Transcripts For BLOOMBERG Countdown 20160303

Anna very warm welcome everybody. 6 00 in the morning here in london. Let us talk about the markets, once again, the equity market. We are seeing a trend in asian session, money going into emerging markets and foreign exchange. The biggest threeday rally in asian stocks pacific since august. Manus we have the msci world, and we drew a comparison from that moment mid february. A. 38 three number of Different Things going into this, which are the beige book coming out. The job numbers were not bad. Inple were batting off this china, because you would get more stimulus. If you look behind the hood here, as in p trimmed losses. And canada, go canada. It is the only developed market that is actually put in a positive return 26 in. Go canada. Like and if you technicals, which some people do them a emerging markets reached two Technical Support levels, onld be for further gains the bloomberg best morning. Let us have the radar. We have strengthening in the u. S. , something we have talked about in the last few days. That is playing into the u. S. Government bond market. We are seeing readjustment there, 1. 85 for the 10year yield. It was 1. 65 back in the middle of february. It is shifting, along with expectations about interest rate. 34. 79, volatility is easy. That is something to note. The question is, how sustainable is this rally . There is a great technician in save this move, this rally. Because he does not believe it is broad enough. He does not believe liquidity is deep enough. That is the subject we will get into with one of our guest host. And upon the us get into the bloomberg first word news when there. Nejra the shanghai composite index which covers manufacturing lastinto contraction month, down from 50. 1 in january. Meanwhile, moodys has cut its reddit for chinas debt cut its credit for chinas biggest phone bank. It has reduced the outlook on 38 stateowned enterprises, day after cutting 25 noninsured Financial Firms to negative, from stable. Shale pioneer and Chesapeake Energy cofounder Aubrey Mcclendon has died in a car crash in oklahoma city. It comes a day after he was charged with rigging bids for oil and gas leases, and accusations he conspired to keeping leasing drilling rights artificially low. Police say he drove his car at a high rate of speed and hit a bridge embankment. North korea has fired several short range projectiles into the sea, after the Un Security Council passed tough restrictions. Exports of gold, titanium, and gold. A key source of currency for kim jongun. The Republican Party establishment is really out is 2012 nominee in a bid to stop on thetrumps march white house. Mitt romney will make the case against the real estate mogul today, after the super tuesday triumph. Romney does believe that donald trump is the right person to lead the party. Global news 24 hours a day, powered by 2400 journalists around the world. Manus thank you very much. Let us go to Juliette Saly in the asian markets. Juliet good morning to you. The rally is continuing here in this part of the region, with the exception of the hang seng index here in hong kong. You can see elsewhere there has been solid buying. Stocks now where they were at the beginning of the year, the regional benchmark index set to levels we havent seen since january. Let us have a look at the light trade, shanghai composite up, ignoring all of that negative news we just heard nejra cehic talking about. Standard poors also saying there is a risk for banks, due to the slowing and sluggish Economic Growth in the asian region for 2016. Investors taking that in stride, seeing very solid gains coming through. Today, higher by 1. 3 australias market having a fourth session of gains. Has been some really impressive movers in the region. I will take you through some of those. The reason we are not seeing the Hong Kong Market lower is the fact that developers and casinos are coming under pressure, down by one half of 1 . You see the weakness in the casino stocks as well. Elsewhere, there has been a call that australian banks could come under pressure, do not seem to affect the biggest lender today. They actually soared by 3 on the news that its rate compensation deal over the mine disaster in brazil last year, and iron ore holding a fivemonth high, though it did get laid in china. Helping out the players in sydney today. In japan, toshiba is a standout, on confirmation that it is in talks with lenders about potential new bail out deals. And the shipbuilders doing very well in korea. That is on reports that they may actually strike some deals with iran in exchange for crude imports. Everything looking pretty positive at this end of the world with this part of the world i should say. Threedayrt of gains, rally this strongest since august of last year. You. Juliette saly thank a bit of breaking news, the company,dvertising coming a little bit shy of estimates at 234 million. Just shy of estimate, taking an impairment charge of 13. 9 million euros. They say they can outperform the at market. We will be speaking to the management of decau decauz. Joins uscois decaux later. Manus George Osborne speaks at a later day, and according to his prepared mark scott u. K. Counselor went to the British Chamber of commerce that anna britain has not been able to leave and answer the most basic question about how business it would retain access to the Single Market, and all of the businesses it brings. Ryan chilcote is in london, or the bbc conference is being held. Good morning to you. It is a complex answer, isnt it . Where does the Business Committee stand on this issue . Ryan good morning. Look, the answer to that, at least according to the most recent poll done by the bcc, 60 of Business Leaders support remaining in the European Union. 30 think that the u. K. Should exit. 10 just do not know. Which was done and i should point that out as being an important a whole month ago it is pretty consistent with the other surveys we have seen of Business Leaders by other business groups and the United Kingdom. It is, you know, more supportive of remaining in the European Union than what you see when you look at the general public. Perhapss more divided then perhaps George Osborne would like to see. You look at the other pole we got just yesterday from the icm, that shows the remain and leave camps in a dead heat, 41 . That is obviously a huge concern to the chancellor. Look, he is going to be happy that he is joined by the german finance minister today. They will be speaking together at 2 p. M. It will all be about how britain is better if it remains in the European Union. There we other Business Leaders taking that side of the fight, as well. And that is important because there are going to be some thertant, strong voices in room, and the top Economic Advisor for the mayor of london, including the leader one of the leaders i should say of mp, john cap mucan moynahan, speaking against. It will serve as a real platform for all of this. Manus lets talk about that. I love the title on the bloomberg first word. Between the devil and the deep blue sea, encouraging the long term. They are sort of on the fence, arent they . Ryan they are on the fence. And i love that idiom. I am curious, it means that i think it goes back to the 17th century, people in the middle of the ship are above the top deck. It may be as little attempt to channel George Harrison and that song there. We do not know. But interesting, look, i think the important thing is to say that yes there on the fence. What they have said is in the Business Community, unsurprisingly, is a bit divided. Larger groups tend to support being within the European Union. Smaller businesses, which the bcc points out are the backbone of the british economy, tend to be against. That is kind of interesting. Let us not forget that the bcc a holier ago came out in support of the idea of this referendum. Which was not a nobrain or at the time. Wouldea that business even support the idea of a discussion or a referendum. You know, some people thought that business should stay away from it. So, you know, i think if you look carefully at what John Longworth is going to say in his speech, he also makes an interesting comment. Which is that Business Leaders need to decide what they want to do, not just on shortterm gain, but what they want to do for their children and their grandchildren. There is the suggestion that they should overlook the shortterm uncertainty, and that is being caused by the referendum, and look at the broader issues. Back to you. Anna Ryan Chilcote joining us from central london. At the conference to start, and you will be speaking to the director general John Longworth. No doubt, ryan will continue to bring him off that fence. Picking up brexit, manus . Manus the French Economy minister said that france would welcome bankers fleeing london. The is if the u. K. Leaves eu. This is in the Financial Times, a morning mustread if you ever really had one. Thoseere to reason like who roll out red carpet, channeling the Prime Minister a number of years ago, i was a we might have some repatriation from the city of london. Would have big consequences for the entire European Union. He spoke exclusively to bloomberg news. Certainly, a brexit result that would lead to the exit of the u. K. From the European Union would have huge repercussions, both economically and politically throughout the European Union. It would show that the European Union can be disentangled in the negative sense. And it would generate negative impacts because we would lose the benefit of economic and financial integration are not just in the u. K. For the rest of europe. Thes let us bring in jim, ceo of principal global investors. They manage 380 billion in assets. Always great to have you in the studio when youre in town. Theit, warning about European Chamber of commerce. Talking about the double in the deep blue sea. Kind of baffling, equity markets are in recovery. How do you look at our risk factor on brexit . Jim thinking about brexit, let us try to get some context of the successes and failures of the European Union. Huge success over decades, the european market. Free movement of goods, services, capital. We forget that. But that is the background to a lot of european prosperity over the last 23 decades. And indeed, the worlds prosperity. The Single Market is a great success. The eurozone, not so successful. The accord the not so successful. Those have been problems. And they have created this power feeling about the eu. So projects that went ahead of the ability to integrate them and then of course we have not getting involved in things. No way to stop that. It is no worry, no surprise that people get a bit sour about the eu. But they are forgetting the big benefit that came from it. Anna they decided a little while to get out of vegetables, jim. What about how much of the International Investment community is alert to the riskier . I was interested to hear what the fed was saying when he said the brexit is not a risk event for the u. S. Economy. How do you you do that comment . Bullard isk that mr. Correct in terms of the overall scale of the u. S. Economy. In a sense, anything that happens in europe is very diluted. Because of the internal focus of the u. S. Economy and its clear scale. If europe did something really silly from a policy point of view, or from a similar banking failure in europe, if you had a big recession in europe, say a minus 3 economy, the impact would only be about half a percent. Anna even if we saw the Banking Sector in london getting himself into hot water with high borrowing cost of a which some examples could be shortterm impact of brexit, that would be so diluted to not be that important. Jim on the u. S. For that is correct. Remember, the u. S. Is huge domestic economy. Also very global in its trade. One of the other reasons i am pretty structurally positive about the u. S. Is that what the u. S. Does is in great demand worldwide. Just think about what it is. Aerospace, software, pharmaceuticals, entertainment content. All of those things are not very pricesensitive. The people want them regardless. The chinese will want their ipads and iphones. They will want the apps that are developed in the u. S. They have a stronger position for that reason. While it is not completely oblivious to what is going on in europe, brexit, i see, is a big risk event for europe. I think the italian minister who talked about political difficulties in europe in the event of brexit is correct. I think you get a rebalancing of europe, the secondbiggest economy come if it leaves. Manus europe would do everything not a steroid to run towards the u. K. In terms of serving out trade agreement, but it would be spent on not reconnecting to new ones. The risk of trade shock, what are the biggest shock factors to come through for us here . Enormous. Could be you could see tariffs on u. K. Exports to the remaining eu. What would that do to, for example, the renaissance of the british car industry . Which is really there as a European Base for many of the global carmakers. What happens to the city of london . I have seen respectable estimates that 50 of jobs in the city of london are lost, that would be 60,000 jobs. Because the rules would be so tight on who could trade and who could get reserves in euros. So i do think there is a very big economic risk in brexit. Not necessarily, it turns out that way, but i would agree with a minister who said that the focus will not be on reconnecting, on disconnecting. Not for thet existential crisis that europe might find itself in if we did see a brexit, could see how authorities in paris, frankfurt, dublin manus part of the prime brokerage business there. Anna jim stays with us on the program this morning. Manus that is getting the day had down. We have two big indicators for the state of the u. K. And with the house price figures, followed by halifax. And European Services and a 15. Te pmi data at and as the day of the payroll, we have u. S. Initial jobless claims. That is at 1 30 u. K. Time. All on stimulus back, headed for the biggest threeday gain since november. That is the discussion, right here on countdown. Join us. Anna welcome back. 6 21 in london. More evidence of the china slowdown this morning. Composite output index, which covers both the services and Manufacturing Sectors, fell into contraction last month. Manus meanwhile, moodys has cut the Credit Rating on 38 state enterprises, just one day after doing the same to the government. , lets getccaughan to him on the subject of china. We have a great chart, jim, which shows the composite of chinese debt. Moodys is concerned about that levels. Other guests say they are not concerned about that in china because the government is not that indebted, when you compare it to the rest of the world. Obviously, this distention between corporations and government is not as simple as it looks on that chart. Jim no it isnt, because the slightly pink one, which looks like about 180 of gdp, that is basically stateowned enterprises. Primarily stateowned enterprises. That is government that actually. And you get that level, which is really out there, hardly any countries that have that much debt that is ultimately backed by the government. That level of debt becomes a deflationary impact on the economy. Has it stops growing, china played a bit of a trick in the last five years. By running up that debt in order to invest. A massive investment boom that has kept the economy growing much faster than a natural trend. This is getting to be the end of is kind of gdp getting to the end of that voyage. And at some point, chinese growth has got to really combat more sharply than many observers think. Manus we had this reading this morning, and our peace talks about this. Setting this growth talk. Terms, about the dollar 4. 25 . Hen that into perspective, 13 whatever way you cut the high of toxic pie up, this is a growth. Anemic growth, a hodgepodge policy, that paints a rather i want to be the grinch a rather armageddonlike policy. Jim i think what it tells you, manus, those people that said china will own the world were delusional. That is what really tells you. If china can grow for 25, that was the nominal gdp growth in dollar terms, that is about the best measure of current chinese growth that ive seen from official statistics. The 7 that is coming up for real gdp is full of adjustments and it is not very transparent. I think all countries, by the way, are getting in a muddle about the deflationary impact of deflationary technology. That is another subject. But if you look at nominal gdp, you have a much better idea of what is going on in the economy. Whether it is a soft or hard landing, i do not know. But they will not own the world. Manus will not be armageddon. Jim it could be. It is hard to tell. Anna how would that happen . So far for the Chinese Government has the back, to look liking it will fall apart. Jim if we make the china. Our argument, which i personally do not think is the most likely outcome, i look at China Foreign currency reserves down to about 3. 2 trillion and change. Falling about 100 billion a month. The imf estimate, given the size goese currency, if that much below 2 trillion u. S. A problem. It is coming down 100 billion a month, we are within a year of a crisis, in terms of what is really going on. Manus look, you manage a bit of money. A few dollars. Jim that is true. Manus that is get you on the spot for msci. Spiking since the low, i read a piece this morning saying this is not a broad or a debt. This is not a real volume recovery. Take us through your perspective. Jim the first thing on the point of it not having a debt, that is the fundamental of the market. That is a comment on the change the market structure. And you saw some people call it an unintended consequence of doddfrank and all the banking relation around the world. You have seen a withdrawal of bank capital from securities trading. The market has no shock absorbers anymore. What used to lead to a 2 lead in markets is now about a 10 move in markets because there is just no capital to stand in front of the rush. Anna you can only take so much money to move the market. That is what you talked about. We will return to that theme after a short break. Well talk about the negative rate environment. Us. Mccaughan stays with manus up next, British Businesses weigh in on brexit. We speak to one ceo who says the move would deter investments and threaten jobs. Anna air asia, talking to the international perspective. What would a brexit mean for Tony Fernandes and his assets here in the u k . K. . Manus 6 30 in london great let us get the bloomberg first word news. Nejra more evidence of the china slowdown this morning, as the composite output index which covers both services and manufacturing, fell into contraction last month. Inhit 49. 4 , down from 50. 1 january. Ceoe pioneer and chesapeake has died in a car crash in oklahoma city. Mcclendon faced accusations that he conspired to keep the price of leasing drilling rights artificially low. Police say he drove his car at a high rate of speed and slammed into a bridge. Severalrea has fired shortrange projectiles into the sea, as hours after the Un Security Council passed to the toughest sanctions yet on pyongyang. The exports of gold, thanking them, rare earth, and gold, achieve source of currency for kim jongun. Will todayancellor attack the argument of colleagues and his conservative party pushing for britain to leave the European Union. Thege osborne will urge backing of the merchant, as he speaks along his German Council part, Wolfgang Schaeuble are. Isemy corbyn will begin reform for the Banking Sector. He told the bcc conference the finance industry must not be an extracted industry that looks at consumers, on, and Small Businesses as a cash cow. The Republican Party establishment is really out is 2012 nominee in a bid to stop Donald Trumps march on the white house. Mitt romney will make the case against the real estate mobile today, after trumps sevenstate super tuesday tryon. A source told bloomberg that running is that believe trump is a right person to lead the party. Global news 24 hours a day, powered by 2400 journalists around the world. Manus let us bring you a bit of breaking news on the margin in the business one of the largest shareholders in the business. Part of the news we had but the that bprgin on adidas, estimates out there. They did make a loss in the Fourth Quarter of 44 million euros. That is obviously from the profit in the year before, but 140 million euros. An operating loss, excluding goodwill and an impairment charge of 7 million euros. We will get more on this adidas story shortly. In the meantime, all about brexit. Anna and that is still to come, and the meantime, i British Business weighs in on the brexit today. Let us speak to one of the Global Leaders who has warned against the u. K. Leaving the European Union. Saying the move would deter investments and put jobs at risk. Joining us on the line from kuala before is air asia ceo Tony Fernandez. Great to have you here. I wonder if you can put this into perspective for us. To much less likely are you invest more in the u. K. If the u. K. Goes for brexit then . Maybe i will spend the question the other way. That in my part of the world, i am urging for more economic union. I think that will reduce costs, increase the market size, and create more jobs. And i think britain pulling out of the eu means that it is a less attractive site to invest. A smaller market. So that, i cannot put a percentage as to whether that is like theyre not, but i think it would be a blow to the british economy by pulling out. Manus part of the discussion in london today will be the discussion from part of the representatives of British Businesses. John longworth saying it is a choice between the devil and the deep blue sea. He is with a bridge of chamber of commerce, staying with an essentially unreformed eu, versus thinking about the longterm, that is the risk here. Stay, vote to stay, but there is no great change has been achieved by David Cameron. Or is that a misinterpretation . Tony well, i dont think i have the devil in the details either. But from what i can see, obviously, the European Union is much more than just the british. From the discussion point outside of the economic view, i think it is very clear. Every economic grouping, whether is your,. , weather freetrade has benefited the people in that area. Where the debate is is the administration costs. Parliament, etc. I think britain is right to ask for reform. For instance, we think all of the others confuse the issue. And i think that needs to be an ongoing debate the trying get that reform. I think britain is taking the lead there. But i think to pull out because of those reasons would have a very negative effect on the economy in britain. And even if i could add on the immigration side, sorry anna tony, i was just going to ask you about matters we are showing pictures of your aviation interests as ceo of air asia that but you also have interest in football here. People were suggesting that if we were to see a brexit would make it harder for the u. K. To secure International Football talent. Do you think that holds water, really . That argument . Tony i never thought of that, to be honest. Being a championship, i am less likely to look at european players. But i think there are all those sorts of things that people forget about. You know, the fact that there is labor freedom, movement. Then you imagine that britain will have to renegotiate with every country in asia for a trade agreement. And britain will be less powerful than if it was in the European Union, a much larger market. And take airbus, which is obviously very close to my heart. Would we have bought a british plane . But the European Company providing most of the jobs, i bought 200 aircraft with David Cameron and the u. K. An engine manufacturing plant. And wings. So i think there is a huge upside in staying in europe. And even on the people side, immigration policies etc. , if you look at the amount that immigration has added to the u. K. Economy, versus the net outflow, people focus on the net outflow. But they do not look at the inflows to the industry, the economics of the immigrant population bringing to britain. I think the studies are very clear. Anna tony, thank you very much for joining us. Air asia ceo, Tony Fernandez on the line from malaysia. Manus all about the guidance. We go to andrea. Let us talk about the death what are you looking about . Fourthquarter margins or the guidance were they say what they are going to do for the rest of the gross margin for this year . Going to be 47. 3, 47. 8. That is up on the estimate andrea i think there have been a lot more upbeat sales for this year. I think that is actually really good news for the ceo coming in. Looks like they have a bit of momentum before it even starts. Anna talking more about Consumer Spending, are they . Andrea they are. The initial current climate, with the worry of brexit and closing prices could even go up for britain. And its a pound goes down, it is quite unusual that they are talking about spending. Adidas,ou look at nike, tell us what you think. Is the challenge coming back, the gulf business i think is also Getting Better here as well sorry, the other business. Andrea they are not in a real battle with nike. Or under armor. They have to get the brand going in the right direction. This looks like it is they have a bit of momentum going in the right direction. They have their collaboration with kanye west. Love him or hate him, he is a huge name. Around the brand. [laughter] to get thingsod going in the right direction. Anna where you stand on this sort of consumer business . Jim and reacting to you much more about the different brands. But i would tell you that in the consumer, one of the great puzzles of the last 23 years of the economy, u. S. And internationally, has been that the benefit of Lower Energy Costs is not getting spent by people. And manus is that just that society has changed . Jim we usually do. There is actually never been a recession, with Energy Prices down. And recessions are almost always triggered by a spike in Energy Prices. So we are in the opposite situation. This would be unprecedented territory, if the u. S. Were to have a recession in the next year or two. Having said that, i think what went on in the last 45 years is that the u. S. Consumer, in particular, and to an extent internationally, has been rebuilding their balances after the financial crisis. There was too much of a debt in the west there was too much of a debt explosion. Are paying down debt, increasing savings. Therefore, they are not spending the benefit they got from lower commodity prices, at least not yet. Anna the long psychological impacts that of the crisis that we went through. Jim mccaughan, thank you. Andrea phelps thank you. Adidas, heg ceo of is going to be on bloomberg at 12 30. Manus up next, advertising on a global scale. It has what it takes to outperform its peers increasingly. The ceo joins anna and i. Anna welcome back. 6 43 in london. It is the Bloomberg Business flash. Nejra shale pioneer and Chesapeake Energy cofounder Aubrey Mcclendon has died in a car crash in oklahoma city. It comes a day after he was charged with reading bids for oil and gas leases. He faces accusations that he conspired to keep the price artificially low. Police say he drove his car at a high rate of speed and slammed into a bridge. Chairmanharmaceutical has left the drugmaker. The news comes after three to mulch was days at the company, following the ceo michael pearson. Valeant has delayed fourthquarter results, and disclose it was subpoenaed by the sec. Stock is down 50 . Miramax, though the company that owns pulp fiction, has been brought by airmedia group. The deal will help spin off the al jazeera media network, building on plans to diversify into general entertainment programming. It ends month of uncertainty about the future of the santa monica, california film maker. U. K. Prime minister david camera and french president Francois Hollande will unveil a cooperative drone project. They will each commit 750 Million Pounds to build a prototype unmanned aircraft, which has been described as the most advanced vehicle of its kind in europe. Will benefit from the project. That is your Bloomberg Business flash. Manus thank you very much. Let us turn to paris, and in our studio, we are joined by decaux. Ancois revenue up 4. 9 . You released some numbers, a good allaround story. I want to get your take. The world has fallen into a real deep concern about growth, about the state of play in the first two months of the year. Are your clients coming back from what theyre doing on the advertising . You have the real finger on the Global Economic pulse. Give us your take. Know, we operate in more than 75 countries around the world. So as you say can we have a very good take on what is going on in the advertising market. And we had a very strong result in 2015. We were up midsingle digits in europe, north america, up highsingle digits in the asian pacific. Reflecting a very strong resilience of our chinese business. With a very booming ecommerce client category, which is investing heavily in our advertising systems. 2016, we have the best start ever. With the guidance of about 9 organic growth rate for q1 of 2016. Reflecting market share gains, out of home is going. Given the fact that the audience is growing. Organization is very strong. And traffic keeps going up. And as result of a we take advantage of this growing audience. At the same town, we are embarking on the biggest digital rollout ever. Starting next week in london, we will install up to 1084 inch screen and the london terminal. Which is the biggest digital platform ever built. Designing a new dataled audiencetargeting platform, where advertisers will be able to change content, depending on whether information, location, and therefore basically displaying the right message at the right location to the right people. Jeanfrancois, what about plans around mergers and acquisitions. Doing deals . The strength of your Balance Sheet was a key competitive advantage. It will allow you to pursue external growth opportunities. Very tantalizing. What kind of opportunities are you looking for . Jean we are looking at a lot of companys around the world. Mostly, bulk acquisitions like the one we announced a few weeks ago. With the excbs outdoor assets in latin america, which would comment what we purchased from last year. And we also acquired a business in peru. And in france, we are looking at buying metro bus, which is owned by two businesses. Both, and many acquisitions are subject to regulations and antitrust approvals, for the Mediumsized Companies can no longer invest in digitization. Which is the name of the game. So we have a very strong Balance Sheet. We have almost no debt. We have been very disciplined, and terms of mergers and acquisitions. In buying companies that are multiple, but buying when they make sense. And i think we have a very strong track record. Being familyowned, 65 of our equities are owned by the family here. And we were very strong alignment with our shareholders, because we invest our moaning. Organicit is m a growth, and makes a hell of a difference when it comes to sustainable profit growth. Manus before we finish the conversation that i want to get your opinion. We have your economy minister, writing in the Financial Times in regards to brexit i want to get your take. Obviously, you do business here. You said you are launching a Massive Campaign here next week. The eu collective energy will be spent on winding existing links, not creating new ones. If britain votes to reject membership of the eu. How will it change your perspective on growing your business here in the United Kingdom . What a brexit damage your revenue . Would it damage or Growth Prospects in the u k, your investment in the u. K. . Manus, unfortunately, i do have a crystal ball. And i cannot tell you what would be the impact of a brexit on gdp. But the industry is driven by gdp, Consumer Spending. Brexit reduced Consumer Spending in the u. K. , given also the fact that london is also very international, the most International City in the world . That is very hard to tell. You have about 11 of total revenues. So it is obviously a very important market for us. But we do nearly 90 of our revenue outside of the u. K. Having said that, we have established in london a very strong digital hub. Given the fact that it is the most digitize market, 50 of revenues by 2015 will be coming from digital, we are investing heavily into the contract. Expecting a decision very soon on the underground advertising concession. What myhe end of march, take is on brexit, very simple. Outside of my home country of france, for 35 years about 10 years in germany and 25 years in the u. K. I think we need the anglosaxon approach in europe to create a very successful european economy. That we provide sustainable jobs. I like the entrepreneurial spirit of the u. K. I think we need that in europe. I like the fact that it is a more liberal market, in terms of labor, which we clearly need of france. And having lived again in germany for 10 years, now 25 in the u. K. , i think we desperately need the anglosaxon approach to create a better europe. And at the same time, i think that the brexit would probably also fuel some more tensions between Northern Ireland and where you are coming from, manus. Scotland, wales, are likely to vote in favor of remaining in the eu. I think it would be a shame for a great nation like great issues to not have these with parts of manus you are the only ceo that manages to discern the accents. For that, sir, you will get more airtime right here on countdown. Thank you so much for joining us. And being as frank as you are. Anna definitely not on the fence there. Thank you very much. Great to have you on the program. The European Central bank will cut the deposit rate for the below zero, at the next positive announcement. Such a move could hamper liquidity in the debt market, and it is already struggling with the impact of qb. Manus one measure of market liquidity has fallen by more than 50 since late 2014. Let us bring in jim mccaughan, ceo of principal global investors. A couple of lines on the pcob, the Deputy Governor is saying that Monetary Policy will remain prudent. Anna remaining stable. Manasquan that is what we all want. But china, what they do, that will drive the rest of the world. The bond market has been on fire. We have a cracking story on the bloomberg is morning, negative and less liquidity in the Government Bond market. There is no death to Government Bond markets. Jim negative rates puts a squeeze on banks because they pay money to depositors at the central bank. It squeezes margins. They cannot pass on those negative rates too many depositors. That is very bad for banks, and a time when they will have bad tots, nonperforming loans energy and metals sectors. So this is a nasty squeeze on banks. And it makes even worse the withdrawal of bank capital from the trading system. That was present before. You know, the bonds have been on a firewall. Maybe there was too much reaction fundamentally on the downside, and both equity and bond markets. And the fear was overdone. But it was overdone because of this lack of liquidity. It really does not take much, and historic terms, to move markets. Anna is there a way to have negative rates and do the things you wanted to do, not have negative consequences . Talking yesterday about how others are using negative rates, and that makes you think, are they looking at japan . Doing something more compensated around Interest Rates . Jim ultimately, i think the problem is they are being driven to negative rates because of unbalanced policies. What i mean by that is the ecb has been driven to negative Interest Rates, to a very high volume of quantitative easing, because the monetary tools are available to them. Is problem in the eurozone been excessively tight fiscal policies, lack of structural reform. So for example, the banks did not raise enough capital when they could. They are now under pressure, and stock prices are very low. That creates risk in the system. It slows the flow of credit in the system. Low in why i am somewhat my expectations of the euro zone economy. Manus we talked yesterday, some banks are overextended Credit Conditions in his view. Also grading future potential risks in the system. That is a fairly dramatic course, from a very sizable bank. Jim it is. And i think from my observation, i would say he is right on the money there. Because the lack of balance in intoy has pushed the banks a nasty squeeze. Because it is all being done by Monetary Policy. And the most optimistic thing i saw the last six months for europe was that when there was that whole slew of bank Capital Raising for what happened in september, october, november, that get squeezed out however as the markets got worse. And it is the banks but if they get the chance, they should be raising a lot more capital. That is what europe actually needs. , thank youccaughan so much. Manus what else are we going to talk about today . Brexit. John longworth joins Ryan Chilcote. Indicated up 12 points. And the usa is trading higher. Decaux the brexit battle intensifies. You get chancellor George Osborne is set to attack anti colleagues when he speaks at the British Chambers of commerce conference. Caroline as chinas brooding party elite fresh pmi data shows more science of a slowdown. Ay Aubrey Mcclendon dies in car crash when they after being charged with rigging bids. Guy welcome to thursday morning. I manus cranny. Anna i am anna edwards. Dids 7 00 here in london lets talk about the equity markets have been. A bigger session coming through in the asian session. Asian stocks three days of gains. Increase. The biggest threeday increase since august of last year. Money flowing into emerging market assets here at assets. Manus they are indeed. The back on the manufacturing numbers, the group last night. They talk about economic expansion. China is getting ready for more business. When you look at these markets, london, paris and frankfurt, lets look at london gaining. 1 . The stoxx 600, the biggest rally since 2011. Where up 12 . Those losses have been contained. Varying under 3 . Anna lets go through first word news. Caroline hyde joins us. Caroline more evidence of the china slowdown. The output index Manufacturing Sector fell last month, it hit 49. 9 points. Meanwhile, the Credit Rating has been cut the last phone company and its biggest bank. The credit assessor has reduced the outlook on 38 enterprises. Cutting 25 Insurance Financial to negative. Energyoneer it just be died in a car crash. It comes a day after he was charged from rigging bids for oil. The company traced accusations that he they say he drove his car at the highest rate of speed. Korea has tried several short range projectiles into the sea just hours after the u. S. Security Council Passed its toughest sanctions yet. Those sanctions limit coal. Backing for the new sanctions. The u. K. Chancellor will attack the arguments of colleagues on his conservative party who is pushing britain to leave the European Union. He speaks to them alongside the german counselor german chancellor. The Republican Party in ahment is reeling bid to stop all caps march on the white house. There set to make the case against the real estate mogul later today. Republicans told bloomberg that romney does not believe trump is the right person to lead. Global knees 24 hours a day, 24ered by 24 how hundred hours a day, powered by 2400 journalists. Manus you are set for a higher opening. Your markets, juliette is standing by. We are getting comments coming through before this today growth ceremony. It comes from the chinese. Juliette, take it away. Juliette did morning, manus and anna. We are seeing risk on in this part of the world. We are about to head into the npc in beijing. Negative commentary, saying sluggish Economic Growth in asia could impact banks in 2016 and moodys cutting the outlook on china. These,look at all of fine. Closing high by 4 . It is now at its highest level since midfebruary. Sinceghest level december. The nikkei closed higher by 1. 3 . The austria and then australia had a full session of gains. Here in hong kong, there has been a switch out it mainly due to some weakness you can see coming through from a number of these Property Developers in the casino stocks. The casino stocks have been under pressure. It has been a positive section thats a positive session here at positive session. The biggest threeday rally since august of last year. Every sector in the black today. We are seeing money going into some of those emerging market currencies. The aussie dollar of course higher. The Malaysian Ringgit has been a standout. The Malaysian Ringgit up. 8 . Of the yen, out back into equities and emergingmarket, currently making it three sessions of winning in asia. Anna Juliette Saly joining us from hong kong did the latest indicators on china show a picture of the economy that continues to suffer on all fronts. The purchasing managing index slowed in february. Manus it did indeed. To talk us through what is going to happen in hong kong, were joined by chief Asia Economic correspondent, enda curran. This flash rating, if we look at it in dollar and the yuan terms, it does not bode well. The market seems to be batting it away. Fill ushere it in. Enda we are in a pattern here where we are getting no end to the negative drift on chinas economy. A circuit getting breaker to suggest chinas economy has hit a hard landing. At the same time, were getting some stability on the markets. In terms of what is happening on the shanghai comes in exchange. Shanghai composite exchange. Sentiment on the Currency Exchange rate is very fragile. The feeling that he could turn at any point. Of course on the underlying economy, there is a sense that it has turned a corner, even after a yearlong campaign of heavy stimulus lifting. Direct spending by the government. The overall story on china continues to feed into this one outlook the reading you mentioned. China has yet to turn a corner. Downbeat. Anna the npc me to get this weekend. Over going to get clear as how the government is going to . This just going to going to tackle this. Does it need to be a bit more hybrid . Apt. That is quite the one to watch will be the physical side of things. We already note the growth range this year did year. They are probably going to have to spend more money. They have room to spend more money. Aroundl bank said 4 of gdp. The narrative next week will be how much are they going to spend . Where is the money going to go . That is the nearterm. The Bigger Picture will remain what we know about, trying to cut back on these industries suffering from excessive commodity underlying. Maybe high Visibility Like you say that the government is aware of risks and they are willing to take steps to offset it. Manus thank you very much. Lets bring in anthony cragg. Great to have you with us. I love your line, everybody banks of the emerging markets as Central Force of peril. China and what china does is incredibly important. Monetary, fiscal, or indeed by the currency. As we set up the growth festival, how do you look at it . Anthony clearly it is a bad number. Investors in china for a long time shouldve been focused more on the Consumer Services side of the economy which is bigger. We have made positive returns in each of the last four years in china, including last year. Even though the economy was slowing. Focusing on retail, some of the tourism. Trends like i was in i was in tokyo yesterday, it is full of Chinese Tourists here it tourist. Real wages were up last year. Chinese new years sales were double digits. The consumer is still spending. Trend of moving the economy from manufacturing to services is still intact. Anna are we looking for the chinese to do more to to relate the economy . Do it in the right places in and in line with strategy where they are taking away from heavy industry. What is the smartest move for them to make right now . Rrr. W the critics say that is an ending boom which many worry about. Theony it is interesting, reaction of the shanghai market has been on the upside. Manus the longest rising streak this year. Everybody had a bit of a bounce. Anthony that is true. You could argue that the worst numbers as they were empowering the government at the npc this weekend to be a little more aggressive, a little bit more stimulant stimulate stimulating. Every thing we have seen from reforms. The adr includes a positive catalyst. Not just monetary stimulus. Manus we have a great graphic for you. Emergingmarket debt. The gorging of debt. The feast of debt, nevermind the feast of stimulus, the feast of debt for china. The truth of it is the chinese have built an incredible growth story which grew 13 in dollar terms in 2015. And you want terms, it came in at 7 . In you want terms, it came in at 7 . Anna how worried are you about the debt in china. Some look at it and say all that corporate debt, that is the story in china others say that is the government Balance Sheet. Anthony all of it is ultimately government. I think at the end of the day the Chinese Government stands behind its debt. Part of the reason for the debt is anyway, china itself got fixated on this high gdp number. It wouldnt allow it to moderate as it needed to moderate for the second largest economy in the world. Anyway, i think investors could learn to live the new normal of the lower Economic Growth rate. Wraps first of all, the government itself needs to learn to live with that instead of disbelief trying to pretend that it is 15 years ago. Anna where do you see evidence where they are still living that for the story . Anthony there is a fixation on this 7 number. Internally. If you compare that with every other major economy, except perhaps india, youre still way above the level of the country. It needs to be allowed to moderate gradually. Remember the slowdown is in its third or fourth year did this is not happening overnight. Manus i want to know whether billion markets 1. 8 and we are only four days into march. I know that is the middle. Are you talking about reentering this market . Is your cash loan back to e. M. . Anthony we are still positive. We are buyers. Assets are growing in emerging markets. Remember that follows 80 billion outflow. Meannk what it does emerging markets are extremely under owned. There he crudely, if you wanted to get out, you would have done so by now. Would behe next move big Fund Management groups. They are already out. Anna what are the opportunities you see in emerging markets . Enda the indian budget is a rather good one. India has a tendency to overpromise and under deliver. This is a nonpopulist budget. And extend up has been indonesia , where some of the infrastructure has been taken needsnd it desperately and for such a to unlock its potential. The other interesting part is it cut Interest Rates since the fed raised their rates. Opinion,to immerse our au contraire, indonesia is going the other direction. Cragg, manager at wells fargo asset management. The debate over the uks eu the runup footage and referendum where live at the British Chamber of commerce to speak to the director general, John Longworth. Anna welcome back. This is counting down. Lets get to bloombergs business flash. Heres caroline. Caroline the big cofounder, Aubrey Mcclendon has died in a car crash. A day after he was charged with rigging bids. Mcclendon faced accusations that he conspired to keep the prices artificially low. Police say he drove his car at a heart rate of speed. He slammed into a bank embracement a bridge embankment. The german sports shoe maker says that income will continue. Operations will increase 10 to 12 . Purchasen will costs in asia. Ukip Prime Minister David Cameron and french resident will unveil a drone project later today. The two countries will commit to build a prototype on an unmanned aircraft. The most advanced vehicle in europe. They are among the Companies Expect to benefit from the project. That is your Bloomberg Business flash. Manus caroline, thank you very much. Business leaders and politicians, the meeting in london. Brexit, the annual conference. Anna Ryan Chilcote is there. Joining us with John Longworth. Ryan. Michael good morning. Ryan good morning did where in the heart of if youre a business that exports outside of and has the then youre not going to sports thing in the eu. That is what those sorts of businesses are telling you. All businesses follow what is rational. What is more important for the u. K. Is the country as a whole, the people of the country and the Business Community as a whole. Ryan youre not sure what the right answer is. Is it a choice between the devil and the deep blue sea which was not a segway of channeling. Star advantages of staying in and leaving. There are shortterm risks of leaving. Their longterm risks for staying in. What we need to do is get the facts out there. What i am concerned about at the moment is there is so much we dig list things. Probably expecting to deploy the Health Minister and say we have a plague of boils and locus. The danger what is of the government pointing out the peril of exiting the European Union as they have been. John the country should be laying out the facts. The people of the country can make the choice. Is not ok for the governments sake we are coming down on this particular side did for the government to say it would be disastrous which is basically wrong, if there is a chance we might hope to leave, there is a chance we might, that would be very bad for the u. K. How is the government going to roll back from that when they persuaded the markets and the currency markets that it is going to be a disaster . The day after we leave, there is a it is not a disaster, it is all ok . Otherwise all of this will crash. You toernment asked lobby on behalf of of remaining. We said we have a divided membership. Were going to lay out the facts of staying in and leaving. We are going to survey the members and report faithfully with the members believe. Ryan d feel like youre under pressure in a conversation . John of course it we say like it is without fear or favor. The Prime Ministers negotiations held far short of what we expected. It is not going to campaign in favor of or against it, but give me your personal view. Areink having read that you a closet brexit man. John do you really . Going to sayu are is people should take a longterm view and you focus on the real danger of brexit and shortterm uncertainty here longterm, you do not indicate that there is necessarily a huge problem. John as i said a moment ago, there are shortterm risks of leaving and longterm risks of staying in. There are actually risks on both sides of the equation. S my job ryan and your personal view is . John i am not paid to have a personal view. Did thelongworth, director general of the British Chambers of commerce. Will not give us a personal view but says the government could do more. They will campaign on either side of the fence. They will host quite the debate here at their annual meeting. Back to you. Anna ryan, thank you very much. Ryan chilcote at the bbo see. Is it Ryan Chilcote . Anna lets talk about where markets are going to head. Manus these are the fair values. Lets check in here. This is all of the u. S. Futures getting back a little bit of value. The stoxx 600 come the best run since 2011. The base book looks good. Sian equity markets anna that will do it for countdown. We will leave you with on the move. We will see you tomorrow. Welcome to on the move. It 30 and berlin. Were kevin you down to the european open. I am guy johnson. Here is what we are both watching the brexit battle. French economy issues the toughest warning yet for the risk of a brexit. What is he going to say for himself. Asian stocks extend the rally, after betterthanexpected u. S. Data