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 recep --

rousseff's removal is not priced into the markets. he says the real is his favorite currency. we are less than half an hour away from the market open in europe. london is closed today. however, what we've seen overnight is this move in japan, but that is not being reflected in europe this morning. looks like a positive open. japan was reacting to what happened friday when u.s. markets got crushed. now we are starting to see a fresh start. , if you want to play along at home on your bloomberg, that tells you what is happening. let's talk about some of the other assets that are on the move as well. the data out of china, reasonably positive, but dollar-yen front and center. the nikkei down 3.1%. crude is softer as well.

aussie dollar, watch for that one. it is a reflection on what is happening in china, and we have a rate decision tomorrow. that is what juliette saly knows about. juliette: thanks, guys. halliburton and baker hughes have called off their $28 billion merger. the proposed union between the second and third largest oil service firms met antitrust resistance in the u.s. and europe. halliburton must pay a termination the of $3.5 billion. puerto rico will default on a bond payment later today. the clearest signal yet that it can't pay its debt. they wouldr warned miss the obligation and called on washington for help. last week, movies said that any nonpayment constitutes a default. s&p global ratings says that withholding interest is

synonymous with default. warren buffett has taken aim at hedge funds again. at the annual meeting of his company, the billionaire said that wall street salesmanship as mosque -- has masked poor returns for years. he said managers underperformed what you could get "sitting on your rear end" in index funds. franklin templeton increasing its investment in brazil, betting the ousting of president dilma rousseff will boost the country's assets. 'srk mobius spoke to bloomberg manus cranny. mark: i don't think it is fully priced. i believe however that we've seen a big rise from the low point. if you look at where we are headed to the previous highs, we've got a long way to go. manus: how much more can we go? mark: another 100%, 200%.

manus: would you add money now to brazil? mark: yes. juliette: donald trump has repeated his claim that hillary clinton is using the woman's card to win the nomination for president. despite a backlash, the republican front-runner told fox news if she were not a woman, she wouldn't even be in the race. white househis last 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 anding here at this very spot and it is anyone's guess who she will be. [laughter] [applause] juliette: global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. find more stories on the bloomberg at top . guy: let's turn our attention to

japan. bond yields slid to a record as the yen surged to an 18 month high. a lot going on. let's go straight to tokyo. kevin buckland is there with the yen pretty much under pressure. what are we watching next? we are watching very carefully the fact that maybe the treasury in washington is a bit concerned about japan. we are watching carefully that the markets think things are in issue in japan. talk to me about the treasury story. does this make things harder for japanese policymakers? kevin: the u.s. is making extremely clear more than it had so far that it doesn't support intervention on the japanese side weaken the currency. that marketd before movements were orderly in the yen, and disorderly movements

are one of the things required for intervention. on this latest list, japan ticks needed to three boxes spark action from the u.s. over currency manipulation, current account surplus, trade surplus with the u.s., and the thing missing is serial intervention. if japan was to intervene one off, that wouldn't be serial information, but it would bring eyes back to japan in a way they wouldn't want. the finance minister has said this latest report does not impact japan's ability to act in the market. guy: some people in the market think 105 will be an area where we could see intervention. jpmorgan says the yen could go beyond 100. what are people talking about over there? kevin: it seems to have shifted. we were talking about 105 before, but we are right on the

cusp of that. been -- it is surging of course, but if you look at the chart, we are not suddenly at this level. the level seems to have moved now to 100. jpmorgan said that after 100, you might look for action. at the same time, they don't think intervention would work if it is unilateral. a former currency official in charge of intervention has said before that without u.s. support, intervention won't work. 100 seems to be the line in the sand for some action. the question of whether it would work or not is another question entirely. guy: thank you very much indeed for bringing us the news. let's discuss what happens next. let's join lena komileva. should the japanese intervene? lena: i think the japanese need

to do a better job managing market expectations. i'm afraid at this point, they would be running behind the curve. this will be very much not on the action, but on the side. when it comes to the yen, there are three parallel stories in clay. the yen has been the litmus test of global imbalance. the depreciation of the yen has been startling. what has happened on the global economic scene here is that there's been a very subtle but concerted rebalancing in central banks' attitudes toward chinese currency policy, with the fed pushing against the tide in terms of strengthening the yuan through a stronger dollar. the ecb signaling they are not going to be devaluing the euro by pushing for lower interest rates. the boj themselves have surprised the markets by not pursuing reflation through a

weaker exchange rate. the problem is that the strength an impact ons been economic prospects on japanese valuations. i don't think anybody in the world, particularly in japan, believes that china or global imbalances can be resolved. guy: so we get to 100, what happens? lena: i'm actually concerned. if 100 is the line in the sand for intervention, then the boj has really lost the game with respect to the markets. guy: many people would argue that it has, but they put a policy in place designed to do one thing, it does the opposite. lena: the boj, clearly they are willing, like the rest of the g-20, not to fuel global imbalances and global financial instability by devaluing against

china. this is clear because the consequences of that were global economic uncertainty and tremendous systemic financial volatility. japan will not have successful reflation domestic policies at the expense of a weaker world economy. however, that shift they want to introduce, similar to what the ecb is doing, to move interest toward -- guy: how do you get credit moving? lena: this is precisely the point. it is clear, one lesson we learned a decade ago is that central-bank liquidity is not a substitute for bank capital. the cost of leverage is not the same as the cost of bank capital. we still have a fairly distorted regulatory system, where leverage is subsidized but

capital is being taxed. term, structural reforms, clearly the job of central banks is not to set interest rates negative. there's not much more juice in that avenue. what is important is that they create the right incentives for banks to take on risk, and that means greater demand management. guy: lena is going to stay with us. up next, is europe due another summer of discontent? the refugee crisis, the brexit referendum, could be quite a tumultuous summer. details next. ♪

demandmust remember that for oil continues to rise. globally, in the u.s. and 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 maybe 1% or 2% a year and the combination of this means that we're going to see a higher price for oil going forward. guy: mark mobius talking oil. we will hear more later.

interesting things to say about brazil. let's get you caught up. here's juliette saly. juliette: thanks, guys. shares in airbag maker takata have plunged again after the u.s. regulators planned to push for an expansion of recalls. the latest move could affect more than 100 million vehicles worldwide. kata says no decision has been made and 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 in asia. the bank is facing inquiry by the sec. people familiar with the matter have said that regulators are trying to determine whether the bank violated anti-bribery laws. standard 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 do my have left the bank over the past six months as a result of the probe. that is your bloomberg business flash. guy: thank you very much indeed. is your gearing up for a summer of discontent? we've got the referendum. with that the refugee crisis. greece could be back in the spotlight. athens has to find more than 5 billion euros. there's another 5 billion in july. those events can trigger quite a lot of volatility. let's rejoin the conversation we and having with lena komileva. how bumpy is this summer going to be? lena: i don't think the markets are priced in for the potential fallout from the referendum.

even a result that would keep the u.k. within the eu. closed vote could potentially have a very destabilizing effect. as far as the brexit is concerned, we are only three years away from another referendum. but what is important is that brexit has become the poster child for a very dangerous political momentum taking place across the eu. the social economic imbalances, the mass youth migration, unemployment. the use of greece, italy, spain. with everybody who stayed behind voting for populist anti-austerity parties, the spanish political deadlock, the portuguese election results as well, all of that is basically creating a very combustible political environment against which germany is rightly worried

that we can't have great integration without greater structural reform, but the structural reform is coming as a 80% of the bottom european population. guy: let me ask you a question about how it could get worse for europe. say you get the u.k. deciding to stay in the euro goes up. you look at japan and what is happening with this incredibly strong yen. you take some of this political risk and put it to one side. you see the euro going through the roof. how damaging could that be? lena: that is the worry here. mario draghi has been very bold to draw a soft line underneath negative interest rates. keen toe ecb are not have a stronger exchange rate, there's very little they can do about the fact that this is a market reluctant to take risk, even with the taxation of

savings through negative interest rates. the concern is coming very much through the fact that in a world of negative interest rates, you don't have incentives to generate more productivity. you are creating incentives for exploiting operational leverage. when that is the case, unfortunately currencies like the yen and the euro tend to bear the brunt of the dp creation -- of the depreciation pressures. you can create a negative feedback loop. this is a very hated stock market recovery. nobody wants to take the risk. guy: we will talk about savers as well when we come back. let's talk about what is happening with this open. we are 10 minutes away. looks like it is going to be a positive one. it is a big week for earnings in germany. we need to tell you all the companies you need to pay attention to this morning.

lufthansa, that story next. we are 10 minutes away from the market open. ♪

guy: seven minutes to the market open. lots of german companies reporting earnings. lufthansa, bmw, commerzbank, siemens all reporting figures. let's go to frankfurt. let's join richard. a dozen companies we are going

to be watching. which ones are we going to be paying attention to? >> to make things worse, or more interesting, it is all going to be crammed into two days. thursday is a bank holiday in monday, a lot of other places are closed. bmw, one of the most important watching, howre is a luxury carmaker preparing for a future where young people don't see a car as the status symbol more than they used to, and when your future rivals may include companies like google or apple? electric mobility is one of the answers. in willw i3 201780 -- quiteange of about a step up. it certainly helps that the german government made up its

mind about how to subsidize electric vehicles, including battery charging stations. that will give a boost to the german industry. car sharing is another thing. bmw thinking how it can promote that, maybe by installing a large fleet in the underground parking lots of large apartment buildings. if you think, bmw has problems these days, yeah, but they are luxury problems. analysts expecting the company to earn 9.6 billion euros in operating profit this year, the third highest corporate profit in germany. lufthansa, we've seen strikes over the last few days. oil prices are coming down. how do those things sit side-by-side? >> the recent strikes we saw in those lufthansa wasn't even

negotiating parties. planes have been grounded more often than they are passengers like. the remaining labor conflicts remain unsolved for the pilots and cabin crew. for the time being, oil is providing a nice tailwind. a bad thing for siemens, which is reporting this week as its automation equipment becomes less attractive. guy: i'm looking forward to it. richard weiss, thank you very much indeed. four minutes away from the market open. the commissioner in europe is taking note of the burton -- the halliburton baker hughes withdrawal. concerns on aaise large number of markets. we are four minutes away from the european open. looks like a positive start. london is out. nevertheless, looks like a positive pitch forward. tokyo closed down sharply.

europe looks like it is going to open on the front foot. a lot of corporate earnings. the euro stoxx at the moment called up 0.9%. the market open is next. ♪

guy: good morning. we're right here in the city of london, and we are moments away from the start of european trading. here is your morning brief. japanese stocks plunge as the yen holds an 18 month high. how far are we from the yen getting 105, and if we get there, will we see intervention? calling off a $28 billion merger; regulatory challenges apparently the reason. betting on brazil. we're told that it is not priced into the market. he says that the rial is his favorite emerging market currency. we are waiting for the european open. tokyo sharply lower, but we are

starting a new day. looks like we are opening on the front foot; a busy week in terms of corporate earnings. that could lead to light volume. let's find out what's going on with nejra cehic. nejra: thanks. as you say, we saw losses in japan, dragging asian stocks lower with the topix down more than 3%. a lot of markets closed for the bank holiday. china, hong kong, singapore closed in asia. at europe, we have markets of the u.k. closed. germany, france, spain, italy. open. we might be slow to get things going. here we are looking at the industry groups of the stoxx 600; a majority in the green. futures have been pointing higher in france and germany and that could be what we are seeing. it's telecom stocks leading the gains, up 5/10 of 1%. let's bring up the board and take a look at how some of the stock markets are doing.

you can see the stoxx 600 pretty much unchanged, edging into positive territory after losses on friday. the dax of 5/10 of 1% in the cac 40 up almost 7/10 of a percent. in terms of what we are watching in currency markets, if we come back to the bloomberg, we've been keeping an eye on dollar-yen. it is unchanged today, but it is near an 18 month high, at 106. 57. we're still seeing yen strengthened dollar weakness. if we look at what is happening in commodity markets, wti down, brent down, and a weaker dollar boosting gold near about $1300/ounce psychological level. let's take a look at the stocks we are watching today, starting with phillips. phillips was disappointed with bids for its lightning business, and is leaning toward an ipl, according to people familiar familiar with the matter.

france gaining almost 9/10 of 1% after it selected a new ceo and chairman in the form of jean-marc jeneac. selling insan paolo, the deal value that just over 18 billion euro, down. guy? guy: thank you. a will do a spike around the , as we get more risk on men risk off. keep an eye on that. we'll follow that story to the next half-hour. let's talk about what we are watching. off8 billion merger called after pushback from regulators. elliott gotkine has more. agulatory problems and

problem with the oil price killed this deal. elliott: very much so. we've see the biggest plunge in a generation; oil prices no half of where they were when they announced the deal in november, 2014. it sapped demand for the services that the likes of halliburton and baker hughes provide. $100 billion will slash spending, a quarter million jobs have gone. and on the other side, the regulator is not too happy about seeing two and three it together i to compete with one. it's reducing the amount of competition. an e eu began investigation, and they were pretty chirpy when it was announced, saying this was a victory for the u.s. economy and all-american. guy: thank you very much.

elliott gotkine joining us out of tel aviv. the managing director and chief economist will come soon. that we from the fed are getting to the point where w e're going to break storage -- he was right? is the oil price where you would expect to see it right now, and where does the risk lie? >> if you are any investor at the moment, you will and wish to have a stronger oil price, because that would mean that the most unloved assets of high-heeled emerging markets will continue to be the most lost. that's very much a challenge for folio managers who are going to diversify away from the developed market and negative interest rates. an analyst, but it's

quite clear that we do need a combination of stronger oil prices, which means better oil sentiment and a cheap dollar -- guy: so this is all down to the fed. keep the dollar cheap and the world will be in a better place. that seems to be the tacit a grange. -- tacit arrangement. >> you the nail on the head. of the important thing is to understand that we are still very much in the same framework that we had started the year -- it's just that we have a positive climate for the key risk indicators now, but that doesn't mean the underlying triggers disappeared. we are still in the market environment driven by supply, demand and balance and changes theconomic prospects -- driving factors behind the

liquidity conditions are -- on the one hand, the fed and then china's deleveraging and the knock on impact it has on global financial conditions. so yes, so long as the said keeps away from tightening for rates,g u.s. interest which means it will only hike rates after a rise in u.s. and nation, and so long as china is not forced through potentially an unforeseen shock intervention by boj or another negative interest rate cut from the ecb to devalue the you want again, we could have this kind of environment where oil depreciates and abroad risk recovery. are a were close to a more stable financial environment and the moment was the -- of moments. guy: we have pmi around 50 level consistently.

i'm not sure i believe those numbers and plenty of other people don't. the breakout number is the steel pmi. the steel pmi is showing a huge surge at the same time the options market is still going a little crazy and maybe we are seeing a bit of a pickup in demand in terms of housing market, but not anything that correlates of the pickup we are seeing. how realistic is all we are watching here? what will the chinese do next? it will be pivotal for this puzzle. >> absolutely. the structural rebalancing of the chinese balance sheet -- china's strength has become its own ability. china tonk is helping weather the global slump posts 2007, through a mega investment cycle we are now dealing with

the hangover. what china is doing at the moment is trying to do leverage this private sector debt mountain that the same time that is pushing on the public sector and trying to keep gdp at cyclical levels. the structural rebalancing and recovery -- it is a recipe for a bumpy ride. we will probably see more china devaluation and a weaker yuan. guy: wow. so were not done yet. thank you very much for your time and getting up early to some serious. lena, linda. we will talk to someone who thinks the ecb is done and wants to add more stimulus. europe is the subject. ♪

guy: the within minutes into the market session. welcome back. let's see what's happening. asia down sharply, but europe was down sharply friday. we start the new week on the front but in europe but only just. the dax and the cac bahrain at least positive territory although the early bounce we saw has faded a bit.

we are treating their lives russian postal let's catch up on the news you need to know with julia sally. juliette: halliburton and baker hughes have called off their $28 billion merger, citing challenging regulatory conditions. the proposed union between the second and third largest oil services firms met resistance. halliburton must pay a termination fee of $3.5 billion by wednesday. puerto rico will default on a $420 million bond payment later today, the clearest signal yet that it can't pay its debts. the governor warned the government that it would miss its obligation and called on washington for help. last week, moody's said any nonpayment constitutes a default, and s&p global rating says that withholding global interest even temporarily is synonymous with revolt. warren buffett has taken in it hedge funds again.

at the annual meeting of berkshire hathaway, he said that wall street's salesmanship has masked poor returns for years. he added that consultantcy f ees underperform what you think get "sitting on your rear end in an index fund." franklin templeton is investing his investment -- is expanding its investment in brazil, boosting the country's asset. the executive chairman spoke to bloomberg's manus cranny. >> they don't think it is fully priced. that we havewever, seen a big rise from the low point. when you are at a low point, the percentages agree. but if you look at where we are headed to the previous highs, we have a long way to go. >> another hundred, 200%. we could go up. manus: when you have money to brazil? >> yes. e: donald trump has

repeated his claim that hillary clinton is using the woman card to win the democratic nomination for president. despite a backlash from women's groups and social media, the republican front-runner told foxnews "if she were not a woman she would not even be in the race." meanwhile, speaking of his last white house correspondents dinner, president obama made it clear who he thought was going to replace him. >> next year this time, someone else will be standing here in this very spot, and it's anyone's guess who she will be. [laughter] juliette: global news 24 hours 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 that top .

guy: would also was on the bloomberg right now is a sello taking place in the italian market -- not a huge market that banks are a big focus, in the italian banks are under pressure. some big names there as well -- something of a selloff taking place in the italian banking sector. luxury is on the front foot today in the banking sector definitely on the back foot. let's talk about the data we have seen around the world. over the weekend suggesting the chinese economy stabilized. i urge you to take a look at what's happening in steel. that eases the urgencies and monetary stimulus from the authorities. housing prices are a big factor over the past year, steel and coal something of the story. are we seeing a weird market developing, particularly surrounding steel? the yen trading near an 18 month high, continuing to gain strength. deflation is the driver for the currency.

let's bring in ubs's chief economist who joins us now from frankfurt. good morning. can i draw a line between what's happening in japan right now and what could happen in europe? there's an awful lot of risk being factored into what's happening with the stars running the euro. if some of those risks were to dissipate -- if there was a possibility we could see depreciation of the single currency in the same way we are seeing for the yen? view is that euro-dollar would appreciate, so we don't see a significant risk of sharp appreciation. our view is that the euro area economy is growing quite solidly. we were heartened by the positive q1 data that came out on friday. we wouldn't overplay them too much but our view has long been

that it can be resilient to its terms of pressures and that would lead to a modest appreciation of the euro-dollar guy: by the end of the year. it's a different scenario than japan. guy: why is it different? why is the end going up and not the euro? they both account for surplus areas and have similar economic aspects of that -- a similar central-bank the, getting credit moving. why wouldn't we see that happen? the euro area is an area very and ient growth prospects am standing in germany which has a current account surplus with the rest of the world but not so much with the euro area -- it has that current-account surplus, the structural feature

and we think will stay around 8% of gdp this year for the domestic demand is growing fairly strongly, and here's the difference to japan -- in see that inflation is fairly low at the moment, but we see increasing price pressures from germany, a major way drowned going on at the moment, health crisis increasing -- germany is one of the key drivers of the euro area upswing, and i think that is the key difference to japan. guy: are you comfortable with the credit numbers coming out of the euro? that seems to be the key metric right now. if credit doesn't start to flow in we need more policy action -- the ecb may be done for now, but in order to get -- to work from here, the credit impulse really

needs to take off. >> that's true. but i think credit numbers come with a lag. we haven't seen the big investments in so far -- isn't this it were to pick off, companies still have large cash flows in the finance investment the beginning without taking recalls. the bigger picture on the credit market is that the banqueting survey for q1, which came out just ahead of the last meeting, was quite strong and we thought it was surprisingly strong given the financial volatility in the first quarter. both the supply side you have things going quite well. that should show up in credit numbers. credit numbers have come up more for consumers and housing loans, less so for long financial corporate's. that is our theme, which we

think is happening now, consumption driven upswing that could and private consumption rather than investment and the external sectors not intervening at all. guy: what i hearing great now should be good news for german yours, because if extrapolate policy from where we are to where we could go to the likely that we are going to see further policy and action that will be negative. how much more negative news do you think it will take and receive? >> it's clearly a controversial issue. we think the ecb is down for now. we think we will continue to have low interest rates coming from the ecb and this discussion may not accelerate -- we are closely watching the inflation forecast numbers they put out for 2018, but we think the ecb is done for now. favor, iomes to german

think there is a lot of discussion and controversy about low interest rates but on the other hand if you look at private consumption german consumers are out there quite solidly. consumption has been growing to close to 2%. guy: isn't that the point? you want savers out there? you want to spend money and not save money? this is evidence of the fact that they are being punished. >> right. but at the same time they are consuming like they have really done before. the average private consumption between 95 and 2005 was below 1% and nowadays are 2%. you look at consumer confidence measures and that number has rarely been higher. i don't want to sound too

optimistic, but i think low interest rates are hurting german growth by increasing savings. it's not something you see right now, and you can see prices increasing, mortgage loans picking up. the numbers tell a different story to the discussion that is going on. think what could happen over the rest of the year and anng forward if you see increase in inflation, which we think it could come through base effects of the oil prices and also more broader price pressures -- that may still the disease and further because we get low interest rate inflation picks up which were hurt going forward. we are in for an interesting year. thank you very much for your

time. the chief economist for germany out of ubs. , low yiel high demand. next.art of the hour is banking stocks getting crushed in europe. more on that next. ♪

guy: welcome back, you are watching "on the move." chart of the hour.

what have you got? nejra: this is about the fact that there may not be enough debt to go around. i know it sounds unbelievable; just wait. jpmorgan, the world's biggest bond over writer, is expecting record low global yields, basing this on forecasts of $1.86 trillion of net worldwide issuance this year versus $1.74 trillion of estimated net purchases. supply will be greater than demand for the fifth straight year. here's the key point; the gap, the amount of excess issuance, is set to shrink the most -- guy: this is goldman's? nejra: it is looking at government debt, i believe, and the reason is because it is falling government borrowing because of austerity and also increased bond buying by central banks. if jpmorgan is right, that eases concerns that a rate rise would drive up yields. guy: great chart. thank you. not enough debt apparently. crude outlook is the subject next. it's all a matter of time before

we get $50 per barrel back. our interview with templeton, coming up. ♪

guy: half an hour into the equity market session; london is out for the day, it's a holiday. take a look at the main markets -- dax up, cac up. you, the italian banks are being absolutely smashed this morning. deutsche bank is in having a good morning either here's nejra cehic. nejra: thanks. it's the bank stocks i'm watching, starting with deutsche bank. u.k. regulators faulted them in a letter involving serious

lapses in efforts to prevent money laundering. this is all according to person with knowledge of the matter. this is about a card payment unit. this is in a deal valued at 1.0 4 billion euros, $1.2 billion. in a statement today, the lender said it would record a gain of 895 billion euros from the transaction. finally, unicredit having lower, and a number of the italian banks heading down today. tolian regulators are going decide as soon as today whether the bank is eligible for listing on the lawn exchange. this is after investors showed little interest in the lender's 1.5 billion increase and a rescue funds has a step that. guy: we are going to see how big

that number is. thank you. let's talk about oil. $46 per barrel, depending on whether you're looking at wti or brent. investor sees it rising to about $60 per barrel. mark mobius is the executive chairman at templeton, and he spoke to manus cranny. >> i don't think you need a freeze. i think the market will handle it. you must remember that the demand for oil continues to rise; it is not going down. the recount globally in the u.s. has gone down precipitously. this only means that the supply have got to diminish despite with happening in the middle east. the demand will continue to rise 1% or 2% and the combination of this means that we will see a higher price. n manus: you think we could

trade through this? $30 is what we are writing about, but you see a potential to break significantly above $45? how far? >> i am looking at $60 -- i can't speak for everyone in my company, but i think $60 is the target. i'm not saying when -- manus: i was just going to ask -- people think there will be a rebalancing by the end of the year. >> as possible. these prices are present by derivatives. not by supply and demand. at the end of the day, some event could trigger a big jump in price. manus: grace on, black swan, iranians aren't for stopping. you have to get them on board. you do need a rapprochement

between the saudis and the arabians, no? >> well, the big issue is who is controlling the market, and if you look at russians, they are not part of opec. they may not cooperate. manus: they didn't last time. is that the biggest risk in this whole monopoly board? >>, know 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 they're responsible levels. guy: mark mobius, as always positive. dhabi, where we are joined by chelsea humphrey. why is he in the region? what is the dcc offering him? well, besides the launch of the bloomberg market middle east program, guy, he happened to to be in the region because of the big investor conference. towns coming through because he is interested as far

as he is a roll your sleeves up kind of investor. he wants to be on the ground and see what is happening.he is particularly confident , 10 this isea the first meeting of the investment community post the 20 30th asian that we had from the deputy crown prince last month. it's a way for him to connect with what's happening in saudi arabia and to ask questions on an economy that he is positive about. guy: let's talk about the gcc and what's going on more broadly. finance ministers meeting this week. what's on the agenda? what is top of the agenda? course, this happens to coincide with this large investors meeting. that are gcc ministers happened quite regularly, but we never get too much time. it's one of those opportunities

-- we have the first meeting from these ministers post 20 30th announcement and post -- this is a gathering of the gcc nations to see how they can coordinate some of these plans with regards to implementing vat subsidies. they can put their cards on the table and see how they work together are see what they have to offer as far as their roadmap to become a post-oil economy. that would be the main agenda for this meeting -- guy: ok. i think technology has let us down. we will get that link back and talk about that story later. i wanted to hear back to the italian banking story and show you what's happening. italian banks pretty hard down and reasons for that, one of havethat we are seeing

-- this is the italian bank that is looking towards its listing or has gone through the listing process picking up a bunch of stock and we will get more on this story through the morning but the italian bank is the big underperformer enough. when we come back, an uncertain future in the equity market. how is the market priced right now versus the impeachment story? a lot of people think -- it's interesting that mark mobius has the opposite view. that story, next. ♪

>> the ecb has done one a can. monetary policy is reaching its limits. -- it is reaching the limits we need to continue fixing the banking system in europe well there are still mountains of nonperforming loan. we need to get structural policy going. fuest.emens he is spot on the money in terms of markets this morning, as you can see. one of the main italian banks -- many of the main italian banks

are down as much as 6%. we will get more on this as we work our way through the morning. you are watching "on the move." here is the bloomberg business flash with juliette sally. juliette: thanks. shares in takata have plunged said u.s.r the nikkei regulators plan to push for recalls, the biggest in automotive history. they could affect more than 100 million vehicles worldwide. takata says no decision on the recalls has been made and that it is in talks with the national highway traffic safety administration. the u.s. department of justice's criminal division is investigating jpmorgan's hiring practices in asia. it is facing an inquiry by the sec. people familiar with the matter say regulators are trying to determine whether the banks violated antibribery laws by hiring children and other relatives of well-connected politicians in exchange for

having business. is said toartered the investigating is bankers over padding expense reports and improperly lending money to colleagues. two say that several employees in dubai, including managing directors, bank over the past six months as a result of the probe. guy: thank you. delta airlines has a new boss today, taking over after eight years as the president. he plans to make still to a more global airline. >> we're going to continue to do what we do as the best airline on the planet. we are going to continue to invest in the operation and the products to make certain that the reliability and service levels continue to grow while we set records and respect operating performance.

our customer expectations are rising and we are getting paid her. the other thing you will see me focus heavily on is the continued expansion of our business. we have made a number of investments and we are in the process of doing a similar deal with mexico. it is a mature industry -- there is growth but there are not new cities or markets. if you are going to look to grow for the future you have to do it out side the u.s. in terms of where we can go and there is great opportunity still to be , a -- latin america, brazil lot of growth and opportunity through central america which is a deal we are hoping to close. population,ry young

the largest city in the world border.oss the the u.s.-china traffic will likely be the largest international traffic flow in the world with partners in shanghai -- that will continue to become not just the commercial capital of china but the commercial capital of asia. >> a lot of capacity has been added between the u.s. and china. are you making money on those routes right now? >> we are. not as much as we'd like to, given the start of nature the investment, but there are restrictions about how much capacity can be added going forward. they are running at against their capacity. useful start to see it moderated and itt couple years will mature a little bit more. let's stay global.

that was the new boss of delta airlines. let's carry a talking about emerging markets. he wants to make his airline global, let's carry on talking to a brazil. turmoil, economic crisis -- what happens next is far from clear. that has not deterred investors. we have that's on the impeachment of president dilma rousseff. mark mobius is a buyer. speaking to manus cranny, the executive chairman of the emerging markets group said impeachment is not yet fully priced in. ? >> i don't think it is fully priced. i don't believe that we have seen a big rise -- when you are at a low point the percentages at great, but when you look where we are headed, we have a long way to go. another 100%, 200%. manus: with you had money? >> yes. guy: let's carry on the conversation out of berlin,

talking to the brookings institution director of global economy and development. good morning, sir. thanks for taking the time. the world is watching the emerging market, seeing something of a recovery. how much of that is based on what is happening with the dollar? >> well, i think the two things are linked, but there has been a great pessimism the reaction against the emerging markets over the last six months. this is a time of correction. i think the medium-term forecast remains strong -- a lot of the center surround china and the uncertainties, there is also the issue of global risk-averse and. risky, as things are demand falls off. the medium-term, emerging markets are likely to grow at least two percentage points faster in the aggregate, particularly in asia and

advanced economies. guy: how much of that is down to the fact that we will see a recovery in material prices? you see a pickup and iron ore or copper or whatever and is and that has a big effect on the emerging markets it is suddenly a drag -- how much of it is down for that? >> i don't think we will see a recovery in primary commodities. i think they mirror cover of the last few weeks but i think sluggish growth remains in the advanced countries but we are far from over the hump. i think the primary commodities will remain a problem but a think we have got the worst behind us. guy: we talk about the emerging markets as if they are one. if we have learned anything, it's that we shouldn't treat them like that. we shouldn't talk about that; we should talk about separate economies. how much divergence do you think

we will see within the group? >> well, you are right. we never should. but on the other hand, there is an overall emerging country aggregate ; there is a big difference between asia, emerging asia -- china and latin america. latin america has more , and with japan and europe in the long run, it has not been that strong. one one looks at the world, has to distinguish between asia -- and i remain optimistic about asia, even if the chinese growth rate of 4%, that is still a hell of a growth rate. latin america is more problematic because of low investment rates; that needs to be financed either by greater savings or by foreign investment. the foreign investment remains worried. africa is a big question mark it; it is a frontier.

in the long run, it has potential, tremendous but in the short run, it remains small and the global economy. guy: what are those countries with big current-account deficits? turkey -- i'm sure you have some it to say on that. south africa, you just referenced africa. how do you think they will fare? at the moment the fed is throwing them lifeline. >> yeah. south africa, it's a big political problem, the uncertainty is very high. the inequality is very high. with nigeria, these are the big economies in africa of course, and it has great potential, that i think in the short-term it needs a lot of reform and a lot of political reform also. guy: yeah. if you look at brazil, at south

africa -- in many ways they have a similar problem, which is political instability. they appear to be different. can we compare his contrast -- is there a theme that runs through the instability story? well, i think brazil is a much larger country, a much larger economy. south africa -- it is quite small compared to brazil. it is much more dependent on a few sectors. brazil is more diversified. both are dependent on commodity exports; both are dependent on china, on chinese demand. but brazil is much larger and more diversified, and it actually has a very strong industrial base. there is technology, there is no how, there are aeronautical industries. in the long run, i would think brazil would be a country that will grow quite fast. guy: we will leave it there. thank you very much for your

time. we have to hitting us -- we have data hitting us. the french market pmi number is on, for the period of april. the survey was 40.3 in the actual number was softer at 48. the manufacturing sector is not looking great. somebody said earlier on this morning in a speech thatthe frae -- i will find out who that was a we will compare and contrast with that comment. funds,of hedge consultant, and derivatives. some advice from warren buffett, next. ♪

guy: we need to listen to what the president of the united states had to say. we have the benefit of for you -- we have a bit of sound for you. >> hillary is trying to appeal to young voters; it's a little bit like your relative who just signed up for facebook. [applause] >> "dear america, did you get my poke?" "is it appearing on your wall?" "i'm not sure i'm using this right." love, can't hillary.

guy: i suspect he will be making a lot of speeches. he has a whole career and stand up. that was the current president of the united states, who want to be there next year. be wary of hedge funds, consultants and the derivative times bombs. nejra cehic is back with more -- with the the oracle of omaha have to say? nejra: he offered what he said was the most important investment letter in the world, and what he said was that a lot of investors that go to managers do a lot better to just pick an index fund that tracks the s&p 500. this is an argument that he was building on; what he has been making for years. to make his point he made a bet that the vanguard group funders could be a basket of hedge funds from 2008-2017. proceeds will go to charity. you gave an update on this on saturday, saying the bundle of hedge funds have returned 21.9%

in the eight years or 2015, whereas the s&p 500 had soared 65.7%. he is really hitting hedge funds while they are down; investors have them while investing in index funds has been increasing. guy: it has been massive. there is a lot of research around his point. part of my job is to give my children to eat broccoli. what if it's not helping? nejra: absolutely not. this guy to get his fiber eats cheesecake endres cherry cola. guy: to my daughter, turn off. nejra: berkshire hathaway is the biggest investor coca-cola. he has been criticized because of soft drinks contribute to obesity, and what a lot of people are saying. he says it's about happiness too, and i'm happier when i am drinking soft drinks rather than eating broccoli. he points to the fact that women tend to have a longer life span, and if you want to increase your lifespan, have a sex change.

guy: on that note we will leave it. thank you very much. that is it for "on the move." stay with us; mark barton is taking it. "the pulse" is up next. ♪

guy: -- mark: manufacturing data stabilizing. japanese stocks sink. the yen hold 718-month. the yield on the 20-year bond slides to a record. halliburton and baker hughes walk away from their $28 billion merger amid regulatory resistance. welcome to "the pulse" from london. i'm