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. welcome to "the pulse," live

from london. let's take a look at the markets. some great guests coming on the program. first, this is a picture for european stocks, down 0.4%. tohave our in-house expert go through what didn't happen in doha, currently down some 4%. then i wanted to show you the fallout, you can see the yen rising at 108.26. let's get to the bloomberg first word with nejra cehic. nejra: thanks. brazilian lawmakers have voted to impeach the president. there were wild scenes of the parliament as the opposition secured the two thirds majority needed to move to the senate. there, for civil majority would see her suspended while she faces a trial. the president and her supporters say the campaign to oust her amounts to a coup.

. george osborne will wrapup his campaign to keep britain in the european union today. the you can chancellor will highlight a treasury report which says it would cause permanent rather than temporary damage to the economy. would cutill say, impact at enormous costs the public spending. meanwhile the french economy minister says, bridget will begin its power within the world. emmanuel macron spoke at an hergency steel summit, where tried to persuade china to scale back its production. because, you are fine, when you discuss your history with china, you are credible. you will never be in a situation

to meet face-to-face with china because the market is not relevant for the chinese. nejra: the death toll in the ecuador earthquake has risen to 272, with more than two and a half thousand people injured. stretchmagnitude quake 170 kilometers from the capital. the prime minister flew to the epicenter after cutting short a trip to rome. 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 . francine: thank you. talks between the world's biggest oil producers failed to meet a deal. 16 nations representing half the crude output gathered in a bid to stabilize the global market. news sent oil tumbling. elliott gotkine is live. with us here is javier blas. and for the biggest part of the show, stephen major, also with

us. elliott, what went wrong in doha? francine, there would only be one of two outcomes, and that was deal or no deal. but given iran's no deal always seemed more likely but that didn't stop of the attendees feeling let down. >> disappointed, yes. but at the same time, i kind of expected all the problems. there were a lot of talks about so yes, inining, hindsight, i was. the iranian oil that it also confirming

was the main stumbling block to an agreement. we got word that there was a draft agreement and the change of positions before the meeting on sunday morning led the russian oil minister to some hot this session that ultimately proved fruitless and the oil minister said that the channels of communication will remain willand the ministers discuss among themselves how best to reach some kind of agreement but probably the next time they will get together will be june 2 and in the meantime russia will continue to produce near record levels. howeems very hard to the they can reach some kind of f iran remains

entrenched. francine: javier, i'm confused. in hindsight, we knew yoiran would never join in, but i felt we would have a soft agreement. vier: there was the impression the leading political force in the kingdom made clear in the first interviews that unless iran and saudi arabia would not join -- the market kind of discount to that but it that it is really the leading source now in oil policy marking and that is what happened. they went in thinking they had a agreement wasft agreed among the key delegations

as they could not have a deal. francine: we will probably never have a deal to freeze production . they will never give it up, right? >> exactly. i think of freeze in production is wishful thinking. the russians it said that the door remains open, but they also said they will be more careful in the future on these negotiations. led to go they were to doha for negotiations and expected to be a champion of what moore junior officials had agreed and were let down. that russiadoubt will leave saudi arabia to play that same game. francine: how much do you look it mustrice of oil -- impact your inflation forecast. >> this move in the oil price says it all, doesn't it? there must be some wishful thinking ahead in our meeting, because clearly, there is

something more structural going on. the idea that there could be a a littlei think it's bit rich. the oil price went from $100 to $30, then bounced to $40. of those moves, i'm not sure what is most important. everyone seems to be hanging onto the idea that the oil price has to meet a new low, but maybe not. maybe it will just be stuck in a range of $30 or $40. francine: is that right, hobby javier? balance between $38 and $42? there was thursday, exxon mobil who said it was important -- they said saudi arabia in particular was a prime

discovery exercise. opec and saudi arabia are trying to find the new price of oil. --hink that we have france we have not a clue what is going to be there, because we don't know the reaction of oil producers. francine: is it not the new price for shale producers? you can take barrels off, but if the price of oil touches $42, than the shale producers -- javier: the truth is we don't know; this is untested. we don't know how quickly shale oil production can increase again, and we don't know because a lot of the industry has been demobilized, jobs have been lost, people have moved out of texas and oklahoma to find jobs. this is going to be tested the

next few months as the oil market recovers. we will know when they start to pump again. we only knowt, that about $30 or $35 is the bottom. a classic supply shop, housing commodities of any kind of in that takes a long time for the market to start clearing properly and for the process to start. to start anyorced kind of asset allocation based on equities or bonds with the oil price itself is individual. it's a symptom, it's not a cause of anything. to do with the imbalances in the global economy. reporte: we have this saying that the supply/demand equation goes back to the second

half of the year. does this change anything? javier: doha delays it a bit. what we know now is that -- everything that has remained the at 10ill continue pumping day.2 2 million per if the saudis want, they can put more into the market on short notice. and again, we don't know what the saudi reaction will be. last year it went up to 10.5 and that is one of the reasons saudi arabia increased production. ran his cut-- iran is coming back. they will increase production. we can to delay the rebalancing and we can't have a longer period of lower prices. francine: thank you so much. javier blas, stephen major.

well'll be looking at allocation ons next. -- into negative territory if necessary. then, dilma defeated. the congress voted to impeach the president. she will be announced to deliver on brazil. osborne puts a cost on brexit. we bring you the headlines from a busy morning for the u.k. chancellor. ♪

francine: welcome back. let's get straight to the bloomberg business flash with nejra cehic. nejra: hsbc is said to be preparing for change at the top. as ceo stuart golovin plans to quit in two years and the bank will appoint a new chairman to help take the next ceo. he joined in 2011 and scaled-back hsbc operations, exiting more than 80 businesses and cutting 90,000 jobs under pressure from unhappy shareholders. stocks fell about 16% this year. the deal to grenade's telecom operator may be vetoed by the eu. people familiar with the matter say its bid may be blocked

within weeks. they remain unconvinced that they could 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 numbered decided not to make a bid. meanwhile, horizon and it's a low unit are working with three financial advisors on he did that would thinld include yahoo! japan. francine: thank you. is not thete pain only problem according to the swiss national bank, speaking at the imf meeting in washington. he reiterated the central banks willingness to intervene, even as he outlined and acknowledged the pain it was causing to pension funds. >> for pension funds and life insurance, it is a difficult is not a, but it

question because of the negative interest rate per say. it is a question of very low interest rates in the local this is not only switzerland it is everybody in the eurozone and u.s. so for life insurance and pension funds it poses many problems. francine: let's get more on this. stephen major, hsbc, is still with us. the problem with negative rates is that it is split 50-50. yeah. it is quite split. i think negative race gets in a raw deal. we have had negative rates for about five years and bond markets have adjusted. i have said before that i think the central bank is only setting the policy rate in line with the medium-term rates -- and the

point about insurance companies them, butough for it's not as if negative rates is the cause. if the institutions field to that's their liabilities property -- properly in the past than they would have had a problem. i think the real issue is that we have had falling yields for quite some time. the last two or three years there has been a clear downward trend. those were waiting for them to go off would not have bought bonds and that is their problem. to the missile a negative rates i think isn't right. francine: and you argued before that the way they are structured -- in japan, it is a three-tiered system. >> if you use a tearing system, it can be much more efficient. is of the key points here that the real economy is what it's about.

the central bank is setting the policy rate for the real economy is and it is doing it for real people in the real world of thought it is important to protect the are ordinary person in their bank account will stop we are clearing it out lower and lower rates below zero and you are pricing at the margin. the ecb is an example of a relatively efficient system. prolonged problem with negative rates -- i will probably do they become a few hindrance? kuroda says they could go further, but psychologically the markets may take it the wrong way. andhey can go a lot further just to be absolutely clear i am if youing i'm a fan -- were an exam, this would be a d+. francine: are the markets

misunderstanding something? >> i think they are, and in the fullness of time, we will see what this is about. in the meantime, i think it is a much longer term, slow process. there is too much debt in the sovereign sector. how are you going to get it down? there are several choices and none of them are particularly attractive. this is the calm way of doing it. is a natural process in line with where inflation is. as market is now clearing -- long as ordinary people aren't too affected, it can go on. francine: switzerland will go further into negative territory. >> and don't forget that mr. draghi has said that there is a floor, and subsequently cut rates again. japan is clearly in the early stages. the dmb is saying unlimited --

and recent moves would suggest further action. it isn't over yet. francine: thank you so much. stephen major, hsbc. he stays with us. we talk treasuries, next. also, what does the rest of 2016 hold for fixed income investors? we will get more of that analysis. i'm sure there is correlation. ♪

francine: welcome back. this is "the pulse." let's get more with our guest, stephen major. great to have you. you had some great calls on treasuries that were quite market moving. onyou have a new -- is that easing from janet yellen? >> yeah. if you had to pick one single factor that has driven the bond market this year, it was the fed's capitulation. that explains why it is the consensus going down in a steady fashion -- francine: to what? to the market pressure or something brewing in china? >> that is the bigger question. capitulation to more dovish forces. you can start with china as being a trigger -- people are focused on g-20 but it has happened before.

rates, look at g3 and g4 and obviously japan and the eurozone have had negative rights. connections of swaps in the banking system, it's inevitable that there is a cap imposed on u.s. fields. it didn't take much for the fed to signal that they aren't going to hike. my concern is that it has moved quite a long way, and are not going to say they will change their view, but if you hit your target, then that may be pause -- francine: what does that mean for treasuries? --i would say not to change if you look at two-year notes, they are close to the target, almost price for perfection. and it is fair to say that there are others who were hiking rates. for two-year yields to go lower from here, the fed has got to

ease or certainly remove any expectations of one more hike. francine: will that happen if there is a brexit? >> you could say that there is enough risk to keep central banks on hold -- i'm not saying to go shorter, i'm just saying that you have come a long way and in terms of the risk -- we have to look at portugal. has and be that spain election in a few days after the u.k. vote and there is stuff going on in italy. it seems to me to there are so many different factors in europe that would make a central bank pause for and for the said, it may be too risky to hike under that kind of geopolitical backdrop. it does seem to be that there is not less chance of tightening, which on its own is really quite bullish for bonds. francine: great, great, great

analysis. it's always crystal-clear. stephen major, global head of fixed-income. wielded talking about asia credit next. also up next, -- ♪

francine: welcome to "the pulse," live from london. let's get straight to the bloomberg first word news of nejra cehic. nejra: crude has tumbled the most in two months; all exporting nations have flunked after talks ended in doha without any talks on limiting output. to do agree refused to any deal unless all opec members joined, including iran which wasn't present,.

george osborne will ramp up his campaign to keep britain in the eu. he will highlight a treasury report that shows an exit would cause permanent rather than temporary damage to the economy due to lower trade and investment. that, he will say, would cut income at enormous cost of public spending. the debt to total in the ecuador is craig has rules -- ecuador earthquake has risen to 272. was7.8 magnitude quake centered 170 kilometers from the capital. the president has flown to the epicenter after cutting short a trip to rome. 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 . francine: thank you. markets are trading lower; let's head to the bloomberg with mark barton. mark: good morning. the biggest weekly gain for european stocks, and first

weekly gain in five weeks, the biggest in two months. the winning run has come to an end; oil stocks very much leading the decline. oil and gas index down by 2.25%. of today's session is overshadowed by that meeting in doha when the world's biggest producers ended without any agreement on limiting supplies. this is the price of wti in the last six months; today, crude is falling as much as 6.8%, the most since a temper first, 2015. significant hurdles to any deal after saudi arabia's deputy crown prince said that the kingdom wouldn't restrain its production without commitments from any other major producers, including iran, which has ruled out freezing for now. still, wti is regarded by 46% of the almost 12 year low reached on the 11th of february.

just to show you why the price of oil matters, this is the correlation between the msci all country world index, a measure of developed and developing countries, and wti in 2016. look how closely they moved. the correlation is the closest since 2013, the closest. it matters that the world's biggest oil-producing nations didn't manage to freeze output. and there is very much a trend toward haven assets today, benefiting begin. the dollar is trading near its lowest since april, 2014. large hedge flows boosting the currency, and also hedge funds and other large speculators are pushing wages on yen strength to a record as japanese authorities appear reluctant to intervene in the market. this is the yen against all its major peers today.

all these major currencies are falling today; the swiss franc is the best performer, still down by 1/5 of 1%. the canadian dollar, an oil-producing nation, down by 1.3%. we had a g20 meeting at the end of last week, in the nation finance minister said he confirmed with his counterparts, including the united states, the disorderly currency movement of desirable, but within 24 hours we had jack lew, bluntly saying that japan needs to focus on domestic demands and called foreign-exchange markets orderly. that is a clear warning that the u.s. doesn't view yen intervention is warranted. but money moving into begin because of that meeting. francine: mark, thank you so much. ff's presidency is hanging by a thread after the lower house of congress voted in favor for impeachment. portuguese] in

the opposition broke into cheers as the impeachment passed by a convincing majority. bad news for the president, but good news for investors who have bet heavily on her impeachment. this is a picture for the stocks. the magazine first reported the february that a senator cited the president in a corruption scandal, which was good for the stock, as people were thinking of impeachment and that it would come sooner. four months after, nothing has happened. theave seen up and down's, president say she will hang on to the very end. that last leg up from yesterday. for more, let's bring in paul mcnamara. also still with us is stephen major of hsbc's global head of fixed-income research.

paul, great to have you. let me know what's going on in brazil. even if the president is impeached, i'm not sure what good news can come of it. we need someone who can manage an economy -- he was the person? paul: that's a good question. the upside would be is that it would be hard to find someone who could do a worse job on the fiscal accounts in the current administration has, both of the previous term and more recently. this is a country which is now running a budget deficit of very nearly 10% of gdp, very high, real interest rates, a bond market which functions as a vigilante. from that point of view, the prospect of moving to a new administration -- one which would presumably be more conservative -- would be seen as a big positive. the flip side of that is that the political temperature is clearly rising. there are accusations that this is defective a coup.

i think it will be more difficult to pass unpopular spending and tax legislation. francine: paul, what is the first thing you are talking about the broken system? what is the first law that the new person has to pass? how do you fix this broken system? paul: i think it has to be a very clear focus on the primary fiscal balance. that's just the difference between tax and spending on basic accounts. that steadily drifted down from quite a healthy surplus while we still have the commodity boom, intimate deficit now. the country with as much debt as brazil, which pay such high yields, simply has to taken a lot more on tax than they put out on spending. so somehow -- it can be on taxes and on spending, but somehow that gap has got to change. francine: is there a concern that is possible impeachment

puts the country and even worse position? if we don't get the catharsis people are looking for? paul: nobody knows what's going to happen. there are two more votes in the senate. there is a great deal of uncertainty, and it is certainly true that the workers party and her supporters do feel that this has been an undemocratic process, that there is a problem. but brazil is set on a very unhealthy course, and i think the reason investors have responded so well is the prospect that any change has got to be an improvement. francine: stephen, if we back up a bit -- brazil is in no way systemic, right? >> yes. recentlyd investor, the returns haven't been so bad, em generally has done well on the back of the fed. but for a bond investor, keeping

the way it probably makes sense. looking at the dead numbers in the amount of political risk that will build in the coming weeks -- nobody knows what will happen. the best thing to do is to maybe cut some duration that keeps them exposed. francine: what happens? how much do we know this impeachment is a good idea? >> we don't. francine: we don't even know who would be in charge. >> there are many examples around the world where there isn't any government, and sometimes it can be a good thing, if you think about it. the examples of belgium, of spain, here in europe. they could be a period of paralysis with weak growth, and it's ok. francine: after the vote yesterday, paul, the impeachment almost a done deal -- how long will it take? paul: it seems extremely likely that the next hurdle in the senate,, will go through. that's the simple majority.

and then you have six months of investigation. specifically with her presidency suspended, probably moving to the vice president. the final verdict, assuming the resignation or other governments i think senate votes, there is a very strong probability that her presidency is suspended for quite substantial length of time. francine: are you expecting volatility and turmoil in the stocks? i think we have lost paul. stephen, when you look at brazil --this seems like such there is such corruption, there is still petrobras, which is why analysts say that whoever goes after her makes sure they have a great finance minister in charge. >> to your question, is it

systemic, it is not like it was a year or so ago, because valuations have already moved a lot. there's a great deal of yield prediction. that it maying is be a factor for the fed, if they are looking at overseas it seems like a very long time -- francine: but it's not quite insular, is it? >> we have found that small countries can sometimes be systemic. just think about greece. it is a very small country, but look what happened. i think we want to be very careful. people, the real yield is quite high, the deficits are very high. i think investors will prefer the front end. francine: you have also changed with your allocation calls on asia. >> yes.

call, becausetion we set our targets, and these are the asian credit indices, and in many ways we had our targets ahead of schedule. also we are a bit concerned about the growth outlook for a number of countries. it's not just about china, but the whole region. just scaling back. francine: thank you so much for joining us today. stephen major from hsbc. the global head of fixed income research. coming up, yahoo!'s deadline looms for offers of the company's core assets.it looks like there may be just one taker . ♪

francine: welcome back. breaking news out of hsbc. they had their shareholder meeting, as we understand, that the chairman douglas flint is commenting, saying, look, of course the company is facing challenges, a lot of them are structural because of the economy. he says it has been a clearly difficult time for the bank. he says he is not happy with the share price. we know that a lot of shareholders also unhappy. let's wait to see if mr. flint tells us how he will turn it around. that is the live feed coming to us from the conference; we will have plenty more if we do get breaking news in the next couple hours. let's get straight to the

bloomberg business flash with nejra cehic. nejra: c.k. hutchinson's deal to britain's biggest telecom operator may be vetoed by the eu. people familiar with the matter say it's bid may be blocked. agulators are said to be unconvinced that it would create competition. they want the companies to sell part of their network infrastructure to a new rival. flight hasirways landed safely at heathrow after being struck by what was thought to be a drone. the pilot reported an object headed the front of the airbus, which had 137 passengers and crew. it is thought to be a first time he drove has collided with a commercial airliner in the u.k., although dozens of near misses have been reported. francine: thank you. it's deadline day for yahoo! bidders. unnumbered decided not to make

an offer, according to "the washington journal." joining us now is its chief business correspondent. great to have you. we knew everyone was intested, but no one is interested in taking over. >> it seems there has been a bit of a shakeout. it has been reported that verizon is the most serious strategic bidder. enormous company that has been expanding significantly in a digital display and advertising spaces. they bought aol last year. it certainly wouldn't be surprising to see verizon witness; if they want it, they can get it. the question is how much they want it. francine: this is a question of price. strategically, does it make more sense? >> perhaps. there is a broader debate here. telecomemember, companies wanted to be in content. that went out of fashion, and

they said we are all just network companies. verizon has the going quite sharply in the other direction, wanting digital business. the former chief executive avail well is leading -- executive of aol is leading that charge. they drastically faded from what they once was, but it is still a big advertising business. you can see how it would be a very appealing process. francine: yahoo! has tried to sell before and never succeeded but this time it's for real. >> no one knows until the incas dry, but it does look -- until ink is dry. most of the share will have to be bought back by alibaba. there is a stake in yahoo! japan in the core web business, what you are i would have experienced. a question of sorting out all those pieces in finding a price everyone can agree on, but

it looks like this deal will get done. francine: at the same time, we were raising eyebrows when we heard about "the daily mail" being interested. it's not completely improbable, because it does give them access to that u.s. market, which is externally difficult to penetrate. >> absolutely. and something that is amazing about yahoo! is how many people visit these sites. ; i am always astonished when i see the figures they have hundreds of millions of monthly users. that is a lot of eyeballs, and the trend is very much toward scale. you want big so you can get the attention of advertisers and people paying their bills. "the daily mail" is already big; yahoo! it would be truly enormous. francine: matt campbell there, with the very latest. costxt, breaks it could every household 4000 pounds a year, according to george osborne.

he will discuss the pros and cons of a brexit. ♪

francine: the u.k. chancellor george osborne is set to weigh in on the brexit debate; he will use a publication of the treasury analysis for the potential consequences of an exit, to argue that such a move would shrink the economy. let's stick to the u.k. economist for bloomberg intelligence. great to have you.

we are getting some figures -- one is that they keep on being debated. it willcellor will say cost of a family 4300 per year, if brexit happens. is that a figure we have modeled and checked out, and that works out? >> we haven't had a chance to verify the numbers that will be released alongside his speech; we will get a look at it then. the truth of the matter is what we know about the analysis is what the treasury has modeled. eu, and leaving the renegotiating a deal similar to the deal the eu made with canada. the thing with that is that we now that the eu deal with canada isn't canada coming into a single market. it isn't surprising that there is going to be a cost for leaving the eu in that scenario. the big thing you have to take into account is huge amounts of uncertainty. will bet really is that u.k. be able to negotiate other

agreements? not just with the eu, because the eu doesn't have a reason to give us a good deal; they don't want us to leave and be better for it. the share of eu trade -- francine: how do you model -- when you model, what kind of models do you look at in seeing how much it would cost? >> the models that the treasury would have used our a big, dynamic model. it takes a part of the economy over time into the future. there are benefits to using these models, because they capture all the interactions in the economy, or attempt to do so. when you look at other analyses, what they miss our general equilibrium interactions. feedback loops in the economy, what you call partial estimates, which companies or think tanks add up to get the whole economy number.

arguably, the treasury analysis is more thorough. against --to be set you have to put it the context of a political argument. francine: so do we know -- let's say that we understand we'll hit a recession if brexit happens. how much do we know about how the u.k. can do for five years from now? is there any chance they can thrive, and is 4300 get reduced? >> i always think about in three stages. the first is the uncertainty and lead up, and that can arguably have a short-term impact on gdp. then you have the fallout for brexit. i think it is quite hard to make a case that there won't be quite a large amount of uncertainty, shock to confidence, and we have done some analysis on that. it's really been the case, in the long-term, of what happens. this is productivity growth. whether the benefits can be

replicated. arguably, they can, but it is a big assumption, and that is what the leaf campaign is resting their argument on. there will the eu, be a big short-term impact. francine: thank you so much. dan hansen with bloomberg intelligence. before we join "surveillance," let's have a look at the markets. we have seen since huge gyrations over the last 24 hours. this is the price of crude, the most important, pared down 2.4%. after talkse volley on sunday between the world's biggest producers did not agree on limiting supplies. it also had an impact on currencies; the aussie dollar and yen rising. stay with bloomberg. "surveillance" is up next; tom

keene joins a from new york. with talk about brazil and their president's future. we talked to richard, half president of the council on foreign relations. we also bring you those morgan stanley earnings later this morning. ♪

francine: oil futures plunge as much a 6.8 are after weekend talks between the biggest reducers, and a failure. the crude stumble pushes emerging markets lower. defeated the leadership after brazil's lower half of congress votes to them each the president. i'm francine lacqua in london