the weekend started this move, and the atrocities in brussels accelerated. i think with investors looking at brexit odds being quite high, it means that they need to sell the pound. guy: the market tends to over do it -- are we over doing it? richard: well, i think the interesting is euro-sterling. as bad as brexit is in terms of generating uncertainty, it is equally as bad for europe. guy: mr. jones, thank you very

much. what we have coming up later on, "surveillance" is up next, but we will take the osborne testimony on brexit at 10:30 a.m. london time. ♪

>> two days after the brussels attacks, police hunt for a new suspect involved in the bombing. after having projections for interest rates, eu officials talk about a rate increase. eu.k. vote to leave the might force gas and power bills up by 500 million pounds. osborne testifies next.