francine: china may press the u.s. on the timing of rate hikes. its currency fixing to the lowest in ifvfive years. 10-year yield dropped below 7% for the first time since summer. unicredit replaces its ceo after losing confidence. it paves the way for a review of its capital strategy. so, welcome to "the pulse," live here in london.

i'm francine lacqua. getting some figures. of pay. the month the german business confidence at 107.7. inwill speak to the man charge of this report later on. that is better than economists expected. ifo confidence is at 107.7. the median estimate was 106.8. the current conditions also a little bit better than expected. to show apecting ifo little bit of weakness, maybe a little uncertainty regarding growth, regarding deflation. those figures coming in better than expected. do notllar, these things tend to have that much of an impact but when we look at uncertain times and what mario draghi may or may not do, it may. 111.44. stay with "the pulse." in half an hour we speak to the president of the ifo institute.

let's check the markets. this is a picture for worldwide markets. global stocks rallying with some of these emerging-market currencies. i want to show you yuan and the 10-year greek bond. we have an agreement, not on debt relief, but the european governments will disperse some money to greece. that meant the 10-year greek bond yield fell below 7%. now creeping a little bit backup. let's get straight to bloomberg first word news. nejra: the ceo of unicredit has agreed to step down after almost six years at the helm of italy's biggest bank. after his efforts to improve capital and revive profit -- lost its supportive investor. he and the board agreed there was a need for a management change. bayer says it is still optimistic in pursuit of monsanto will succeed despite the $62 billion bid being

ejected. share offerys $112 a does not address the execution risk of the deal. monsanto shares rose 3% in new york. fallen 7% saysve the offer was revealed. the deal would create the world's biggest supplier of rm chemicals. leaving the european union could add tens of billions of pounds of two u.k. government borrowing and force the chancellor george osborne to extend austerity into the next decade, according to the institute for fiscal studies. asstead of returning -- currently planned, britain may face a budget deficit of as much as 30 billion pounds if it votes for a brexit next month. donald trump has won the republican presidential primary in washington state. presumptivee nominee on the cost of crossing the delegate threshold required to formally secure the

nomination. at the same time, paul ryan has begun telling confidentes he wants to end his standoff with trump. according to two people close to the lawmaker. they said ryan's decision is due couldcerns that the split sharpen divisions in the republican party. global news powered by our 2400 journalists in more than 150 news bureaus around the world and you at top go. the strengthening dollar is striking up -- is the steadynga -- rate against the dollar combined with depreciation against other major currencies. our guest is the international investment strategist at devere group. when you look at china, the problem is that everything goes back to the fed. there is believe

policy diversions, we may see the beginning of the dolly riley -- the dollar rally. summit,is why the g-7 japan came under a lot of pressure from the americans to go easy on your monetary weakening. is the ofr tfor that american saying that we want the dollar weak. china to make chinese exports more attractive because the last time china tried to do a devaluation against the dollar, last summer, it dropped the percent, -- dropped 3%, markets got shook up. i subscribed to some say a conspiracy theory, that is there a tacit agreement whereby china will devalue by the dollar devaluing. that helps the two biggest economies in the world. francine: what you are pointing out is the shanghai accord,

whereby the fed and u.s. authorities decide to hold off normalizing policy so as not to put china in a bind. then two months later try to do everything they to to prop up markets believe in a rate hike? tom: this is what i've called the dance the fed does with markets and has been doing it for some years now. there are hawks in the fed, who say, ook, we have a slightly tighter labor market. -- look. they have been wanting to normalize rates for years. for various reasons. some of them almost ideological. this then leads to a rally in the dollar, which is a form of monetary tightening. of chaos.o a big ot the fedfew weeks later, comes back and says due to the tightening of the dollar, we no longer need that tightening. francine: let's take a step

back. do you believe this is the beginning of the dollar rally? tom: no, i don't. doncine: you by consequence not believe that china is about to devalue their currency significantly? tom: correct. i do not believe the fed is going to rate hike until december at the earliest. francine: because of domestic concerns? tom: partly domestic. the wage is still weak. a positionenter ahead of the u.s. elections where traditionally the fed in the months before the presidential vote to not like to change. francine: maybe 2016 is different. thank is so much for now. tom elliott, stays with us. plan to get coming your way, including agreement over greece. we will analyze what the debt

relief deal means for the country and its creditors. billion question. following months and is rejection of bayer's offer. we will look at the takeover. the world'sheck on largest economy. we will speak live to the president of germany's ifo institute. ♪

francine: let's get straight to the bloomberg business flash.

nejra: marks & spencer shares are trading lower this morning after its new ceo unveiled his plan to rejuvenate the retailers moribund clothing business. he says he will him there other clothing ranges, reduce prices, and boost in-store staffing. the company posted underlying annual pretax profit of 684 million pounds. said to be working with jpmorgan, hsbc and the company's first sale of islamic bonds. the largestll help oil exporter set up a real denominated sugar program. the sale could take place this year. other banks could be appointed before takes place. cut pay for its top executive to the lowest level in three years. were reward an

average of $1.5 million in base salary, bonuses and remuneration for the year ended in march after profits that japan's biggest brokerage slumped and losses abroad swelled. a tough week for deutsche bank just got worse. the lender has slipped to number four in a table of the world's biggest currency traders by market share. as it fell from being number two. second places up while citigroup cap hold of the top spot for the third year in a row. francine: thank you so much. there with what we have just heard in terms of the main topics we need to look out for today. i just want to issue a correction. the ifo index is actually much worse than we were expecting. i had earlier said it was at 107. it is actually at 0101.6. this is applications

because there is a sense -- this has implications that there is more concern about what the future of europe will bring. will keep a close eye on the ifo expectations index at 101.6. greece set to receive a further 10.4 billion euros in aid. they are committed to easing the nation's 321 billion euros of debt. >> i'm glad to be able to say the imf has expressed its intention to recommend to the funds board to approval financial arrangement before the end of the year. imf will go to the board on the basis of this agreement to be part again of that program, a support program for greece. >> i'ts an -- it's an important moment for greece after so much time. we have now in agreement not only on the review and the structural measures, but on debt. the two will collide into one.

in the summer we agreed to finish the first review. have collidedings and now we have an overall package. francine: bloomberg's european politics correspondent joins us from brussels. exactly was agreed at last night meeting, and what will the political impact of the deal be? an: they called it breakthrough last night, the european finance ministers. that might be going a bit too far. as you said, the headlines are the fact that got its hands on 10.3 billion euros. that will help repayment in the summer to the ecb. there was an initial agreement on debt relief but no concrete figures whatsoever. but the imf did say it would continue to take part in the greek rescue program. that is good news for countries

like germany, where -- it seems to be critical going into federal elections next year. it is aw bit of somethingay, to satisfy everyone but certainly no concrete agreement on debt relief yet -- in a way it is a bit of something to satisfy everyone. francine: this is the end of the six-year greek saga? ian: it will be very nice to say after six years of the long all night meetings, it is the end of it but it does not seem like it. all they have done is push the decision off for a year or two. sooner or later, they will have to come to some agreement on how to reduce greece's massive debt burden. they have got no idea how they are going to do that yet. the imf and the euro area are qu ite far apart still and you can see a lot of arguments down the road. all they did last night was

agreed to have those arguments in two years time. francine: thank you so much. now, let's get more with devere's groups tom elliott. are we disappointed that we do not have debt release? : i would not have expected anything of that nature at this stage. because you have the german federal election later this year. and a german government is not going to put its name to an agreement that wipes up loss of debt ahead of the election. i think there is no acknowledgment from the meeting that by 2018 there will be some eithernt whereby they extends the maturity of the debt, perhaps the eurozone countries buy some of the imf and buys off the imf and exchange it. there are ways and means of

making the burden much lower for greece, for the run up he any details till after the german election. what is important to note is that on sunday the greek parliament passed the package of reforms that had been demanded by the imf and euro groups concerning passions, concerning non performing loans, sosa security. have beene greeks done with has been asked to them. which is an unusual thing for anyone to say. francine: i guess the bottom line, the debt is unsustainable. this is also because the growth we were expected has not come through. it is not through any fault of the greek people or the greek government. tom: it is. and what i think we going to see is the imf's insistence that the greeks should only be asked

for 1.5% surplus. that will come more in the mix of solutions post the german elections. francine: we talked about the fed and about greece, and we will talk risks that tom sees next. let's have a check in the markets. you can see that greece, the 10-year yield dropping to less than 7%. after this bailout deal. some of our other top stories. deutsche bank trading. that has exposed another slide down of the currency. overall stock markets gaining a touch. we're seeing quite a lot of currency moves from emerging markets. up next, bayer's bid for my center. r off has been rejected. what will the german firm bring to the table next? ♪

bayer shares down this morning after it says it was still into a bid for monsanto after the bid was rejected. for more we are joined by the deal team leader. thank you so much for joining us. so, bayer has been under pressure in terms of share price. do we know that shareholders want this deal? >> if you look at the market

reaction, the clear answer is no. the fact is this is a huge acquisition for any german company. it might hit it -- hurt its credit rating. there is a lot of concern. bayer was seen as a pharma company. now they are seeing them switch into crop science. they are asking themselves, do we want to stay invested? there is a bit of an identity crisis. evaluation.d the my center said, you're not offering enough. do we intimate they would sell at a price -- monsanto said, you're not offering enough. a i have rarely seen such from the rejection. on the one hand, they said it undervalues us, there is risk but we expect -- we respect bayer. in that sense monsanto has invited bayer to come up with a higher price.

bayer has to ask itself, do we want to raise equity, sell assets? if i had to guess, i would say bayer does not table is best offer first. francine: how much you know what comes after in terms of regulatory concerns? >> that is a key question because we had two other major deals in this space. dow-dupont in the u.s. and the chinese buy syngenta. that raises questions. on the flip question, there is not a lot of overlap between the strength of the company's. bayer is strong in crop chemicals. d company.s a see regulators will be wondering, can we allow three huge mergers without putting all of them very closely under the scope? francine: at the moment, anything is open. we could see a third company coming. >> there has been speculation that the other offer could come t they are known to

be very conservative. it would be surprising. is bayer willing to bob arnott and reach a deal? road selling it to investors -- is bayer willing to reach a deal? then they will sit down and decide, do we make this deal happen? francine: i know you're choosing everyone -- chasing everyone but what is your hunch at the moment? is it too early to call? able told love to be tell you a clear answer. but i think it is obvious they need to bump to get the deal done. they have shown a lot of conviction that they want to get this deal. if you look at what analysts are saying, we think it is worth 120 to 155. in that sense, there is scope to move up. bernstein said they need to offer at least $135 a share.

bayer has leverage, to sell assets or get more financing and raise more equity. in that sense, there is firepower. it remains to be see if they do it but my hunch is there is a good chance they will consider it. francine: how does this translate into your world? is this a story about she financing? -- cheif financing -- chief financing? or a story about valuations? if you're the only one left to be bought out, you can command higher multiples. mind, it is a nonsense story. i was amazed when it first broke. i still am amazed. francine: people do not believe it. rman company -- is buying it. francine: you're talking about gm foods. ago, they had all these headlines about frankenstein foods. these were monsanto seeds.

i find it very strange. francine: but they are a company that is trying to grow. it make strategic sense. regarding theay regulators, i understand there is nervousness from regulators over monopoly positions. in the defense of the merger, i sould have thought that bayer' almost nonexistent position so far in seeds does mean they could go to the regulars easily and say, we are not going to be a monopoly in either -- in either of those two sectors. francine: think is so much. we are getting breaking news out of india and apple. this was expected. we understand india is set to require local sourcing by apple to open stores. one of the few countries in the world where i found is. have stores. we did understand from local authorities that india won a 30%

of the iphone components to be made in india to allow apple to open stores. this seems to be confirmation of that. we will get you any more breaking news that we have on iphone. we also talk ifo and germany next. ♪

francine: welcome to "the pulse." i am francine lacqua. let's get to the bloomberg first word news. nejra: chinese officials are said to be prepping their american counterparts in the event of a fed rate hike. the chinese delegation try to find out if a june or july rate hike is more likely in talks later this month. for the u.s.rise central bank to raise rates for the first time since december.

the ceo of unicredit has agreed to step down after almost six years at the helm after an effort to improve capital. his successor was named and he and the board agreed there was need for a management change. bayer says it is still optimistic that its bid for monsanto will be accepted. monsanto says the bid significantly undervalues the company and does not address -- address the execution risk. leaving the european union could add tens of billions of pounds to u.k. government borrowing and force the chancellor to extend austerity into the next decade according to the institute for fiscal studies. it says instead of returning to surplus as currently planned,

written may face a budget deficit as much as 30 billion pounds if it votes for a brexit next month. donald trump has one that public and presidential primary in washington state, putting him on the cusp of crossing the delegate threshold needed to secure the nomination. paul ryan has been telling confidants he wants to end his standoff with trump. his decision is in part due to the fact that the split has sharpened republican issues. you can find more stories on the bloomberg app top . francine: market up this morning. that's had to the bloomberg west mark barton. mark: the big move in china was the beginning of the reference rate.

the reference rate was lower 6.5 693 point dollar -- per dollar. we have this research on dollar that the fed is going to raise rates. we have the strategy the pboc has pursued in china which is keep the rate steady against the dollar with depreciation against other major currencies. that strategy is coming under pressure with the resurgence of the dollar. this is the yuan in the past 12 months. the fixing is lower than the levels reached in the january turmoil. the market rate is still .5% stronger than in january. 6.56, that is the level in january. that is the big depreciation that happened in august last year when we were at 6.20.

this year we have had a fairly steady rate since the turbulence at the start of this year. -- keepand i on events an eye on events in china, and greece with regard to the creditors, that have reached an agreement to allow the release of billions of euros in aid and easing the debt mounting. finance ministers and the imf also stood down from their own hard-line stars before delaying the pay let -- payout. interesting, the yield on the 10 year just to dipped below 7% a little bit earlier, 7.03 now. was at 6.97. that is the third time we have seen greek yields below 7% since december.

when greece was trying to iron out a bailout with its creditors the yield was up to 13%. you have definitely seen a lessening in market pressures in the greek bond market. interesting comments from goldman sachs, it is keeping faith in the boj's ability to surprise the markets. says they are very bearish on the end and there is only one way forward for the boj, pursuit to reflation. brooks and his colleagues see to the weakening to 115 dollar, 125 in 12 months. they also point to a computer model and say that exchange rate should be closer to 133, a rate

not seen since 2002. ceo'sht of the unicredit departure, i want to show you how he fared relative to his peers. he came on board september 2010 with the total return 20% low. the peers are down by half a percent so he has underperformed his peers on a total return basis since he started in september 2010. , thank youark barton so much. russia has returned to the international bond market even as sanctions remain. the state bank -- bloomberg spoke to the city the state bank's ceo. >> there is great political question -- pressure on all financial markets.

the state department with the consequences, no, we do not understand it because the issues of bonds is not subject to sanctions. francine: ryan joins us now. how much of a problem with political pressure? right now we were talking about euro clear and euro clear bonds. agreed to buy the it began long before that. originally russia was talking about using notches the tb -- .ot just vtb they began the conversation with everyone from deutsche bank to goldman sachs but they decided to pull out because the u.s. told american banks, you should

not participate in this. the european union quietly told european banks that you must be sure that this money, even though that russia, the government itself is not under sanctions, that this will not go to any sanctioned institutions. the banks' compliance departments were saying, we do not want to get on the wrong side of the regulars that regulators and u.s. government so they stayed away. do not have the traditional underwriters so that made it a very difficult issuance. more from ryan, including whether this was a political victory against some of the sanctions. president-- the evo is joining us from munich. .hank you for joining us

when you look at business confidence, it is a little better than expected. what surprised you the most with what we found out about today? me was thatrised the increase was one point, which is quite a lot. another surprising element is the construction industry, we have a record high here since 1991, so construction is booming , but it is broader. it is all main sectors in the german industry and trade where the climate has improved. francine: what does it mean, we are not hit by a slightly stronger euro? is it monetary policy that is working? german history does not seem to be too concerned about brexit but at the same time, we have had tapered conditions for some time now. i think we are sort of waiting

for this to feed through in the german economy and it seems that is coming now. there was some fear that exports might not perform very well because of the difficulties in the emerging markets and now that has not come, does not seem to come through. overall the picture is better than expected. francine: how much does this have to do with monetary policy and how much does it have to do with real growth, with real hope for the future spurred by consumption and german exports? clemens: that is difficult to disentangle but it does seem to be the case that the low interest rights player -- interest rates play a part. a lot of investors are taking their money away from bank accounts and putting it into construction investment. exports are not expanding very quickly but at least they are not falling. mostly this is driven by domestic market in germany, so

it is construction, business, and of course consumption. francine: i know you have made some comments in the past about debt relief for greece and that you were against it. why would you be against it? the current situation it seems is just untenable. i think that debt relief is not the main issue in grace. there has been a lot of debt relief repeatedly and more may, in the future. the problem is that the greek government does not really support the reform programs and greece will not recover unless there are structural reforms and reforms in the labor market. i think the order is the issue here. we should first insist on these reforms being carried out and then later it would be good to talk about debt relief and not the other way around. francine: what do you say to

critics who say the reason why we need debt relief because growth has been so much lower than we expected, and it may be part of the program that has put in place? clemens: i think in the long term it is inevitable that there will be debt relief, and i do not think that currently that is the main problem. the debt service we have currently in grace is very low for a number of years. the imf says it needs to be lower even in the long-term. i think it is not the best way of negotiating with greece to say we offer debt relief now an exchange for further promises of reform that will not be kept. i think it would be better to go the other way and make debt relief conditional on compliance with reforms. francine: clemens fuest, thank you for joining us. formers for the

unicredit ceo but may be good news for italy's banks. $100 oil is done. find out why, next. ♪

francine: welcome back. let's get straight to the bloomberg business flash. nejra: india's finance minister is said to have ratified a decision that apple must meet local rules to open its own stores. the minister decided to support india's foreign

investment promotion board that the iphone maker will have to procure 30% of components locally if it wants to sell through its own retail stores. it may be a fatal blow to apple's efforts to open stores in the country. shares are trading lower after the new ceo unveiled its plan to rejuvenate the clothing business. they will narrow the clothing ranges, reduce prices, and boost in-store staffing. they posted an annual pretax profit beating analyst estimates. said to beo is working with jpmorgan, hbs be, and riyadh bank. they will help the world's largest exporter -- they also said the first sale could take

place this year although its size has not been determined, and other banks could be appointed. nomura had cut pay for its top executives to the lowest level in three years. the seven bosses including the ceo were awarded an average of one and a half million dollars losses abroad -- swelled. a tough week for deutsche bank just got worse. it has slipped to number four as it fell from being number two according to a euromoney institution survey. up then picked second-place ranking while citigroup held the top spot for the third year in a row. francine: thank you so much. some other corporate news, banks, we focused on them yesterday and we focus again

today. has agreed tooni step down after six years at the helm of italy's biggest bank. he and the board agreed there was a need for change in management. program have you on the . he wrote a great piece. italy's banking backstop you said, needs a turnaround. why is it so important that he would step down? >> there has been a loss of confidence from investors has unicredit needs capital and it is also seen as a savior of the system. unicredit is the only systemically important bank and it is crucial that it gets enough capital to support itself , so this is good news. if they raise capital this could be a good thing for the system. francine: when ghizzoni was in

arrival inuess their terms of share price has been doing much better. explain to us why is this happening. is it because that he was too political to shore up some of the banks? lionel: i think it is seen as ,ore profitable, less complex because it is less global than unicredit, but unicredit is still a good franchise. or is value in there. francine: the other piece that you wrote, we do not know who will replace mr. ghizzoni. does it need to be someone international? is there an ideal profile? lionel: clearly they want an outsider. it is strange that we have not one but two names from ubs.

ideally, an outsider, even better would be a foreigner but maybe that is too much to ask in the current environment. francine: the other piece was stay tuned, and stay tuned was something that jpmorgan ceo told bloomberg just 24 hours ago. we do not have the time. we have to turn things around quicker. lionel: it is the u.s. banks that are taking share at the expense of the european banks. the longer this goes on, the worse it is going to get. the u.s. banks are profiting at the moment while the european banks are trying to turn things around. francine: a lot of the european banks are turning around and becoming much smaller. thank you, lionel. oil, $100 accrued is done.

in an exclusive interview, bloomberg asked whether he was expecting a return to prices of $100. hoping for it, but i think i should not speculate. that could be the case or not. norway, not only for oil and gas experts, but more or less for everything we do in dependent one very strong global markets for all our exports, including oil and gas. prices, weil period, saw for a short thankfully, but we saw oil prices swelling to $140 a barrel so that does not contribute to global growth. i am not hoping for it and i

think to plan for that kind of shouldange, if it happen, if you plan for $60 and you get $100, we have to benefit and tax it like we do. withan for $100 an end up $60, then you have a problem so i think it is better to plan for $60 and let the people who want to hope for $100 to hope for $100. francine: that brings us nicely to our chart of the hour. we picked up something for volatility. -- wti impliedce volatility. it shows that all futures have not been this stable in new york since november. that is the level for $50.

in february it reached the highest level since the 2008 crisis. a below for apple with india saying the company must meet local sourcing demands. what happens next? as we ramp up to the june 23 referendum date, we will bring you any news and the breaking news, s&p saying rex it is a good risk. ♪

francine: welcome back. news, the s&p saying brexit would risk the sterling reserve. we will keep a very close eye and we will keep an eye on where sterling is today. apple's hope of opening stores in india they have been quashed. apple must meet local sourcing rules. basically what the rules require apple to do is have 30% of local component. nejra: if it wants to open its own retail stores other than using franchisees. this is the finance minister ratifying a decision by the foreign promotion board. it could be overturned by the government that it could overturn apple's efforts to get into india.

a billion devices were forecast to be sold next year. tim cook has just been to india. francine: bloomberg "surveillance" is up next. we will be talking about currencies and brexit. ♪

francine: fighting the fed. china may press the u.s. on the timing of a rate hike. no holiday for greek debt. payout as thets a imf concedes. it drops to 7% for the first time since november. and unicredit is replacing the ceo. that paves the way for a review of capital strategy. this is "bloomberg