Italy german spread, all narrowed. Some of the biggest moves we have seen in the market. Convergence is absolutely clear. Lets see what the detail is in terms of what is happening with the greeks. The greeks are going to receive a little more liquidity in terms of emergency funding. 10 points or 11 points coming off the london market today. Dividend housing Marks Spencers doing a little better. In london equity markets are opening a little higher despite china seeing a slowdown in manufacturing numbers. Lets get to some individual stories we are keeping an eye on. Deutsche bank is said to be nearing a 2 billion euros settlement. Ubs said 1. 5 billion in settlement. That was their record. Some companies had 6. 5 billion dollars. Will they settle with regulators . Stock up 1. 4 5 . I suppose the issue is to get big litigation out of the way and crackdown on reorganizing your bank. They had a sales number at novartis that was interesting. Operating numbers will be ahead of what they were originally. The stock up 2. 2 percent. We are waiting for ericsson to open their margins. They took a 600 million kroner restructuring charge. Mobile youre going to see a little softness. They got competitive in terms of alcatel and no kia nokia coming together. These are three eyes three things to keep an eye on. 75, 55 is where it trades on the downside. The Central Bank Says there is room to remain in this lower band of rates. They may have room to cut rates. That is where you see the big move. The new Zealand Dollar down 1. 5 . Back to you. Thank you very much. Three minutes into the open. The ftse 100 a little bit firmer. The dax is higher by 47 points in frankfurt. Some data out of france. Im getting used to saying this. The pmis come in. Manufacturing in contraction at 48. 4. Services coming in at 50. 8. The composition pmi coming in just an inch above expansion territory at 50. 2. A little later we will get a reading on german manufacturing. We will get the same reading for the eurozone as a whole and the u. S. At two 40 5 p. M. We will bring you those numbers as they cross. Pmi data across the planet, we had some readings of manufacturing activity. Both missed estimates. Shanghai composition on a skyward trajectory despite the data. It is up more than 110 . Lets begin with the data. We are joined by brian from tokyo. Lets kick it off with china. This pmi figure is not very reassuring about the direction of the chinese economy, is it . Brian no the chinese economy is decelerating. What was disturbance disturbing is the weakness. That is part of the larger goal to wean china out of debt fueled investment led growth, and it is really being felt at the economic level. Jonathan we get excited about what the peoples bank of china does. We know the bank of japan gets very busy. I am looking at japanese manufacturing slipping into contraction. What are the details, and what can policymakers do . Brian the manufacturing weakness is centered on domestic Japanese Companies that arent getting a big currency boost like the Big International exporters. That plus a week consumer economy has cap japan in the slow growth mode. Kept japan in a slow growth mode. Whether they are going to dip deeper into a more intensive qe program or try other things to get the economy moving again. Jonathan i think there will be a temptation to look at these data points and talk about a regional slowdown. Is that a step too far . Is this a real domestic story for china and japan that they have their own problems internally . I think so. In china you have Economic Policy makers at war with themselves. They want to slow things down shift from debt fueled investment to a more balanced growth pattern. They are afraid of going below 7 . Japan is calling out of deflationary environment and a recent recession, and they are very particular issues on both sides. Jonathan a big thanks for joining us. Lets get the investors take. We are joined by the chairman of the investment committee. Stephen, great to have you with us. We cant talk about china without talking about the chinese equity markets. Forget the data. Its only a bubble if you have not got a position in a bull market. Whats your position on china . Everything is a bubble because it is all about Monetary Policy. That has confounded pessimists that when you have aggressive easing and things like reserve requirements then you change the game. That is what has happened in china. Its hard to see that changing. For china specifically, when you see a weak data point everyone gets excited, and they say what is the bank of china going to do next . We know there is putting more space to cut the rate. At the same time bad loans nonperforming loans. How much space is there to get aggressive with rates . Its a tradeoff, isnt it . I think there will be more easy money to come. We have seen from the figures overnight that the fundamentals are deteriorating rapidly. Its going to be a tough one, hard for investors on the other side of the world to see a lot of clarity. The lag time of what the peoples bank of china have done, when do you brian expect to see that . Typically, Monetary Policy has a lag. We have started easing the back end of last year. It probably wont be until 2016 that we see some sort of pick up. You have some savvy investors who are saying where you play this is looking at some commodity resource stocks that would be absolute trash. This is a perverse situation. The chinese stock market has doubled, yet all those companies that do business with china have been absolutely trashed. There is an argument that if you see a genuine pick up in Chinese Business activity next year and maybe sometime this year, there are good Access Points being incredibly low prices. Jonathan do you agree . I do. Longterm investing is about understanding markets are volatile and there are opportunities for entry and exit. The commodity super cycle story which a lot of people believed in, has unfortunately exploded. A lot of people lost their money on that. Maybe the emerging markets story in china is the ultimate story. It will come back at some stage. Jonathan the debt overhang is pretty much present. You have seen a dollar dominated bond in china and a default in china. Do you expect more of that to come . Some people think this is a good thing, a little discipline. We shouldnt be strangers to debt defaults. Overhangs of substantial depth debts are not exclusive to china. We have seen when monetary authorities are sufficiently robust as they had been in europe then Monetary Policy does work. For investors taking longerterm views, perhaps they may have missed the shanghai move. Perhaps the way to trade that was with commodity stocks. Jonathan coming up facebook does not like the dollar. We will talk about that. And it is another multibilliondollar settlement on the horizon for big banking . Just maybe. We will talk about that a little later. The ftse 100 higher. A big move on u. K. Stocks. Another inversion deal. I will try to bring you more details later on the show. We are back in two. Jonathan u. S. Companies lets talk about them. Facebook and ebay cited as a cause for concern. Those sales hit by a stronger dollar, so much that facebook missed analyst estimates. We are seeing many of the exporters in the u. S. For the First Time Since 2012 growth missed forecast. Sales up 42 . It could have been 49 growth if you strip out the effect of the stronger dollar. Clearly it did have a significant impact. If you are looking at the numbers, they were pretty stellar overall. We were seeing Strong Revenue sales. We see a significant uptick. Quality, reach, this is what they are seeing in advertising. Mobile makes up three quarters of their advertising business. We all want to be on facebook on our phones. The Company Wants to target us the a are smart phones as well. 4 billion videos are watched per day on facebook. We are all logging on more. We are seeing 1. 4 4 billion of us have a facebook account across the world. Nearly one million of us are looking at it every single day. User growth advertising growth, and they are hiring like crazy. Cap increased their headcount 48 in the last 12 months. Cap have more than 10,000 working for them across the board. It seems people are more worried perhaps about the stronger dollar. The most important thing is boosting underlying business. Many are convinced by Mark Zuckerbergs vision for the future. Ebays future is one to be worked out. They beat analyst estimates. Sales, profit both grow despite the stronger dollar. We did see growth for both, even though we saw a loss. Cutting growth, thats why they are able to reinflate profit. In two 2400 jobs went. Investor splitting themselves up. The smooth separation of the paypal unit from the Online Market will occur in the third quarter. That is clarity. Everyone wants to know when that might happen. Shareholders have had them under such a strain saying we want to do splits apart. There is more value in new separated. There is a fight for ebay going forward. Paypal is bigger than ebay. Paypal brings in more revenue in the quarter, so when they part ways, what then for the value of the marketplace . How does it cut back the presence of all the other retailers going online . What can it do to lure us back . Jonathan Stephen Isaacs is still with us. He is the chairman of the investment committee. The underlying numbers at facebook, the dollar takes a bite out of sales. You look at the move, and it is trading up 43 times estimated earnings. How do you play these stocks . This isnt exactly a cheap stock. You have the fact that Mark Zuckerbergs shareholders are a secondclass, and they are hiring like crazy. They are out of control. It looks i get fantastic stock. If you buy here, you need a huge amount to buy here. They are picking winners. This is a detailed game where you need absolute stockpicking skills. Thats a skill some people have. Jonathan the market is dominated by huge macro top down. Now we are talking about the u. K. Situation as well. I have asked people about the u. K. Situation. They tell me and matters, but no one has told me how to play it. Can you invest around it . Stephen i dont think so. The market didnt move. Its only over several years that you get the impact of less business friendly politics. I think thats arguably the case now. I happen to believe miliband will win. I think the polls are right. I dont think he will win the majority but they will form the next government. Jonathan why unfortunately . Stephen from a business point of view, higher taxes, greater regulation, discouragement, all of those are going to reduce the talent pool and make entrepreneurs less excited about investing in the u. K. Jonathan is it possible that labour came and spend, spend spend and created a little bit of an economic boom in this country . You are talking about the end of austerity. That is why it is dangerous to play this. This is negative for sterling. It is a binary view. The tailwind of some of the measures the tories took an office will still be there, much as when tony blair came in. He had a fantastic tailwind that lasted almost 10 years. You already talk about longer terms of productivity, the speed limit of the economy i think will be changed with the new administration. Jonathan thank you very much for joining us. Still to come we will get the latest dealers of the trader accused of participating in the 2010 flash crash. More on that after the break. Jonathan good morning, and welcome back. 23 minutes into the open. Here in london, a huge stock move. Up 35 . The British Company being bought up by arris group. It is a small deal compared to some we have seen but it matters because they are incorporating into the u. K. To try to save taxes. Its an inversion deal. We havent talked about them in a while. You thought they would stop. They have not. I will bring you more details. The british trader contributing to the flash crash. Conditions of the veil include that he sleeps at his parents theyll his parents home. What else to we know about his parents conditions . Its not clear that he has posted it yet. One condition is that he ponies up about 5 million pounds. That is the exact amount he has in one of his trading accounts. His lawyer says he has that money, but its not clear the court was able to confirm transfer of funds. There are a lot of interesting conditions of this bail. One is that he forfeits his passport. He has to be at the family home between the hours of 11 p. M. And 4 a. M. He has to be sharing the home with his parents. One of the conditions one condition is he is not able to interact with the internet at all. The next big hearing will be in august where he is going to say, i want to stay here in the u. K. Back to you. Thank you very much. The best line i have heard is it is like trying to pinpoint a land ranger. I dont doubt that people try by leveraging, which you can do. I think the hope is you might in theory be able to influence the market. You are talking about the worlds most liquid stock market. I think its a fantasy to suggest one day this man was the cause of it. Its about making an example. I think they will probably extradite. Its very sad for him but there you go. Coming up we are just minutes away from german manufacturing data. That is three minutes away. Will germany deliver . Find out after the break. Jonathan good morning and welcome back. We are in bloombergs european headquarters. Lets get to that data out of germany. German manufacturing coming in at 51. 9. That is a miss. Services pmi comes in at 54. 4. That is a miss. The composite comes in at 54. 2. That is also a miss. We were looking for 55. 6. Lets bring you up eurodollar. We had a miss across the board for french pmi data. The Services Number a miss. The come positive a miss as well. We are seeing a similar story in germany. Eurodollar just missed session lows. Lets get some more detail on the german pmi number. Hans nichols in berlin. Usually germany is the one that outperforms. This data is not so good. Hans surprisingly, theres a miss on the manufacturing. The manufacturing miss was the greatest of all three. It is manufacturing we expect to be stronger because of quantitative easing. In the last 34 weeks, weve had mixed economic numbers out of germany. There has been concern about the slowdown in greece. For the most part, the view was the German Economy would be able to withstand that. On tuesday, you had the new gdp figures updated from 1. 5 to 1. 9 . The other data is troubling. Earlier in the week, we got the eew number the z. E. W. Number. That was disappointing. A lot of attention is going to be paid to that number. Jonathan data disappointing. I imagine the railways disappointed of you people this morning. What is going on . Hans weve got a 23day strike. The passenger strike is going on until the end of the night. Huge, massive lines all throughout german rail stations. The local news have been playing it all morning. About two thirds of longdistance trains in germany are running. They will likely return to the negotiating table tomorrow. They seem to be at loggerheads. A lot of trains were canceled. Some people were taking the bus. Some local stations reported that bus fares went from eight euros up to 16 or 21 euros. You can still get around, it is just going to cost you more on the bus. The commute times are a lot longer. That will affect productivity. The freight side of this story could affect the economy. Jonathan hans nichols, a man who does not take public transport. He is chauffeur driven. Thank you very much. Lets take you from berlin to frankfurt. Deutsche bank is poised to settle u. K. And u. S. Investigations into benchmark interest rates. According to someone familiar with the matter, it will run the bank about 2 billion euros. For more, lets get over to shane in frankfurt. How does that figure compare with georgia banks with deutsche banks total Legal Provisions . Shane we know what they set aside last year. About 3. 2 billion euros for total litigation. They say they are expecting costs about 1. 5 billion. That is roughly half of what they set aside. What we dont know is what the 3. 2 billion is for and what the 1. 5 billion is for. Weve heard that a libor settlement could come as early as today. Most people are assuming the vast majority of the 1. 5 billion they are expecting will be for libor. We cant really know that. So many other things are also open at deutsche bank. They have investigations into forex dealings, assetbacked securities alleged u. S. Sanctions violations and so forth area it is still open. It is a decent legal cost in the first quarter. Jonathan busy because they are in the middle of a strategy review. What does the timing of the settlement mean if we get it eminently given the bank is in the middle of this review . Shane for management, they kind of want to get this out of the way. Investors and analysts are saying the same thing. Weve heard that tomorrow the Supervisory Board can meet and look at the options presented by management. Next week, they are presenting firstquarter earnings. If they get a libor settlement today or as soon as possible they could get this off the table, go to the board, present their new strategy boost profitability at the bank, and put down some solid numbers next week and the situation could look very different. The timing is important here. Jonathan shane, thanks for joining us this morning. If we get the details, we will bring them to you here on bloomberg tv. Busy morning of economic data. We had a miss on french and german manufacturing this morning. Numbers for the eurozone just a little later today. Still to come, we talk novartis, the worlds biggest Pharma Company reporting results that beat expectations. Could it have the most to lose . We will discuss that after the break. Jonathan welcome back. This is on the move. We are at session lows on the dax. The ftse 100 is up by 0. 05 . So many stocks to talk about. Caroline ive got one big mover for you in germany. It is goldfinger. It was once germanys secondbiggest builder. It is an Engineering Services company. It is down 14 . Ubs says they called it earlier. They said it is going to fall below 50 euros. Down it goes. Major profit warning is what analysts are saying. They are saying that profit will be below last years. Weaknesses in oil and gas hitting them. They made the new appointment of a chief executive, but no specific guidance coming out. We are going to get the new ceo now taking charge of what is a really beleaguered builder. On the upside michelin up 5 . Shares are up the most since 2012. Firstquarter sales beating analyst estimates. Unit sales of 1. 5 . They are planning to do a Buyback Program over the next couple of years. They reiterate their outlook. They are saying, lower Raw Material Prices is going to help. We are also going to see a favorable currency flow. All because of that week euro and strong dollar. Lets check in on the drugs makers. Novartis, the worlds biggest drugmaker if you are looking at sales, up 1. 3 . Firstquarter profit beat analyst estimates. They are beginning to see the benefit of their restructuring. They sold off their Animal Health business. They brought on more cancer drugs and formed that joint venture with glaxosmithkline. They are beginning to see the strength from this. Now, the focus is on new drugs. This is a company seeing a lot of patents expire. They have to get new pipeline drugs. One of them, a Heart Failure drug. It does seem to be helping them in the future. The dollar does hurt. Jonathan caroline hyde, thank you very much. Lets keep the conversation on pharma. We had novartis this morning. Roche beat Sales Estimates yesterday. We are joined now by an analyst from geneva. Great to have you with us this morning. The numbers from novartis great. Lets skip all that and talk about how busy this company has been in the last 12 months. They wrap up a deal with glaxo. They bought the glaxo cancer drugs as well. They formed a joint venture for their Consumer Health care products. How long does it take to shake this out and carry on delivering . You are right. The last year has been a transformational year for novartis. I would say they started the year very strongly, especially on the productivity side beating estimates by some 12 encore operating profit. As you said, glaxo oncology business only contributed one month, but weve seen now a big contribution from this business which is around 2 billion. As you said theyve invested on the vaccine business. That will also help on the margin. I would say that they are really improving. They have created novartis business services. That will also save on the cost. Jonathan good stuff. You call it a huge execution year for the company as well. Two blockbuster drugs launching. What do you expect to come from them . Odile you are right. There are really two or three points here to highlight. The execution on the acquisition of glaxo oncology business, the launch of two products. The biggest one is lcz 696, a drug for chronic Heart Failure that showed strong benefits. We expect an approval in the summer. That will drive the top line going forward. The other project has been approved for psoriasis. That is also a very important drug. They have good top line. They have innovation. Jonathan odile, i want to talk about the patent clear from generics as well. I looked at the data from bloomberg intelligence. More than 47 billion in sales hit due to generics. The socalled patent cliff period. This suggests generic erosion could drag sales by 78 alien dollars in 20142020. Is novartis one of the big losers . Odile what may be important to highlight is that during 20102013, it was mainly chemical compounds that lost patent protection. Really easy to copy drugs. Novartis still has [indiscernible] they will have some generic losses but more in 2017 or 2018. The biggest comes from the biologics. More difficult to copy. Novartis is extremely wellpositioned, with the leaders in what we call bio similars. They expect a number of launches in the coming years. That will also drive the top line and the margins. Jonathan we can talk about the products all morning. Then you just look at the dollar. It is the dollar story again for a lot of these companies. How much attention do you have to pay to that . Odile absolutely. Novartis as well as astrazeneca, all Companies Reporting in u. S. Dollars will be strongly impacted by the currency rates. Novartis will have a 10 hit on the reported numbers and a 30 hit on the bottom line, which is very different from roche, that had only a 2 hit. Some think that novartis needs to absorb on the reported numbers. If you look at the numbers on the currency really not changing, the numbers are really good. Jonathan odile rundquist, thank you for joining us from geneva. I want to look at the markets before we head to the break. Disappointing numbers out of not just france but germany as well. The two big economies in the eurozone. The dax now off by 110 points. Eurodollar, 0. 4 weaker. So much to talk about. Not just economic data, but greece as well. Not so happy anniversary for that country. Five years since the former Prime Minister officially requested a bailout. Did he think we would be where we are five years forward . Jonathan good morning and welcome back. Lets get trait to this top stories. Petrobras released Financial Results since the scandal that cost the ceo her job. The firm reported a net loss of 7. 2 billion last year. These and mastercard shares surged on wednesday after the Chinese Government ended the monopoly of union pay. Visa was the biggest gainer on the dow yesterday rising by more than 4 . The European Central doubled emergency funding for greek banks. They raised the cap by about 1. 5 billion euros according to someone familiar with the matter. That brings the cache buffer to 2. 9 billion euros. Today marks the fiveyear anniversary of former greek Prime Minister requesting a bailout. Needless to say, it is not a happy one for greece. The country remain settled with enormous debt. Lets head out to hans nichols in berlin. Guy johnson with us as well. Disappointing data out of germany and france this morning. Five years ago, did anyone think we would still be chasing that elusive recovery wed still be talking about greece the way we are today . Hans you might have heard some voices that didnt think europe had the firepower, the bazookas. You did hear some of that, that europe was always a little bit reactive a little bit late. What you didnt hear was athens. Take a look at this quote from the then Prime Minister. Our european counterparts will act decisively to allow us to rebuild our ships using strong and reliable materials. Guy johnson has spent a lot of time in greece, a lot of time on the port. Does that port still have some wind in it . Guy i think the shipping companies are doing fine. Im glad you are so familiar with my holiday history. It is the one bit of the Greek Economy that continues to function fine, the shipping industry. The threat is that if you tax the shipping industry aggressively, people start leaving. At some point the tax story has to get sorted out. Some say this is the heart of the greek problems. You need to figure out a way of financing the economy to let it go. Jonathan ponds, the other big challenge, five years ago when you restructure, you do it once so you dont have to do it again. They havent done it well and we have to do it again. Unless we get this euro bunch that grinds things out for another year. It seems like that is the direction things are headed in. Hans if you are talking about a third bailout package, you need to send me to finland. It will be very difficult for Angela Merkel to get a third bailout package through the bundestag. Send me to helsinki. Finland may be the biggest obstacle to getting a new third bailout package. We have to get through so much even before we get to a third bailout package. We have to complete the current program. Greece has to figure out some way to unlock the cash to pay their bills. Jonathan hans nichols, thank you very much. Guy, the market has done its rollover on the back of some of that data. A very interesting move in the bond market yesterday. Bond yields did something phenomenal. They rose. Cant say that many times. Guy we are dealing with a heavy stock. Jonathan that is the best comparison. It is actually six basis points. Guy it isnt that much. So the markets i think are fairly jittery at the moment. The u. S. Earnings season is interesting. Youve got a lot to think about with greece coming up. I think people are really looking for a handle on what to hang their Investment Strategy and a lot of people are nervous about the bond markets. A lot of people are nervous that earnings arent keeping pace with equity levels. We circled back again to qe, to Monetary Policy. It is not an unfamiliar debate. Jonathan u. K. Politics of course. Two gigs at the moment. I watched a video yesterday of mr. Salmond. Is it going to be on the agenda . Guy i think it has to be on the agenda. The subtext is definitely there. This is always the story. I dont think nicolas sturgeon would have said that. What youve got is she is trying to back off, to make the snp more warm and fuzzy. That is not quite what we heard. This question of hugh is going to be in control jonathan you have to ask the question of whether he would have done that 12 months ago. His position has changed somewhat. Guy that is a fair point as well. But he is going to be in charge. Jonathan ill give my opinion on the break. You arent going to hear it on live tv. Lets wrap up the data. Eurozone data coming out in a couple minutes. U. S. Pmi at 2 45 u. K. Time. Disappointing data out of france. Disappointing data out of germany. Eurozone composite out in just a couple minutes. Equities just off session lows. The dax still down. Eurodollar, 1. 0684. That is trading weaker as well. The markets just starting to roll over a little bit. Eurodollar down by 0. 4 . If you want to talk about these markets, im on twitter and you can follow me there. Guy germanys business blues. Will will bring you the eurozone manufacturing data next. Francine tsipras on the sidelines of a european immigration summit. Guy and, it could be the biggest libor fine yet. Deutsche bank may pay two point 2 billion to settle a probe with the u. S. And u. K. Welcome to the pulse. We are here in london