Transcripts For BLOOMBERG Countdown 20150415

Caroline we will be looking at the ecbs 1. 1 trillion euro bond buying plan. Mark stocks are headed for the biggest drop in weeks after gdp growth output investment, and retail data in china also load. All slowed. Yvonne man is in hong kong with the details. Where are we seeing weaknesses and strengths right now . Yvonne the weaknesses are definitely coming in line when we talk about retail sales and the factory sector. The Australian Dollar also slid in reaction to some of this data coming in from china. The First Quarter gdp was bang on target at 7 for the First Quarter. That is in line with economists and what the Chinese Government was hoping for. No newsflash there but that disappointing data you pointed out there are coming out below expectations. Factory output for march was at 5. 6 the lowest since november of 2008. Economists were estimating a 10 growth theyre previously. Urban investment also came in at 13. 5 . Retail sales were also a big mess, their slowest pace since 2006, coming in at 10. 2 with estimates at 10. 9 . The slowdown does make the case that if the government doesnt do anything further here in terms of using, it will be increasingly hard to reach the 7 growth target for the year. We will see what happens after that, mark. Mark there were worries about deflation in china, what does the data tell us about that . Yvonne we have seen a lot of the global patterns here in terms of deflation. The disinflation pattern, we have also seen that in china particularly in the factory sector for some years now. Todays data also allows us to calculate a broader perspective in terms of price changes. For that, the gdp deflator that we just saw here is going into negative territory with 1. 2 of contraction the first deflationary reading since the financial crisis of 2009. Mark yvonne man in hong kong thank you. Caroline governing google next. The European Commission could issue charges against the tech giant violating competition laws. Google is accused of highlighting its own web services in search results at the expense of rivals such as microsoft and expedia. The implications could be severe with hefty fines and constraints about how it delivers googles Online Search engine. Lets get out to hans nichols who is been tracking all these developments. It was the best case and give us the worst case for google. Hans good morning, caroline. The best case for google is that when these formal charges come down today is that they are actually weaker than expected and that google is able to litigate for quite a long time in various restrictions before any remedy is put in place or for any fines are put into place. There is no dispute about googles market share. They have 90 of market share stop market share in europe compared to 65 in the states. They came close to settling it with the last commission but at the last second there were complaints from some rival Tech Companies and now the new Eu Commissioner for competition is taking a harder line. Google is bracing for a harder outcome. Heres a quote from an internal memo. It says this is obviously disappointing news but we have a very strong case with especially good arguments when it comes to Better Services for users and increased competition. The worst case for google is not just a hefty fine and a change to the way they operate, but that it will went the appetites of National Regulators and that they will then crackdown. So then google would be facing charges not just at the eu level, but at the national level, and not just in europe. They get 35 of their revenue from europe. If you take what the eu can find, which is 10 of global revenue that puts you at a potential 6. 6 billion euro fine. You will have the cash to pay for it but your member when microsoft was fined . They came in at 2. 4 billion. The eu is not averse to putting big fines on Tech Companies. This is not just about search. There is an informal inquiry going in to what they are doing with their mobile operating system. No formal case there just yet. Caroline it sounds like google is continuing to try and talk tough. From the u. S. , are they fearing that it is protectionism going on in europe at the moment . Hans when you look at what Eu Commissioners are publicly saying, it sounds a little bit like protectionism. Take a look at take a listen to what the german politician who is now the digital commissioner for the eu said. He said and caroline, this is so much bigger than just google or just search. Although google also lost that right to be forgotten case. This have to do with revenue, the entire tech landscape. Europe feels like they are a step behind it sounds like they are getting a little help from brussels. Caroline on nichols all over the story from berlin. Mark talks of the deal for greece continue today as the countdown for the april 24 deadline continues. Officials say the nation and its creditors are moving closer to reform which would unfreeze the 7 billion second bailout. Caroline the imf chief economist warned that a scenario that would hurt Financial Markets cannot be ruled out. He sent a strong dollar would boost growth in the region. Price of oil has helped. The Exchange Rate probably hasnt helped yet but it will. This is leading us to have higher forecasts for this year than last year. The main risk that we saw last year was the risk of recession in the eurozone. It has not disappeared but the risk is much smaller than it used to be. Mark the ambassador who worse who worked with george soros for over a decade also weighed in on the list. He told bloomberg in an exclusive interview that he was not worried about greece leaving the eurozone . Do you think greece is leaving the eurozone . Probably. I would carry a lot more if i were greek. If you mean, do i care as an investor . The banks dont own greek debt anymore, draghi has qe at his disposal. My guess is there wont be contagion but even if there is he can contain it and as soon as Market Participants see that you wont have contagion. I dont get this theory that greece flushes themselves down the toilet and put themselves through misery and the spanish and italians say they want to do that to. I think the more rational response is for them to go with reform and get more embedded into europe. I prefer to see greece in the eurozone for a lot of market reasons and maybe humanitarian reasons, but as a market participant, i think it is way over analyzed and overrated. Caroline as greeces cash crunch gets ever more urgent the ecb once again extended to greek banks. Ecb president mario draghi will face questions today on greece and his qe program at a press Conference Following the central bank meeting. You can catch that here on bloomberg in full at 1 30 p. M. London time. Lets get to the breaking news we have for you this morning. Alcatel and nokia, we had that is yesterday, were considering a full overall acquisition. They are coming out today saying that alcatel will nokia will buy alcatel for about one third of the shares in a deal that values the company at about 15. 6 billion euros. The board of both companies have approved the terms of the proposed transaction. Both boards are confirming the deal will stop the deal. Remember, here is the overall Mapping Service that nokia owns. They are looking to dispose of that and it could be worth about 2 billion euros. They already have cash in place after they sold the handset unit to microsoft last year. Nokia saying they will buy alcatel in a deal that values the company at 15. 6 billion euros. Combined, they have a target to reduce their costs by some 200 Million Euros and they see 2015 constituting a review. They want a review period. They want the deal to be finished up by 2016. Mark i have got some news that Julia Roberts is looking to step down as chief executive of africas biggest insurer. That is according to people who are familiar with the matter. Roberts will resign after more than six years at the helm of the londonbased firm. They said they didnt want to be identified because the move is not been announced. They reported a reduction profit last year after the rand in south africa we can against pound sterling. He came to the helm of old mutual back in september, 2008. The total return, shares plus dividends, is up 19 under his tenure. That is versus 6. 7 for his peers, so he has outperformed his peers since you became chief executive in september 2008 according to people familiar with the matter he is planning to step down as ceo of africas biggest insurer as soon as today. The top stories on bloomberg this hour. President obama will drop cuba from the list of state sponsors of terrorism. The move comes a week after obama met resident castro in panama which marked a significant shift toward restoring relations between the countries. Congress now has 45 days to respond. Sri lankas central bank unexpected the cut its Interest Rate today. That makes it the 20th central bank to cut rates this year. G7 Foreign Ministers are in germany today for their second day of talks. U. S. Secretary of state john kerry skipped the first day of talks to stay in washington and lobbying congress for the deal with iran. Caroline you can join the conversation on twitter. It is know what you think about the show and tell us the stories you want to hear more about. I am carolinehydetv and markets act markbartontv mark is at markbartontv. Alcatel is being valued at 15. 6 billion euros. Mark coming up the ecb meets today. It will be all about the timeline for qe and the greek issue. We will get investors takes on what to respect. Mark welcome back, the ecb meets today and qe is back on the menu. This is not top of the list, is it gekko is a question of how is the program doing and how the economy is improving. I think it will be about maintenance of the message and maybe some hubris from draghi in terms of glorying in slightly improved economic figures. I think, on the other hand, he will want to stop any nascent rumors of it and stop of an end. Caroline there are also concerns out there that they can get their hands of the right amount of assets and possibly greece coming to the four as well. Nick they will probably mention the range of assets they can buy going to various agencies. Greece, i think he will and he will emphasize the fact that the introduction of qe is the thing that is really stop contagion from rising over the worries with greece. If anything, he will be emphasizing that subtly as a need to keep qe going. Caroline do you agree that if greece really did rear its ugly head or we saw a grexit and we are hearing reports and denials of threats of default could be stamped. Nick the flight to quality spreads would widen. The existence of qe, the fact that this has been forecast so much or on the agenda for so long, i think people are prepared that banks have leveraged. I dont think it would be the crisis that would have been two or three years ago. Mark to show the ecbs enthusiasm in forecasting inflation over the horizon. The inflation forecast is 1. 8 for 2017. Many say that is a bit too optimistic. That assumes the full up limitation full and limitation of this qe program. Is that a bit optimistic . Nick i think it is cloud cuckoo land. Especially if china were to introduce a policy of devaluation of the renminbi. I think these are optimistic which is another reason to believe that qe will go on ad and financial ad infinitum. Caroline can you talk about some of the chinese data here today . Industrial production and the like the to be slowing more than many anticipated. Nick we shouldnt be surprised. You have to close down various pieces of a factory to retool. And rebalancing from excess investment and relying on overseas trade to domestic consumption. They have reserves and ample scope to give a further boost the writer fiscal or Monetary Policy and i think we will see Monetary Policy easing in at few months. China is fine. Mark what about the chinese stock market mark what about the chinese stock market . The bestperforming global stock market. Frenzy, mania, bubble . Nick i think that is more of a worry. A protected a protracted correction is possible there in the nature of 25 . We have seen this impressive growth in china over 20 years and investors have wondered which stocks they should go for to benefit from that. For many years, it wasnt terribly rewarding. There have been rises in prices over time but not as impressive as this last rise. We should now turn into bubble territory. You have to be in for the very long run. Caroline but bring it closer to home with the United Kingdom the. The british pound under pressure last week. Uncertainty starting to weigh on the markets. Interesting report coming out today from bloomberg saying that the bank of england could actually move faster, could raise rates faster if labour is elected because they would have less austerity. Nick i think that is possibly the case. A less rabid desire for european exit. The fringe parties are all very old school, left wing, snp, plaid cymru and the green party. That would drag labour to the left of the same way you cant has dragged the same way ukip has dragged the tories to the right. And out right loabour victory would do the best because it reserves it removes the possibility of a Hung Parliament and a referendum. The taxandspend policies are not the markets favorite. Mark it is certainly beginning to be felt in the currency market. When might the stock and guilds market catch up . Nick i dont want to give an exact date is a question of exact date. It is a question of polls, really. I think the conservatives will start to increase their lead as the date approaches. We saw a slew of very carefully targeted announcements in the manifesto. Policies that arent going to please every part of the electorate but, i think it will please the critical parts in critical, marginal constituencies well rather cynically while rather cynically during the message that there are some people that will never vote tory. Mark do you think the promise of a referendum by cameron was a clever move . Nick i think in the very long run it will be seen as a clever move because i do think the conservatives will win cup either outright or with a coalition. I think many ukip voters may vote tory because they are the only ones who will give a referendum. I think in the long run it will be good for the conservative party if we havent referendum because then there will be a decision from the plebiscite. And it could stop the internecine warfare that has plagued the party for years. Caroline that of course is in the longest term. In the interim, if we go and are concerned about any referendum what is the sense of what we do for investment into the United Kingdom . It is scaremongering to a certain is the certain degree . Nick i think it is more scaremongering i tend. Scaremongering. I tend to lean on the side that we will survive the same way that switzerland has without the euro. Businesses are split on this, the markets are split but some of the markets have a too short time horizon sometimes. I think they will quickly form a view that we are just important to our trading partners as they are to us and will become more sanguine about the process about the prospect of a departure from the european union. I think it will turn out to be something of a red herring in terms of markets. Mark are you a 2015 or 2016 men yet of man . Nick i think it is september at the earliest but i do think we will see a bounce back in u. S. Economic figures over the next two or three months. I think the weather abated facts affects diminish. Caroline still to come on countdown, it a billionaire family trying to break down a multibilliondollar merger. Mark time for a look at the Foreign Exchange market. As ecb president mario draghi prepares to hold court today, i thought we would look at the euro against the baskets of nine major currencies through the eyes of the eurobloomberg correlation weighted currency index. As of today, it is only 1 10 of 1 above the low for the year reached on march 13 which in itself was a 2. 5 year low for the index. Year to date, the indexes 7. 7 lower. That is the worst performing currency on the bloomberg correlation weighted indices. The swiss franc is the best with a gain of almost 9 over the last year. As you can see, the euro is down by almost 10 , which makes it the third worst performer after the Swedish Krona are and norwegian krone Swedish Krona and norwegian krone. The other currencies in the basket of the aussie dollar, Canadian Dollar sterling japanese yen, and the u. S. Dollar. The ecb meeting today should be one of the more uneventful ones in recent months. A few key questions the president mario draghi might want to answer include, is tapering really on the cards our inflation forecast to optimistic, will the ecb have enough assets to buy, what is the latest on greece, and is their progress on Structural Reforms within the euro zone economy . That is a currency index you dont get to see every day. Over the last 12 months, the eurobloomberg correlation index is down by over 9 . Caroline lets take you on to some of the top stories on bloomberg this hour. U. K. In the party u. K. Independence Party Leader Nigel farage has said that his party is serious. They have placed tax cuts and more spending on police. Meanwhile, president obama plans to drop cuba from a list of state sponsors of terrorism. This comes a week after the president met raul castro in panama. Congress now has 45 days to respond to obamas notification. Sri lankas central bank unexpectedly cut its Interest Rates. That makes it the 20th centralbank to cut rates this year. The economy slowed the most in two years. Mark g7 Foreign Ministers continue their talk in germany or a twoday summit to discuss ukraine, iran the middle east and terrorism. Hans nichols is in berlin. It seems as i ron is iran is dominating the conversation. Hans interesting was russias decision to lift that ban on the missiles. They said they would start selling to iran at some date in the future. The German Foreign minister criticized that deal harshly. He is lining up with the u. S. On this position. That is important because he is a member of the p5 1. Here is what he had to say as you mentioned, it is not just iran, it is not just russia. A whole host of issues. The situation in ukraine, some attention there and not a lot of optimism. We need to Work Together clinically. Politically. We need to join hands as governments and use the entire toolbox of diplomatic cooperation to solve these conflicts and work for a more peaceful world. Hans that today, these ministers will be joined by u. S. Secretary of state john kerry will stop he was in the u. S. Until late yesterday briefing senators on the iran deal. We have found that the Obama Administration has agreed to have aggression to have congressional approval of any deal on iran. Senate republicans are claiming a victory and democrats are claiming a compromise. Mark hans nichols in berlin. Caroline lets get back to todays corporate story. Out of france, nokia has agreed to buy alcatel in a deal worth 15. 6 billion euros. It will create the Worlds Largest supplier of mobile phone Network Equipment and while frances government doesnt own a significant stake in alcatel, it is concerned about the approximately 700 people work for the company in the country. This is all shares, no cash involved. You will see alcatel shareholders get. 55 nokia shares for all the alcatel shares they own. Getting a nice premium their overall. Both boards have approved this transaction although the deal is still subject to the approval of nokia shareholders. The combined company will be called nokia and headquartered in finland. It will have a strong presence in france, they are saying. They have been talking to government officials to try and protect the rmb jobs in france the research and Development Jobs in france. The chief executive of nokia will remain the chief executive of the combined company. This is all about the internet of things in the future of broadband, whether on your mobile, fixed line. The company said they will be the foremost innovation leader. Mark lets turn to a slightly smaller deal, but still a multibilliondollar deal. A 6. 4 billion bid for parnerre. Was a surprise move . Yes and no. No in the sense that exor has been carrying a lot of cash on its balance sheet. It sold for about 2 billion euros a company in switzerland called sts about 18 months ago. They have been looking for acquisitions. They had a history, in addition to investigate fiat, of diversifying in financial services. I dont think anyone expected this move because while they say it is a friendly offer, it is complicated because partnerre agreed in january change in january to join with axis. Mark and what are the alternatives for the Companies Involved . Well, they made it pretty clear that they do like to invest in financial services. They could, as an alternative, try and look for a private equity company, private banking. These are all areas. I think they will obviously wait to see the response from partnerre. They said yesterday that they will respond to the offer as soon as possible. I would think that they have a backup pan backup plan ready to go if this doesnt come off. Caroline of course you can join in the conversation on twitter. Let us know what you think about the show and the m a stories that are catching our attention this morning. I am carolinehydetv and mark is markbartontv. Mark coming up is the interview and fidelity essay about china after the break. Mark billionaire investor Stanley Druckenmiller who worked with george soros for over a decade has spoken with bloomberg in an exclusive interview. Here is what he had to say about the chinese stock market. Stanley the chinese stock market is up, i dont know 140 for six months after being on a downtrend for five to seven years and is doing so on a record volume. If it was any other stack and the other stock market i would tell you that there is a 98 chance that china will be in a cyclical boom six to 12 months from now. Because it is china and we dont know the nature of what we are dealing with here relative to normal mature, developed markets, i would downgrade that assessment from 95 . Because you dont trust the data . Stanley no, its not the data i am watching the markets. Whenever i have seen a stock market explode on record volume and record breadth and moved to that degree, six to 12 months down the road you are out of a recession and into a fullblown recovery. The reason that happens, i think there is enough of that that it is certainly greater than 50 . And just think of how differently the world was thinking about that. The fed had it in their minutes last month that one of the reasons to delay or one of the things of concern with the chinese economy. Christine lagarde was on the kind on the cover of the Financial Times last friday and her biggest worry is that chinese economy. For someone who wants to see what this might look like six to 12 months down the road, i am very intrigued with the possibility of a chinese possible a chinese recovery and what we might see differently if it is actually unfolding. Caroline industrial output and retail sales missing estimates in march. Lets get some reaction from a chinese economist. First, talk us through the main number. Gdp of First Quarter is coming in at 7 . People should be to worry, this is where the government wanted. Well, i think possibly yes. Just looking at the gdp number it is the governments target and it seems that the government in march said explicitly that they accept structural deceleration. But i think there is also reason to worry if you look at Industrial Production. So that kind of shock slow down towards the end of the quarter. That is definitely a worrying sign that the economy is still heading down. Caroline certainly, Industrial Production coming in much lower than even you had anticipated. What was behind the slowdown here . Yao i think there is a factor that after the late Chinese New Year holiday this year Migrant Workers are coming back to factory slowly. Even excluding that number, this set of data is basically saying that china right now is actually underway to a hard landing. The government needs to do more easing policy. Caroline when you expect that easing policy to kick in deco taken . What type of monetary easing do you expect . Yao i think the most useful one is to cut the required reserve ratio. Cutting the Interest Rate is very likely as well. But i think the difficulty these days for the bank is that fx reserves stopped rising anymore. That means a big flow of liquidity into the economy is cut off. The bank has to do more just to offset that cut. We did a calculation, if there is no more fx reserve they have to cut just to keep the liquidity. If they really want to help the economy, they have to be much more aggressive. Caroline you are expecting more action to come to the central bank. All of this is about reorientating the economy, cutting down on production. Cutting down on corruption. Meanwhile, many see a bubble blowing up in terms of chinese stocks. Is that an area of concern for the central bank in the government. Nick it may be a small area yao it may be a small area of concern if you look at the connection between the stock market and the overall economy that connection in china is not particularly strong. If we have a strong market going for a correction, the impact on the real economy is also not that obvious. It is the resale sales buying and they dont have very big leverage. Spillover from the stock market should be manageable. Caroline slightly worried by the Industrial Production figures but you feel there is more stimulus to calm. Is basically the chinese policy working at the moment deco at the moment . Is the Reorientation Program working the way the government envisioned question mark envisioned . Yao this year they are trying to push for Fiscal Consolidation of local government debt. That is definitely going to attract them for structured investment. So what the government can do is not to reverse the slowdown but to make sure that the slowdown doesnt turn into a crash. That is something they need to work on. But i think when it comes to chinas Monetary Policy, we need to be more patient. It is likely to take longer for this to work. Caroline for the second quarter, you are envisaging 7 . Could ever fall below that target . Yao that is actually our forecast. The full year, we are looking at 6. 8 . Caroline it has been wonderful speaking to you. Coming up, we will be looking at our favorite stories from bloomberg digital output including the London Housing crisis. A Chinese Investor can be looking in that particular area. Of course, just remind you of some of the breaking news, it is of course the deal that has been done between nokia and alcatel. You look at the details of how much they are paying for that particular company, a 28 premium if youre looking at the share price over the last three months. 15. 6 billion euro price tag overall. They say china, europe, asiapacific is where these companies have significant strengths. We will be looking at how the french government response. Will they be protecting jobs of 700 research and Development Jobs currently based in france. Will this be a key concern for the france government Going Forward . They have to get regular get Regulatory Approval and nokia shareholder approval but it seems nokia and alcatel have both agreed to the 15. 6 billion euro deal to create one of the Biggest Telecom equipment makers in the world. Mark now, golfing tips from a pro. Masters champion Jordan Spieth gives us a few tips on improving your golf game. Here we go. Ready . How good is that . You got a get it there, sally. So jordan, here you are. This weekend, when you are this position, what goes through your mind at this moment . Well, i left myself with some tough cuts. Putts. But i just try to have an imagination. It is really all about speed which we are really struggling with here right now. We got the line down. Are you saying Mike Bloomberg is having a hard time with speed . He is not used to the green. There is. There it is. They honestly didnt speed up the greens this morning. I thought they cutting earlier cut it earlier. When you are in this moment how do you handle the pressure and not choke . Have you handle it . There are breathing techniques that definitely help but ultimately, you really have to focus on the whole on the hole. Dont think about it being for birdie, park, bogey. The point is, you have to get the read, think about the speed and just pretend like you are just hitting other pot on the practice green. Mark does your putting suffer from a lack of speed . Caroline probably too much speed . I am better at shipping. Chipping. I find the driving i really just want to smash it too far. Im looking at a bit of Luxury Property this morning. Im looking at the fact that apparently there is a glut. Too much is being built at the moment. John caldwell has just bought an old car park, a parking garage and wants to convert it into six houses, penthouses, and 21 luxury apartments. The problem is, there are ready 440 new homes approved in mayfair at the moment. Prices are likely going to have to fall. Maybe a bit of trouble at the top. Mark my question for draghi today, must we really start worrying about tapering . Will the ecb find enough assets to buy . What is the latest on greece . Lovely piece here ahead of the ecb meeting. Go to bloomberg. Com. Caroline we will be showing it all here at 1 30 p. M. London time. Countdown continues in the next hour. Mark shine upon gdp drops to a sixyear low. Caroline the European Commission is set to be charging google with violations. Mark greek may not come up with the money needed to save itself from the bailout. Hello, welcome to countdown. Caroline coming up we will look at the questions faced by the ecbs 1. 1 trillion dollar plan. Mark chinas economy is in focus. Stocks are headed for the biggest drop in weeks. The retail data is slowed in the worlds second biggest economy. Yvonne is here with the details. Yvonne painting quite the dreary picture for the chinese economy. For the month of march you seeing the stocks swinging. Lets talk about the gdp number for the First Quarter, they are 7 for the First Quarter. That is in line with what economists were expecting. The slowest growth since 2009. There was the surprise that all were mrs. Misses. You can see the urban investment was down. Retail slayer roles are the slowest retail sales have gone down as well. This slowdown does speak to the case that chinas government has to step up and do something in order for us to keep up with that 7 growth target they are hoping for the year. We are still talking about firstquarter numbers here. Mark are we seeing evidence of positive developments there . Yvonne we did see some. Towards consumption, services. In terms of services we are seeing a robust growth that is a positive. These are Service Sector accounts for 48 of the economy. They are hoping there could be jobs growth. The Service Sector is also Much Less Energy dependent. Hopefully there will be clear skies. Mark thank you. Lets get back to todays top story, nokia ss deal. We understood yesterday that a deal was to be done. Now the devil is in the details. Alcatel is being valued at more than had been expected by analysts. We saw a ramp up in shares yesterday. Many felt that this would be a cash and share deal. It sold off its mobile phone units to microsoft last year. It could also be looking to sell off its mapping unit. It is going to be in all share deal. 28 premium on what is the average share price for alcatel. Investors will get money back. Alcatel shareholders will hold 33. 5 . Nokia will hold the rest. Both boards have agreed to the terms of the proposed transaction. The french government although the government does not hold stake they may deem it important. A have a 700 are in be jobs in france. All of nokia will be what the company is called. Rajiv surrey rajeev suri has been the chief executive. This is perhaps where analysts are concerned, are we back to a whole new restructuring or the companies . Both have been focused on where their strengths are. They have been focusing on china trying to get that competition. We know that they will leapfrog in terms of size and offer Telecom Equipment for an innovative era. They want innovation and leadership. They need more data flying through our tablets. They want to come meet compete and become a leader in this new connective world. It will be interesting to see how the market digests the price tag. When you only have Alcatel Lucent taking a third of the entire company, the premium was not two thirds bigger it was just one third bigger. Mark the eu could issue charges against google a soon as this week. They are accusing them of violating competition laws. Google is accused of tampering with their own search results. The fines and constraints could be on the table. Hans, can you give us the worstcase and best case . Hans the best case will be from the Eu Commission it is not as harsh as we expect. Google might be able to slow this down by litigating it in a variety of ways. The worstcase scenario is hefty fines. If you look at the market share google has they have 90 of the market share in europe. That is compared to 65 in the united states. Google is braced for this decision all stop here is what was said this is obviously disappointing news, we have a strong case with especially good argumentation when it comes to Better Services for users and increased competition. The worstcase is not just a hefty fine, google would have to change its search engine. It could affect overall revenues. 35 of googles revenues come from europe. If you take the potential fine 10 of total, we could be talking 6. 6 billion euros, that is on top of a remedy. You look at what the commission has done in the past, microsoft was fined 2. 4 billion. This could whet the appetite of other regulators. This could put more own this restrictions on google. We expect a decision at later today, sometime this week. Right now it is not looking good for google. Mark how much of this is protectionism . Hans when you look at what the politicians say publicly, it seems as if they are concerned that the european Tech Companies have fallen behind. Take a look at what the commissioner said for the digital economy, he said, our online businesses are dependent on a few key noneu players worldwide. This must not be the case again in the future. In some ways, it is larger than google. Google lost the right to be forgotten case that gave every european a right to scrub their data. This is about the auto companies, technology, mobile data, sharing, everything we talk about here, this could be a potential hurdle for Companies Like google. There is a new boss in town. Mark thank you. Talks on a deal for greece resumed today. The countdown to the selfimposed deadline continues. Officials say the nation and creditors are not moving closer to a deal that would agree to a bailout. Caroline chief economist warns a crisis that would unsettle the market cannot be ruled out. The lender upgraded its outlook for europe saying a strong dollar would boost growth in the region. The price of oil has helped her. This is leading us to have a higher forecast. The main risk that we saw last year was the risk of recession in the eurozone. It has not disappeared, it is smaller. Mark billionaire investor Stanley Druckenmiller also weighed in on the risks. He told us in an interview, he was not concerned about greece leaving the eurozone. Do you think greece is leaving . Stanley i would care more if i was greek. If you mean do i care as an investor the banks dont always greet debt. My guess is there will not be contagion, but even if there is he can contain it, as soon as Market Participants see that, it will not be contagious. I do not get this theory that greek puts its self through misery, and spanish and italians are like, lets do that too. A rational response is for them to go to reform and become more embedded in europe. I would prefer to see greece stay in the eurozone for a lot of economic reasons, and maybe humanitarian reasons. As a market participant, i think it is overrated and analyze. D. Caroline the ecb once again extended aid to the greek banks. The ecb president s mario draghi will have a press Conference Following the central bank meeting. That will be here on bloomberg. Lets have a look at the other top stories, nigel farage says that his manifesto pledges they are confident and serious. President obama intends to drop cuba from a list of statesponsored terrorist. The move came after his meeting with castro. Congress now has 45 days to respond to obamas notification. Sri lanka unexpectedly cut their key Interest Rates. It makes it the 28th centralbank to cut rates. Mark we will asked our next guest why he has a preference for the european embassy, coming up next on countdown. Mark the ecb meets today, our next guest says european equities are attractive a. Our european stocks still attractive on an absolute basis . They are. That is what the game is at the moment. When we look at bond euros at the tenure point 10 year point it is hard to view bonds as an attractive asset. Caroline talks that talk to us about where the opportunities lie . Talk to us about where the opportunities lie . There are not many areas left with low hanging fruit. Financing is cheap for those putting cash into deals. It is more about synergy and longterm value. It is hard to spot the areas for opportunity. Some people look at energy, our view is there is more value to be traded in. I would caveat my remarks to say we are defensively part defensively positioned in our portfolios. We have concerns about market complacency. The fed hiking rates, liquidity dust protecting the bond market. Greece is a real issue that at some point we will have to grapple with. We do not believe the fluency reflects that. Mark the liquidity has been impacted by a number of figures is it going to end in tears . Quinn this is the concern. It reminds me of alfred bigs who said i am protected and scared. It is an issue. There is a midline between the etf investment and the underlying securities. Highyield bonds or leverage loans for example. If you look at surveys of fund managers, they want the underweight bonds. If you look at the flows of investors, mutual funds are overwhelmingly going to bonds. Caroline what sparks the exit . At the moment you are fighting the ecb because they are buying significant amounts of sovereign bonds. What would the fear factor think . Quinn if you invest in treasuries you will be looking at 1. 9 versus the 14 basis points in germany. A hike affects the short end in the united states. It has not been filtered into expectations on what it will do to bond market. It is for all of us a difficult estimation. Mark are we ever egging it . They say it will be a shallow pace of increases our wait over egging it isnt that big of a deal . Quinn i think so. We have gone so long with a loose policy. It should signal a change in investor expectations. It will be a shallow journey, of course there will be hikes based on data and that will be the direction of travel. It will be interesting to see how the investors react. Caroline when are you expecting the first hike . Quinn i was calling for june. Mark you are looking through the low inflation level what gives you confidence. Quinn it is about earnings and unemployment. If there has been one segment that has been noisy and robust it is the drop in unemployment, the increase in the participation rank and area earnings. That is what is key for the fed and the balanced mandate that will drive the decisionmaking. Inflation has become an issue across the world. It has been difficult for Central Banks to grapple with. I wonder if we are moving to a regime that moves away from less rigid adherence. Caroline your other risk is greece. What do you think they are missing . Are you expecting a grexit . Quinn the probability of that has increased. It is unpredictable at this juncture. It is somewhat like the fed hike. What we can say is there is a radical regime in charge in greece. They are pretty pursuing a radical agreement. That deadline is looking difficult to achieve. On the other hand, we have seen the ecb has continued to extend emergency finances. What it shows is the danger of being bailed out by the official sector. This is the reality this is about the troika. We are going to see continued brinkmanship and unpredictability. I think consequently, the potential for a grexit cannot be ruled out. I would not say more than 20 of a probability. It looms larger than the beginning of the year. Mark you will be grilled on greece no doubt. Can you believe we are talking about tapering of the ecbs on billing program. . Quinn im sure he will dismiss conversations quickly. Im sure in dismissing that question you also say we reserve the ability to increase the program should we desire to do so. It astonishes me that we are beginning to talk about it. Mark thank you. Chief executive at even von management. Caroline coming up, sri lanka is cutting rates this year. We will keeping we will be keeping an eye on the key movers, and i think we might see an uptick in alcatel shares. It is now valued at 15. 6 billion euros it will be in all share deal. Join us after the break. Mark welcome back. Mario draghi prepares to hold court a little later. I thought we would take a look at the euro versus nine currencies. As of today it is going it is only a 10th of 1 . Year to date, the index is 7. 7 lower. That is the worst performer the swiss Bank Swiss Franc is the best. The euro index is down by 9. 4 which makes it the third worst performing after the norwegian krone. The other currencies are the aussie dollar, the Canadian Dollar, the pound, the new zealand dollar, and the u. S. Dollar. Todays ecb meeting should be more imminent uneventful. A key questions he might face today, is tapering on the cards . Are the ecb forecasts to optimistic . What is the latest on greece and the Structural Reforms . It probably will be one of the more uneventful meetings. Caroline you said it well. Lets take a look at the other top stories. Nigel farage just sent his manifesto and said it was serious. He pledged tax cuts and more spending on greece. President obama intends to drop cuba from a list of states connected with terrorism. It marks a shift towards restoring relations between the two countries. The congress will respond to the notification. Sri lanka unexpectedly cut its key lending rate, it cut to 8 . It comes as growth slows the most in two years. You can find more on that story at bloomberg. Com. Mark the eu could issue charges against google this week for violating competition laws. It will is accused of highlighting its own services at the expense of rivals. The implication could be severe with hefty fines which could constrain how google delivers its engine. What is likely to happen . Tony there have been three settlements that have been shocked, just as we think nothing more can surprise us, today they will announce the first set of charges against google for the search engine. Today they will also announce a new probe that will they have been studying informally for a while about the android for google phones. Caroline google is sounding strong in what it hopes to achieve in the general counsel. They feel they have a strong argument for why they do what they do. Do they really . Tony everyone who goes into litigation always has a good case. Everyone defends himself vigorously. This will be like a lawsuit in the u. S. The eu will review charges their own internal Labor Department wild and what google said. The commissioner will make a decision on whether they should go ahead with fines or an action that will limit the way google does things. Fines are not important he codes the biggest fine with one billion euros. Google has the largest cash horde ever and it will not make a difference. Mark what is the worstcase scenario for google . Tony, the worstcase scenario is if they do something for the lottery a logarithm. Caroline the u. S. Standing up and listening to this and feel that this is protectionism coming from Europe Google has more market share here than in the u. S. Tony it does have a healthy market share here. The europeans look at it and say the americans are just playing politics. Some spc lawyers felt there should be a case against google. Mark tony, thank you. Caroline check out what you think on twitter with us, please do tell us your thoughts on what you think should happen to google. I am carolinehydetv and mark is markbartontv. Mark as tony said, this is been going on for a long time. Up next, what is the u. S. Bond volatility . Mark where is the u. S. Bond volatility . Christine lagarde warned that markets could be in for a bumpy ride once the said starts raising rates. She said liquidity could evaporate if everyone rushes for the exit at the same time. The while, david hunt says the one concern is liquidity and its rapid disappearance. And jamie dimond also warned the next financial crisis could be exacerbated by u. S. Treasuries. This is the bank of america, merrill lynch, move index for the volatility for the u. S. On market will stop the red circle right there highlights october the 15th of last year. That day an unexpected flax rally went reeling. It is swung the most since 2000. Jamie dimon to call that a warning shot. Called that a warning shot. Volatility that day was quite incredible. It jumped 35 , the most since december 1980. What is fascinating is where it stands, yesterday it fell to 74. 9. The green circle there of 98. 47, the move index has sunk by 25 . Heat from Asset Management at merit securities says the. Of calm was caused by slow inflation and a fed that said it will not raise Interest Rates this month. He warns that when inflation comes, it will be problematic. He says we have not seen the fire yet but the market is about to be burned. He is avoiding treasuries. The yield on the benchmark 10 year ended at 2. 17 last year it is now 1. 88 . That is why four basis points above the 1. 64 low for 2015. Keep an eye on this chart. Where is it . Caroline for roche the u. K. Has pledged tax cuts and more spending on health care for police. President obama met with castro and marks a significant shift in restoring relationships between the two countries. Sri lankas central bank unexpected we cut its key Interest Rate. It is the 20th central bank to cut rates this year. It has come when growth has slowed the most in two years stop you can find more on that at bloomberg. Com. Mark here is what Stanley Druckenmiller said about the lowest estimate in china. Stanley the chinese stock market is up after being in a downturn for five years. It is doing so with record breath. It was any other market i would tell you, being at a market observer there is a 98 chance china will be in a cyclical boom 612 months from now will stop because it is china, and we do not know the nature of what we are dealing with relative to normal, mature, developed markets, i would downgrade that 295 . Because you do not trust the data . Stanley no, it is not the data. When i have seen a stock market explode on record volume and breadth like day follows night six months12 months down the road you are in a fullblown recovery. The reason that happens, i think there is enough of that that it is better than 50 . Think of how differently the world is thinking about that. He said had it in their minutes last month that one of the things of concern was the chinese come economy. Christine lagarde was on the cover of the Financial Times last week. Her biggest worry, the chinese economy. I am very intrigued with the policy possibility of a chinese economic recovery and how differently we may think if it actually unfolds. Caroline a live shot of london, bathed in sunlight. Xts phone is not looking hot, 5100 basically flat this morning will sto. Mark nokia has agreed to by alcatel. Joining us now, julian wright. Julian it is a game changer. Yesterday we had a Holding Announcement from the two companies we already have confirmation the deal is pushing ahead. There is urgency behind this. I think it is significant. We can talk about the challenges that companies will face in this merger. It changes the dynamic in the equipment supply industry. Previously you had to leading companies two leading companies. This now projects them firmly in with the other big suppliers. The whole dynamic will be change. Caroline they talk up the fact they will be an innovation leader, who brings the strength . Julian nokia brings strength in mobile broadband. They focus on their mobile business. They disposed of other business they did not consider core. Alcatel focuses on i. T. Networking, core networking they have not made huge inroads to the wireless market, except in north america. It is a marriage in the predominantly fixed wireless there are areas of overlap, but they will deal with these as they come. Mark other challenges . What was the big risk in coming together . Julian the main risk is they have to push this through. They have two businesses they have to bring together. Both know this will be hugely challenging in an industry that is moving on quickly. We are pushing towards 5g and Key Developments in other technological areas. These Companies Need to be at the forefront of research. Inevitably, for a. They will be focused on which areas will be retained, which will be dispensed. That is one challenge. Another challenge which all of the major vendors is facing is the transition to software. This market is moving towards a Software Based supply market. Hardware which these Companies Used to do is a commodity business now. The future is in software. The challenge is to develop that capability to create, manage and Configure Networks based on software. Caroline who are the clients . Julian the dream clients would be in china. Both nokia and alcatel have a strong presence in that market already. It is a big boost in that market if the two companies are coming together. You have large chinese vendors but there is a huge opportunity there. Other emerging markets in europe of course. The u. S. , less so, because the u. S. Has already been through the rollout, some of that investment has already been sunken. Looking very much towards asia. Mark where does this leave erics and erickson and juniper . Are they being lifted as potential partners . Julian this need to words a softwarebased plan also the need to support a new kind of telecom infrastructure. If you look at some of the Companies Like facebook and google, what they do in terms of data centers and processing capabilities to support their services. Some are moving in a similar direction. All of these vendors will have to pull in the capabilities to support those new types of networks. They will be looking for partners and companies with that expertise. It is more in the i. T. World than telco. I think there is a need for all of these companies to develop that capability. Caroline thank you very much for putting that in perspective. Mark lets take a look at the stoxx. Cks. Africas biggest insurer will be replaced. He became ceo in 2008. He has outperformed his peers. Bye to Julia Roberts. Caroline interestingly a few lower shares for lucent. The overall valuation of alcatel is more than some analysts were estimating. Alcatel will get a third of the nokia company. Chip equipment making a is and ill asml has come out with firstquarter numbers. Second quarter is looking lighter. On the move is next. Mark next they will speak with the alcatel executive chief executive. Quirks good morning. Welcome to on the move. We are minutes away from the start of trading. Going back from the alltime high. Let me bring you up to speed with the brief. Coming in inline with expectations and there is a deepening slowdown. Alcatel lucent has a deal valued for the largest supplier of mobile Network Equipment. The tech giant is said that it will face charges for violating antitrust laws. No change of policy is expected. A one trillion euro bond buying plan. Mario draghi is expected to be asked. Blame the imf or that. We will go to the market open with caroline. Caroline it is pretty much flat today and we have it flat as a pancake for the moment. Looking over at china with the 7 number coming in. It was inline with where the government wants that. If you dig deeper, the Industrial Production looks particularly weak and it is all about rebalancing and refocusing on the sumer and trained