whites stocks sink. the ye -- >> stocks sink. the yen is at a high. --s >> i don't think you need a freeze. you must remember that the demand for oil continues to rise. it is not going down. be rising demands and the lack of investments in new supply.

good morning. i'm guy johnson. the team is running through global markets. let's talk about how we are trading. crushed equities got friday. london closes today. you will see a lot of things being taken out of the european space let me show you some of the main market boards. let me show you what is going on. dollar/yen a critical line. 106 is where we are trading or. get to 105 and you can see action from the boj. a continuing move on what is happening with the dollar/yen traded. nymex is trading down 1%. we have a decision out of the rba tomorrow. 1/10 of 1%. we will come back to the market shortly. let's get you caught up with

what you need to know. >>hugh hughes calling off the merger. they met antitrust resistance in the u.s. and europe. halliburton must pay a termination fee by wednesday. paymentthing on a bond later today -- it can't pay its debts. thegovernor warning that government development bank would miss its obligation and called on washington to help. last week, movies said any oody's said any nonpayment could still lead to default. buffett has taken aim at hedge funds again at the annual meeting of berkshire hathaway. said they have masked things

for years. the group underperformed. franklin templeton increasing its development -- its investment in brazil. the executive chairman of the fund managing emerging markets about the study. >> i don't think it is fully priced. i believe, however, we have seen a big rise from the low point. if you look at where we are headed from the previous highs, we have a long way to go. 100%, 200%? >> we would go up in brazil. we would add money. donald trump repeated his claim that hillary clinton is using the women's card to win the democrats nomination. front-runner told

foxnews if she were not a woman, she would not even be in the race. meanwhile, speaking at his last white house correspondents dinner, president obama made it there who he thought would replace him. president obama: next year at this time, someone else will be standing here in this very spot, and it is anyone's guess who she will be, but -- [laughter] [applause] global news, 2400 journalists in news bureaus around the world. more of our top stories. let's get you caught up on everything you need to know out of asia, how the markets are performing. julia is standing by. julia: good morning. not a great day for the markets that are open. of course, we have labor day

holidays. a holiday in hong kong. china am a taiwan, singapore closed. we are seeing these come yen continuing to strengthen near 18-month highs against the dollar. last week had its biggest two-day surge. export see a lot of companies are coming under pressure in japan. seeing big selling coming through in jakarta. the philippines is off by 2.4%. kospi down. -- a secondeclining for session, really due to the resurgence that we have seen in the u.s. dollar, and of course in the japanese yen. we have seen that weaken, the yuan.

new zealand's index down. indexs the topicx index.-- topix oil and gas stocks off while most 3%. let me show you some of the stocks we are watching individually in the reason -- region. exporters coming out met by the likes of toyota. it has denied it is the source of reports on job cuts and also its earnings. give an update yet on the full-year earnings. there are a few bright spots. stocks are looking good in sydney. bit of a penny stock, but it says it has reached a deal with bankers, of over 100%. ac really leading.

the yen is the story of the day and asia. a little bit weaker at the moment. ndle. below the 107 ha guy: thank you very much, juliette. let's turn to what is happening in china, fresh pmi data out of the country. it is amid a probable recovery. bloomberg correspondent stephen engle in hong kong is crunching the numbers. so much talk about the chinese economy stabilizing. does this data tell us that is what we are seeing? what are we getting out of these numbers? en: what we are getting is an establishment of the trend. we are beyond the anomalies we get with the lunar new year's holidays when pmi went up. in february, they were down.

factories were closed for the weeklong holiday. what we are seeing now, 50.1 in april for the manufacturing pmi is not going to blow anyone out of the water and say, we have a sustained v-shaped recovery. what it does show is this is sustainable. this is a managed stabilization by the government. this is what they have wanted to see, but there are still some clouds on the horizon, of course. new orders, fairly robust, coming in. the sub indexes 51. new exports and new imports fell in april. that is a worrying sign. also, employment showed some weakness, showing that some factories are indeed cutting workers in what is still a slowing pace of growth for this chinese economy. but you are absolutely right about the potential pause in policy from the pboc. they have already had six

and it isate cuts starting to feed into the economy. that is where we are getting lots of fresh lending and into areas where perhaps they don't want to see bubbles forming. guy: ok. are we in a similar situation as what we are getting in europe with the ecb saying, we put the policy to work, now we will see it actually deliver? similar story for boj? are we in that similar story from the authorities in china? stephen: you can kind of say that. "prudent" is the word i keep peering from people in china as far as the priorities right now, kind of watch and he, see how this does feet into the economy. we are seeing that. say economists we surveyed if the easing will continue, they say the easing will be in place, but if they cut the end, theyates, at the will likely not come for another

couple of quarters. fourth quarter at the very earliest, if indeed some troubling signs starts to come into play. keep in mind after the interest rate cuts, the benchmark lending rate is at 4.35%. it sounds pretty high compared to the developed world, but this is a record low. the economists we have spoken to sayeth they do cuts again, not by much, probably to about 4.1%. to create moret overcapacity in some of these traditional industries that we are already starting to see, like in steel and coal, and housing, of course. guy: stephen engle joining us out of hong kong. associate joins us out of berlin this morning. good morning to you. are we in a situation where the german industry bodies are going to be looking at the numbers out of china and breathing a sigh of relief? is germany really going to be watching these numbers carefully to see what happens next?

companiessure german have a huge interest in what is happening to the chinese economy. of course, this has to signs. the companies that are interested in exports to china will have a look at the figures. the other ones, the companies that are already in china producing for the chinese market. guy: what happens next in your mind? do we just sit now and wait for the chinese to have further policy action, or do you think actually that we are done, and this is the new normal? max: i think the policies are still quite active. in may, we will see some fiscal stimulus that will start to take into effect. we have the reform, we have financing support for export companies. we have cuts for the employee's contribution to social security. may be less of a monetary stimulus, but coming into the second quarter, quite active on the fiscal side. guy: what advice do you give to

german companies when you are looking, looking at china, what advice are you giving them right now? max: we are moving away from the broad range of fast growth that we saw across the entire economy. it is becoming more focused in a broader range of areas. i mean, at the moment, german companies especially have been benefiting from large investment activities. part of the buildup of over-capacity has been very well received by german companies, as they have been able to supply the factories with new machinery. so it is shifting a little toward the different sectors. we will see some improvement in health care, but also in also, consumption has been strong. guy: is germany in the wrong place? is an industrial giant. germany enjoys incredibly low levels of unemployment, yet if china is successful and makes

the shift toward more service-based, consumption-driven economy, that is not great for germany. havechina is on its way to a greater importance over the service sector, but it will still remain a significant manufacturing power. i don't see the shift happening anytime soon. even if it is successful in the near term, over the next five years, the service sector is strengthened, manufacturing will not disappear. it is in the process of industrial upgrading, which will benefit german companies in terms of supplying the necessary technology and the necessary machinery to implement these goals. nevertheless, the manufacturing, even in the low-end the sector, will be of significant importance to the chinese economy. i think german companies are well positioned to keep a keen eye on the chinese economy. guy: but just in terms of relative performance, germany has been -- germany has wreaked so many benefits from the

industrialization process we have been through in china. will other economies around the world overtake germany in its relationship with china? services. they will provide all the bits and pieces that the chinese authorities don't have yet. the knowledge-based economy is not established. max: there is a lot of competition in terms of not only other countries moving into china, but also, we will see a strengthening of chinese companies that will be moving out in a wide range of sectors. i think the german economy has been very export-oriented, relying on foreign export markets. it is used to the competition, so i am not very worried about this. guy: where do you think in the german economy, which areas, which specific industries do you think will benefit the most, if i look at high-end automotive chips, where i going to see the real bright spots in the

relationship with china over the next few years? max: if we look at the development in terms of implementing industry 4.0, so the upgrading of automation of manufacturing, this is an area where germany has great strength , and it is still relatively new. a lot have talked about it. not so much implementation, but i think we will see this new developing sector of the industrial upgrade becoming of greater importance. i'm confident german companies have this on their radar and will be performing quite strongly. guy: i'm sure you're absolutely right. joining us out of berlin. thank you very much. up next, find out why templeton's mark might see oil at $60 per barrel. that's next. ♪

6:18 in london. rishaad: look at the shares -- this out of the nikkei. trying to push for an expansion of recalls, already the biggest in automotive history. the recalls were widened to all vehicles fitted with airbags that lack a moisture absorbent material to slow deterioration. the criminal division is investigating jpmorgan's hiring practices in the asia-pacific. regulators try to determine whether the bank violated anti-bribery laws by hiring the children another relatives of well-connected politicians in china in exchange for having

business steered to the company. investigating bankers over having expense reports and improperly lending money to colleagues. in dubai,ployees including three managing directors, have left the bank over the last six months as a result of the probe. .hat's your bloomberg business guy: thanks. the emerging rally has farther to go. an associate spoke to bloomberg's manus cranny. >> first of all, the continuing deterioration of the u.s. economy, which means the fed will not make moves to raise rates. that's number one. continued weakness in the u.s. equity market. what you are seeing after three years of underperformance in emerging markets, now you are seeing a pull back away from the

u.s., away from the u.s. dollar, and you are seeing that with some of the currencies, the emerging-market currencies getting stronger. i believe we are at a turning point for emerging markets. manus: let's tighten that up a little bit. no more hikes from the fed this year? the fed told us to coop. -- two. >> i don't see it. they were threatening last year and it was only the end of the year when they -- hikes?no more >> as possible. manus: a softer dollar? >> possibly. manus: in terms of the oil story, you mentioned brazil. impeachment rio, ising, the impeachment all priced in in brazil? >> no. i don't think it is fully priced. i believe that, however, we have

seen a big rise from the low point. when you are at a low point, the percentage is great. but when you look at where we are headed to the previous highs, we have a long way to go. manus: how much more can we go in brazil? 100%, 200%? >> we can go up in brazil. manus: will you add money in brazil? >> yes. we are adding money in brazil. the other big opportunity is russia. close to us and many other investors, for the most part, because of sanctions. if sanctions are lifted, of course, this would depend on what happens in the u.s. in terms of the elections, then you could see a big surge in russian stocks. manus: you mentioned trump in the white house -- you mentioned shocks to me. trouble the white house. how much of a shock? >> at the end of the day, in spite of what he says, what he is able to do is out of the

question because of the checks and balances in the u.s. system. manus: looking at emerging market bonds, we have touched on currencies, what is your favorite em currency at the moment? >> favorite em or right now might be the brazil currency. manus: how much higher? >> i can't say. manus: emerging market bonds in terms of returns, they beat 130 asset classes. em stocks, bonds, currencies. where do you want the biggest exposure? x it has to be equities at this stage. equities. you have the bricks. the bricks are doing fairly well, india and china. brazil and china are still fairer -- far away from where they should be. there is a real upsurge of their combined with the big growth you see in china and india as well. manus: one last one on china, mark. yuan?e see this dollar-

>> you see a gradual weakening. we are looking at the basket. at the basket is not weakening, they will not -- manus: any more rate cuts from china? >> no, i don't think so. unsurprisingly. us now. here with bullish on oil as well, unsurprising given the narrative. manus: i think one can always say they will speak their own book. is his personal opinion. if you look at the data, look at the suppliers coming out of the system, and this is a story, is eventuallyit going to add to the rebalancing story. i personally find it hard to buy iraqyou see iran and

pumping and saudi arabia planning and threatening to pump more. no deal on the horizon in june in opec. he is bullish on oil. guy: interesting. on friday, they had this speech as well, indicating the fed believes the rally and oil may be a little overdone and there is too much capacity in the u.s. system. i think it is fascinating. how kind of critical to his whole thesis on the emerging markets doing well is the fact that commodities stay high? the rally we see not just in oil, but in materials more generally, actually saying on track. i heard him talking about russia , that market. manus: yes. he said he was adding money to the brazil story. 100%, 200%. impeachment was not fully priced in. i think when you look at the overall story from templeton, it is very much about the region here. he likes the region. you talk about the region am of the bull market.

etc., they are underpricing peers in the region. mobius believes in it. a young man in a hurry, maybe trying to do a little too much, but he favors those core areas and 30 othersyria, states locally. a great conversation. a little bit more oil from mr. mobius today later in the day. forward to that conversation, manus cranny. we will hear all about it coming up a little bit later. in the meantime, let me show you what is happening with the markets. we are watching very carefully. ins sentiment we are seeing the yen right now, we are flatlining at the moment. we are coming up against some key levels of resistance at the moment. can dollar/yen actually break through? will we see continuing dollar

strength? at the moment, trading at 106. 52. up next, we will talk about why halliburton called off the $20 billion merger. that story next. ♪

holiday in london, so everybody is asleep. everyone is getting up in brussels are let's get you caught up to what you need to know. puerto rico will default on a bond payment later today. it is a air signal it cannot pay its debts. the governor warning that they bank would miss its obligation. they have been calling on washington to help. said any, moody's nonpayment constitutes a default. interest even temporarily is an anonymous --

is synonymous with the default. berkshire hathaway annual meeting. warren buffett says salesmanship has masked poor returns for years. consultants have steered pension funds and others as the group underperformed. franklin templeton is increasing its investments in brazil, under the expected ousting of the president. spoke to our very own manus cranny. is fullyon't think it priced. i believe that, however, we have seen a big rise from the low point. when you are at a low point, percentage is great. but when you look at where we are headed to the previous highs, we've got a long way to go in brazil. manus: how much more can we go in brazil, 100%, 200%?

mark: we can go higher in brazil. we will add money. rishaad: donald trump repeated that hillary clinton -- wasold foxnews if he -- she not a woman, she would not even be in the race. president obama made it clear who he thought would replace him. president obama: next year at this time, someone else will be standing here in this very spot, and it is anyone's guess who she will be, but -- rishaad: -- [laughter] [applause] rishaad: global news, 24 hours a in with 150 news bureaus just over 24 hundred -- and just over 2400 journalists. top stories if you are a bloomberg user. ray much.s

let's check the markets and what's going on. what is happening in asia right now? japanese stocks are leading the tumble in asian stocks. the selloff dragging the asia-pacific index down for six the day. look at the topix here. it has tumbled most in 11 weeks. it is down almost 3.4% at the moment you japan's market was shot on friday. we are seeing a little bit of a from the bankon of japan decision and the reaction to the yen strength twh the two-they gain. -- o-day gain. markets are closed in china, hong kong, singapore, open in japan, australia, and south korea. with the yen strength also comes more volatility for japanese stocks. this is a gauge of expected swings in the nikkei. risen there and it has increased the gap between the nikkei volatility and the vix index in the u.s.

the yen driving a lot. look at the yen. 106, the as much to strongest level since october of 2014. it has a raised the day's advance now. 106.47. still, the yen has strength. currenciesong g 10 here meanwhile, we are seeing dollar weakness. it weakens to its lowest level in almost a year, falling for third straight session p look at the impact it has had on gold. the dollar just drives, boosting gold. gold holding near its highest level in about 15 months, closing in on the psychological $1300 level. hedge funds have been missing the party somewhat because they have been cutting their holding by the most since they turned bullish in january. guy: thanks ray much feared let's turn our attention to a deal that will not be done, halliburton and baker hughes

calling off the merger. we have more on this story. slumping oil prices, probably not helping the situation, either. >> they haven't. situation right now, they are experiencing their last slumping -- worst slump in a generation. baker hughes and halliburton announced it is and the oil prices were roughly double where they are right now. lower prices meant companies have been slashing spending to the tune of $100 billion. a quarter of million jobs have been affected. baker hughes halliburton deal to god this through. this is the worst financial crisis ever to hit the industry. there is a regulatory issue as well. the european union has launched an investigation. they had become one. the u.s. justice department filed a lawsuit, worrying that

the tie between baker hughes and halliburton would eliminate head to head competition in 23 products and services in oil exploration. where the doubting u.s. government stands on it. in the wake of the announcement that the deal was not going to go through, the u.s. attorney general saying this was a victory for the u.s. economy and all americans. guy: not all bad news and baker hughes, is there? >> it is not. the breakup fee it is due from halliburton, it will get that in the next couple of days. that is equivalent to almost debt it could be. usedto boost the pressure pumping business, which helps get the last hard to get bits of oil and oil fields. halliburton does have the cast, about $10 billion in the bank. three and a half billion dollars for halliburton is precisely 10% of its market value. i said, not all bad

news. thank you very much. joining us on the deal that is not being done. the deal expires in spain midnight tonight. the deal was made back in december. a new election will take place on june 26. no candidates are winning a majority that could end the deadlock. the situation in spain is one of the elements that could be a summer of high drama for europe with britain facing the eu referendum. greece embroiled in aid talks. there's plenty to be concerns about -- concerned about the let's bring in our guest. who joined us out of berlin. -- concernedou about. let's bring in our guest, who joins us out of berlin. we have a number of elements that could really trip us up, from the brexit to what is happening in spain. greece is back on the agenda.

europe has a lot of challenges ahead of it. a lot of uncertainty, and uncertainty is poison for the economy and poison for markets the review mentioned the risks. there is a new election in spain. it does not look like there will be a fundamental change in currency. the challenge will remain with us they are negotiating with the troika. brexit is on the table. among these risks, brexit looks like the biggest for europe at the moment. guy: how much of an economic drag does this represent? how much better off would the european economy look right now -- that me repeat that. if we did not have these risks, how much better off would europe look at the moment? rcel: i think it is a moment where we don't really see the

negative impact of these crises on the european economy and the spanish economy has been doing rather well. it is currently more than 2%, growing more than 2%. it is doing ok. the problem is what will happen in particular to private investment if you continue to have this level of uncertainty. the same about brexit. i don't think it is priced into the markets, into growth expectations currently. everyone here, at least on the continent, expects britain to stay within the european union, so there might be a rough awakening if the results are different. i don't thinknt, we have realized yet what might yet be to come. guy: ok. if that's the case, why is the german private sector not investing? for anot investing different reason or is it actually looking at the european environment and saying, actually, we don't think this story will be there, as a result

of which, we don't need to put more work into our productive capacity? marcel: german companies are doing incredibly well abroad. , more than 230 billion euros. the big problem for private partlyent in germany is foreign factors, uncertainty about the recovery in europe. there is still uncertainty about asia, about china, the way has companies dependent upon growth. the private investments, it is still the german economy. the conditions for private investment are not for a favorable. infrastructure, transport infrastructure in germany is deteriorating. the labor market is getting increasingly tight. there are more than one million open jobs in germany. there is regulatory uncertainty for many german companies. that is what they are complaining about. i would say, largely a

domestic reason why german investment is lower than what we have in france, although the german economy is doing better overall. the german government needs to look at this issue very seriously. guy: do you think the migration story will alleviate some of these issues? i'm not saying that maybe many of the migrants have the skills that germany needs right now, but at least it placed for that idea. i was curious to see in the latest employment data that we did not see a migration. actually, the employment rates a low -- the unemployment rate stayed low. refugees are only gradually coming into the labor market. talking about 60,000 this year. any of them actually still have to submit their application or know whether they are allowed to stay. we will see an increase in our expectation of 0.2% in unemployment due to the migration effect next year in 2017. that is when we will see the biggest impact. in the short run, the refugees

need an additional spending of about 15 billion euros in the german economy. it works like a stimulus program for the german economy over this next year. we estimate it will increase growth by about 0.3 percentage points. quite an increased year the question with refugees is what happens beyond the next two or three years. will they get into the labor market, what kind of jobs will they get? it is really about integration, qualifying and training to refugees to be able to pick up some of those open jobs. again, germany has more than one million open jobs. about probably talking 300 thousand refugees that will come into the german labor market over the next three or four years. it is manageable. ok. we will carry on the conversation. thank you very much, marcel fratzscher of berlin.out

he will stay with us. heading out of the hedge fund. why warren off it has money managers in his sights. ♪

6:45 in london. it is a holiday. most of what you can see there will be shut today. there is 41 pair you are watching. that is dollar/yen. we have dollar/yen trading at 1 06. it is down just a touch, but it is moving aggressively over the last couple days. possibly action from the boj. bute a way to go yet, possibly one to watch this week. here's a bloomberg's nest flash. -- bloomberg business flash. regulators plan to

push for an expansion of recalls, already the biggest in automotive history. the move could affect more than 100 million vehicles worldwide. no decision on the additional recall being made. it is in talks with the national highway traffic safety administration. the u.s. department of justice criminal division is investigating jpmorgan's hiring practices. the bank is facing an inquiry by the sec. people familiar with the matters and regulators are trying to determine whether the bank violated anti-bribery laws by hiring in children and other relatives of well-connected politicians and clients in china in exchange for having business steered to the company. standard charger is said to be investigating over padding expense reports and improperly lending money to colleagues. people familiar with this a several employees and the bye, including three managing directors, have left the bank over the last months as a result

. that is your bloomberg business flash. guy: be wary of hedge funds. consultants and a timebomb, takeaways from warren buffett's annual shareholder meeting. more from the oracle of omaha. >> buffet called -- buffett called is the most important lesson in the world. he said investors have been pushed by consultants to go to managers who as a group have , forperformed index funds example, tracking the s&p 500 index. he could say more in the index funds "sitting on your rear end" because other arrangements he took capital like crazy. buffett was building on the argument he has been making for years and two prove his point, he made a bet that a vanguard group fund that tracks the s&p 500 index could beat a basket of

hedge funds from 2008 through 2017. the prophecies of the best will go to charity. on saturday, he gave an update on this. the bundle of hedge funds picked by partners had returned 21.9% in the eight years through 2015. -- s&p 500 index funds what buffett is doing is hitting hedge funds while they are down because investors recently have been pulling money from hedge funds where it is investing in index funds has increased since the financial crisis. buffett had comments on derivatives, calling them a time make itying banks attractive to invest. he sat out of the 50 big global banks, we probably would not touch about 45 of them. guy: fascinating stuff. there is so much written on this stuff from an economic point of view. coca-cola versus

broccoli. >> with the u.s. election, we know buffett endorsed hillary clinton at a rally in december in omaha, but he then that, if or clinton becomes president, and i think one is likely, i think berkshire will continue to do sign -- do fine. berkshire hathaway will not be affected by the outcome of the election. he says it is unlikely to change the fact that the u.s. is a remarkably attractive place in which to conduct business. he said 20 years from now, there will be more capital in the u.s. and you real terms than there is now. no presidential candidate will end that. they can change it in ways that are good or bad, but they cannot end it. he said in the annual letter in response to people who were young people now will not do as well as their parents, he said the babies being born in america today are the luckiest in history. he is very optimistic about the u.s. economy, in other words. finally, about the brockley,

this is a guy who is known for getting his five a day from strawberry cheesecake and cherry cola. berkshire hathaway is the biggest in vector in -- investor in coca-cola. people say these soft drinks lead to obesity. he said, my happiness from drinking the soda outweighs the health benefits of eating more egetables.es. -- v if you want to improve your you should have us exchange. guy: i was going to make a joke about my children and brockley ccoli, but now you brought up this exchange. let's look ahead to what we can what are the standout stories? some of the companies will be interesting. which ones are they going to be? the think i will pass on broccoli one.

very busy week for german corporate earnings. reportinganies were tuesday and wednesday. on some of theh big stories. bmw the biggest picture in german automotive's. effectedal, bmw not -- not affected. what does it mean for sales in the medium term for a company like bmw for the time meaning -- being? they are doing very well and it looks like to edit half-billion -- like to half-billion operating profits. that is what analysts are expecting. in the medium-term, we are wondering how will a company that builds luxury cars position itself in a future where a big car is no longer a status symbol of the younger generations and

where the new rivals could be apple and google. so some of those ideas of the company executives have been mentioning, like electric mobility, the new i-3 getting 114 miles out of the battery pack compared to 80 for the old one. little bits of improvement here. fthansa, how tolu make peace with the labor union. remain forrobably the time being. they will enjoy a tail wind in the first quarter. oil probably a headwind for zenith. saidxecutive officer there 5.3 billion is the earnings call for this year. some say with the slowdown in china and with the low oil prices, it is going to be

for the customers. it means less cash to invest in things like oil, exploration, and drilling equipment. optimism and the shares have held up fairly well. wondering if there will be news on the equipment maker. if you look at ge, ge posted a loss in the first quarter. they are in a different situation after taking on much of what used to be -- also reporting on the same day. with germany's high employment and the economy robust for everybody, it should be decent times. share price has been skyrocketing and has not always done that in the more than 10 years. this last week, 118, a new record high. you could have bought the shares for less than 65 in summer. now there are almost double

that. we know the new ceo is coming in. three more months. some are hailing him as a brand guru who will squeeze more out from an international sales perspective. first, we would like to know how adidas will position the tailor-made brand. guy: banks never seem far away. ubs tomorrow. thank you very much. richard talking a little bit about the top story in the extended range we are getting out of the i-3 out of bmw. angela merkel making a significant push for the electrification of the german car industry. i'm curious as to how this develops from here because i think this could be one of those big opportunities that history really remembers. president joins us from berlin. marcel, how does she really get behind this? i know she is. talk about the electrification of germany.

here mayhe opportunity be to make a really big industrial push. what is stopping her? marcel: you have to be aware that the german car companies are incredibly important to the german economy there. they are part of the german success story for the past few decades. they had invested very heavily in diesel technology. they want to see this investment terms of electric cars, german companies are not leading. american companies and others, japanese. the priority in germany clearly is not in pushing the german automotive industry very hard, on electrifying the car, finding mobility. there is progress. there was some agreement last week where the german government decided that it wants to provide soinvestment stimulus everyone buying an electric car, getting 3000 euros.

that is in order to push that. l, let's wrap this up here we will come back. marcel fratzscher joining us. we will take a short break. up next, kind of a late subject. ♪

guy: japan leads a selloff in asia with the yen near an 18-month high. oil service firms call off their merger on regulatory challenges. but -- >> i don't think you need a freeze. i think the market will handle it. the demand for oil continues to rise. it is not going down. guy: mark mobius sees oil going to $60 a barrel. he's talking about rising demand and a lack of investment in new supply.

welcome to "countdown." i'm guy johnson. friday, european stocks get crushed. this morning, similar story in asia. how are we going to start things in europe? kind of a fresh start. the japan stuff kind of a reaction to friday. this is the picture at the moment. the euro stoxx called off by 0.1%. london is out today. you are going to see light volumes. the cac 40 called up. europe is opening on the front foot, folks, despite that london story and the light volumes. asia, reaction to friday. what we are seeing in dollar-yen is important. nevertheless, think about this being the beginning of the new cycle. in terms of the asset classes, this is the picture right now. dollar-yen is absolutely flat.

you've seen this massive move over the last few days. i think we are getting some technical resistance. the nikkei finished down aggressively by 3.1%. active friday. nymex trading at 45.51. you can listen to franklin templeton and mark mobius and once you've done that, listen to what the dallas fed had to say as well. there is a rate decision out of australia tomorrow. watch that carefully over the next couple of trading sessions. let's get you caught up. here's bloomberg first word news with rishaad salamat. rishaad: thanks, guy. halliburton: off their merger, blaming it on challenging regulatory conditions. the proposed union between the oil services companies had met antitrust resistance. halliburton must pay a termination fee by wednesday. puerto rico will default on a

bond payment later today, escalating the biggest crisis ever in this $3.7 trillion municipal debt market. the governor warning the commonwealth needs to focus on providing essential services. reached a tentative framework with investors who own $900 million of it that, under which creditors would have a potential haircut. warren buffett has taken aim at hedge fund managers again. the billionaire said that wall street salesmanship has masked or returns for years. managers underperformed. he said, sitting on your rear end in index futures. donald trump repeating his claim that hillary clinton is using

the women's card to win the democratic nomination for president. despite the backlash, the republican front-runner told fox news if she were not a woman, she would not even be in the race. speaking at his last white house correspondents dinner, president obama made it clear who he thought was going to replace him. president obama: next year at this time, someone else will be standing in this very spot. it is anyone's guess she will be. [laughter] [applause] global news each day, every day, powered by our 2400 journalists in more than 150 news bureaus around the world. find more of our top stories. top is your destination. guy: thank you very much indeed. oil prices are set to rise within the next few years.

spurred by rising demand and a lack of investment. that is according to mark mobius. he spoke to bloomberg's manus cranny. mark: i don't think you need a freeze. i think the market will handle it. the demand for oil continues to rise. it is not going down. the recount, globally, has gone down precipitously. this only means the supply has got to diminish, despite what is happening in the middle east, and the demand will continue to rise, and the combination of this means that we will see a higher price for oil going forward. manus: do you think we could trade through this $45? $30 is what we are writing about. you see the potential to break significantly above $45. mark: i'm looking at $60. i can't speak for everybody else. i'm not saying when. manus: i was just about to

say, can i get $60 by the end of the year? mark: quite possible. these prices are driven by derivatives not by actual supply and demand. some event could trigger a big jump in price. black swan,swan, whatever color you want to call it, the iranians aren't for stopping at the moment. i know you say to me a freeze is not what we need, but you do need some discussion between the saudi's and the iranians, no? mark: the big issue is who is controlling the market. if you look at russians, they are not part of opec. they may not cooperate. manus: they didn't cooperate the last time. is that the biggest risk in this monopoly board? mark: i think the biggest risk is some event which triggers derivative activity to either go

long or short, which drives prices to very unusual and irresponsible levels. mark mobius talking oil at $60. interesting, you bringing in that story from the fed, talking the world is awash with oil. members of opec are producing the most since 1989. they don't seem to be any closer to a freeze. guy: they don't. you've got to watch what is happening in the states carefully, but more broadly watch the level of supply coming in. the markets almost want oil to go higher. i'm assuming there is a direct line that i can draw between raw materials going on, russia doing well, and his view that we are going to sete brasil doing well. if the former falls, those other two dominoes tumble as well. manus: this picks up on the

theme we chatted about earlier in terms of emerging markets. for him, the critical thing is, these assets -- and we've covered this in the back quarter of 2015. we talked about that under loved trade, which was divesting of emerging markets. what you've got here is a re-engagement. he doesn't think the u.s. is going to recover dramatically anytime soon. he doesn't think the fed is going to login two rate hikes in 2016. i looked at it. emerging market bonds, returning 86%. that beat bitcoin. that beat him. of other assets -- that b-day myriad of other assets. i think that has to do with keeping a floor in the price of oil. saudi are in's for

the low 60's now. guy: interesting stuff. certainly from a financial point of view. thank you very much indeed. fascinating interview with mark mobius. vibe to thisasian now. juliette saly standing by. juliette: good morning. we are hoping for a pretty quiet day. a number of markets are closed for labor day. we have markets in hong kong, china, taiwan, singapore, thailand. what we have seen instead is widespread selling all to do with that really strong yen. the nikkei closing down over 2%. the topix having its biggest fall in more than a month. we had only one day for investors to respond to that decision by the bank of japan to not increase monetary stimulus. we had markets closed on friday. they will be closed again tuesday through thursday for

golden week holiday. today, there was panic and trigger selling. that flowed into the rest of the region. we've cut the won declining against the dollar, the kospi declining. australia doing a little bit better. 0.25%.wn the philippines down by 2.3%. this is what the topix ended like with only one sector moving higher, the telcos. just having a look at some of the individual stocks we were looking at, you can expect with that stronger yen, we did see export stocks coming under pressure. toyota leading the declines. westpac in sydney falling almost 4%. pretty disappointing start to the bank earnings season in australia. there was some buying in gold

stocks the yen is still below that -- or surging past that 107 handle. a little weaker at the moment. we have seen the yen up 13% against the dollar so far. no wonder such widespread selling in japan today. guy: thank you very much indeed. that 13% movies unlucky for some. let's talk about the broader picture with central banks. it is labor day. we don't celebrate capital day. capital has been the dominant feature over the last few years. labor has suffered. marcel, joining us from berlin. if i look at the world right now, and i look at what is about to happen, the fact that qe is running out of steam, and my an idiot, an absolute idiot, if i think that saving money from

here on in is a good idea? because savings are going to suffer. marcel: absolutely. low interest rates have been here for some time. many central banks have indicated that rates will stay low for much longer than they anticipated. saving is not a good idea. that is what central banks want. they want to increase consumer spending and private investment. that is why the central banks are pushing to make it more attractive for companies to invest. guy: as we've already seen, that is not happening yet. i'm wondering how much more aggressive central banks are going to be. how negative do rates have to be in europe before we get a significant credit impose happening? marcel: the european central bank have taken additional measures in march. they have increased the purchase of state conduct to $80 billion

per month, including corporate bonds. they have indicated they will give additional liquidity , up to four years at zero interest rates starting in june. they have indicated they will not push rates much lower, but they want to focus on the quality side. i don't think we will see more on the interest rate side. more on the quality side. guy: but if the idea is you need to penalize saving and encourage spending, is that going to generate a response? if i look at the surplus and the deficit globally in the economies, you need to make that shift from one to the other. back to the original question on whether i'm an idiot to save, how much more aggressive our policymakers on that front? marcel: the central banks can do a lot more. they always have additional

options. there's this discussion about helicopter money in the euro area. many central banks have to wait and see. it takes time for this monetary stimulus to work through the system, to result in more credit to the private sector. the central banks have been very aggressive. it is very important to focus on other policymakers. and on structural policies, the labor market, try to set incentives more for private investment. the main focus now should be on other policymakers, and here we have a lot of uncertainty in europe. uncertainty is really the problem. companies and households say, let's postpone investment in consumption because we don't know where europe is going. guy: thank you very much indeed

for spending so much time with us. looks like a lovely day outside. we will let you enjoy it. that was marcel fratzscher joining us out of berlin. fuest isclemens joining us. we will get his take on the brexit. ♪

guy: 7:18 in london. 2:18 in new york if you are watching. here's the bloomberg business flash with juliette saly. juliette: thank you, guys. shares in airbag maker takata have plunged again after u.s. regulators plant for an expansion of recalls. the latest move could affect more than 100 million vehicles worldwide. akata says no decision on the

recalls has been made. the u.s. department of justice criminal division is investigating jpmorgan's hiring practices in asia. the bank had admitted it is facing inquiry by the sec. people familiar with the matter say that regulators are trying to figure out whether the companies went around bribery laws. chartered is said to be investigating its bankers over expense reports and lending money to colleagues. two people with knowledge of the matter say that several employees in dubai, including three managing directors, have left the bank over the past six months. that is your bloomberg business flash. guy: thank you very much indeed, juliette saly. halliburton and baker hughes have called off their merger after meeting stiff resistance from antitrust regulators.

elliott gotkine has more. partly regulators, partly oil price. elliott: those are the two main reasons. we've seen the plunges, and oil prices when they announced this deal were roughly double where they are now. falling oil prices has not just impacted the share prices of baker hughes and halliburton, but it has resulted in countries and companies slashing spending. a quarter million jobs gone. schlumberger, the biggest oil firm in the world, halliburton and baker hughes were hoping to better compete. schlemmer j saying this is the worst financial crisis to hit the industry. the european union had investigation into the tie up.

no doubting where the u.s. government stands on this deal. in the wake of this, the u.s. attorney general saying the collapse of the deal was a victory for the u.s. economy and all americans. , let's talk a little bit about the upside to this. there's quite a lot of downside, but there is at least a break fee. baker hughes not entirely walking away empty-handed. elliott: very much a silver lining for baker hughes. they are getting $3.5 million from halliburton. that money will help it cut cost, boost its pressure pumping business, which helps get the hard to get its oil fields. this may make baker hughes more appealing to a potential acquirer. halliburton has to pay this money. about 1/10billion,

of halliburton's market share. it has got the cash. presumably it would rather have held onto it. overall, in the balance of things, this is a better use of that money, i suppose. guy: great stuff. thank you very much indeed. the pound posted its first back-to-back monthly gains versus the dollar since april 2013 in april in a move traders now reflect a lower risk surrounding the brexit. our next guest says that for germany, the consequences of a brexit could be grave. let's bring in clemens fuest from munich. when we look at the brexit, the balance of probability according to the bookmakers is still that the u.k. stays in. can i ask you a question nobody seems to be asking?

what happens to europe if the u.k. remains? what is the direction of travel for germany and the u.k. and the companies that seem to favor more open markets? are we going to get what we want? clemens: at least there is a chance that we are getting what we want. there is a chance that ttip will go through if britain stays in the u.k. and there is a chance we will remain with an open market, but at the same time address migration. we would not like to see migration into the welfare state. it is important for europe that the u.k. remains. guy: someone say that europe moves toward britain and britain moves toward the rest of the eu as part of this move. what does europe look like in 10 years time? how different will it be? clemens: i think what we will see is a two-speed europe.

we see the currency union, the euro area, with more integration, and a larger free-trade area, of which britain would be part. generally, perspectives for the eu are not bad provided the u.k. stays in and the eu's focus is on its most successful project, the internal markets. we will see different types of integration. this will be going on and hopefully stabilize the euro area as well. guy: will services actually finally work as a single market? the service sectors need to be liberalized. there needs to be more cooperation in other areas like energy networks, communications markets. there is not enough of the internal market there, but there is also a growth potential for the future. one of the challenges will be to

open up that potential. that will work if the u.k. stays in. it will be more difficult if they are out. guy: what and who will it take to get the european economy going? let's say brexit does not happen. how much more work does the ecb have to do to get credit flowing around this economy? clemens: i think the ecb has done what it can. monetary policy is reaching its limits. now it is really structural policies. we need to continue fixing the banking system in europe. there are still mountains of nonperforming loans in many banks. we need to get structural policies going. up to now, everybody has been looking to mario draghi and expecting he was ask the economy -- he will fix the economy. he will make a contribution, but

this will not be enough. governments have to act. they need structural reforms with growth-friendly fiscal consolidation. if they can't do that, the recovery will remain slow. guy: very briefly, if i'm a saver in europe, should i be worried? and if i'm saving in 500 euro notes, should i be doubly worried? should the ecb get rid of them? clemens: i think there is no justification for getting rid of the 500 euros note. clearly, savers should be worried, but interest rates are low because the economic situation is still fragile. i think that if europe gets back to growth, interest rates will also increase. nots really in the interest just of the unemployed, but also of savers, to get structural reforms going so that a recovery

really comes. fuest, thank you very much indeed. that is it for "countdown." "on the move" is next, with me. ♪

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x1 makes it easy to find what blows you away. call or go online and switch to x1. only with xfinity. guy: welcome to "on the move." we are counting you down to the european open. i am guy johnson. japanese stocks have been plunging. this is the yen. how far away are we from hitting 105 dollars-yen and how will the boj respond? halliburton and baker hughes have called off their $28 billion merger on regulatory challenges. betting on brazil, emerging markets investor mark mobius tells bloomberg that