It is the end of the quarter. Thursday, i am ahead of myself. It is job state. This is what the markets are looking like. We had a bit of a reversal. European stocks down to 1. 1 . Asian stocks still higher but on the day a little bit lower. You can see crude, 38. 8. That is putting a lot of pressure coming from the Mining Sector at eurodollar, the week in terms of dollar weakness. I want to show you copper because it is down a touch. We are getting some breaking news. Chinese data, lets get straight to bloomberg first word news with nejra cehic. Nejra britain might vote to leave the union to help keep Consumer Confidence at the lower level lowest level in more than a year. A gauge of expectation for the Economic Situation over the next year was at 12, down 18 points from year ago. Blackrock is planning to cut 400 jobs in what may be the biggest round of layoffs today at the Worlds Largest money manager. 2 duction are equal to 23 . To the percent. 3 . E are expected to to donald trump has come under fire for saying there will have to be some sort of punishment for women who have abortions. That immediately angered proabortion supporters. Trump later issued to statements clarifying his position, alternately it would be saying it would be the a doctor who should be held responsible. Global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. You can find more stories on the bloomberg at top. Francine. Francine clarifying the position. That is what they call it now. Sometimes they call it flipflopping. Eurozone inflation data from march is due in just under an hour. Prices are expected to follow , posing more problems for mario draghi. Our Central Banks editor paul jordan judges from frank for it. T joins us from frankfurt joins us from frankfurt. Paul it doesnt matter if you get 0. 1 . Is euroro area area, these numbers are still way short of the just under 2 mediumterm inflation goal. Policymakers decided to ramp up stimulus. That kicks in in terms of the actual purchases on friday. Two banks coming through in june. There is a long way to go. Francine their latest round of qe stimulus does not work. What is next . Question. Ry big one that is been asked quite a lot did policymakers have a lot here and policymakers have noted there is no more room for Interest Rates. Asset purchases, 80 billion euros a month is a pretty big number. That suggests you really got to watch or the start to suck up the euro area bond market liquidity, even by adding Corporate Bonds into the mix. The ecb says there are plenty out there. More economists are a bit more skeptical. Banks could be played paid to be paid to take money from the ecb. If that works, there is scoped to take that further. Ecb is confident. It says it can do more. Not everyone out there shares their optimism. Francine that is humbly the most probably the most diplomatic way of putting it. For me for the first half hour is Derek Halpenny. Derek, great to have you on the program. It is been quite a week. We are getting inflation figures. How much more pressure issue putting on draghi to put the to do more . Derek that is one element of the implications of what yellen spoken about. I think also you have to take it the beginning of the year, the markets were bracing themselves for the fed to tighten in march. What they have done is eased Monetary Policy through for the guidance in terms of cutting the dots. At the press conference and in new york this week. Weve had a substantial easing of policy compared to at the beginning of the year when the markets thought there was going to be a rate increase. That is a big change. The implications of that could be positive for europe. How that plays out is questionable. Commodity prices were to hold up better because the dollar doesnt strengthen. If equity markets held up in general as capital improves, economic are favorable. They are trying to limit the risks of china becoming unstable once again. Trying to help on that side through conditions that may be more conducive to stabilizing dollar. We need to see how this plays out. I think the fed easing policy is important. Francine our ecb editor was putting out there all of critics saying qe in europe is not working. It is getting worse. The risk of disinflation. How do you . Disinflation . How do you tackle disinflation . In europeeen weaker than the united states. The economy is much larger in europe than the united states. Europe has a much more difficult problem at hand. I would kind of caution we do should not play we should not play too much into these nearterm inflation meetings. The ecb has not responded in part because what they knew what was coming. Further out, you could argue even though europe has drifted higher, the broader commodity improving theis potential outlook for a jump in the second half of the year to guess year. These shorterterm year. The shorterterm figures just the beginning of the policy response. Francine breaking news, the china enterprising index is entering the bull market at the close. It is gaining 20 . The problem is turmoil. It is down 20 very quickly and up 20 very quickly. Janet yellen was saying we need Financial Markets to be more stable. Derek we do. The shanghai comp said is well underpriced the shanghai comp is it is well underpriced. Capital outflows from china are week celebrating. There has been some easing of that. There has been capital control. Nonetheless, it is helping to improve confidence or reduce the fears about a hard landing in china. Francine are you not concerned about Central Banks . It is a catch22, because usually in the past, it was markets following Central Banks, not the other way around. Derek to be honest, i still question whether this broader improvement of risk since february is a sustainable. Especially in some of the commodity space. I cant really fathom that to be honest. The demand story does not appear to have changed. The move in Commodity Prices seems to be on hope rather than evidence. I think there is a good chance we are going to seek reversal on some of what is happened. Concern ife of some that becomes disorderly again. Francine derek, thanks for helping me. He stays with us. We will be talking more by china. Stay with a pulse. A roller coaster quarter comes to a close. We have winners and losers. We break down u. K. Growth figures. Apples new phone arrives. What are the security concerns . s dovish janet yellen speech sent the dollar toward the worst months since 2010 good what has the 2010. What has the First Quarter been like . I will get to the chart in just a second. Showing that vcr to show the performance of the major currencies this quarter. The best performer this quarter in terms of the majors has been thats has been the zillion real. The brazilian real it Gains Momentum and speculation grows that a change in government could be the best hope to ending the worst recession in a century in brazil. Brazil outperforming. Underperforming is the pound. He worstperforming major concert major currency against the dollar. I want to see this chart this is my chart of the hour, showing the pound is suffering its deepest quarterly loss since 2009. We are talking about it on a trade weighted aces. Basis. Sterling has dropped 5 of this september. Ll 6. 4 in this is according to a Deutsche Bank measure. The currency will slide the most among its peers in the next three months. This is about concerns over a potential brexit. We are approaching the june 23 referendum in the u. K. In the u. K. Josh would increase those bearish bets. It might increase the risk of a brexit. I want to talk to you about the risk of the volatility as well. Look at threemonth volatility it we will get into that referendum in less than three months time. Seeing this big spike here in the wake of those brussels attacks. Francine nejra cehic with some of the volatility we saw linked to those brexit concerns. The best and worst movers in the last three months. Lets ring in Derek Halpenny. Derek, when you look at quarter one. It was ugly for europe. The biggest market move, volatility is more present on currency markets could is it that markets here it is that right . Markets. Is that right . Derek the low and turning points were only 11 for february. It was risk off. Yellensthe day after testimony to congress. The first indication that the march rate hike might not happen. She did not telegraph it. The markets went back into risk on. We have seen the reversal in sentiment. It is been borne out broadly. It has been volatile, but markets are beginning to fragment more. In terms of there are specific stories, specific currencies that is resulting in bigger moves. It was a sentiment that every thing is correlated to oil. It is unclear exactly why. We did have a dollar play. I think people are more sophisticated. The brazilian real is the bestperforming currency. That is a political story. , the aussie outperformed and did very well. Zealand dollar for example has recovered as well but has underperformed. There you have the rb and said rbn z. They put out the report outlining the concerns in regard to deflation becoming ingrained in the economy through lower wages. I think theres a chance you could see a divergence between aussie and kiwi going forward. Francine what happens to eurodollar . People are pricing in easing from janet yellen. Derek because of the stats from yellen, were pretty much revised eurodollar forecasts. We are higher across the board by five big figures. 110 andhe range between 115 existing through until the possible rate increase in june. Theng softer and lower in second half. The idea of policy and strong divergent play, im am not convinced on that anymore. The slightest instability and Financial Markets and yellen will grab the opportunity to remain dovish and try. Francine instability that would come from where . China . Derek brexit will become a big issue. I agree with what was just said. A big risk. As i mentioned in the last segment, this commodity price sentiment ineneral emerging markets, i question you about sustainable. I think the negative macro fallout from what is a monumental commodity price crash , has that played out fully . I am not convinced it has. Even though there has been a big devaluation and emf as, i would argue there is some potential for that instability to come back. Francine what happens to the yen . E has given it his best shot it has not worked out yet. Derek something i highlight today is the unprecedented selling of Japanese Equities from foreign investors. ¥7 trillion over the last 12 weeks. The largest most sustained prudent selling since economics came into existence in 2012. The strength of the yen is part of the story, but i think there is a broader concern among investors about this whole economics project. That is potential serious implications. If there was a real unraveling of that, it could see some further yen gains. Francine derek, think you so much. Thank you so much. The worst performers in the quarter. Derek halpenny from mitsubishi. Lucas to ride. Roller coaster ride. China enters the bull market. Much more china, that is coming up next. Francine welcome back. It is the pulse. Lets get to bloombergs business flash with nejra cehic. Nejra orange is heading into a make or break weekend as they try to salvage their plan after Technology Talks have not advanced sufficiently to clinch a deal today. They will meet again before the end of sunday after a final negotiating push. Shares of both companies are trading lower. Money management icon mark mobius is stepping down from daytoday management of the emerging markets group. Mobius who popularized emerging market investing remain will remain chairman of the business. We had the emerging markets group. We had a local Asset Management group. Many of the companies countries, what were doing is combining them and bring them into one big group so we can use resources more effectively. Im moving up to serve as an overseer role. Nejra David Cameron is chairing talks later on the prospect of huge job losses in the steel industry. After losses left the almost zero value. Steel prices have plunged the lowest in a decade. That is your Bloomberg Business atsh. Francine it is been it has been a rocky quarter. The market looking like it will end on a positive note. Index entered a bull market. The best game since 2009. Gain since 2009. Think you for sticking around. We will get the correlation between executive market. The hang seng not doing bad at all. If you look at the Japanese Equities, you were talking about the outflows good outflows. Derek the fact that the yen has strengthened so significantly. There is a greater uncertainty in regards to economics project. How it how that is going to unfold. The fact that the boj went into negative Interest Rates signaling to the markets that their ammunition is running out. That is questioning the whole project. Is been 7 trillion outflows from Japanese Equities. Francine in the last quarter . Derek since february. On top of that you have had japanese investors buying huge amounts of foreign bonds. ¥16 trillion outflow which is huge. The reason why it is not impacting dollar yen is a lot of those outflows from japanese investors are on a fully hedged basis or close to fully hedged. The impact has been negligible. The fact that valuation of foreign securities has come down. They are rebalancing by investing. Francine is there a link between yen haven and Japanese Equities to what we are saying on swissie . I made a bloomberg chart just what we are seeing on swissie . What we are seeing on swissie . I made a bloomberg chart. Derek i suppose the breakdown of some of those stocks as they are racing toward more of the defensive type stocks versus cyclicals which have recovered in the Risk Appetite scenarios. That explains some of that differential. For japan, i think it is different. The unraveling of economics or concerns. That is the direction we could be heading. Francine Derek Halpenny from mitsubishi. Where moments away from gdp figures. We are moments away from gdp figures. An important one because it plays into the brexit debate. We have a referendum on june 23. The productivity puzzle in the u. K. Versus the u. S. The ftse down 0. 5 . Francine welcome back to the polls,ulse, live from london. Breaking news out of the u. K. The gdp figure we were expecting for the Fourth Quarter is a little bit better than expected. In terms of the figure year on year. Let me get it up for you, because i lost it on the bloomberg terminal; its better than expected. You can see an increase of 0. 6 for the Fourth Quarter. . En we were expecting 1. 5 the other important one is the current account balance; thats 32. 7 billion. Is better than expected but watch out for the current account balance. This is a picture of the currency you can see. Lets get straight to the first word news. Nejra thanks. Planning to cut 400 jobs in what may it a guest round of layoffs to date at the Worlds Largest money manager, according to people with with knowledge of the matter. Its equal to about 3 of its employees. Despite the cuts, blackrock will continue to invest and hire in key areas and expects to end the year with a higher headcount. German joblessness is unchanged in march, snapping a run of 5 decline. The number of people out of work held at a seasonally adjusted 2. 7 3 million. Thatata are signs they are struggling to tackle that wave of refugees. Donald trump has come under fire for saying that there would have to be some sort of punishment for women who have abortions if the procedure was outlawed in the u. S. Trump later issued two statements clarifying his position, saying it would be the doctor who should be held responsible. Global news, 24 hours a day, powered by 150 news bureaus around the world. Francine thank you so much. Lets head to the bloomberg with caroline hyde. Caroline thank you. Were on a down day to end the quarter. We see the stoxx 600 off by one percentage point, digging into the industry groups. They have been the best performer this year but they are down 1. 5 metals are lower. Oil and gas trading lower. Clearly there is some concern about the uptick in supplies, inventory Still Holding on to their largest since 1930. Concerns that there is a down day to end this quarter and month. I want to show you how particular industries, indices have been performing this year if youre looking across europe. This is normalized. The white dotted line is 100. Everyone has fallen over the course of the quarter, but some have fared better than others. Ftse is up 2 . Were off by 1. 5 . The stoxx has lost 7 year to date, so it has really taken a hit. European stocks have underperformed the u. S. The most since 2003. Stocks are selling off by 6. 7 . The swiss index is underperforming significantly, and check this out. Your homeland, francine, italy lost about 60 of its market value. It was all about the banks. We look at whats happening on ledyear to date, the miners the charge, Anglo American having 75 . 60 ,talian lenders up by similar to the other banks. I leave you with where you should put your money, bonds. 2 trillion added to this particular index. Bank of America Merrill lynch, global broad market index. Francine thanks so much. Lets get back to one of the drags on u. K. Gdp productivity growth. Lets take a look at this. See, theyre revised lower in the latest analysis. For more on this and the growth figures, lets speak to our nior analyst at i growth gdp is better than expected. It glided to 32. 7 billion. That iscentage of gdp, the most since records began in 1995. What does that tell us . Its a huge number. What we are seeing a significant volatility from investor income numbers. The traded number itself has been relatively stable; one can argue it has been improving. But were seeing significant shortfalls coming, from the money we receive from companies overseas. Francine thats linked to what . Volatility from investor income numbers. Currencies for this global slowdown . There is a currency effect, but it is mostly due to the u. K. Economy, u. K. Companies paying out more overseas relatives of the income. Soft performance and eurozone investment is whats driving a lot of the shortfall. But as we go into the First Quarter, we should see improvement. But take a step back this is what the bank of england is saying. This is a temporary and transitory effect; as the improvement comes, we will see the shortfall improve. But take it in itself, its a huge deficit. What that means is that the u. K. Is borrowing large amounts of money from overseas. Its lenders are generally happy to provide. But if we have a significant shock to u. K. Confidence and this is where we think about brexit that is when one starts to wonder how easy will be to continue this. Francine i know you are not a political analyst, but on the other hand, gdp figures do they help with the case of britain staying within the eu . Any piece of information or data will be scrutinized, visa fee the brexit debate. Visavis the brexit debate. Its too early to expect any uncertainty impact. It may start coming in the First Quarter, than more in q2. That is where we might see something. Think that the votes in the backdrop are a lot of people there, if we leave, will be a significant adverse economic impact. Francine to what . Confidence, investment . More, i think, in foreign direct investment. Because of the uncertainty. Francine do you know how much . We think it is going to be an impact over quite a while; we are trying to assess over longterm. We think the plausible range would be about 2 5 gdp. Much of that will be short an end focused, much of it driven by a pickup in sterling and drawing down household. Francine can you make the leap and say, if this country leaves the eu, we will see a recession . Im not sure you get a recession, but we certainly sends a significant slowdown. More than that, a significant loss in output compared to where we have been in the eu. Thats certainly argue. Francine what does that mean for productivity . We have in trying to figure out why we have this battle. We have a similar trend in the u. S. , is it regulation . Is it Technological Advancement . Something more sinister . I think it is a lot of things. Sure, regulation has a role to play here. Were also seeing a composition fact for example, that we are employing a lot more young people that lost jobs and found it harder to get back into the market. But there are younger people, less experienced people, less skills the start. A productivity impact. But if we take it back to a highlevel, what we are seeing is a subdued level of growth. Its ok that growth is subdued with strong employment growth. And that has been with us since mid2013, and that is where this latest wave of subdued it week productivity growth comes through. We see some variation, but there is nothing to suggest that productivity is picking up. Francine is that bad . I know it doesnt fit the puzzle; it doesnt fit the old economic model. What does it mean we are less happy . Im not sure it means we are less happy. Its good in the sense that we are seeing more people kept in employment. One of the big problems of the downturn is people putting longterm unemployment, the loss of skills, which have permanent scars. Francine but these arent necessarily quality jobs. No, and that is part of the problem. Thats part of the composition effect. It does mean that growth and the wealth, as the country will be constrained by the sloth productivity. Francine its clear that the u. K. Is doing better than a lot of european countries, and i guess you would argue that are than the rest of the world. Is this just the new normal . Central banks are putting everything in growth, and it is stuck in a rut. To some extent, it is. Certainly some of what we are seeing in terms of Global Growth is a demographic effect. Labor supply a growth, and that will be with us for a long time. Whether productivity stays subdued, whether there is an overhang, for example a debt crisis, i think that is probable, but that can easily be with us for the next three to five years. In terms of what we are looking at, in terms of forecasting future, yes, it will be relatively subdued for quite some time. Francine david, great to have you on the program. A quarter marked by negative rates and massive volatility. We will take stock of Goldman Sachs, next. Francine i would say this is a gorgiosity of new york. Its a new bloomberg word. Its very nice. Here in london, its sunny. Futures, you can see, are practically unchanged. Im sorry to say, after beating u. S. Equities last year, european equities are now moving to u. S. Equities for the First Quarter. Lets get straight to the Bloomberg Business flash. Nejra thanks. The ceo of barclays japan is to resign in june. He was the executive who broke the news to employees in january that the bank will close its cash equities operation in japan and focus on derivatives. His departure will leave andrew jones as the sole ceo for the asiapacific region. Bouygues try to salvage their Wireless Phone merger plans after announcing that talks have not moved efficiently. They will meet again before the end of sunday before a final negotiating push. Hosting talksis in downing street on the prospect of huge job losses in the steel industry. It follows its decision to offload its u. K. Assets after losses and writedowns left the division with almost zero value. Steel prices have plunged to their lowest in a decade, meaning they could struggle to find a buyer. That is your Bloomberg Business flash. Francine thank you. Breaking news over the last couple minutes. This is from south africa. The president , jacob zuma, has failed to uphold and defend the South African constitution, according to the courts. Im not sure we have seen a huge impact on the local currency, but we will get that chart up for you in to monitor any more headlines coming out of south africa. This is south africas top court, ruling on jacob zumas allegations over the last couple weeks. This is according to scandals about his home renovations. We had poll the last couple weeks to say whether he will have to go before an impeachment court. We will keep monitoring and give you the latest, as well as any impact on the markets. European stocks head for their worst quarter relative to the u. S. Since 2003. Investors will be turning their attention to the ecb, which could be wrapping up to me tomorrow, improving asset purchases by 20 billion per month. The head of global liquidity sales at Goldman SachsAsset Management. She manages more than 190 billion. Great to have you. Thanks for coming in. We hear more and more concern on the markets, and Central Banks are throwing everything they have at the world. Growth is not going anywhere. Is this the new normal, or are you worried . There are certainly many things to worry investors these days. We think there are two big challenges, though, that are really impacting investors, and they are the low and negative Interest Rates, as well as volatility in the market. These are challenges that you say arent going away anytime soon. Francine the volatility is something that, for the first time, janet yellen almost explicit we talked about in her speech a couple days ago. The volatility is here to stay, unless what happens . I think volatility is here to stay in the sense that it took markets by surprise earlier this year, and we think those same things that took the markets by surprise will continue. The frequency of volatility is going to continue. It is a good reminder for investors that there are several things to keep in mind. With, collett late stage credit cycle and later stage economic cycle. Francine talks in the about negative rates. Talk to me about negative rates. Some say you should do it properly, theyre not bad, they dont even hurt banks. Others say they are bad because it means Central Banks are desperate. Others say they arent sure. You think they arent a good thing. Negative rates like you said, you can view them a couple different ways, and they impact investors different ways. For the investor that has to hold cash, whether it is your corporate balance sheet, ratesn fund, negative coupled with banking regulations are really a challenge for those investors. Theyre challenged in terms of where they might have put deposits on banks. Custody assets are left on invested and there is a real challenge. We are seeing them take a different view on how to manage that cash. For other investors like Institutional Investors and pension funds, negative rates are doing what Central Banks want, which is pushing them out into riskier assets. Thats relative to where you set. If you were invested in european sovereign debt, maybe you are pushed into u. S. Investment grade or highyield or emerging markets. Francine do you think negative rates will have to go more negative . And again, what are the challenges for investors . Well, i think the ecb did surprise in terms of what they threw at it last time. I think it was more than the markets were expecting. Well watch it digest. I think there is more to come in terms of watching it play out. The targeted repo operations have not started; qe bond buying hasnt started. In anticipation we saw european credit react positively. But i think we want to watch this play out. Francine do you know about liquidity in the market . We havent seen some of those worries play out in the fixedincome market. If you look at the amount of redemptions we have seen so far the fixed income and the other shifts, the liquidity worries have not played out, as some people were worried about. Francine what are your clients most worried about . What i find crazy is that the market is any risk on risk off mood. And janet yellen is the only game in town. Yeah. And she clearly did reiterate her dovish stance yesterday. I think we have dudley speaking later today, two key figures to keep an i on in terms of what the fed is thinking. The four hikes have moved to two, and that is in line with what we are thinking, but she really did lay the past for keeping an eye on whats happening globally, and that impact to the u. S. Economy. She talkswere you about volatility, she talked about china, or are you saying, phew, at least we dont have to normalize straightaway. I think she is being prudent, but in any case, when you are in a later stage of a credit cycle, you need to be prudent, you need to be selective. Wed say you need to be active, and whether that is active on the active side in terms of equities are credit or active on the beta side. You need to be active. Francine great to have you on the program. Thanks for coming in. Kathleen hughes. Becomes the new iphone available as new sales and security are under francine breaking news the s p has cut its aafrom negative to stable on china. We will have to see the impact on chinese stocks. The hang seng entered a bull market, gaining 20 over a short period. Thats out of some of the rating agencies. Corporate news. The new iphone unveiled today, after the fbi successfully hacked one of the companys phones without their help. Shares have surged after it is rumored they helped to hack it. Lets bring in the head of european technology. Great to have you. You have the product he goes on sale today. The big hope is that this will have emerging markets priced slightly cheaper. Its almost 200 cheaper than the flag iphone 6s. One of the key focuses for apple is that its targeting china, india, and also crucially people who are coming from android. Device, and ith has the same internal specifications, the same camera, but in a more premium body and for less money. Its being seen as a kind of midcycle francine which is rare. Its rare. But its really trying to create two tracks; a midrange product that is not designed to look like a watered down version of the flagship. Francine how long do we need to give them to figure out whether this works . I think a few months,. We should start to see the difference particularly when we can expect new flagship iphones. Its around that time when people assess all their options and we can make conclusions. There is some early data that suggests there are preorders coming in, significantly higher than ordinary. Apple fbi versus does that make a difference to the phone . I dont think so. The security for apple has always been pretty highend. They have done quite a good job at proving its security credentials. Francine great to have you; thanks for coming in. Nate langston with the new iphone se. Were moments away from the euro zone inflation figures and we will bring you that on surveillance. Tom keene will join me from new york. We kick off the conversation with mike amey. We will be looking at treasuries, u. S. Dollar, and the breaking news on china, the Rating Outlook cut. Francine the eurozone breaks another round of disinflation as the data defies draghi. Is the ecb losing the war on deflation . Asian stocks head for their best month since 2009, as the dovish Federal Reserve feeds off the news that china got downgraded. The stoxx 600 trails u. S. Equities by the most since 2003. An ugly quarter slams shut in europe. This is bloomberg surveillance. Im Francine Lacqua in london with tom keene in new york. Consumer data is ine