guy: welcome to "on the move." it is 7:30 in london. i'm guy johnson, alongside matt miller, it was over in berlin. apparently, we should all worry about china's debt. why blackrock's the re-think thinks the world -- blackrock's larry fink thinks the world's's second-largest economy needs to de-lever. speculation about further cuts. who has the toughest job in banking. find out why martin gilbert

things that goes to john cryer. we are less than 30 minutes away from the european equity market open. let's ticket look at the terminal and show you a bloomberg is telling us about what that open will look like in 29 minutes time. it looks like the market is going to be opening on the front foot. a positive open for europe this morning. around .6% for the london stocks . london and paris are slagging a little bit. european markets were fairly flat yesterday. as a result of which, if fairly decent start to the day. what else is going on, matt? matt: you are seeing the aussi job by the most in more than a month after we got the minutes back from the rba meeting, suggesting they will stay put for the next meeting to look and see what their moves have done so far. crude oil jumping to basically a six-month high. look at nymex crude.

u.s.eculations that stockpiles will continue to fall. and then gold down. we have more big names added to the gold pile. we have heard from druckenmiller, who thinks gold should be your biggest currency asset. s, his-- george soro company is buying into shares of gold. central activity around the world is pushing the price of gold ever higher. let's get now to the bloomberg first world news. haidi: thanks, matt. the rba says a broad-based weakening of inflation pressures are behind the surprise interest rate cut. the australian central bank first cut in a year. gross outlookhe remains steady.

the decision was not seen as a therebyunk, reducing the likelihood of another cut in june. purchased a $254 million stake in gold. soros has warned of this chinese debt. he thinks a hard landing for china is practically unavoidable and this will worsen global deflationary pressures and drag down equities. there are plans to increase his holdings in gold, betting that the gold will increase in value. the chief investment officer expects godl to rebound by as much as 40% in the next two years, a level last thing in october 2012. it is finally been revealed how much the debt is in saudi

arabia. the kingdom has a stockpile of $117 billion. that puts saudi arabia among the top dozen holders of the u.s. debt. china'sjust 1/10 of trillion dollar hold. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . matt? matt: haidi, thanks. with us is the director of investment at london and capital. he is managing more than $4 billion in assets. thanks so much for joining us. let's talk first about what we are seeing going on in gold. his teams everybody is piling in here. some here are calling it a currency, which central bankers will probably take issue with. what you think about the run up of 20% we have seen this year?

>> generally, we know the gold is really sensitive to low interest rate. but we have seen is, once we have been into a deflationary environment, the real interest rates are coming down with the negative interest rates. that means the cost of the gold continues to come down. historically, it is a lost income. that is one of the big reasons people do not want to own gold. it is up at his income. negative rate of structures, that concern is no longer there. one of the things that held the goldbach is no longer there. what is important is we are in a world of deepening negative interest rate structure and qe. that means all currencies are trying to devalue against one another and of course, gold is there protecting the status of the ultimate currency. it is much more driven by demand than what you can produce.

and of course, the production takes a long time before you can change the supply side of the equation. right that thes gold has come back into favor as an ultimate hard asset in a world where we are trying to fight deflationary pressures with all that is available with us, and plus new instruments that central bankers continue to think of. that is really all about the negative interest rate structure, supporting the gold. manus: it will be interesting to see how this fits in with the deleveraging story as well. the blackrock ceo talking about how he is bullish on china, long-term. but he is a bit worried short-term. he spoke at the chinese symposium. fink told bloomberg that despite the reforms, it is the debt that really remains the concern. fink: i would give the chinese leadership some of the best marks in trying to transform their society. the fourth year of the

plan to reorient china away from manufacturing, away from an export dependent economy, to a much more resilient domestic economy, in a much greater service economy. that is a very hard thing to do. it takes many countries 50 years to do that and country is generally have recessions in the transition. china mostto reselling, informal policy -- most recently, in formal policy behaviors have overstepped the market. the market is saying that china's dependency on debt and investing in some of the state-owned companies is not a good long-term solution. i would say indeed, it is not a good long-term solution. hopefully, this is only a short-term remedy and they get back to the basics of trying to build a better domestic economy. manus: ashok, do you agree with

that? the short term debt story is what is hanging over the market right now. the volatility attached to this is the biggest concern, i would argue. debt: whenever you see building up, it inevitably means mistakes are going to be made in the way the capital is invested. and you are going to get a very poor return on the capital. but i would not worry too much in the sense that this is not going to spread globally. i don't think so. i think it is containable. a lot of investment has gone into metal mining, you know, manufacturing side as well. with the slowdown in the world and slow down in china, that means the production itself is not being utilized fully. the cash flow you need to generate to service the debt is still eroding very gently. of course, the problem with

china has always been that we have to throw more and more capital to generate the growth. you had a situation where only about two to three years ago you of debt to0 dollars create $1.00 of growth. the capital efficiency is increasing quite rapidly now. in a way, we have a problem and it is a very large problem. ultimately, if the things really do get very bad, that of course, we know we have seen i in the , it canng countries balance. we are talking about a really serious problem here, though. storeooking at the saudi this morning, where they have more than $100 million in u.s. debt.

the chinese have a little more than $1 trillion, but the debt issued in the first quarter almost equal that. we are talking about $7 billion in debt. this is a problem getting too big to deal with. ashok: absolutely. what we are saying as we had measures taken in the first quarter to measure the growth rate, to make sure did not slow down too much too fast. some of those policies are now slowing or reversing. some of the let us data coming out of china -- some of the latest data coming out of china has shown these are slowing down. in a way, the first quarter moves have already eased off. iswill see that that precisely a response to the fact that the indebtedness was rising too fast and too quickly. words, the compass we

are borrowing into to have a strong enough balance sheet to repay the debt and continue to make the payments on the loan itself. we will see is what kinds of measures will be taken by the chinese authorities to make sure the debt burden is easier to carry. that means interest rates are going to be cut. more soft loans are going to be offered to soe's and so on. i think it is a more medium-term problem, not an immediate problem. manus: thank you very much, indiid. ashok is going to stay with us. up next, speculation that the south african finance minister is going to tumble. we have the full story, next. ♪

london.4 in in stunning morning. i did see some red clouds earlier on. it might rain later, but just be prepared. here is the bloomberg business flash. haidi: thanks. vodafone has reported quarterly sales growth that the estimates regarding organic service revenue. this rose 2.5%. analysts surveyed by bloomberg on average had expected 1.5%

growth. that was helped along by improved results in several key european markets. associates have become the hedge fund to win approval in china. the shanghai-based consultants say bridgwater won permission to operate in the free trade zone back in march. this raises expectations that china might just lift the moratorium. twitter is planning to give users a little bit more freedom to express themselves. a person familiar with the matter tells us they wilson stop counting photos and links within the 140 character limit. links currently take up 23 characters. the move is part of a larger plan by ceo jack dorsey to give the clients greater flexibility.

in 16p to the lowest years. the u.k. will decide whether to remain in european union. 59%billion pounds is down from the same period in 2015. in fact, the lowest since the year 2000. that is your bloomberg business flash. guy? guy: thank you very much. south africa's rand has fallen toa two month low. pravin gordhan has been prying to stave off a junk credit rating. there are many agencies still waiting to report, but these efforts have been repeatedly undermined. the presidency is denying that pravin gordhan is at risk of being arrested. gordhan clearly is a man

with a great deal of respect around the world. he is struggling to do the job the people want him to do. is adjust a believe now that he does not have the backing of senior figures within the amc. how is the impact and what is happening in terms of market pricing and the rand? reporter: good morning, guy. there is speculation on whe ther finance minister pravin gordhan can hold onto his doubt. he has been charged with espionage, possibly arrested, and possibly fired. this has weighed heavily on the markets. also felt that speculation, that is definitely indicating that investors are not happy with that kind of uncertainty. uncertainty has been ripe in south africa and weighed heavily on the markets since the former finance minister was fired in

december. they are trying to rescue the situation and wave off a credit rating downgrade, but the effort seem to be undermined by possibly a political force that are trying to seek for him two possibly be charged and arrested. matt: matt miller in berlin. how much damage is increasing -- or how much is this damaging the political certainty in south africa? investor sentiment must be heard when zuma a point somebody and five months later the guy is going to get arrested for espionage and is not love to do his job. reporter: but we are seeing is that it is definitely doing damage. pravin gordhan is a trusted man. he has a lot of respect. he has been really trying hard to make sure investment communities know that the south african economic situation is improving, and also to wave off

the threats of a possible credit downgrade. about himon keeping his job is something that will undermine these efforts. we do know that president zuma will be addressing lawmakers in parliament later this afternoon. it is expected that he will be questioned about how some of the political forces are undermining efforts to possibly make sure that investors have improved sentiments in the economy. that is something that finance minister pravin gordhan has been trying to do over the last couple months. guy: thank you very much. let's bring back in ashok shah. political instability goes on and on. a much is keeping you from not investing in the m right now? ashok: more importantly, there is the fact that we have seen a corporate earnings down cycle that has not stabilize

yet. we have a situation where, in a way, because of the cycle and a large number of the economies in the emerging economies, we are waiting for the stabilization before it becomes unstable. then?olitics comes third, >> yes, but it is important in the sense that where it is stable, it is easier to invest. to understand when considering the nymex of the russian market. -- the dynamics of the russian market. is a question of how big a discount that one person can put on the political market because of the political uncertainty. also, markets like of africa have political uncertainty rising. and something very similar is happening in brazil right now with the political uncertainty. you have a much bigger discount and those countries. where you have political

stability, then that premium tends to be, in a way, going down. the assets tend to be valued quite highly. guy: ashok, thank you very much indeed. we are nine minutes away from the market open. keep an eye on vodafone. they could pop at the open. the market open is eight minutes away. that story, next. ♪

matt: it is a dark and cloudy morning here in berlin. features are indicating that we will see green when the bell rings. i want to get to the stocks to watch with caroline hyde. she has been watching vodafone, beating estimates. caroline: because he the stock pop up 1% or 2% on the open. watch for vodafone, organic revenue be estimates. we took out the mma story from this particular stock. there was much talk that it could team with liberty global. but at the moment, vodafone is looking like it could rise. . revenue fell within 3% they managed to pull in 41 billion pounds. and manages to grow its dividend per share annually. meanwhile, keep an eye on hugo barra. it is promoting its ceo.

this cannot after the bell. o when i become the chief executive. we have seen the likes of the previous chief executive having to step down on the back of that. they left earlier this year on the back of the plunge in shares. an this new cfo bring boost to the shares in business? we could see a rise as much is 2%. finally, premier foods raises its sales outlook. without the u.s. company could be eyeing up premier foods. remember, it was the likes of mccormick, analyzing the maker of bisco. shares could rise up to 5% today, guy. guy: that open is coming up very shortly. we are four minutes away from the european market open.

futures are pointing to a positive start and a lovely day. around 0.5%.is up ♪

guy: good morning and welcome. you are in bloomberg's european headquarters, alongside matt miller in berlin. we are moments away from the start of european trading, and matt has the morning brief. matt: good morning. we should all worry about china's debt. why blackrock thinks the world's second-biggest economy needs to deliver. and is the rba done? the aussie dollar surges on news of further cuts. plus, who has the toughest job in banking? why aberdeen thinks it goes to joh john cryan. guy: looks like we will have a

fairly positive open, around half of 1% higher. we'l talk about vodafone, about hugo boss, but the general tone in the market is a little bit more positive. we're up around 6/10 of 1%. here's the market open with caroline hyde. caroline: we are waiting for them to get galvanized. keep an eye on germany as it reopens. ftse called higher. we could be seeing the rally after the united states is bucked by oil prices going higher, and noticeably the technology stocks in rome. stocks increased by market capitalization at a debt of $18 billion. we are higher on the stoxx 600, up 3/10 of 1%. telecom services up, this is the imap function.

you can see which industries are on the move in europe. the downside, consumer staples. performins not performing quites well. john cryan is having a challenging time, but oil has been helping to drive asia higher, and let's check in on oil, because we haven't seen the sorts of levels in the brent contract all the way back to six months ago. you have to go back to october or november before you saw these $49 per barrel coming out. the cause seems to be the supply/demand balance reorientation itself. goldman sachs was surprised by the resurging; we're seeing oil driven by worries about nigeria and supply concerns. all of this is just starting to see that maybe u.s. inventories data out later today could stop it dropping for a second straight week. data in terms of inflation from and i want get cpi,

to get on the stoxx to be watching across europe. one of them is vodafone. how is that performing on the open? higher, 1.9%. the calls were right, vodafone pulling in fourth-quarter organic services revenue, a growth of 2.5% that h beat estimates. their revenue came in line. hugo boss up a tenths of 1%. it's rising as a new chief executive comes to the ranks. promoted,s been becoming ceo and chairman of the managing board. the event profit warnings, shares fall off, a nd is this a new era? and premier foods, up almost 5%. you love this particular company if you love custard birds. 2017.sed its outlook for they still need to prove

themselves after rebuffing those m&a talks earlier. guy: thank you very much, caroline. let's look at these european markets. this is the picture at the moment. a generally positive start to the day; the stoxx 600 up by 6/10 of 1%. just to say, a whole bunch of asio, lafarge. there are a number of stocks on the downside. yeah, absolutely. we're going to continue to see stories like that. let me talk about deutsche bank. the co-ceo john cryan is the most challenging job among all his european counterparts in turning around the german letter, according to martin gilbert. that's even if he can continue to borrow money. he spoke with francine lacqua. listen in. >> i think john cryan at

deutsche has a tough job. tijian has a very good wealth manager that he can fall back on; barclays has a good retail bank. all got goodey've bits, and they'll have investment banks that they are probably trying to downsize. matt: let's bring in a shock ashok shah. let me ask you what you think about a bank like deutsche. you can to borrow at low rates and pay dividends; investors should be happy about that, but he has a heckuva job in the turnaround, doesn't he? >> absolutely. the problem with deutsche bank is that it is still too large, and the capital structure will need a lot of boosting. of course he has time until 2019 to get to the requirements. so in the meantime, he continues

to make sure that the middle of the balance sheet is printed quite significantly, and of course it's only a matter of time before the equity raising becomes one of the big, central points in the next couple quarters. but of course, the more important point is that, really, the european economy itself is much more stable with the actions of the ecb taken to measure the growth trajectory at 2%, which will ultimately measure if deutsche bank stabilizes and comes through on the other side in better shape. at the moment, it is one of the largest banks in europe, and even if the deal leverages, it will still remain an incredibly large bank. whiles a tough journey the balance sheet continues to strengthen, and of course the

rate of return on equity will continue to abate amend further leverage comes down. to that extent, from an investor perspective, i think you want to be in the middle of the balance sheet rather than in the tail end of the balance sheet, simply because you will continue to see a steady up dress cycle over the next couple years, and the best way to capture that is in the middle of the balance sheet. matt: ashok, i am looking at the stoxx 600 broken down. your today, the banks -- year to date, that banks are the worst performers by a long shot. do you think this is a time to invest? pt tou go ahead and attem catch something falling? >> i think that may be a good buy for the shorter term, but in the medium-term, banking sector will continue to come down as the balance sheet is deleveraging. from an investor perspective,

where you want to be in the is the middle rather than the tail end. you can take full advantage of the cycle. i'm struggling -- when that capital raising comes, do you think investors -- they are going to look at this bank and say, trade is on .32, it's incredibly cheap already, it will have to raise money, that will be incredibly expensive. why would investors want a piece of that pie? >> one of the reasons why the banks are trading at that kind of a low rate is that there is a fright in the markets that the nonperforming loans -- you cannot fully disclose the balance sheets. but i think that given what is happening in terms of bringing the borrowing costs down, therefore the cycle is being reduced quite significantly, the borrowers are able to service their debt --

guy: back up a little bit. you think deutsche is trading at .32 book because the market is where they aren't telling us anything. >> we know that the european banks, including deutsche bank, have not cleaned up their balance. we have known that there are so many ways -- guy: we still have mark to market problems? deutsche does, but generally the market? i think we have to recognize the european banking sheet -- that is why the banking sector trades at a discounted value, because there is an embedded issue. up,hat issue is cleaned than the valuations will become more normalized, and that's exactly what we are seeing in the u.s. banking sector. when banking balance sheets get cleaned up, they turn into much better rates, and we have that to look forward to in terms of what happens to europe. guy: ashok, good to see you. ashok shah.

up next, we will speak to the cfo of land security. the company this morning said they have seen a strong performance for the year, but added that a brexit may bring uncertainty. ♪

guy: welcome back. a quick check on where we are the market, bouncing back a little bit, the dax playing catch-up yesterday because of monday. european markets are trading higher, anglo training nicely to the upside. the downside is a little bit heavy with divvies. lafarge. a bunch of stocks trading on the downside, as you can see. that's why they're where they are. they haven't done anything wrong but pay of their investors. let's find out what's going on around the world. let's get the first word with haidi lun. haidi: thanks. the rba says a broad-based weakening of inflation pressures is behind this month's surprise interest rate cut. the german central bank's first

reduction in the year coming after cpi fell on the first quarter for the first time since 2008. this adds the growth look remaining steady. the aussie dollar jumping, as analysts say it was viewed as a slamdunk, reducing the likelihood of a follow-up move come june. billionaire george force has cut his plans in the new york stock -- in the world's biggest oil producer. that risk from china's economy is creating a hard landing for the company. it could worsen global deflationary pressures and dragged down stocks. plans to increase holdings of gold and other precious metals, demand lifted from uncertainty around the u.s. elections and recent eu referendums. the chief investment officer says gold, silver, and platinum markets could rebrand by as

much as 40% to a level last seen in october, 2012. the u.s. has finally reviewed how much of its debt is owed by saudi arabia, after keeping the figures secret for more than four decades. the treasury department says the kingdom has a stockpile of $117 billion, putting them among the top holders of u.s. debt. but that is still only 1/10 of china's trillion dollar probe. bloomberg submitted a request under the freedom of information act. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. you can always get more of these stories on the bloomberg at top . guy: thank you very much. land security says they saw a soft performance for the year, with revenue profit up 10%, net asset push value per share also rose. the company says brexit could bring uncertainty. joining us on the phone is the cfo. good morning.

martin, to you think yields have bottomed out? >> good morning. in, socontinue to come values have continued to rise in retail portfolio. the growth in values has it been as sharp over the last 12 months as it has been in the 12 months before that, but values continue to rise as far as we see it. guy: can you tease apart for me what the brexit effect is and what is happening more cyclically? >> yes . so london is a cyclical business, and it tends to be driven by supply and demand. there is very good demand in the there at the moment, and is an increasing level of supply coming through. so in normal circumstances, the market will tend to oversupply itself.

if we look back over the history. but right now, we are in a position of reasonable balance. in fact, if anything, there are low levels, healthy demand, and that is why rents has been rising. that will naturally begin to slow. in in they factor cycle is the demand. and demand is driven by all kinds of things. one thing -- matt: martin, there is some uncertainty around brexit. i wonder if you think that a vote to leave the european union could result in mor supplye, as in, more people will have to leave london if printed leaves the eu. do you think that' sounds reasonable? >> i think what you would find that british people decided to come out of europe is a period of uncertainty.

and what that means is businesses are less likely to take long leases over spaces they don't know they will occupy, because they don't know what the economic conditions are they will be trading in, because it will not have been reached. you will get a period of uncertainty; that will mean that rents are likely to fall. thosehat means is that people who have schemes they are wondering about whether they should stop them, probably they are less likely to start those schemes. but the key impacts will be early on in the period of uncertainty, because people will not enter into the wrong leases. matt: essentially, a vote to leave the european union could leave londoners with lower rents. on theink about to leave

commercial side will be in a period of uncertainty where rents will not see the continue upward path they would probably come off from their current good levels. guy: quick question, margin, on artin, on the retail environment. can you see yourself in the future owning anything other than the really big? is that the sweet spot for you going forward? >> i think for us retail is about the destination were people want to shop. yes, that is about large-scale shopping centers that provide a really thriving destination that has entertainment, great catering, a real reason to go. then there will also be convenience. people want the ability to pick something up locally, get in and out very conveniently.

i think you will get a polarization between convenience and large destination shopping. guy: martin, just a rep things up, i looking at the anr function, there is not a single cell on your business from the business community. do you worry that, given the volatility ahead, it could be a little optimistic? tradingwe are already, at a discount, and we have had a great performance. up,ings are up, nav is underlying net assets are worth 14 pounds. we're trading considerably below that. i think the analyst community is looking at that, saying that it's difficult to put a celll on that. i can understand it. i can't speak for all the other

property companies, but we are in great shape. we have increased the dividend i just under 10%, and that is a vote of confidence in our business going forward, come what may, irrespective of brexit. our lease lengths are long and that is because, of our great development pipeline. we'r verye confident -- we are very confident in our earnings stream. guy: thank you so much for your time. thank you for spending five minutes with us. matt: very interesting stuff. sticking with the u.k., the ceo of the u.k.'s biggest fund manager says a brexit will bring severe volatility to market, that will not cause another lehman brothers moment. sticking exclusively to francine lacqua, martin gilbert says despite potentially severe consequences, it is best to ignore political risk. >> you've got to ignore it, really.

you look at it from bottom-up; what effect it might have on the bank or an insurance company. what we don't do is take a top-down approach to investment and, say, political risk too great. francine: not even for brexit? >> not really. i think for brexit, the asset management industry is probably the least effective between banks, insurance companies, and management. that is mainly because most of all, it is around our european operations like luxembourg. an investor in germany from italy, luxembourg is their hub, whereas we in the u.k. are definitely -- we would definitely buy u.k. registered funds, or perhaps dublin. we're not going to be hugely affected, but there will be -- if we do votes to come out,

there will be some unintended consequences we haven't thought about, and obviously there will be quite a lot of market volatility. francine: market volatility, or could it be something even uglier, like a systemic freeze? could it be a lehman like moment? >> no. i don't think so. it will be very uncomfortable for a few days. currency will be volatile, the share market will be volatile while people try and work out what the effect is. and i think part of that is because markets are really pricing in that we are staying in. currency markets certainly. say, could be, as i extreme volatility if we vote to come out. guy: the view from aberdeen. up next, why calls on swiss stocks showed the franc trauma, continuing to rumble on. that is our chart of the hour, next. ♪

matt: block him back to "on the move." let's get your chart of the hour. nejra cehic has it for us. nejra: thanks. i'm looking at the swiss market index. we know this is one of the worst-performing stock markets in the developed world year to date. it is down almost 9%. of what this chart shows is that

traders expected to get worse. this is showing the ratio at its highest since 2012. the ratio of put the cause outstanding has also surged 18% in just two months. there may be more pain ahead for the swiss market. guy: and it is all about the franc? nejra: looks like that.i tracked it back to january 15, 2016 -- guy: we remember it well. nejra: [laughter] we saw the smi plunge. and before that, the tread was largely upward. it has been downward since then. this is interesting because, if you look at the dividend yield of swiss companies versus the 10 year bond yields, we are getting a better cash return on stocks. swiss markets are seen as a defensive play, but it really looks like investors, particularly foreign investors, see to much currency risk. even though the frank is weakened against the euro, it is still above the euro at which they set. it gained crucially against the

dollar, and therefore against the hong kong dollar, which is painted to the dollar. it does seem like currency risk is too high. guy: thanks very much. up next, more gold. ♪

guy: welcome back. you are watching "on the move." let's see how things are shaping up; here's a picture for the open markets. we are climbing. markets beginning to get further ftsemorning, 600 up, lagging, dax playing catch-up. what stocks are is are watching? let's find out caroline hyde. caroline: in taking the leader of the hack pack. wild world temperature controls, the best performer on the stoxx 600. the reason is it is getting upgraded by some analysts. bank of america merrill lynch says the market is missing an. point.io inflection

people need more in terms of power and temperature controls. it's playing into the u.k. of session that is housing, taylor wimpey. the u.k. housebuilder is managing to woo the investor base by missing a special dividend to the tune of 300 million pounds. they're saying they are increasing their financial targets as well, the 2016 through 2018. they are bullish. they had record home sales last year. they got orders for 70% of those being built in 2016. looking bullish on taylor wimpey, but not so pretty for the auto sector. fiat chrysler down by two percentage points, because analysts are wary. it seems to be the concern of the mp. they are saying it is exposed to

the u.s. auto leasing bubble, that is coming to an end. they say the company hasn't done enough to protect itself from a downturn. the price target goes lower, to 5.4 euros. fiat chrysler falls. guy: thank you very much. has a $250 million that -- inic gold barrett's gold. gold futures have climbed 21% this year, including a 17% surge in the first three months, the best quarter in three decades. what's going on? plenty of people are long or very short on this right now. let's talk about the metals. joining us now, sanford bernstein analyst. also here, a metals and mining analyst from bloomberg. ken, everybody is divided on this one. some people are long. they think they desperately need to buy more gold. others -- >> like, digs that -- look,

exactly. you take gold as a currency that doesn't have a central bank, and when you lose faith in other central banks and what they may a currency that doesn't have a central bank to screw everything up. that is why all the hedge fund guys are worried about central-bank moves, so they are moving a little bit of money into that other currency, that doesn't take much to move the needle when you have these mega-hedge funds moving currency exposure. matt: i have a chartier you can look at. in theows the 20% rise price of gold, then it shows the rise in the holding of hedge funds. 1850 comes now of hedge funds are holding. what do you guys think is the best way for investors to get gold exposure? buying the physical asset and

holding it could be difficult, expensive. it could be not a possibility. what is the best way for a retail investor to get gold exposure? guy: i will let you take that one, ken. >> there is a thing called bit gold. it's a website; you can buy one gram of gold. i talked to the ceo; they have $1.6 billion in this thing. italy started up a year ago. it is a way to take gold into currency when most of bank accounts yields zero, or most interest rates are negative. gold is the joke, it has no interest rate; well, it has a great right now because everyone else is negative. guy: paul, do you believe the rally? >> we have seen a rally across the commodities space and in a number of other areas. what? driving are people moving into gold because the gold price has

moved or is the physical holding driving the gold price? look, it used to be the case that if you wanted gold exposure, the only way to do it was through the minoers. that was one of their justifications they used to give. gold folks used to trade on high premiums, particularly with other mining stocks. these days you have the physical etf, the easiest way to gain exposure's. -- gain exposures. there are plenty of other options now. andle can gain exposure, the flipside is always the fees that you end up paying whenever you are holding physical gol, a significant chunk is paid away in transaction costs. paul, we have seen the miner rally hard, and for pass

the price of the underlying security. miner'shink the actual price action will be limited by the massive amount of etf holdings? as you point out, it is so much easier for investors to get exposure for etf. is that put a cap on how much the actual miner price can rise? you have tominers, remember that they have the operating and financial leverage the gold price. what you saw at the end of last year particularly was a very slow correction to the downside. from the we have seen a number of cases, it's a recovery. -- gold recovery up on that up from those highly suppressed levels. it's the impact of the leverage on the balance sheet. plastic feels like a different product. is it a currency? is it not a currency?

it seems the flip-flop. palladium doesn't have that kind of vibe. >> they really are. the big fundamental, with platinum especially, is a lot of the analysts think the problem that diesel is having -- guy: used in the -- >> in the catalytic th fusers. if that is going to be the case, is there a need for platinum, if we are going to take energy-efficient cars to the energy space? matt: i wonder how much an investment that could be for currency reasons. the same as gold. you will not see anywhere platinum or palladium. it's all of the ground. don't you think it could serve the same kind of inflationary hedge? the same kind that gold does? >> certainly there is a physical

etf for platinum, and you see a significant amount of holding, a significant amount of demand for platinum and palladium coming through investor purposes, which is removed from the auto paralysis that we are leading to. so yes, we are seeing a significant rise in platinum and palladium, you do have that speculative element. i think the critical issue, as well, in the platinum industry is the call structure of the industry down in south africa. for the pgm industry, you have the mother of all storms; declining demand on the back of diesel, and at the same time, you have significant wage inflation that has been eroding the margins for any number of producers. it's a situation that doesn't feel like a long-term, viable investment. question.aightforward

if i want exposure to what is happening out of the ground, do bt or mining stocksf? i think the real problem you get in buying the minoers is cost inflation moving in line with commodity prices. it seems to me that if what you are holding the metal for is the inflation hedge, you would be better off owning the physical metal rather than the underlying commodity. you buy the mining stock you are exposed to the risk of cost inflation and production, which in a south african context, we are talking about platinum and palladium. guy: what about more broadly in the mining sector? the miners have had quite a rally; the commodity story is up amazingly, everything rallying off the back of that. we do i get the biggest bang for my buck? >> what you want is the most

leveraged stock. one of the strongest performers. you have significant operating leverage, significant financial roll leverage, and we saw the stock moving to percent, 20% in a day. that is certainly the biggest bang for your buck. guy: been great to see you. thank you very much. up next, are you about to sell in may and go away? stay with us. we will go to frankfurt to speak with j.p. morgan portfolio cgala, andim thm why you should stay invested this summer. ♪

guy matt: welcome to "on the move." you are looking at live pictures of the brandenburg gate. i want to get our bloomberg business flash; for that, we go to haidi lun. haidi: thanks. vodafone shares are higher after reporting quarterly sales growth on its network that be estimates.

the wireless carrier says organic service revenue, which excludes handset sales, rose i want to get our bloomberg business flash; for that, we go to haidi lun. haidi: thanks. 2.5%. analysts surveyed by bloomberg had expected just 1.5% growth. it was helped along by improved results across several tier markets. bridgewater associates has become the first foreign hedge fund to win approval to set up a wholly-owned investment management business in china. the shanghai-based consultant says bridgwater wants permission to operate the free trade in march. thatises expectations china may lift a moratorium on investment management firms that were imposed over concern about activities like peer-to-peer lending. twitter is planning to give its users a little more freedom to express themselves. a person familiar with the matter says they will stilart stop counting photos and links and their character limits. the move is part of a larger plan backed by jack dorsey, to give greater flexibility. that is your bloomberg business flash.

matt: thanks. the saying goes that investors should sell in may and go away to avoid the annual market slowdown, but one strategist has been looking at the data and says selling in may might not be the best course of action this year. let's go to tillman gull ar. i'm looking at the bloomberg -- the seasonality chart, for the stoxx 600. i see that june, the last 10 years, nine of the last 10 months have been negative. why the of think this year should be different? >> well, generally we don't buy of sell in may and go away. we looked at the general survey and we saw average variations from a november of 1.9%

performance to the worst september the only negative month we could see, with -.4%. but those numbers may be off by monthly variation, and therefore it's highly likely that all this is more noise than any serious pattern. and we don't see any kind of theory behind it to sell in may. even if you are on vacation, from that point of view, we don't see a theory behind that. matt: it's kind of an old wives tale, i guess. but what made you think this year different is different? is there something -- as we look ahead to earnings -- that makes you more optimistic?

as we look at the central bank policy, to global growth, that makes you want to be invested in the market this year? think looking at q1 was quite disappointing. looking at global growth was disappointing. the earnings were not great. year-on-year. but we think the worst is behind us. we are quite optimistic going forward, looking at the second half of the year. we should see earnings recovery, provided that the dollar stays where it is, and oil stays where it is. so we should see a sharp rebound in the materials sector. guy: what is your tolerance for volatility? in june, we have a fed meeting, up boj meeting, a brexit vote, not to name a whole host of

other factors coming through that month. to bely, people are going pretty nervous about putting money into the market at that point in time. think the tolerance for volatility must be very high, and not only this year but in years going forward, because what we experienced in the last year was not normal. we had very high, sharpe ratios with good return and relative low volatility. this will change. the cycle is older; valuations are higher. from that point of view, we should expect much lower shar ratios, but it doesn't mean we expect negative returns. it will be positive returns of higher volatility. guy: if you were to take money out of the market, presumably would be putting it somewhere, which is yielding not very much. how big a factor is that in the thinking? you have to put money to work,

because otherwise you'll be penalized. this isutely, and driving valuations higher. the risk free rate is nonexistent, and sometimes negative. on the bond side, it is very hard to achieve any positive, real returns. this is pushing up valuations everywhere. there is no alternative. this is something you have to consider if you want to go out of the equity markets. wonder -- you are looking at s&p 500 data for this, and i understand it's purely a statistical study, but don't you see some currency risks going forward this year? especially if we continue to see the bank of japan and the ecb going more negative, and the u.s. central bank finally getting back on the path to normalization?

think this was dealt with in the past year, with a very strong dollar. his markets realize that t dispersion is notis as big as expected. from that point of view, fundamentally, we see the dollar more as a slightly overvalued currency and what we saw this the dollar is starting to topping out. hans: thanks so much for your -- matt: thanks so much for your time. we will take a quick break. when we come back, we talk currencies more, as the aussie dollar jumps the most in more than a month after the rba

minutes suggest it will hold on cutting interest rates; it will stay here. you should do the same. ♪

matt: welcome back. you are looking at live pictures of the brandenburg gate. let me give you some of your highlights for the trading day ahead. both sides of the brexit debate will scrutinize u.k. inflation

and ppi data, due out in just over half hour. than i 1:30 p.m. u.k. time, we will get u.s. inflation and housing starts as well. 45 minutes later, industrial production data. staying on that side of the atlantic, we also have a democratic primary in the state of kentucky. oregon holds both republican and democratic primaries. set inoined now on london. guy, i will you do the honors. i'm excited. guy: i can tell, i can definitely tell. richard jones is here. we need to talk about the fx story. we will talk about the pounded just a moment. i want to talk about the aussie. we got very excited about this pump we saw overnight,, and you can see why in the context of the down drop. should we be getting this excited? the r.b.i. basically said it was a close call. richard: i think the shots like

we have seen overnight, the rba will probably take june off the table, and after the inflation data, there was an expectation that we could get access again as soon as june. i think analysts are still thinking august is on the table, but that's like an aussie is very much rolling out the medium. june 7 out. matt: how much, richard, does the possibility of a u.s. move come into play? we have heard from a lot of fed governors, not any better voting, that june is still a live meeting. richard: yeah, i don't think that is playing into the pricing to be honest. if you look at what fed funds are pricing, it is up 10%, so june is really a nonissue for investors. i think the fed quite rightly says we go into every meeting with an open mind, and every meeting his life, but i don't

think the market is expecting any action. guy: walk me through the pound ahead of the cpi. richard: there are a couple things going on. we had a pull overnight that was quite favorable. we learned over recent history not to put too much faith in polls, of the other thing driving the pound higher is the better risk sentiment, it's giving a little bit of upside to the pound. improves,bal backdrop i think the pound will benefit, and one of the things that has been weighing on the u.k. economy, in addition to brexit, is concerns about the global backdrop. guy: the cpi numbers will be interesting. any sense of how concerned we should be? the bank of england is looking at inflation particularly closely. richard: we had an early easter, so we might get a slightly softer -- guy: airfares. we will be talking about airfares. richard jones, thank you. stay with us; we will go live to

paris, where the labor reform i s up. on the radio, jon ferro and i will be kicking around the foreign exchange atioction. ♪

francine: talking to "the pulse," live from bloomberg's european headquarters in london. i'm francine lacqua; these are your headlines. the debt we should all be worried about, in a bloomberg exclusive. larry think warns of a chinese credit crisis. george soros cuts his investment in u.s. stocks end goes for gold. and frances strikes. trapped train and metro workers walk out after president francois hollande forces labor law changes through parliament. welcome to "the ls