sharesna: mitsubishi plunging, manipulating the fuel has. volkswagengging -- is paying money in the cheating scandal. a premium for u.s. treasuries over german debt, the highest level this month. as investors wonder over if mario draghi will hint at further easing today. warning signs, billionaire investor george soros says the global recession in china. plus -- i it would not be surprising, don't think it would take a heroic effort if you are being

equities could return to last year, it would be a big statement. anna: we have the exclusive ,nterview with hugh hendry and why he is big on japan. manus: welcome to countdown. anna: welcome to the program everybody. it is just that 6:00 here in london. manus, big on japan? the most moves we have seen, 2.5% this morning. but really, that is just tying in with the global picture we have seen in equities. hitting the highest level since december. absoluted there is an sense of relief in the markets. 16% from the low, all predicated on whether you think that china has settled, and whether george soros is right -- china is

looking like the u.s. in 2008. let us break it down. we will kick off with the s&p futures. we have a nice rally on the way, the s&p late afternoon was not so bad. to 61%ternoon, back probability of a hike in rates in december. anna: yes, exactly. oil price very much a price, energy stocks rising. asian stocks rising, as the price little more stable after a decent rise. barrel, nymex at 44.21. up by just a fraction, but substantially higher than it has been over recent days. that is a story over oil, u.s. production falling, and how freeze talks to be revisited as early as next month. a lot of talks about bond markets, as the ecb day -- the spread of the u.s. over german bunds, very much in focus as we

look towards the ecb is going to stay. that is the data coming out of europe. we will discuss that later, and expectations for a fed hike on the rise. manus: absolutely. that will play into the markets. one of the big corporate stories , let us bring you the breaking news from one of the largest pharmaceutical companies. first-quarter sales coming in from a net sales, at $11.6 billion. that is just ever so slightly below the estimate of $11.8 billion. they delivered a solid first-quarter, novartis telling the loss. they confirmed the 2016 outlook. that is critically important. there are two sides to this business, drugs coming off patent. and one of course is happening which gave ins the latter part of 2015. they say that the growth plan is on track for earnings-per-share. and they maintain the first

indication for this year, keeping the 2016 forecast. earnings up $1.17, that be the core operating income of $3.2 billion. anna: that is the early earnings report. let us talk about what is happening in the auto sector. day, shares in mitsubishi motors have not yet traded in japan. as the number of sell orders far outnumber the dead's. bids. the company admitted to exaggerating fuel efficiency results. manus: let us get a little bit more on the story and the asian market, even on man is standing by. by 50% today,ne people are speculating that when he gets going, we could see a price check of 20%. the overall official move? yvonne: that is right. we're just waiting for that match right now. but as you mentioned, with the sell orders far outnumbering the

seeing 7733, the aee market is that ¥583 share. we could be seeing limit down at 19%, a plunge at the close. because in japan from the regulators do force these companies to start trading. maybe at the last minute, we could see another tank their at the 7:00 a.m. our u.k. time. the is after we heard about vehicles impacted by the cheating scandal. the bigger issue now is a testing method of the carmaker has gone through has not been fitting with japan standards, since 2002. and this cheating scandal now could make it harder for mitsubishi to stay afloat. it is one of the most cash-strapped carmakers among the japanese peers, and they could now be forced to be bailed out again, something they are quite familiar with over a decade ago, when they had that cover in terms of the recalls

around the 2000 era. series what we are looking at and the broader picture here in asian markets, we are seeing that crude climbed a that is certainly boosting sentiment. the yen holding onto that three-day retreat, really boosting japanese equities, up 2.4%. they are leading the regional benchmark as well. and there are bets piling up now that next week with the boj meets, we could be seeing some type of monetary stiglitz. goldman sachs is one of them. they have a new timing for monetary stimulus, for next week since june. back to you guys. anna: thank you very much. lots to think about in the asian sector, plenty on autos later in the show. on that story and indeed on volkswagen as well. for the moment: get back to hong kong. haidi lun as that for us. haidi: good morning. with the theme of automakers embroiled in scandal, volkswagen agreed to pay at

least $10 billion for several claims. and losses by american car vehicles.r diesel that is according to person with direct knowledge of the matter. this comes ahead of the deadline, set by the federal judge, saying how the carmaker will fix the vehicle to get them off the road. in a court filing on tuesday, volkswagen said they expect to reach a settlement. there will be no need for a trial this summer. billionaire investor george soros says that china resembles the u.s. in 2007 and 2008, before credit markets freeze out the global recession. markersid that credit far exceeded the forecast, should be a warning sign. hendry says he is now speculate on a recovery for japanese stocks. asian policymakers maintain the policy of negative interest rate.

he spoke exclusively to bloomberg's francine lacqua. this, the deficits of buying, the currency is going to collapse and we would lose buyers of the bond market. about that itng hasn't happened for a week. internet have in the year before, you the year before. people have to stop repeating the same error. i: the earthquake that shook southern japan last week is estimated to have cost 3 billion u.s. dollars. the initial production comes worldwide, more than 50 people died into powerful tremors and aftershocks. the april 16 earthquake was the most powerful to hit japan since the fukushima disaster five years ago. president obama will tomorrow

urge britain to keep the country in the european union. in between lunch with the kwame and the duchess of cambridge, obama is excited to weigh in on the brexit debate with david cameron. drizzle evidence of that americans are broadly aware of the debate in the u.k., or care about the outcome. ii, then elizabeth oldest reigning monarch, and the longest reigning in british history. gun salutes take place around noon in the u.k. david cameron will lead tributes in the comments. news 24 hours a day, powered by 2400 journalists in around the50 bureaus world. find out more about the stories on the bloomberg at top . sending it back to you guys. manus: thank you very much for getting is up to speed. there is speculation that the signalario draghi may

further easing. the 10-year u.s. note and the bund and germany, the most in three weeks. anna: western european central banks, live from frankfurt, great to have you on the program. what is the angle going to be today? will he be emphasizing the stimulus, or pointing to things improving in the euro zone economy? the unemployment picture and the output gap narrowing. >> well, you would bet that he has two messages. one is that ecb stimulus is working so far. and the other is at the risks remain on the downside, therefore the ecb should need to act in the future. and it would do so. what he would emphasize at the moment there is no need, otherwise it begs the question why hasn't he done so? and you are right. some of the data, you can be selective, some of the data is relatively strong. the unemployment rate in the euro area is 10.3%, way that o hybrid down from 21 1%

around three years ago. if you take a look at the output gap, it is closing slowly. but it is starting to close. when he gets there, that is when the inflation picks up. inflation is nowhere to be seen. that is the real black mark for the ecb. great there is a statistic in terms of the trust factor in mario draghi. in germany, likely to address that? the trust level from germans on the ecb, the distrust is rising exponentially/ . >> yet, this is the key. as long as the ecb does not have any inflation, it is very easy to argue that the policies are working. and in fact, they are detrimental to certain sectors of the economy. notably savers for people planning for retirement. that is where the attacks are coming from. they're gaining traction when i just there but in the netherlands and other places. people are angry. the german attacks are also seen

on the ecb independence. and if mario draghi is asked about the subject, you expect some kind of response. he has backing from the bund ba backing within the governing council i would imagine. and therefore, he can say the ecb will do what it has to do. we will get inflation back on track. probably quite diplomatic, and he is mario draghi's friend. paul gordon joining us from frankfurt. joining us now in the studio, alan higgins. great to see you this morning. weigh in on the ecb this morning. do you think he will be playing up the need to do more because inflation is still well below target? he is focusing on doing this already, and looking at the data that is improving your the eurozone? i think you are spot on.

it will be quite balance. i think he realized that when he kind of said that is it, that might be a bit of a verbal mistake. but i think he will be balance. in particularly, pointing to the this idea that you get paid 40 basis points for new lending. and we haven't seen the impact of that yet. and he will say, look, we are going to do more. i do not think he will get drawn. asking about helicopter money, i don't know if that is going to be -- someone had asked that. the bloomberg journalists, but i don't think it will be drawn particularly. corporate bonds have not really started yet. but really, you have to say, since the last meeting, and i was on just before talking about corporate bonds being included, and they were, the risk market has done very well. we don't know what the market circumstances would have been like. so, the only issue is the euro. manus: let's talk about this.

since march 10, we have had a rally. it stayed a little bit in the sinceouple days, up 2.75% march. we have given a little bit back here. but they're not as preoccupied on currency as they are on transmission. the transmission mechanism connecting to be the balance. alan: i think you're spot on. going back to the euro when it was all about getting it down, that is despicable things. we realize that that term, general dollar strength has been risk taking. so we're kind of easing back on that. and yes, it is yes about the euro now. and maybe they consider it a fair value. the euro has a big asset. we are neutral, we do not really want to get involved either way. and it is pretty fell value. and is focusing on interest rate differentials would be a weak argument. anna: you say there are certain questions that have to be asked

at a press conference. it can be difficult to watch. another question is around the relationship with the german political scene, as we were talking there with paul gordon. wolfgang, the finance minister mariomany, saying that draghi shares the blame for the right-wing populists parties in europe. we were reminded by paul there, they are friends. there is a risk to that conversation a little bit. is that something that he might not want to way into, but is that somebody needs to ask questions about? alan: he probably will. politicians are politicians. and we listen, summit along that line. more encouragingly, though bund bank has become supportive of the ecb. that is far more important actually, whereas politicians they need to get reelected. so i am sure it will be very polite. support,e has the bank

and to a certain extent, it is a good place. manus: chief investment officer stays with us. anna: and of course we will bring you the ecb rate decision, followed by mario draghi's news conference at 1:30. manus: more central-bank action earlier in the day, a rate decision from sweden's bank at a: 30 u.k. time. on the data from, u.s. jobless claims at 1:30 this afternoon. anna: we get earnings from tech giant microsoft, and late in the day, president obama leaves saudi arabia, no doubt talking about oil. and he comes to the u.k. more on that next 24 hours. seeking outlk about growth in a slow commodity environment. ♪

anna: welcome back. 6:19 in london. looking over victoria harbour there, up by 1.7% on the hang seng. asian session pretty firmly in the green. let us get the bloomberg business flash. here is haidi lun. thanks, anna. american express rising in after-hours trade come after posting better-than-expected first-quarter earnings, coming in at one dollar 35, more than was expected. customers are increasing spending. while come falling in extended trading, while some orders are coming from apple. the iphone maker will start using intel or some of the modems. also forecasting profits that were in line with estimates, after results in china. of kfc and taco

sales climbing in the chinese market. the chinese unit about his plans to spin out, could grow around 60%. shares rising in the after-hours session. that is your bloomberg business flash. manus: thank you very much. let us talk mining now. do not expect commodity margins to be as high as they were in the last decade, that is according to the present of operations at the minerals and australia. his name is mike henry, and he joins us now to discuss growth and opportunity in the commodity great to have you with us. i was looking at some of the 27% on basicp resources. the stock is up 31%. the big question on everybody's mind, is the worst behind us, in terms of metals and minors? or is this just a brief reprieve? you --ello, i think if

good morning. i think if you look at the increase we have seen recently in some commodities, we are not expecting the that will hold for an extended period of time. short to medium-term, we think we will see things like iron ore, the result potential to come back down again. but the long-term outlook remains quite positive. global growth, we expect over the long-term, going to be quite strong. and given where we are positioned, both in terms of a recent on the cost curve as well as geographically don't we think there is still a fantastic opportunity, both for the industry and the opportunity. anna: anna here, iron ore prices dhave done quite well in recent weeks. talkw mckenzie, your ceo, a little bit variously about oil prices. what is going to bring those prices down then, do you think? mike: i think we need to look, anna, and the fundamentals

that have driven the price run-up. it is not just sentiment. we have seen an uptick in activity in china. that has led to more steel. they were running very low inventories for steel and the input. as we see activity pushoff, they needed to purchase more fairly quickly. and that brought prices back up. what we are continue to see the low-cost and new production come to market, either through productivity or new investments. and as that happens, once the mills are through the restocking cycle of we do expect to see rises come back down again. george soros this morning has written a piece, saying he sees china as being similar to the u.s. back in 2007-2008. this is rather in auspicious. he says that was a debt-fueled economy, before the credit crunch. how concerned are you about the

rebalancing in china? would you agree with george soros, in terms of what we're really staring at in china? look, let me separate my response into two parts. one is the long-term economic growth of china. and we believe the fundamentals are strong. we are big believers that china will continue to develop, and as they do so they're going to require more by way of commodities. demand will increase, and that bodes well. in terms of debt, i think there are key differences between historically.u.s. a lot of the debt of course in china is domestically controlled. and china has the reserves that would allow them to deal with any short-term issues, and any case in terms of debt. it is not something that changes our view around the long-term fundamentals for china and the attractiveness of china as a commodity market. anna: let us talk little bit about your m&a and tensions, mike.

in recent past, you have copper, gas,l, given the opportunities that are out there, some assets relative to history, are you going to widen the shopping list? reason that we have talked about copper and oil as being the areas we would like to grow is because we see the fundamentals for those commodities as being the strongest. good long-run demand, you have to decline rate in existing oil production, meaning you will need to bring new investment to market. so we see prices recovering more quickly. copper, by the end of the decade, we will see the deficit. that will mean higher prices. on the m&a front that we have a long-held strategy that we are sticking to. low-cost expandable assets, that has been a winning strategy today. it will be winning in the future. those sorts of assets do not

come up for equally, when they do, they need to compete against internal opportunities to deploy capital. one of the great things about the company is that we have a portfolio of high returning growth projects, that we can bring forward in due course. orould not categorize m&a acquisitions as being highly likely. we will never say never. manus: never say never. talking about margins, do not expect we be saw the last decade, you need to tighten that us. is a decent margin for you going forward, giving everything that you just said? i don't wantook, to go into the specifics of numbers. what i can say is that for many of the commodities, we expect to see higher prices. on an environment where on the cost side can we continue to drive things hard. and across all the businesses, we think there is further to go. what is that going to look like?

volume through productivity, taking what we currently have, getting more volume. at the same time, driving down units. anna: mike, thank you for joining us. thank you so much for joining us. when we come back and we will talk about cars. ♪

manus: welcome back. this is countdown. 6:30 in london. we have breaking numbers from erickson. anna: the telecom equipment maker given the best quarter numbers connect sales coming in at $52.2 billion. that is a little bit below the estimate of $54.4 billion. net sales number alone that below the margin, excluding restructuring. 33.9 percent, just below the estimate, 66%. and the net sales number, just

flashing red on the bloomberg terminal, 52.2 percent below the estimate, talking a lot about the restructuring costs. they have an pulling a number of the phone operators, pulling back their spending on growing or upgrading the network. 4g spending has been done in various parts of the world. plus the competitive environment has been intensifying against nokia. so this is a business that has been expanding beyond the network year. that is the most recent story that the ceo is saying, leading to more clout the software and the like. much of the so-called fourth-generation networks have been done in the likes of u.s. and china. lots to talk about with the ceo of the company. he will be joining the later thise team morning at 10:40 u.k. time. manus: and we have little bit more in terms of structural changes, one of the big topics running through on that. ok, breaking. let us get out to haidi lun. good morning.

thanks for that. mitsubishi motors have not traded here today in asia. the japanese carmaker yesterday admitted to manipulating data, involving at least 625,000 vehicles. shares closed down more than 60% on wednesday. the company's president has described the scandal as shameful. agreed toswagen has spend at least $10 billion to resolve civil claims by the u.s. government and losses by american car owners over diesel vehicles. that is according to a person with direct knowledge of the matter. this comes ahead of the deadline today that was sent by a federal judge for the carmaker to say how it plans to fix the vehicles. in a court filing on tuesday, volkswagen says it does expect to reach a settlement. and there will be no need for a trial this summer. billionaire investor george soros says china risible the

u.s. in 2007-2008. before the credit markets freeze up and caused the global recession. he says the march credit numbers should be seen as a warning sign. and queen elizabeth ii turns 90 today. she is the world'oldest reigning monach. meanwhile, david cameron is expected to lead tribute in the commons. antislavery activist harriet tubman will appear on the front of a new u.s. $20 bill. come common the first african-american woman, and the third woman to feature on currency, in modern times. she helped hundreds of others to freedom on the underground railroad. she replaces former slave owning president andrew jackson. he will be relegated to the back of the $20 note. powered by 2400 journalists

around the world, you can find more about the stories and others on the bloomberg at top . anna? manus: thank you very much. let us to the markets now, a nice run in the asian trading session. nejra here to break everything down. the stock market looking decidedly up. nejra: across asia, we see stocks resuming the ralluy, their industry groups on actually higher. in hong kong, as you say, the seng up since january. outpacing the global rebound. in japan as well today, we are seeing gains on the topic, heading for the highest close since february, despite some yen strength and a. but the chart shows over the longer-term, it has really lacked the global equities by more than 10% this year. that of course has been largely

yen. to a stronger but coming back to today, part of the reason why the risk sentiment is the higher oil price. wti trading in the highest level in almost five months. this is after data showed u.s. crude production dropping. you see that is the white line. to the lowest level since october 2014. and also, iraq saying that the producers plan a new push to agree on an output freeze as early as next month, providing some support to crude prices. and finally of course we are looking ahead to the ecb meeting today. economists of course are not expecting any change to rates. what investors are perhaps expecting signals of further easing. and also, 60% of analysts predicting more stimulus may come as soon as september. on the other hand, probably the of the fed tightening has increased this week, according to fed fund futures. what i am showing here is the treasury bund leak spread, that

has widened if you look to the wards the end of the chart. jumping to over a three-we time. anna: thank you very much. economists are virtually certain that mario draghi will not cut rates when the european central bank meets later. whatever happens, the stock volatility, that is the subject of the chart on the hour. guy johnson is here with more. alan higgins is still on set. guy, a great chart. just suggesting that compared to history, compared to data releases in the eurozone, what mario draghi says has a big impact on volatility. guy: it has increasingly over the last few weeks. the december meeting, the critical meeting, and the meeting that we had in march -- both had huge amounts of volatility. and this will a chart that will the right-hand side showing you just the kind of volatility we are seeing. both of those are down.

let us walk our way through what we did today, looking at the potential for volatility to come through. mario draghi is not expected to do anything. no, but he has to walk a very fine line between saying that he is not going to do anything, probably not going to do anything for a while. and a sounding like he is done. the market will get pretty negative, because the view is definitely that he is not done enough yet. it is when to be an interesting day, i think. headline level, but i think it will be really important. manus: you think this article that's a goes on to talk about that despite the two major cks 50 in march, sto still down 15% over the last year. it just has not worked. believe market is not he can fix the earnings story in europe. they do not believe that mario draghi has done enough. that is the line he has to walk today. in order to keep the body of the

governing council on board, he needs to signal that maybe they are going to review the situation. going to announce the details. but he cannot go much beyond that i suspect. breaking out of the trading range, i think that is important. the last couple of days we see them popping through the top end of that. but nevertheless, i suspect he will find it very difficult to justify. looking at the risk, it may be skewed to the downside. anna: even if they are not there specifically to prop up equity prices, they are there to fix inflation, get it up to the target. and it is remaining elusive. expectations, the market-based expectations where inflation goes, not doing what mario draghi wants them to do. hole 2014, heon was concerned when it was around 2%. now it is 1.4%. future inflation five years forward, the issue with the

corporate sector and earnings. it is very hard to get turnover. and a sales growth is very, very hard, nominal gdp environment. manus: guy johnson will be back on the move. alan higgins stays with us. let us talk about autos now. the company has agreed to set aside at least $10 billion to resolve civil claims by the u.s. government and lawsuits by the american car owners. anna: that is according to a person with direct knowledge. let us get more with tom lavell, who joins us from frankfurt. the proposal is given to a judge today. what is the main impact at this point? and the number, $10 billion, how does that relate to other numbers that have been thrown around? tom: well about two thirds of that has artie been announced at least for the third quarter. so this is just a step in the total cost that they are going to be facing. he still also have to have an

agreement on the fines. to as much asunt $42 billion. the big impact at this point, provided that this settlement is agreed to by the judge, that means that the supervisory board tomorrow can go ahead with finalizing the figures for 2015. and announcing them next week. the big question there is what to be what is the impact on the dividend? analysts are assuming there will be a cut. how much is all over the place? manus: that is one of the biggest issues, how close is volkswagen to a full resolution on the diesel emissions scandal? that is what the market really wants to know. a bit like the bp moment. they want resolution. don't they? tom: yes, they do. but it will go on and on here as well.

volkswagen has said it does not expect to complete any fixes to cars until the end of this year. the problem is, it has not been able to even start on the u.s. fixes because it has not reached an agreement with regulators. that is what today's settlement is supposed to help provide a step towards. anna: and after volkswagen k mitsubishi. mitsubishi motors have not traded, after admitting they had manipulated fuel tests on many cars. is there some kind of tie in with the vw scandal? any similarities in the stories? tom: mitsubishi is more run-of-the-mill. you actually had engineers intervening in the testing and the data provisions. it is a standard either cover up, or someone falsifying numbers. presumably, from what they describe. the volkswagen scandal is quite different, because there, the

themselves automatically manipulative things. the software was manipulated. and that brings into question standards for testing, and also whether there should be something in addition to laboratory tests. laboratory tests were supposed ofhelp provide a way escaping manipulation. but apparently, this is not the case. manus: tom, wrapping up the latest on the auto scandals around the world. alan higgins, when i walked in this morning, we were putting a bitow together -- i more clearly than anna. bonds,s a lot about companies in distress. not for equity traders. the poker hands ready to go? alan: we looked at volkswagen stock, it has not recovered. it stayed flat. just one example.

manus: take us through that big drop. the same day the equity drop, and the rationale is that, well, could volkswagen get closer to the fault at an extreme level? could it be downgraded? the message there is less extreme than glencore, like we talked about before. but they have given an answer from the stock coming out of in the month, expecting it to be cut. but these are contractual. this is not huge yield. you see the bonds, a bit of a shout out to the small bonds, including our own a bond geeks. correctlycrisis, the basically look at the fault as overdone. this company is a survivor. it will not go to zero. anna: is this something you do fairly often? when you see a company staring

like a rabbit in headlights, a if you come to judgment that this business is going to survive ultimately, and survive in decent enough shape, than there is an opportunity? alan: yeah, a risky business. you get the stock a lot more volatile. that is kind of a hedge fund trade. as you saw from the stock, to be fair, it is just flatlining. if you sure do, you have not made any money. the nice thing about the bonds, contractual nature of the, they have to pay it. they have to mature the bonds. manus: waiting on a print for mitsubishi. as soon as we get it, we will bring that to the viewers. this is back in a position, turning back to the parent, how to you think you should analyze a day like today? bondgain, analyzing the and equity story on a day like today, what is important to you? alan: ok, so you not buy any

direct japanese stocks. we could consider the bond. we will have a look. our bond team will basically get down, to research, they will be a customer of the big investor, for the likes of pimco and fidelity, etc. seeing if there is an opportunity. and in the japanese corporate sector, it is a bit more murky. you have to be careful. i think there is more confidence in situation like this. but yes, we will look at how far they tumble. what kind of yield and the risk-reward? the risk equity is really not our world. for japanese equities and we invest with third-party equity funds manager. they have to make the tough decisions. anna: alan higgins stays with us on the program. manus: we are going to talk about george soros. he warned about the debt levels in china. the risk istells us

one he is willing to take. who is right? that is something we will discuss, right here on "coun tdown." ♪

anna: welcome back. you are looking at the live shot of new york. 1:49 in the morning there. let us get to hong kong for haidi lun. haidi: thanks, anna. novartis has reported first-quarter earnings nearly beat estimates, following $21.17 a share. that is above the estimates of $1.16 a share. that comes after the coming loss protection on the first selling pharmaceutical. erickson has reported sales have missed estimates, after sales billion.6.4

that comes as phone operators continue to pull back on spending, upgrade networks. and it is the end of an era in video gaming, with microsoft announcing it will no longer manufacture the xbox 360. age of 10, they say it is ready for retirement. more than 18 million units have been sold. and business owners also still get support for hardware and software. the company is due to announce earnings after the markets closed today. and that is your bloomberg business flash. back to you. manus: thank you very much. the billionaire investor george soros says china's debt-fueled economy resembles the u.s. in 2007-2008. that was before the global recession. anna: speaking at an asian society event in new york, he says the credit growth figures, which far exceeded forecasts, should be viewed as a warning sign. hendry warned about

a to the press six years ago. but now he is much more bullish on the prospect. heaking to francine lacqua, explains why betting on china is a risky is willing to take. china.verything is and the data with china is at the margins, exploding on the upside and measure. and that is clearly getting through the world of risk. it was the dominant fear factor. is data, as presented today, in direct contradiction to the great fears which have been built up and priced in to a lot of risk assets. so when i look at the price behavior this week, it shows signs that we may be breaking off and on,ne day not being invested in risk. i.e. it kind of feels better. francine: so, you have the

trusted authorities, need to figure out what they will do. and you'd overall me to figure out how they will manage debt, right? hugh: yes. but then, i would say it is complex, of course. but let us cut to the chase. it is arguably quite simple. you mentioned about debt, ok? for simplicity with the debt is largely an indebtedness within the domestic economy. community is jal ust struggling, still struggling, to come to a means to decipher the risk parameter that that entails. and i find it incredulous, because we have had japan, for the best part of the five years, demonstrating that when your own people are owed a lot of money,

is really not such a big deal. unless you have defaults, let's you have a credit crisis brewing. indeed. but when it is your own money, the sovereign can move heaven and earth to buy a large placate. is this an intellectually satisfying response that i give you today? no. ok. but i live in a grubby, practical world, where i have to recognize the authorities. and with the president of japan, i believe that these tier one economies, these are economies and have very large internal and domestic markets, which are not beholden on foreign capital. and they have the means, the means to paper over the cracks. does that mean that china will go back to growing at 10%? not at all. but we are in an ever decreasing

circle, if you will. i suspect we are probably on an economic upswing again, which will stabilize for a while. but there will be another downturn. and we will revise gdp estimates to 5%. people will be terrified witness lee. the thing will stabilize, there will be recovery, another recession, free percent over the next five or six years. lacquahat was francine speaking with hugh hendry. still in the studio, alan higgins. i know you brought up this chart, they love panic indicator. what is it telling you? alan: very quickly, very little love. markets are in panic mode, which is bullish. manus: falling out of love. alan: they really hated the market rally. indicators like the american

association of individual investors, they are bearish. until recently, really in demand, people were scared of the market. and so, the sentiment indicators are very important. so the reason that it is bullish, everybody hates the rally, there is room for everybody to like it more. alan: people are defensive. generally contrarian indicators work very well. manus: one of the indicators we are fastened by are the energy indicators with msci. this is the energy basket and emerging markets, where one goes, the other goes virtually in lockstep. looking at the indices, there is a great deal of convergence. alan: that is quite incredible. interestingly, on that same behavior market, brazil and under really hated, weighted with a fund managers that we invest in. it has been a bit of a world of

pain for equity managers. anna: what about bond managers, interested to get your thoughts. somebody who has a 100 year mexican government bond, argentina coming back to the market after 15 years with $13 billion? were you interested in that argentinian debt? alan: we stick to investment grade. we think of behavior. just talking 100 years gets people afraid. but i will tell you, the value of that redemption in 100 years, a quarter of a point. it is worthless, once you the mathematics. argentina was amazing. we invest more with third-party em bond managers that will buy that. look at russia, we could go either way. russia defaulted in 1998. have not defaulted since. do you know where that bond traders? 2.5% yield.

people seem to be betting that argentina will go the way of russia. anna: thank you very much for spending the hour with us, alan higgins. manus: mitsubishi misery, futures indicated up in london, and mario draghi day. ♪ you shouldn't have to go far

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