anna: plummeting profits. it is a tough first quarter for ubs sing its top line fall while bnp paribas says that they are showing resilience but it has been a challenging quarter. >> there was a particularly unfavorable market environment at the start of the year. anna: the central bank unexpectedly cuts rates and the inflation outlook. draghi drama. the ecb president hits back at

critics and that savers cannot expect returns without economic reforms to rekindle demand. it is just gone 6:00 here in london. it has just gone 7:00 in berlin. in terms of these nubbers from commerzbank, the net profit, that is against a forecast of 160 million euros. just a touch above or in line of the forecast. in the ratio. 148loan-loss provision million and the estimate was 170 million so it looks as if they're having to make fewer provisions for loan losses than had been expected.

before loan-loss provisions or 2.3 one billion -- 2.31 billion. the low interest rate we find ourselves in means that barclays suggesting that net interest income would most likely be dampened. keep an eye on what they say about that. another big theme has been cost-cutting. they are talking about aiming to keep their cost base stable. this deal see a full year moderate loss in long provisions. there talking about considering increasing the strategy of market share. we had already heard from the ceo at the agm that matching last year's profit would be tougher given the slow start to the year.

they are saying this morning it will be more challenging to meet that net profit. it's going to be more challenging to reach the net profit of 2017. let's leave that alone for one second, we have numbers from bnp paribas this morning. let's get the details of those. carolyn joins us with the latest on the french banking sector. >> a surprise 10% increase for the net income of bnp paribas in the first quarter. 1.8 billion euros has beaten estimates and despite the low interest rate environment and the vodafone market we have seen in the first quarter which weighed on the investment bank, that is a trend that we have seen as other u.s. banks reporting earlier this year.

like deutsche bank last week, the pretax profits dropped by as much as 54%. 16 -- revenues and weak revenue in equities but somehow in bnp paribas this was upset by exceptional items that produce a positive in pass in the first quarter as well as a drop in the provisions for bad loans. these provisions fell by 28% in the first quarter. even in italy the cost of risk is down. i spoke with him and asked about the challenges of this first quarter. >> the revenues held up well but of course there was a particularly unfavorable market environment, particularly at the start of the year, the first two months. the situation combined with good cost control and in particular a

significant drop in the cost of risk. they deliver 1.8 billion in bottom line. this leads to is a return on equity of 9.4% and a return on tangible equity. that is fully in line with our strategic objective for the year. >> from what you can see more recently, do you think these favorable environments might improve? >> the favorable environment i talked about is basically who has been weighing on our cid on the global market. we saw lower client flows because there were concerns with our clients about global growth. there were concerns about regulatory treatment of subordinated debt and also uncertainties about monetary policies. several of these things came in less troubled water by the end of march which saw a kind of pick up, for example, we

ourselves with the first eurozone bank to re-issue toward the end of march. >> you have these job cuts or of six ordepartures at 75 jobs which would correspond to about 10%, with that mean it is about 2000% short of voluntary departures globally question mark >> it is a -- globally? >> is a shift of the things it we do. we will behind 200 people with respect to the digitization aspects and as a whole, bnp paribas remains a formidable employer. we will hire 20,000 people this year, 3000 and france this is similar to what we have last year so we remain fully committed to that. 10% chocolate -- job cuts globally for the business. >> >> we made a generic path on

which we do plan of vacation and we do it entity by entity. it's basically unfolding now, it is too soon to crystallize one number. anna: caroline connan speaking to the manager about their numbers this morning. let's stick with the banking theme. we had numbers from hsbc just over an hour ago. the ledger reported a bigger profit than analysts had predicted. let's get the heidi lynn who is light outside the asia headquarters in hong kong. you had some time to pour over the details of these numbers, profits beating estimates but lower than last year? >> we were bracing ourselves for a fairly ugly printout but in the end they were better than expected. billion when$6.1

it comes to that pretax number eating expectations. still coming down from that 7.1 billion number in the same quarter of last year. it is down about 18% but not as bad as we were expecting. we were estimating $.17 a share so that was also a beat, we are also focusing very much on dividend. the have been some question marks over whether they will be able to maintain that this year given the challenging visit -- conditions which phil gulliver refer to himself. at the same thing with seen given that we are in the earnings season but they had managed to hold it at $.10 per share. on the other side is the bad loan charges, they essentially doubled to almost $1.2 billion and we were expecting $999 million so that was a little bit and on the count of hefty

exposure to the commodities slowdown was also responsible for the overall growth. of hsbc a very big part 's operations. we've also been looking at the slowdown when it comes to right here in hong kong, particularly when it comes to private wealth and retail banking. that headline number is not bad and also managed to hang on to the dividends for now. plenty of earnings coming through from the banking sector this morning. let's look at our risk radar and show you how some of the asset classes are moving overnight on the oil price. this is the price of wti. this is the one your movement we are seeing their. in case you are for a moment startled. we are near $45 per barrel.

the industry forecast increase around 500,000. 1300old price went above in the last 12 four hours, up 22% in 2016. the dollar story is very much at the center of thinks. that is a topic of conversation we will pick up with our guests in just a moment. weakeningubstantial in the australian dollar as result of the rba cutting interest rates more on that later. let's get the bloomberg first word news. those banksongst dropping 64% to my missing analyst estimates. 707 million swiss francs. way short of the 735 million frank average estimate they said heightened geopolitical uncertainty as well as global market volatility leading to a

more pronounced client risk aversion. imsa net rising debt level has become a significant risk for major asian companies but they are decelerating slightly this year but is too optimistic. >> the growth is 5.2% which is higher than the other regions and it accounts for two thirds of a growing economy. moderation,r own they still remain as a global economic leader. >> the biggest rally since abenomics began harming the economic recovery. the just breaking through that against the dollar. the bank of japan governor said that policymakers will not hesitate to expand monetary stimulus to achieve that target. >> one of america's biggest pension funds has joined warren buffett in scolding money

managers who retain point percent of the gains. retirement teaches systems and calls the practice broken. >> as an investor of capital, we negotiate hard. i have said clearly that the two and 20 model is broken. for large investors it is off the table and we are negotiating much lower sets. >> and u.k. risk is losing 250 billion pounds per year in trade if it leaves the european union. alistair darling says is estimated to be between's -- that much higher than without eu membership. described thee claims as absurd. lake --english premier

came close to relegation from the premier league a year ago. 5000 -- when the season began in august. if you are a bloomberg terminal user, find our top stories on top . less that after game was a bit late for me but i heard the cheers. let's check out how the asian markets are doing. julia is standing by for a. s&p and 0.8 percent, some strong moves in the australian session as well. juliet: it really has all been about australia in the last hour as we saw this surprise decision. i what to show you this six-month graph of the aussie dollar.

since january its reason 15% against the greenback today. we had that very significant fall when many in the market were surprised by this decision to cut the cash rate to that record low of 1.75%. certainly a big thank you for many in the economy as we saw $.17 all part of the effort to rebalance the economy away from the mining boom and that has been a very by almost 2% in late trading. a very solid session coming through in new zealand as well. the rest of the region has been playing catch-up a little bit. we had many markets close yesterday so they have come back on mind -- come back online and have seen that strong rally. moser doing quite well. the shanghai composite up by 1.7% in late trade. that pmi number was a little bit

weaker than expected in april, but there are some encouraging signs of stability and china. that is why we have seen up pickup come through on the share market. we are seeing the hang seng down by 1%. you can see a lot of those property stocks coming under pressure. in korea, it is up by 0.4%. consumer prices and south korea. they rose 1% last month from a year earlier which was pretty much bang in line with what the market was looking for an having a look at some of the stocks we been watching, all about the banking sector heidi was talking about hsbc with shares in hong kong up by 1.4%. through with ae miss on its first half numbers but investors seem to like the fact that the new ceo is trying to cut costs. anna: lots to focus on in the asian section.

let's bring in our guest for the rest of the hour, jeremy stretch head of the imperial bank of commerce joins us on set. it's very good to see you this morning. we had some official pmi data over the weekend and the early hours of this morning the manufacturing number. is it a cause for concern or do you generally buy into this china is stabilizing thesis? ideat did not buy into the that china was coming off the rails. so in a sense that stabilization is where we were anticipating the economy to be. we are seeing signs that loan growth is picking up and a significant pickup and money supplies. you could argue they could be storing up further problems for further down the track. course of thethe next six to 12 months we are not buyers of the china ampligen story.

stabilization and that has important implications for economies leveraged up the china growth numbers. >> you reference the imf warning today saying that they are warning about chinese debt levels. they have said it before and many other voices have echoed their fears about levels of debt in china. the pboc is that weighing to act on this story are are they happy to see a little bit of increase in lending to try to stabilize the economy? >> at this particular juncture they're looking at the lending right. saying if they can see new lending which is trying to generate some degree of growth than we will worry about the problems that could be further done the track at a later date. it's a classic case of worrying about today and tomorrow rather than the medium debt issues. that's how we are seeing an increasing move toward chinese markets thinking more about a western scenario or the politicians saying let's deal

with today we will worry about the long-term issues and it will to look the next regime at the potential problems that come along afterwards. anna: are we beyond being wrongfooted by moves in the chinese currency? back to last summer that was something that really cut investors off guard. we see the pboc reference rates for the yuan, is it strongest this year, a lot of that reflecting what's going on with the dollar and other baskets of currencies that china trades with, have we learned enough about what the chinese are doing that we think we understand that now? >> i think they clearly got the move last summer wrong in the sense that they assumed the wrong metric being targeted. rather than the desire to cheapen up this currency dramatically because of this fear of a weaker economic backdrop. you're right that there is now a reflection of what's going on

globally and other markets and as the u.s. dollar gets hit across the board that has obvious implications for the way that the basket is going to trade. i think investors are not quite as fearful as they were during the month of january and february when the risk criteria or the assumptions of the slowdown were much more dramatic. and i think now, we to look at both the baseline gross -- growth than them expect other external numbers. you need to look at both sides of the equation. anna: have a chart here on the bloomberg entitled, in gold we trust. the gold price rising. some people suggesting that any enthusiasm for risk assets should be tempered by the fact that we are seeing appetites for gold at the moment, that others say this is purely a dollar move . >> i would say it is predominately a dollar move being reflected in the gold price. this in commodity prices in most instances moving up quite dramatically in recent weeks.

commodity prices denominated dollars difference -- janet -- generally move inverse to the uh and of the u.s. dollar and it has been cheapening up. elementsre are other at play because there are subtle changes in the way that the gold market is operating which is encouraging more chinese interest in the gold market so that could be an additional demand coming through. predominately it is the dollar cheapening story but it's also reflective of some other variables where the markets were perhaps indicating the golder prices -- gold prices were too cheap at the turn of the year. anna: here in the studio now let's have a look at your day ahead. -- at 9:15 london time we get the manufacturing numbers for april. change? they could spain be punished for missing its debt and deficit target? there is a political cover station we need to have as well. then at 11:30 p.m., dennis

lockhart talks monetary policy and gives his economic alice he of world affairs council in jacksonville. and hillary clinton a donald trump aim to extend their leads in the race to the white house is indiana holds them a chronic and republican presidential primaries. if you're watching and frank for, let's get the bloomberg business flash here is reshot. rishaad: despite bad loan felles, shri tech's profit ahead of the average estimates by quite a substantial margin. charges for bad loans are doubling to just about $1.1 billion. first-quarter profit there felt 64% which missed analyst estimates as divisions reported a drop in earnings. billion a year ago. that fell shy of the 735 million frank average estimate.

the bank says it has heightened economic and geopolitical uncertainty as well as global market volatility led to a more marked and pronounced client risk aversion. bank posting it surprise increase in first-quarter profit decline divisions. net income only at 10%, 1.8 billion euros. getting a boost from a 365 million euro accounting game which is tied to their own debt. the will proceed with lighting division. the ants -- astronaut -- amsterdam-based company will lift the provisions. that is your bloomberg business flash. >> let's not what was happening australia, the aussie dollar has taken a tumble after the nation

cut interest rates to a fresh record low. move aimednexpected to counter the emergence of disinflation that has swept the developed world. standing by in sydney is bloomberg's peachtree dan -- dan petrie. concern to say you don't get that if this wasn't unexpected but there have been some expecting this move. >> that's right and a and a good morning to you. what we saw with this move whilst there was some conjecture that it would happen it certainly did come as a shock and it's -- at 1.75% is a record low we saw the aussie dollar dropped by over 1% but the flipside is that the stock market is up almost 100 points and the nation's banks are rallying as a result. the problem we've seen and you may have alluded to it quite rightly in your intra-is the fact that the dollar -- australia is caught up with this inflation nightmare affecting the developed world.

disinflation is the big concern. it really did force authorities to make a decision. when you see the australian dollar at this point, even policymakers are still not happy with the currency where it is. a phil forbe exporters and to get that proverbial demand going again which has been a face of the australian economy for almost 14 years now. with dan petrie joining us the latest going on in australia. ever since we got that weaker than expected negative number on cpi, the market has been resetting its expectations but if you look what happened to the currency many were wrongfooted. >> we did see that very surprising drop in cpi last week and in a sense i think analysts would then have us conclude that we know there were different -- disinflation there he pressures

we know that the aussie dollar had appreciated so that was amplifying those disinflation rate fears but the question was how with the rba react to those in how would it moderate their forecast going forward. there are still some element switch cause some concern you would assume due to the degree of consumer leverage the resilience of the housing market in both of those will be potentially amplified by this move but it seems to be the case that the rba were mindful of needing to cheapen up the currency to try to provide a boost to the economy going forward and to benefit or increase important deflationary pressures. in a sense, i think it's been a problem for the australian side because the u.s. dollar has also been week and that's the other side of the equation which is a great cause of the headache. anna: how much does the australian dollar play on it still. try to diversify away from mining, they talk about living in a non-mining time.

is that reflected and reduce reliance or is that wishful thinking? production or of the mechanistic relationship between the two. talk about the last two decades were the reliance on china has been important. think we are slowly and progressively moving away from that and i think notably, the chinese will be moving away from that reliance on australia as well because of the chinese growth story becomes more driven by domestic consumption as they are trying to achieve that will or lesss impact influence on things like the mining sector on -- or iron ore particularly in australia. we are seeing some degree of diversions but chinese money flowing to australia has been one of those factors driving up the aussie $ even if the economic linkages art weaker the money flows are still favoring australia and driving up the dollar. >> we will get a budget from the federal government later on.

up next, is lose tons a on the right flight path? we look at their first quarter -- earnings. stop

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anna: ubs reported first-quarter profit fell by 64% missing analyst estimates. the ceo told us that the environment remains very challenging and market volatility we've seen this year is quite paralyzing. he spoke to bloomberg's guy johnson at the headquarters in zurich who started by asking him if the market should be disappointed with what they've reported today. >> if i look at the kind of market conditions with an operating at, those results are resilient. profitability in those environments is not easy and most importantly, we have been doing that well keeping the

opportunity and the possibility in a more normalized environment to deliver stronger results. course theyall, of are below last year, but i would say that considering the environment i am pleased to see how we operated. >> you pretty much mourned at the morgan stanley conference that things would be tough, that you should have been even more clear at that point. >> a think i was pretty clear about the environment back then and i think it's our responsibility to highlight the market conditions that we have been operating in a results reflect that. >> client transaction volumes, the lowest recorded ever for q1, clients are terrified right now. how is that going to change in a hurry? >> we definitely entered into a new territory in the first quarter. if you go back to the last three

to four years, in every given quarter you would have served weeks or months during any quarter of strong market conditions or in any case some kind of positive pickups. the first quarter was an environment that had only one constant. risk aversion from january at the end of the first quarter. >> to you think this will be like last year but in reverse, lester started off really and got horrible is it going to get better? >> i hope so, but it looks like we are still in a challenging environment because none of the issues we have been highlighting in the last few quarters are disappearing. of macro economic issues geopolitical issues are now coming on. we will see soon a vote on brexit other major --

de-escalation coming from that u.s. elections and potentially who see a lot of factors may market sentiment and in that sense you see volatility. the kind of volatility that translates to client activity, it's a paralyzing volatility. marksustainable question yes or no -- sustainable? yes or no? and are you surprised at the number is as good as it is? >> any money is a font of wealth creation you cannot talk about a lot of wealth creation nowadays, but this is basically the fruits coming to us on the work our colleagues have been doing in the last couple of orders. and one consolation as we look at any quality of the money. i'm very happy with the results, not because of the quality

because i know it is good and strong, but of course we retain our targets of 3%-5%. we had 6.5% in the first quarter for wealth management and 5.3% for wealth management america's in their the range is 2%-4% so i think with respect to the rest of the year we will have more moderate growth. >> you talk about brexit as being one of the main risks. the fnb out today talking about them being significantly overvalued, probably every opportunity they have they say that but we are coming up to things that could potentially make it even stronger. how have you prepared the bank for this? how have you looked at your operating environment or the divisions, how have you figured out how you would whether such a storm because it would have an effect will stop >> if you look at the conditions we saw in the first quarter, there is nothing you can do in the short term to offset such a headwind.

we been working on our most recent cost-reduction initiatives, the 2.1 billion we went to achieve at in of 2017 on an annualized asus. we made good progress during the quarter we're pretty confident we will achieve the 2.1 billion by 2017 as i mentioned. so you work on structural issues, mainly front to back, improving efficiencies and improving processes and position the business to be ready for a more normalized environment. anna: sergio there talking to my colleague johnson. in guy is still in zurich now, talking that there only being one constant in the first quarter and that was risk aversion. it was it dreadful quarter to be looking at as a european tank. bad, knew that it would be

the morgan stanley event in march he said it would be bad. sergio was not kidding. you can tell by his body language he was down on these numbers. he knew what he was delivering here as the result of which is going to be very tough for him to drag himself out of because the impression given is that things are not improving a great deal right now. it's not as if the q1 story is done. he gives the impression that at some point things are going to get back to normal but actually life is remaining tough and he talks about this paralyzing story that is engulfing everything right now. the clients are absolutely terrified. you're sing transaction volumes done at record lows. a really tough place to be right now. in some ways, ubs has the business model to whether this. q1 are ass we saw in good as we saw in 2008.

there are some bright spots. but nevertheless, when you're dealing with this engulfing story that isn't going away anytime soon, and management cannot say that in two quarters or one quarter, we are back in a much better place that actually, investors will look at this with a tough i. they knew that it would be bad but these numbers are disappointing. anna: as you point out there is that one silver lining. pleasedsaying he was with such as the quantity but the quality. we will see to what extent it takes the edge off this story. guy johnson joining us from zurich. bmw first quarter before interest and taxes come in it 2.6 billion euros which is just below the estimates. they are talking about confirming their full-year forecast. despite the fact that their q1

profit has missed estimates they are confirming their full-year forecast. they see their car division for 2016. they see the revenue rising slightly in 2016 for that car division. lufthansa also reporting numbers narrowing at the first quarter loss because of fuel and because of their cost cutting programs those are the headlines coming through there. the german carrier saying the euro wings carrier is reaping benefits again riveted by continuing decline. this is an area like many others in low cost of petition. the switch them -- split them into two from their low cost service such as euro wings but that has led to tensions with the union said as we know the last couple years or so, profits have been damaged as a result of walkouts. quick look at what luke tons are reporting this morning. let's go to bloomberg's first word news.

rishaad: in a bid for your's biggest bank, there pretax profits falling to $4.1 billion from 7.1 billion a year ago as the estimate which is 4.1 3 billion for bad loans doubling to $1.16 billion. rising debt levels have become a significant risk for major asian economies. asia-pacific growth is to celebrating slightly this year. expecting that asia will go by 5.1% which is 2.4% higher than other regions and it constitutes two thirds of the global economy. despite its own moderation it still remains a global economic leader. >> the yen's biggest rally since it began, it's actually harming the japanese economic recovery. the boj governor kuroda reiterated that they will not

hesitate to expand certain policies to achieve that inflation target. -- he's joined warren buffett in scolding money managers who charge 2% fees and retain 20% of the gains. chris, he called the practice broken. >> as an investor of capital, we negotiate hard and i have said very clearly that that 2-20 model is broken. for large institutional investors it's off the table and we are negotiating much lower sets of a management fee and incentive fee. losing: the u.k. risks to an 50 billion pounds per year according to alistair darling who says that with britain's trade with eu countries is expected to be higher than it would be without the eu ember

ship. he says it would establish a necessary terrorists and barriers. he describes it as absurd, global news 24 hours a day backed up by more than 2400 journalists in more than 400 bureaus around the world. the oil price rally as deep-rooted as it looks? are we pricing in the lower for longer matchup. my colleague joins us now from dubai. manus, it is good to see you. you can looking at the oil markets, different points out into the future and they tell you different stories about how much we should buy into this rally in oil prices. manus: absolutely, if you think about what's driving that rally look at the dollar, back at level since june of last year. -- theyi's art reducing

are just squeezing back but you're right i have a chart. anna i know that you love a chart, let's take a look at it. it's the front month price of oil which is the upper line. west texas intermediate, the front contract on this, up she goes, up she pops. it's a bit cliche but that is the road she is traveling. mario draghi likes a five-year five-year, this is the five-year forward. the price of oil five years forward. wti up 21% this year. five-year forward pricing is down nearly 3%. so the elongated part of the market is reflecting that lower for longer. suction said that the market -- socgen said that the markets got slightly ahead of themselves. this all comes back to the point that $45 is a self fulfilling prophecy.

off go this brig it's in shale and the deep oil wells around the world. see000 barrels, we will that will come through from the united states of america. when it comes to trying to dig a little bit deeper into the bandwidth on oil, this is a really great way to look at it. a five-year-five-year, you thought that mario draghi had the monopoly -- not at all. those oil traders can be just as smart. anna, back to you. anna: manus cranny joining us with his take on the oil markets right now. jeremy stretch is still with us. manus was talking about lower for longer on oil, whether we talk about oil or rates there is a lot of fx traders to deal with at the moment. i saw overnight that goldman sachs is having to rethink their call on the yen. have a cart -- chart that shows yen strength prompting this

forecast rethink. expectations have changed quickly as the currency rallies. it seems at the yen rally is really taking many people by surprise. the length of it and the duration, how does it seem to you? >> in a sense of a nymex is almost been turned on its head because it came in in late 2012 on the presumption of those three arrows, one of which included a cheapening up in the currency to provide an export to the growth scenario. we've moved away from that where at least it seems the market has moved away from that and we have subtly revised our forecast in recent weeks. it's not that we were more optimistic about the yen but the dollar side of the equation as well. aboutk mr. kuroda talking not hesitating to act but the markets would suggest he did hesitate to act last week. because he revised done his growth targets and extended the. in terms of -- extended the period in terms of meeting that forecast.

markets have been a little wrongs footed assuming the boj would be a little bit more manipulative in terms of changing policy and the fact that we have to wait until july for the next policy it really leaves this particular trajectory. anna: how much support what he have from the g 10 in g-20 if he decided to do more to weaken the currency? on the one hand the has been a lot of talk about not using that as a tool to boost growth but corroded overnight warning that yen strength risks harm to the economy and it's up some 13% against the dollar and 2016 which is the most among the g 10 countries. >> in a sense, if we go back to 2012 or even longer if the go back to the autumn of 2010 when people are talking a currency wars, of course there was a suggestion when we went back to the start of abenomics, with threatening risk of an additional round of currency wars? i think international investors particularly recognize that having a stronger growth

oriented japanese economy is beneficial. if you're allowing them to cheapen up the yen moderately, not complying with the valuation , then the g-20 would probably acquiesce and allow the japanese to cheapen up the yen moderately as long as it is not a move which causes a great deal of the stabilization and other markets -- destabilization in other markets. 13.8% against the u.s. dollar year to date. is there with the commodity currencies. >> in a sense to go back to what we were talking about earlier. that really provided an initial stimulus to yen the japanese investors brought money home we've seen those long speculative positions maintained at record highs because there is

this ongoing debate about whether the boj or the mof will actively encourage the yen to cheapen. divided.next, a nation we'll have the latest from madrid as spain gears up for second election in half a year.

anna: this is a live shot of new york, very early in the morning. things are looking a bit misty. london.50 in spain's parliament has run out of time to form a government. the missed deadline when now trigger a repeat collection for late june. maria joins us from madrid. good to have you on the program, guide us through will happen in the coming weeks in spain. said, the king about

two hours will sign this official for a new election, the campaign will start june 10 in the vote is likely to take place june 26. three days after the brexit vote and it really is an unprecedented scenario because it's the first time in modern history were spain has failed to elect a prime minister and it just comes to show how successful the neo-party is which only went national about two years ago and have been really capturing the sense of frustration, mostly the result of the crisis but also because of corruption increases linked to both major parties in the done so well and of really gone from it protest movement to becoming a real political force. this is really left the establishment thrown into navigate these new waters and it is really an unprecedented situation. like i just said it is hopefully -- hopefully taking the vote june twice six.

anna: really interesting timing coming three days after the brexit vote. what are polls telling us about what will happen and how do the economics feed into this campaign? who seen some decent signs of .ecovery in the spanish economy >> that's right. with what we've seen basically is they still show a majority so there's really no end in sight to this deadlock and it's very likely that the next government has going to have to be a coalition and the pressure to form the coalition will be even greater. until we have failed to elect a prime minister. the economics is an important issue because they've really played up this card that they know how to manage the economy well they've really brought up this recovery they've treated with jobs. just friday they've announced a new budget plan with ava announced we will bring that unemployment and create 2 million jobs in about two years.

that's really going to be important but going into the election, it's a power struggle between the socialist party. what they're trying to do is replay what happened in greece were they took over the traditional socialist party there. i would focus on that and see if they can create a coalition of the last run together and if they do overtake the socialist party and become the second biggest party that could be a big moment. is maria joining us for the latest from madrid. savers in germany want to experience higher returns until economic reform rekindles the demand for capital. that's going to mario draghi who was speaking at the annual meeting of the agent develop meant bank in frankfurt yesterday evening. hitting back at critics who have blamed the central bank policy for depressing returns on savings. he says germany's account surplus has also contributed to a lower rate. marks over the

european area in general are contribute into uncertainty for individuals and firms. this can hold back investment. removing the uncertainty will help force consumption and unleash investment across the confident. there's no doubt in my mind that institutional reform in the european union and the euro area has genuine economic benefits. for all those want to see a return to more normal levels of interest rates this is an essential part of the solution. anna: jeremy stretch, the head back, mario draghi fights and takes on his critics. he's been criticized in the german press and by the german finance minister who suggests that we have a saving culture and germany, he's having to defend himself because that is

where his negative interest rate policy is perhaps hurting. >> he certainly has been criticized very roundly by german allocations as of late and in a sense he is pushing back against that and he has pushed back in a number of occasions over recent years talking with the culture of saving, the lack of domestic consumption which drives the german economy via the current account surplus which you can drop provides residual appetite for the euro which means the currency is too strong in a sense that's one of the reasons why the ecb has been much more aggressive in terms of its policy stimulus to try to implicitly cheapen up the euro. if germany reduce its reliance on exports and enhanced its spending culture a bit and fiscally expanded a little bit to provide more leeway for europe as a whole, and he would argue that the ecb would have to do less and that would reduce it. anna: it's always going to be a hard sell. it goes back to the financial

crisis. near the currency block different in its characteristics it is difficult to pull those top messages to those economies that are proven themselves to be resilient and strong. it's hard for them to hear those messages. >> germany has obviously dragged the eurozone through the crisis with inherit problems along the way as we know, but it has been that german economy which has sustained the rest of the unit. now, to hear that criticism from the european central bank leader's rep -- is obviously hard to hear and they have cherished the idea of a strong currency which has been compromised to an extent by some of these policies as well. in a sense the german psychology is being tested by the european central bank leader in a sense that just underline some pressure points and these fissures between the us that the ecb should be an organization which is akin to the bundesbank.

anna: up next, cost that hsbc be in the quarter. for more details in the banking sector with had a host of earnings. we get numbers from the aberdeen asset management and speak to the company later on this morning. ♪

anna: plummeting profits. it is a tough quarter for ubs. says europeribas is a showing resilience, but it has been a challenging first quarter. >> but of course, there was a marketlarly unfeasible environment, particularly at the start of the year. hsbc has seen profits come in at $6.1 billion, despite loansrs forbads for bad doubling. the inflation outlook,

meanwhile, has the yen surging. welcome back. this is "countdown." i'm anna edwards. we have had a host of numbers from the banking sector and plenty of other numbers from the airlines and carmakers. there is a lot going on. let's have a look at the futures at the start of the european trading day. numbers are stronger across the european futures, or across the european equity scene. up by acks are fraction. the ftse 100 is up by .5%. yesterday, we saw a decent stock rally in the u.s. there was some speculation about just how much support there would be from different banks.

all of that is feeding into the trading environment. will we see those kind of futures turn into reality in an hours time when the european equity market starts up? let's tell you what is happening with the oil price. we are around $45 per bale with wti.with high stockpiles continue to be the story. gold, we went above $1300 per ounce on gold. it is a little bit weaker compared to the recent close, but up 22%. just putting in the aussi dollar as well, we saw a drop of 1.2% lower. that is after we saw that movie from the rba. it was a surprise to som

that they cut their interest rates by 22 basis points. we have numbers from the aberdeen asset management. dollars,lion underlying pretax profits. the sn under management, $192.8 billion. the story is very much about the inflows and outflows for this company. they have suffered from more than two years of withdrawals, including $13 billion in assets, as appetites sour towards emerging markets. that is where this business has had something of a specialized interest. the ftse 100 was pushed back in march after it was pushed off after that market slump at the start of this year. boss of thist, the business, will be speaking first to bloomberg at 9:00 u.k. time on "the pulse." stay with us for that.

let's get to the bloomberg first world news at this hour. we are joined from hong kong. reporter: hey, anna. we have underscore in pockets of weakness, with weak external demand. fell. policy makers are balancing the need for ongoing stimulus, while trying to shed excess capacity. the imf have said rising debt a risk forecome asian economies. they are optimistic about the region's outlook. >> we expect the region will grow 2.4% higher than the other region. asia will remain a global equity leader. risks are harming the

japanese economy, according to the boj leader. achieve tempted to their 2% inflation target. the chief investment officer of one of american's biggest pension funds has joined warren buffett in scolding moneymakers. cio as the $187 billion practice, called the practice of broken one. >> as an investor of capital, we negotiate hard and i said very clearly, the model is broken. the large institutional investor is off the table and we are negotiating sets of a management fee. reporter: the u.k. risks are losing 250 billion pounds each year. that is according to the former chancellor. he says that britain's trade

with eu companies is estimated to be 76% higher than without the brexit. leicester city are champions. the season began back in august. we have 2400 journalists based in 150 news bureaus around the world. this is bloomberg news. you can find more of our top stories if you are a bloomberg user at top . anna: it seems that leicester city is stalking the city.

juliete, a decent day for the australian market, i think? juliette: absolutely, anna. the fx market is at its highest level since october 27th last year. that gave a good boost to investor sentiment. we've also got the bid up by over 5%. it did come through with a first number that missed estimates. but investors say this is because of the new investor' cutting costs. a very solid session in new zealand as well and korea has closed higher by .4%. japan closed today and will in fact, remain closed until friday for the so-called "golen den week." that has given a reprieve to investors. in china of course, the survey coming in at elizabet a little bit below what

the market was looking for. the hang seng though, is trading lower here. and of course, hsbc coming through with this numbers as well. just looking at the regional index, excluding japan, we are seeing a little bit of a switch up there. oil and gas players are coming under pressure, but financials and health-care stocks are looking quite good today. and checking on the yen, its fourth session of gains against the dollar. and getting very close to that 1.05 handle, which is when we could see intervention from the boj. the aussi dollar has that very big from coming through with surprise interest rate cut. the rba should be plays that the aussi has pushed through $.76. stick with what is

going on in asia because we had earnings from hsbc earlier this morning. the lender predicted a bigger profit then was predicted. wrote ambers are couple hours ago. the profit the estimates, but they were lower than last year? beat estimates, but they were lower than last year? >> the topline number is better than what we were expecting. the market was bracing for a worse result. the number beat expectations. it is still a decline of some 18% compared to the same period of last year when we had a profit of $7.1 billion. the causation of what we have seen, the explosion of the commodities selloff. the photo in china also affects this.

it was just a terrible quarter for equities globally, but particular here in japan. comes to security for ages, it was a particularly strong rally. in terms of earnings per share, $.20 per share and we were looking for $.16, but that is still down from $.26. hsbc has pretty clean management, holding his dividends. very muchrt of the treasured progressive dividends policy that hsbc has been keeping to, that has caused some ures whether nat the banks will be able to stick to that policy. we did also have to look over the numbers a week ago, debating whether there would be another cut, giving the 60% declines in the share price. but here in hong kong and london, is this a good time to

buy back regulatory requirements? we will also be looking forward to the earnings reports. they will be more details about how much the bank of going to sell, trying to meet these rules. that is estimated to come in at over $2 billion. certainly anna, a better-than-expected beat from hsbc, but going forward there are many pressures coming from the bottom line. you. francine haidi, thank that is part of the banking story today, but let's stick with it, because hsbc reported numbers came in below estimates. the environment remains very challenging. he spoke to guy and guy joins us now, live from zurich. talking about the challenges from the first quarter, the only

constant you said was risk aversion in the first quarter. guy: we knew it was going to be a tough quarter, anna. and it was. every single unit disappointed. the market is not going to like that. the big question now is, are things going to improve from here? that is the question that i put twto sergio. >> i hope so. it looks like we are in a very challenging environment because some of the issues we have been embarking upon in the last few quarters are disappearing. it shows,ail of macro macroeconomic issues in geopolitical issues, are now coming on. we have got to see soon about t he vote on brexit. we are going to see the de-escalation coming from the u.s. elections. potentially, you see a lot of factors that might affect the market sentiment.

sense, that isat volatility, but it is a paralyzing volatility. anna: sergio ermotti there. ubs has indicated 3.8% lower this morning. it seems the negatives there are possibly outweighing the positive about the new money. guy: yes, that new money was good, the best numbers since 2008. it is a bumpy number. you don't get a lot of clarity because something scheduled into one quarter and then they fade out in the next. but look, you get the piece of paper, you look at every single unit, one after the other, a miss. a couple quarters ago there was a similar story about deutsche bank. the market is not like that and it is not going to like this at all. arming and for a similar story that we saw in 2015, but in reverse? the first half of this year was

horrible, but improved towards the back half of the year and that is what the market will be looking for, any kind of guidance. sergio could not give me any clarity at the moment, but he does not see things changing. he says it is very tough out there at the moment. anna: guy, thank ou. -- thank you. guest, the in our investment director at citifinancial. he joins us on set. we have had a lot of results from banks this morning. help us see the wood for the trees in the banking sector. >> there is a malaise going on. wasink the comment brilliant. the volatility is the wrong kind of volatility. it is making people sit on their hands. mma is more muted. people are not transacting. anna: ubs is talking about how

abnormally low the transactions are. >> i speak with managers regarding their positioning and nothing is happening. there is no turnover in portfolios. the turnover has just stopped. ve clotted what they want and they are holding on to what they like. what theyhave gotten want and they are holding on to what they like. they don't really care what they are paying. we have a very distorted market and the banks are in the middle of that. the u.s. banks have been struggling more than the european banks, but even with hsbc, less transactional and more well. it is not transactional in that sense. it is struggling less than the other, where if you are a market maker, you are really struggling. that is one side of what they call the casino side of the bank. anna: and how come the banks defend themselves in the first

quarter when we saw trading conditions like that? i have a chart here of ubs. and we have the global investment banks in the competitive tiers. in purple we have the creditsuisse move. ubs fell less than european peers, because it was bad for many people.. >> bond trading was a particular part of this. again, people are not transacting. they are sitting on their cash, not doing much. they cannot do a great deal if the environment is not particularly bullish. it is going to be a struggle for them. often banks, but are not involved in this process. it is transactional forecast and they are not getting involved in some ways. anna: much was that first quarter story and how different is it now? were quite scared

about the chinese growth slowdown. meanwhile, the hang seng unfolds because the fundamentals stink. more than half the companies are in lost mode. so, there is this contradiction between the way the central bank moves of the fundamentals. when you focus on the fundamentals, they are not very good. it is a liquidity versus fundamental story. the bigs express probably most difficultly, the struggles they have been going through. -- the banks express probably the most difficultly, the struggles they have been going through. anna: we will ask peter about the rising asian debt levels, next ♪

anna: welcome back.

this is "countdown." 1.47, up as at little stronger against the u.s. dollar this morning. the year been equity markets will open a little bit higher this morning. let's get to the bloomberg business flash. sted a surprise increase in first-quarter profits, as a decline for provisions from bad loans helped outweigh islam in trading revenues. net income rose 10%. estimates.ad of revenue got a boost from a 365 million euro accounting gain. commerzbank has reported first-quarter profits, even as it plunged more than 50%. slidender said net income to 163 million euros, that still exceeded the predicted bloomberg

income. the amsterdam-based company will euroase shares on the ue answered and exchange. they still have plans to sell 25% of the business. bmw's profits declined 2.5% in the first quarter. that is a carmaker invested in new developing car technology, such as the self driving feature. this led to 2.4 6 billion euros . is concentrating on sustainable profitable growth, rather than short-term profits. that is your bloomberg business flash. anna? debt the imf says rising levels have become a significant risk for many asian economies. they expect asian gdp growth of 5.3% this year, a slight deceleration from 2015. they say debt levels have

mae majorover t economies. peter, give us your thoughts. how concerned are you about the size of debt in the chinese economy? the imf made comments about that this morning. >> it has been a growing in chinan since 2008 in particular, but the imf comment is very amusing. i am not entirely sure they are actually making the observation. yes, look at hsbc. the provisioning has doubled for bad loans. it is quite obvious that china has got a problem. there were discussions on bloomberg about forming of a new will regardis that

a banking moratorium. they are certainly aware of the issues. there is a massive rise in personal debt levels as well in thailand. in the european region, it has been boom time. even the average chinese consumer is holding up pretty well. the chinese consumer is pretty strong. the numbers in most areas -- cars are now a bigger market than in the u.s. the consumer has been involved. it has been a relative boom in the chinese middle class. there has been private credit across the entire region. anna: does that mean we worry more about the debt held by the chinese corporate and the state owned enterprises than the consumer sector? >> the corporate bond mikarket

is seizing up. the yileeld is rising now. nowdefault side is rising and that will be an interesting lead as to what comes next for china. debt is required to manufacture the gdp growth itself. that is very similar to the u.s.. you need a lot more juice just to get the gdp growing. china is a bigger economy. but the point is, it still takes a lot more debt per ounce to get the gdp growth. the deb levelst are rising, but you need more volatility. anna: that default cycle you mentioned is coming in china. does it ever manifest itself, though? >> there you go, and it is a central bank frenzy, isn't it. stocks on top of earnings did

well. draghi was fighting with the german finance ministers. it is all their entertaining, ass we have this new cl called the central bankers and they are promising to print more money. anna: they are the biggest players in the market. >> but it is very ridiculous. back to the point, what is the end game here? they are going to monetize it and we have always known this. is playing athen, dangerous game, partly blaming germans for the fact that interest rates are so low. manage 9%.peans but they are an older economy and it is very easy to take pot shots and say, isn't it awful. but i you look at your pot of money and it has not grown.

it is not the natural disposition to spend. anna: thank you very much. peter, with us on "countdown." next.e move" is up ♪

welcome to "on the move." we are counting down to the european open and i'm anna edwar ds. plummeting profit and it is a tough first quarter for ubs, thing is topline fault 55%. the ceo tells us potential volatility from macro events is quite paralyzing. bnp say revenues show resilience, but it has been a challenging first-quarter. >>