thank you, ping. reliably fast internet starts at $59.95 a month. comcast business. built for business. we are counting you down to the european open. i am guy johnson and here is what we are watching. oil output talks between major producers end without an agreement, sending crude futures tumbling. how much more selling is there still to come? is dilma done? hangs by apresidency thread. the process now moves on to the senate. and the brexit battle begins.

chancellor george osborne is out his plan for remaining in the eu. how are they look at? -- how are we looking? let me show you. this is the bloomberg, and it shows you the fair value calculations on wei. the stocks are down by 1.1%. interestingly, the london market looks like it will open better than most, only down by .9%. we are going to talk a lot about the dax. we are going to talk a lot about oil -- let me make that absolutely clear. we will come back to this, and what is happening in brazil. in the meantime, let's update you on what you need to know with the bloomberg first world

ms.. -- first world news. reporter: brazilian lawmakers have voted to impeach president dilma rousseff. the opposition achieved the 2/3 majority it needed to move the process on to the senate. there, a simple majority would see rousseff suspended as she faces an impeachment trial. hisge osborne will ramp up campaign to keep britain in the european union today. the chancellor will highlight a treasury report that shows an exit will cause permanent damage to the economy due to lower trade and investment. that he says, will cut government income. meanwhile, the french economy minister says leaving the eu would weaken its power within the world. he will attempt to persuade

china to drastically scale back its production. you are part of the eu. you are credible because you are part of the eu. your domestic market is not relative to china. reporter: global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. you can find more stories on bloomberg at top . guy: thank you very much, yvonne. cron's political ambitions? let's talk about what is happening with crude oil. the main sticking point remains the old one.

the saudi's refused to limit supply without a commitment from iran. we are joined now by our middle east editor in doha. blockbuster thwalk us through te action, elliott. reporter: we knew there was going to be one of two outcomes, deal or no deal. no deal seems to be the more likely outcome. saturday night came and it seemed an agreement had been reached. they were all on board, but then alexander novak, the russian oil minister, says some countries changed their position right before the meeting. th it was confirmed that the gulf countries that changed their position. although, he refused to pin the blame on the iranians.

>> i think we haven't reached those expectations we had when we prepared this meeting. iran did not participate in the discussions today. this is a position of the largest producer, saudi arabia. they think all opec leaders should participate in this meeting. iran is trying to regain the market share it lost while under sanctions. 's position seemed as entrenched ran's position seemed as entrenched as the saudi's. guy: what happens now? >> it is not completely off the table. they want talks to continue.

omani oil minister says he has good relations with both countries. he has acted like a mediator. talks will continue up until june 2. in the meantime, we will see iran continuing to pump out before million barrels a day. -- pump out 4 million barrels a day., presumably, we will see a continuation of the volatility in oil prices as well. let us not forget, there are financial consequences to this, given the slump. we have seen these oil-producing countries spend $3 billion worth of the reserves because of the lack of money they have been receiving from the sale of oil.

that is something that will presumably continue as long as oil prices remain volatile. from here, where we go will have to wait and see what producing countries say. guy: great stuff, thank you elliott. doha.t joined us from we don't have a deal. story.l" seems to be the the market though, in anticipation of the deal, has been ramping up in the last few months. you can see this really clearly on the bloomberg. the otop orange line is the current curve and this takes you all the way to 2022. and this is where we were three months back. you can see this at the front end of the brent curve. that is the speculative money

coming into this area. we do not see it toward the back end. you can see how quickly some of this money will be unwinding out of the oil. let's get a sense of where we are with this oil market, where the reaction function will take us next. joining us now is our guest for the next 45 minutes, the global head of equity trading strategies. states lastthe week. what are you hearing from investors? >> going into last week it did seem like we were stretching to the outside. we have seen some technical shorts, which will be heavy this morning. the bigger question is, stepping back, and you are showing it on the world was very worried.

the fact that we are coming in probably gives a buying opportunity because the back end should remain elated with a lot of these apply being taken out. of the supply being taken out. guy: we know that the exposure is massive. we know that there are shale guys out there suffering. when i look at the derivative effect of this, i look at the banks. >> i guess the volatility will continue to drive them to some extent. re seems to be some support on the way down. this should give some breathing room to some extent. guy: what would you expect to happen? marketstrength of the

banks.en by minorers can me expect to some consolidation to some extent? yes. guy: if i am looking at this curve i will say, you know what, at 2020 or 2019, the price is much more elevated from where we are now. we are trading up towards $50. i am pretty comfortable with that. how are the majors going to be feeling about what just happened? >> as long as the back end does not move, they will be ok. it is more of a question of, is a credible to use $50 as the back end? this weekend will not be a positive for the back end, but it will not be enough of a negative to bring it all the way back down. we have to look at the volatility in the energy sector and its relation to the market. there is still some risk in the

future, and the market has failed to price that in. yes, it is really think very well. it is not trading as big a premium you could argue for, given some of the risks. guy: he is going to stay with us. we are going to discuss what is happening in brazil, the president hanging by a thread after legislation passed an impeachment. is dilma's presidency now doomed? we ask that question, next. ♪

guy: 7:43 in london. here is the bloomberg business flash. yvonne: hsbc is preparing for change. ceo stuart gulliver plans to quit in two years. the bank will first appoint a new chairman. gulliver took over in 2011 and operations,ack the cutting nearly 90,000 jobs under pressure from unhappy shareholders. the stock has fallen about 16% this year. telecoms biggest operator may be vetoed by the eu. the$14.5 billion bid for

mobile business may be blocked within weeks. regulators are said to be unconvinced. want the company to sell part of their network infrastructure to a new rival. verizon is the leading bidder for yahoo!. a number of bidders decided not to make an offer for the struggling web company, according to the wall street journal. and the aolerizon unit are working on a bit. -- working on a bid. dilma rousseff's presidency is hanging by a thread. [shouting] jonathan: as you can hear, the operation broke into cheers.

our reporter has been watching developments and joins us now. what next? is dilma doomed in terms of what the story looks like and how it is going to unfold? reporter: it does not look good for her. a could be as little as 15 days before she is at least temporarily pushed out of office. from here, the issue passes to the senate. wina's opponents need tow a simple majority in the senate to start the full impeachment proceedings, which would trigger her suspension. 46 of the 81 senators are already saying they will vote in favor of the impeachment, with just 20 saying they will vote against it. at this stage of the game, it looks like it will take something extraordinary if dil'' is going to hang

onto her job. guy: what is the expectation? what are you hearing from market bankers? reporter: it is not start trading for a few good hours yet. we have been looking at an etf of brazilian stocks, which was up 3.7% this morning. there is also a few securities that are thinly traded. we could see a day of fairly strong rallies on the back of this vote. u very muchyou there to muc indeed. metcalfe is still with us. the chart is kind of amazing. if you look at the chart, we see this amazing rally coming up in

the other direction. we have talked about this on the show many times. the market maybe has a little bit less left in it. reporter: we would agree with that. this is obviously going the way the market expected, but the ris ks are still there. she is not especially liked in the country. up 40% in a very short period of time. can we push on a little bit further? maybe. what are the critical factors the market will look for? is it the political landscape? is the understanding what happens in terms of the legal

area? reporter: the next 15 days will be very important. the process has begun. beyond that, what does the impeachment might skip look like? is the big news in the context of several years in brazil, yes. is a good in the medium-term, absolutely. guy: part of this move, though, is down to the fact that we saw a rally. taking us back to the oil story, maybe we have run out of road on that as well. >> the dollar is going down. it seems to be correlated, as we are noticing verevery day. we have priced in so much. the big question will be the dollar. when will the fed hike?

for the next few months, it looks as long as we are holding onto the currency level, markets should be ok in general. guy: so, the em trade is still on? cheapwas the undervalued, part of the market. everybody expected the dollar to go up this year. we are seeing this recycling. we have seen inflows back into the yen. versus some of the countries, it looks like brazil has gone through it. therefore, we are a little bit ahead. on: we are going to carry the conversation and talk about the european equity market open. we are now nine minutes away from the market open. up next, we look at some of the

potential corporate movers. the market opens in nine minutes time. ♪

guy: it is 7:53 in london. which stocks should we be watching at the open? let's find out with caroline hyde. caroline: we are going to be watching apple suppliers. there is a speculation that

apple is asking its suppliers to keep production limited at the reduced levels. iphone 6 is selling as well as could have been helped. this is all being reported by the nikkei at the moment. they arener of chips, going to be one to watch. as is a&m. so, watch all of these suppliers. we have seen calls for 2% to 3% lower. also watch imagination technologies as well. so many out there are likely to be hit by the fact that apple is not doing as well with it iphone sales. this one could pop up 2% to 3% because of the potential bid that was put on ice in january. they were likely to to be working together. january, they were

looking at a deal. they got a thumbs up from the takeover panel in the u.k.. they were looking at 6 billion pounds. sainsbury started looking at the home retail group back in january. the sales then looks to be rallying. maybe that little bit more expense. but 6 billion pounds was the price tag and after those reports, it looks like things could be up a bit in the trading. guy: caroline hyde, walking us through some of the stocks we need to be watching. i suspect we will see some action in the oil areas this morning. let me take you to what is happening with the terminal this morning. this is the fair value calculation. the ftse 100 is down by .9%. it looks like the cac will soften up to the tune of 1.9%.

that is the story as we get to the market open. it looks like it will be softer. a beautiful morning in london. we will see you in a moment for the market open. ♪

manus: good morning and welcome. we are right here in the city of london, moments away from the start of european trading. it's going to be a busy one. oil output down, talks between major producers without an agreement, sending futures tumbling. how much more selling is still to come? dilma done? impeachment process moves on to o the senate. and the brexit battle begins in earnest. chancellor george osborne is claiming that the economy will shrink by 6% with an exit.

what is the number based on? let's talk about where we stand. futures point to a negative start for the day; looks like the markets will be down. i suspect it will be an oil-focused morning. here's the open with caroline hyde. all-encompassing in asia trading, likely to see europe drag lower as well. no deal done in doha. clearly the saudi arabians are cautioning that, wanting to see other producers like iran step up to the plate. they do not to give away their market share. this is tugging down equities across the board, particularly energy-related stocks, ftse up. shello have miners and among the big underperformers today. similar moves in the cac, down on the open. not one single stock is rising. totale among key

losers. watch out for miners and oil companies. some of the biggest selloff in two months in the oil market as that depression sets in, marked by sub $40. we are seeing the fx repercussions, using the canadian dollar. u.s. dollar goes higher, canadian dollar goes lower. on flipside, we see buyers move into the havens. u.s. dollars higher in the yanis strengthening. yen, oncee on the again over performing, getting stronger, because of oil and the risk aversion, but also because of what jack lew has been saying over the weekend. is an orderly fx market -- don't do anything to intervene to weaken it. soey is coming out of gold, money into the human. let's have a look at the stock

market, because i want to keep an eye on bp. 3%, as we see concerned that the supply glut is not going anywhere, thanks to the other big producers. the suppliers of apple are going to be selling off today, concerned that apple is asking suppliers to keep supply reduced. what is the iphone 6 doing in terms of sales? and we got news over the weekend the investment authority and brookfield are eyeing a 6 billion pound offer back in january. guy: thank you very much. let's repeat a little bit and show you what is going on in terms of its equity selloff in the energy sector. the sectors here at the bottom of the bloomberg map. 3.70%. we just want to get an idea of the size of the slice we are

talking about. that is it on the pie chart their. offncials are also selling as a result of what's happening, the material sector also weakening. a number of major sectors on the downside. i want to shave his other chart as well, which is what's happening with the russian ruble, which has vanished a little bit. is getting ruble crash this morning as a result. the fact that these talks have not gone anywhere, we know what that correlation looks like. the russian ruble very much under pressure. let me see if i can bring you that chart. dollarthe russian ruble, versus ruble with the dollar going higher. a fairly significant move as the russians come under pressure. grew down. ocash

-- crude down. refusingremains iran, to limit supply without a commitment. let's bring in our chief oil analyst. good morning. -- front-end of the markets it has moved an awful long way in three months. how much of that is going to be priced out? where is screwed going to? the very short-term, you will see prices go just below $40, but then again you have so many unplanned disruptions -- nigeria, in his -- izuela, kuwait think that is limiting the downside. but in terms of sentiment, the lack of the deal is very negative. i wouldn't be surprised if you do see a sub $40 oil this week. -- iis this idea of a free

know we have talks on resolving it today in yemen and elsewhere, but nevertheless there is a geopolitical pressure. maybe we were getting to ahead of ourselves in terms of anticipating a deal. >> oh, absolutely. from a fundamental analyst point of view, these talks make absolutely no difference to balances, because freezing out that i january levels, where they were producing at maximum in any case, how does it change balances? all these producers are starting to lose production everywhere the world. latin america, asia. abouts much more sentiment and that is why you are seeing so much volatility. i couldn't agree more; i think we can't get to ahead of ourselves the cousin of the producers are showing documents and talking to the media, talking about how it's a done deal. wonarguably, politics

it was way too bigger hurdles overcome. . . guy: this out is -- are they getting close to winning the war with u.s. shale? we have seen the story, watch to the counter as the rains come out of the market. all of the hard work may have been for naught. it ise, but equally, slightly more subtle than that in the sense that saudi arabia wasn't keen on getting prices up to quickly. the key for this meeting was that it also didn't want to negative sentiment spiral that would send prices back to the 20's. that is the balance it was trying to strike. they were trying to come up with a positive statement, and i think that clearly failed. but equally, i would say goes beyond shale. shale production is falling but if you look at the other numbers coming out, non-opec supplies fell by 700,000 barrels per day in march, potentially about to

decline by one million barrels. nigeria, venezuela, angola, they are all falling. opec production has also fallen over the last two months. guy: they give very much for your early thoughts in this conversation. i just want to say that the energy sector is down by 3.5% as a result of what we are seeing; unsurprising given that oil is significantly lower. let's bring more voices into the conversation. bloomberg's first word oil strategy julian lee joining us from citigroup. good morning. walk us through what is the story behind this? what's going on? >> i think the fundamental story behind the story is that for 40 years saudi arabia has subsidized high cost oil producers by restricting its own output to keep the price of oil well above the cost of extraction. a year-and-a-half ago, in a global environment where oil is

becoming less and less attractive in the longer term to consumers, saudi arabia turned around and said this policy has to change. --s is a fundamental shift it goes well beyond saudi arabia and iran, well beyond u.s. shale. shift in fundamental the way saudi arabia looks at the oil business in its place in it. -- ais a saudi policy low-cost production comes first -- guy: but how to the market misread this story so massively? >> i think the market got taken up with this narrative of u.s. shale and saudi production. they got taken up with the narrative of saudi arabia and iran. do, it looked in a short-term way -- it didn't step back and take this 40, 50 year

view. guy: julian brings up the issue of iran, amarita, showing cost of production in what's happening there. goes the world now look like it will -- does the world's now look like it will only be feasible for those with incredibly low cost of production? some of these countries can produce oil at levels that are barely above zero. and i doabsolutely, agree broadly with julian in terms of what he thinks. saudi arabia doesn't run oil prices to go up too much, but that also doesn't mean they won't price it at $40. i think there is a bit of an in-between. they probably like a between $70 and $80, which is where consumers and producers are happy. that the sweet spot where the cost of production in the middle east -- they also have social costs to fund that, it is not too high that it encourages ultradeep order production.

that is the kind of balance you're trying to get, and clearly you won't get the expense of oil at these prices. i today's prices it is mostly still underwater. guy: another tangential question. much of the surrounding demand destruction, and the fact that the saudi's are viewing the world in a different way. if you look at industries that would benefit from oil, $70, $80, $90, and look at a shift that take place -- and looks like it will happen because the technology and various other factors. as the flipside? -- what is the flipside? >> oil going lower, which would be seen as good for consumers and so on. we see some resilience in the consumers, their foyer oil went back up don't think we would retail reprice -- would be hurt, transport would

be hurt. that said, it is still very unlikely that we will be capped on the way back up. if you start going up too much, shale production will come back. now,r $40 is good for probably the best of both worlds for producers and consumers. guy: julian, when we look at the set up now, what does the world look like? if we got overexcited about this and we are back to the base case before we started talking about doha, is that a long-term story we are looking at? if you take a look at the crude curve, which christ back up to $70 or $80, and i can show you on the bloomberg, this is the print forward curve. you go out to 2020, we get up to the 50's and we stay there. is that the right pricing? has the market got the backend right? firstly,l all depend,

on how quickly high cost oil continues to come out of the market, and i completely agree, this goes beyond shale. this ist the north sea, the new project that haven't been sanctioned by the oil companies. think, trying to find a price level at which shale oil producers start to come back into the market. is that $50, $70-$80? we don't know because he haven't tested it yet. but this is about a fundamental, long-term rebalancing in favor of low-cost production, predominantly the middle east. guy: right. concur with that, amarita? i'm questioning the market's ability to forecast prices. >> i absolutely agree. the one thing i will say about the forward curve is i think it

is grossly underestimated. we are losing so muchbut this ia production, and well we all think it will be a slower recovery, equally, a lot of analysts didn't see that coming as well. i sense of the market today that there is so much complacency about, oh we are the $30 environment. i generally think there is a spike coming. it was going to last, the we have identified 6.5 million barrels for projects that have been postponed. it will happen very quickly and shale will respond, but how quickly can they respond? that is when the risk that we spike higher. than before we fall back to. guy: linda yueh anticipated happening? -- when do you anticipate that happening? >> i think 2019 is a very likely time to get a supply squeeze. guy: thank you very much. thanks to julian lee and dan senh.rita

let me show you the oil majors. 2.5%.off, down to the sector, by at large is suffering. next, one of the most beloved markets in europe, but why is the tide turning? why strategists are turning bearish on the dax. that story, next. the brandenburg looking fabulous. the weather in london looking not bad either. see you in a moment. ♪

guy: welcome back. oil is lower. here's the bloomberg first word news with yvonne man. yvonne: thank you. brazilian lawmakers have voted to impeach president doma reset. -- president doma reset. dilma rousseff. the senate agreed to move the process onto a senate, or a simple majority will -- the campaign to oust her amounts to a coup, supporters say. george osborne will ramp up his campaign to keep britain in the european union. the u.k. chancellor will highlight a treasury reform to show that it could cause

permanent rather than temporary damage to the economy, that could lower trade and investment. that will cut government income at enormous cost to public spending. hsbc is said to be preparing for change. times" says he plans to quit in two years. 2011 andtook over in has scaled back hsbc's operation, cutting nearly 90,000 jobs under pressure from unhappy shareholders. stock has fallen about 60% this year. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . guy: thank you very much. yvonne mention the fact that george osborne is laying out the case on the economic front here in the u k, these of the. what's happening with the brexit you can see. -- you can see what's happening

georgebloomberg, and osborne says that britain would be permanently poor. people here that a liberation a great deal. the ubs chairman says that european growth would be derailed, and more volatility approaches. more around a lot the story. sentiment may be changing for one of europe's most loved markets. one strategist is forecasting a 1.6% slump, according to the average 13 projections compiled by bloomberg. a negative return this era be the first annual decline in five years. let's bring in sofia horta e costa. what's changed? why has the story changed? >> it has changed a lot in such

a short time. , it had almost 20 and a big chunk of this story was that germany is the industrial powerhouse of europe. with draghi unleashing all these measures to boost growth, people climbed into the dax in german equities thinking that if the recovery will take hold it will be in germany where we want to be. obviously you have that big euros story -- a huge slump in the euro and a lot of companies are exporting these. that is why people love german equities during the euro crisis because all these companies -- in the first quarter, the euro rose against the dollar, the biggest gain for the year, so we

have a lot of that story online. if you get china slowing down, that's a double whammy. you don't want to be in germany and there are more interesting places to the. qbspecifically on germany, in general on a global basis is moving away from just race to the bottom. obvious -- for us playing domestic recovery in europe, maybe pay more attention to the periphery, where most of the key we will take place through credit easing and so one. . -- we saw huge activity last summer mainly driven by the dollar and these assets were accumulated last year and are now starting to unwind. it is not about your weakness anymore -- we are seeing a

familiar selling pressure in germany. guy: you just got back from the states. all i take for those guys to start putting money to work in germany? >> i would guess two. things. a catalyst for not investing for now, more importantly it is more about when you stop getting solid performance in europe, when they will have to come and bite. so far europe in the u.s. have been a bit of a wash with equity see thisnd until we dollar strength showing up, you were unlikely to see a big impulse. guy: thank you very much. it has been a great pleasure. thank you for spending so much time with us. up next, it's time for our chart of the hour.

emerging markets are on their best rally in seven years, but how much longer will the bears be in hibernation? that discussion, next. ♪

guy: welcome back. move." watching "on the emerging markets paying careful attention to the oil price, and there is a big story surrounding that. let's find out with nejra cehic. nejra: the chart today is really showing short interest on developing world bond and stock funds, plunging.

significantly because back in january and february, we were seeing that short interest as a percentage of shares in the double digits, around 13%, 15%. it has now dropped to between 2% and 3% for both bond and stock etf. it is near the lowest level since 2012, the largest etf tracking, developing nation , at a 1.5% bonds low. traders have added more than $1 billion to u.s. traded, emerging-market stock and bond deals through april 15, pushing for total inflow this year to $4.5 billion. that followed an exodus in 2015. a lot of this is driven by assets rallying, china's economy stabilizing higher, oil prices and fed going slower. it has pushed down some emerging-market stocks and currency.

guy: thank you very much. up next, we will carry on the conversation. emerging markets rally after legislation passes in brazil, next. ♪ you shouldn't have to go far

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x1 makes it easy to find what you love. call or go online and switch to x1. only with xfinity. guy: 8:30 in london. it is turning out to be quite a monday morning. let's show you what's happening. in the markets are all lower, although we are off the lows of the session already. oil companies are front and center, with the delhomme meeting this weekend. that is what's happening with the price of the stocks associated with the morning -- majors are all fading. the crude has been rallying as of late. let's get more details on what's top stories to focus on with caroline hyde. caroline: one of the key underperformers when it comes to oil and gas -- the worst

performing sector on the stoxx 600 today is the best in the area. it really is one of the worst performers on the stoxx 600 and no deal in delhi's that the. -- is the theme. it's also having apple suppliers company is-based having its worst day in almost two months, this as we know that the reports coming from the nikkei asian review on friday are really starting to govern once again how much there is a problem in iphone sales. notthe iphone 6 plus getting the demanded anticipated? apple is looking to tone down those supplies, saying to keep the reduced levels the semiconductor. seven percentage points into clearly there is a number out there, really feeling

the concern in the nervousness. thomas cook is up 3.2%. is this a little bit of m&a speculation? a bit of both. monarch airlines is talking about a potential takeover target. thomas cook could be one of them, as well as air berlin. thomas cook was also raised to hold, so little bit of m&a speculation and analyst recommendation. guy: thank you very much. unsurprisingly, the russian ruble and everything associated with the markets this morning is suffering -- the ruble coming up stuck a little bit and let's find out with the emerging-market story. stocks and bonds have been enjoying their best rally in

seven years, but investors in brazil may find that the story is getting a little bit passed over. are they getting what they wish for? up --it's not cracked maybe it's not all it's cracked up to be. our senior principal analyst joins us to discuss the fallout from the impeachment vote that we have been talking about for quite some time now. we finally has a silverdome story. good morning. we still have the upper has to deal with, but it does look as ma rousseff will be impeached. walk me through what happens next. >> certainly. the next step that will be for the senate to vote on the peace process. the process is more simple than in the lower house, where the opposition requires two thirds

of the vote. now in the senate it will be a 51% majority. that it willkely happen in once they approved the process, the president will be suspended for 180 day period, with a new president temporarily taking office. if the president is found guilty, and the vice president will be taking over until we have elections in 2018. guy: so many questions surrounding all of that. is he going to get caught up in the scandal as well? what kind of an economic story is he going to put forward? the markets are priced in an awful lot in terms of expectations. got to the risks. what are the risks to that scenario? how will this play out in reality? >> at the moment, we expected period of policy paralysis and

political instability. they are beingd, investigated for different one in the most present -- improperction campaign financing. if the see is that president is eventually outed on the impeachment process, at the end the party will have a very difficult negotiation with all the conditions part of the brazilian congress. initially, there will be some momentum and support, the ones they start implementing, it will be difficult for them to maintain because they have never been in power. the program they proposed is a is verythat fails -- it difficult to deal with the

ruling coalition. social groups will oppose that austerity program. guy: so in some ways, it is an easy bit done. the markets are trying to anticipate will happen; it's price tag an awful lot into what's happening with the rial, the market. would you say in terms of the difficult bit, is the hard bit ahead of us? >> i would say so. i think that any positive reaction takes a very short-term view. we can expect difficult moments for brazil; may have a very high unemployment rate. difficult for the vice president if he eventually

replaces her. -- itthout the support of will be very difficult to make -- brazil is the largest economy in latin america, and is the main export market. because of this policy paralysis and the political power struggle, it will be difficult for brazil to respond as quickly, and also affects the economy. many countries in latin america that depend on brazil has made trading partner. guy: it will affect other countries, that the u.s. is going to affect brazil. if you look at the kind of economic backdrop that brazilis, low commodity prices, the dollar that may strengthen, what is the economic backdrop in your mind? >> that's one of the main reasons we expect trouble for brazil over the next few years.

the negative external to environment will make it -- any change it will try to implement will be heavily andsted by powerful unions the people that used to support the government, and it will be very difficult for them to make a change. guy: we will leave it there. us.k you for joining up next, german politicians voiced criticism over draghi's negative rate policy. we are joined by top advisor to germany's vice chancellor. ♪

guy: i'm guy johnson london. let's take a look at what is on the move. this is the story -- crude down, we've showed you what the contract table looks like. front-end has been very much affected by what has been going on in london. tangible,ointment is and you can see it in the majors. but as was said earlier on, watch the outages. that is one of the critical factors. everybody is talking about the strike in kuwait; but there are plenty of other outages. she thinks we may see a spike -- maybe not now, but in the future. been in market today focuses on

doha. here is the bloomberg business flash with the yvonne man. yvonne: thanks, guy. hsbc is preparing for change, the ceo planning to quit in two years. the bank will appoint a new chairman to help the next chief executive. he took over in 2011 in scaled-back operations, exiting more than 80 businesses and cutting 90,000 jobs under pressure from unhappy shareholders. the stock has fallen about 16% this year. there is a deal to create britain's biggest telecom operator, and it may be vetoed by the eu. people familiar with the matter say that the u.k. mobile business maybe blocks within weeks. regulators are said to the that it will create enough competition. they want the companies to sell

part of their network infrastructure to a new rival. verizon is the leading suitor for yahoo! after a number of bidders decided not to make an offer for the struggling web company. meanwhile, verizon and is a low unit are working with at least three financial advisors on a day that would include a stake in yahoo! japan. that your bloomberg business flash. guy: thank you very much. the u.k. treasuries will publicize analysis of the economic impact of brexit, coming as chancellor george osborne is said to make a speech. they published a comment piece by the chancellor in which he argued, are you better or worse off? the answer is that britain would be worse off, to the tune of 400,000 pounds for year for every household. let's bring in our u.k. economist -- morning.

numbers,e with these but the chancellor is taking it off the doorstep and trying to make it clear the economic impact. >> absolutely. the thing to remember is that they are always worked by the uncertainty. you can use any model to come up with a variety of different he will throw this number around like it is fact that there is a lot of uncertainty. it is possible that we will be worse off in the aftermath, but it's a longer term estimate he is putting off. , in 30 yearsbout time, this is how much worse off it will be. with these models, the big thing to remember is that you have to make an assumption about what will be happening when we aren't in the eu. -- itperfectly possible

is possible that it won't, and that the chancellor is going to come out with this big number. guy: you have to look at the distribution of outcomes. the most positive outcome, the most negative -- presumably, that is the spread he is talking about. presumably, this is the worst-case scenario, if we can figure it out. >> yes and no. this estimate is if we try and replicate what canada's negotiation's -- to try and in some way replicate what we got with the eu by renegotiating. giveuestion is will the eu us a good deal in my feeling is probably not because they will set a precedent. you haven't got any sort of interest.

the estimate is at the high-end. that is the other thing to remember. guy: is there a compare and contrast with the scottish scenario? >> i think less so. i think the stakes are a lot bigger, to be honest, for this referendum. i think leaving the eu, there is a chance -- and we don't know, there's a lot of uncertainty -- but i think it's possible that this could make a big impact on the u.k. economy, and also that it wouldn't. by feeling is that in the short-term there will be a lot of uncertainty, the cost to the economy and it is whether we can recoup that in years to come with a new trade agreement or the like. the politicians will make them sound like facts. thank you very much.

it's ecb week. we've heard some unhappy voices from germany ahead of the meeting, the various finance minister telling us that the state of the ecb should be german, and that record interest low interest rates are -- berlin with the school of governance director, who joins us now. good morning to you, sir. is the ecb the front of germany, you think? it is the friend of germany because it sets the monetary policy for germany. right now we see german politics going on in you know you want to focus on other issues, in the ecb's controversial, which is why it is viewed as having against mario draghi. guy: in terms of how the

economics of germany will develop from here, when you look at what the likely outcomes are, we see an awful lot of moving pieces. we don't know what is happening with the euro, what's happening with china. we don't know what will happen in terms of southern europe. when you look to what happens next, like the key variables for you? >> inflation in the euro area is still at zero, and the ecb has already done an awful lot of things. the euro is now rising is that the following and all this put together makes me a little worried that if they increase by a further 10 basis points or increases qe, that also increases the time of qe and it won't have a big impact right now the real worry in europe is growth; they need to focus more on growth. this is why the ecb criticism is also wrong -- the german governments have to act now. guy: ok.

so i look at sweden and the economic performers that countries producing -- it has negative rates and has a big fiscal push underway as a result of the migrant crisis. is that something germany should replicate? >> well, it's not germany that could rescue the euro area by spending more. they certainly need to spend more. this is not the time to have a fiscal surplus; this is the time to invest, and there's a huge investment gap in germany. this is the time to use that money to the german economy. but governments need to move more, and the problem is that with the debt level at 132% in italy, there isn't really a lot of room for fiscal maneuver. even if it is difficult, we should focus more on the reforms. we should get the economy going good markets,.s, more flexible guy: yeah, but let's assume that does happen -- you need to

kickstart it and we have thus far failed to do that. it is easy to do it when the sun is shining rather than the rain coming down. germany has the option of making that happen. 's current legislation in germany surrounding dead wrong, or should germany repeal that legislation and move on from there? >> no, germany is a shrinking economy in terms of demographics. afford huge debt levels. germany needs to spend more, but they cannot spend for the entire euro area, and they cannot reflect the entire area. i like to call this the draghi policy mix. we need to have the ecb giving full accommodations. there is some kind of instrument to counter the demand of refugee crisis. together.eeds to go

that is reallyg happening to bring back trust in this economy, and that is a real issue. i am not very positive right now. i think the risks in europe has increased in the past six months rather than decreased. guy: if the rest of europe was pushed through the structural reforms, if the rest of europe put its economy on a more sound footing, would debt mutual is asian be something we could realistically expect from germany? >> it's just not in the cards right now. we already have debt mutual ideation, and it is now hit at the ecb. we will also have some kind of implicit mutual eyes asian through the rescue mechanisms -- even if it is not complete. is the probably need completion of the deposit insurance for the entire euro and then certain things,

reform spending, integration. the problem is that the europeans are not getting their act together and really thinking about reform. they just kicked the can down the road and that is not going to help. guy: thank you for taking the time to join us. next, the week ahead. of busy week starting with oil, but plenty more still to come, including this man. look forward to the ecb meeting. we will talk about it, next. ♪

guy: welcome back. you are watching "on the move." good morning, john. jon: it was so nice to be back in london. a --ew hq, going past with is with us as well. guy: oil's down. draghi's got a problem, right? rish: this does not make his job any easier. i think economists are coming to the conclusion that they will have to do something additionally when it comes to using. market pricing is pointing that way. the oil story doesn't make it any easier. for default we have seen just puts pressure on inflation, and every other central banker. guy: what are the stakes? are they just watching and

giggling? jonathan: the world we live in, the likes of draghi want a higher crude price, and crude is seeing -- it's pretty ridiculous, but that is the place we are in. there is an session to see how wti trades into the open as an indicator of what will happen. at the same time, we are ignoring what's really going on. corporate profits. we knew earnings were going to be week. all roads lead back to crude. if you look at those numbers you go through jpmorgan, bank of america, you strip them back and analysts dominate my saying that we don't care about your consumer business. we want to talk about those increase in provisions and the losses on the back of energy. jonathan: that's the short term. but you wonder how it'll come

down. thanks to mr. jonathan ferro. we're going to go on the radio now. a lovely day in london. see you tomorrow. ♪

oilcine: doha disappoints, futures plunge 8.6% after weekend talks between the biggest producers end in failure. dilma defeated. the leadership of latin america's largest economy hangs in the balance after brazil's lower house congress voted to page the president. and courting yahoo!. verizon is set to lead the pack in the race to buy it reaching the final mile.