Friday morning. Breaking news across the bloomberg number the Chinese Authority in banking are taking action for those banks that they consider our lending perhaps a little bit too fast and too furious. We saw the loans hit record levels this week. This concern about indebtedness of the chinese population at large, and the corporate overall indebtedness expanded over 200 per capita. The peoples bank of china are determined that some banks who have landed too fast, they have raised the reserve required ratio. This is according to people familiar with the matter. This will be regional banks, among the lenders, seen as overstretching themselves. They did not give us any additional details, and terms of the banks that were actually affected. Or how much the reserve requirements would actually impact the marketplace. Of course, this is all about china rebalancing exactly what is going on. Let us take the conversation, you were looking at the currency there, the yuan has had a good run. The biggest weekly month in a year, and we see the chinese authorities moving on the stabilization and ahead of the g20. Let us get to the markets. I am looking at dollaryen. This is a very personification of why the markets are perturbed at the moment. You are looking at quite a significant strengthening of the dollaryen. It has moved to the most, strengthened the most in stew thousand eight. When you have here essentially is a cold. This is a theme we will see on bloomberg, we surveyed 63 economists. 27 say the moves of the bank of japan and the governor are likely to get to 2 an inflation targets. What you see of course is inventory, oil hitting and 86year high. That added fuel. The sugar the riskreward. You have 10year government bonds, wall street are holding the most treasuries since october 2013. 10year government bonds down 1. 73 . We are seeing that add to the voice of where they think cutting treasuries will go. Holding at gold, 1226. This week, that is up for six straight sessions. Wti down halfou, a percent. By 504 Million Barrels for the highest since 1930. One thing just an open we are seeing the norwegian centralbank governor that excessive use of the oil income he has predicted a need to withdraw 10 billion from the fund this year. That have to have repercussions in terms of global perspective. One company with a global perspective is hans nichols. Taken away. Hans manus, net income is a miss for olli. The estimate was for 1. 5 6 billion euros. So a clear miss on net income. Operatingook at 2015, profits came in at 10. 7 billion. When we look at the dividend, it will be paid out at 730. The estimate was for 740. A slight mist there, so operating profit was at the upper end of the margin. One quick number that caught my attention here, the net income from their Asset Management division, 637 million. That is right around where we are expecting it to come in. But the big number to focus in on fourthquarter net income, it is a clear miss. Coming in at 1. 42 versus estimates of 1. 56. Manus that dividend survey going to be a topic of conversation or is when we get underway. We have the ceo joining us at 6 45 on countdown. How to do miss the dividend, what does it mean . What is the Share Buyback, what is going on at pimco . All of that to come with the cfo coming up later. But is it you up to speed, bloomberg first were news, Caroline Hyde is here. Caroline David Camerons negotiations with eu leaders spills into a second day, as he searches for a deal on membership is something he can sell to the british voters. He is facing resistance over more demands for welfare curbing, and objections for plans to protect the financial industry. Ecb the boj following the on negative rates, a quarter of the economy in the world is under subzero. Those surveyed is in a negative rates will help governor k uroda. Meanwhile, only 42 say the policy is succeeding in the euro area. Chinas currency is heading for the biggest weekly advance in a year. But the rally should not be taken as a sign of chinas great reversal in capital flows. Goldman sachs is warning that any further shock to depreciation will only accelerate the exit. With 550 billion of outflows in the second half of 2015, and the yuan is weakening 100 billion more. A 9 billion fund manager is pessimistic about the market. His Global Equity fund beat 99 of peers, but it now has a Dividend Fund in cash. With all the recent turmoil, he says he has no immediate plans to buy shares. The former treasury secretary Larry Summers said the biggest challenge to the u. S. Economy is getting inflation to move toward the Federal Reserve old. Speaking to bloomberg, he said that the fed should hold off on for the rate hikes. Larry we are in a new world where the challenge is not excessive inflation. The challenge is getting inflation up to 2 . And markets are saying that is not going to happen in any major place over the next decade. Caroline donald trump has described hope francis as disgraceful, as he disgrace his immigration stance. He said it is not about building walls, and it is not christian. The republican president ial frontrunner once a war on the Mexican Border to combat illegal immigration. He says it is disgraceful to question his face. Global news 24 hours a day in more than 150 news bureaus around the world. Manus is are no one in the world that can be spared from donald trump . Market,ake us to the the Chinese Markets have had a bit of a run this week. The currency has had a strong week. We just have news coming through that the chinese pc of the are going to get hard and heavy for those going fast and furious. Alliteration for friday. Zeb yeah, they certainly are. And donald trump cannot do anything about this one. We are watching this news from the pcob. Sources telling us they may raise the ratio that boosted lending too fast. They have apparently come to the conclusion that these banks that have increased lending too fast recently, and reserve ratio needs to be hiked. That should be good news essentially for banks, bringing down the risk profile and engendering more confidence among investors. But it does that among uncertainty as to which banks are effective. Going forward, if that lending will turn sour bad lending. We dont want that for nonperforming loans. The shanghai composite and hang seng are lower. It is a mixed day across the region. We started out lower. But you did see pockets of gain in thailand, sri lanka, as well as wellington, new zealand. Australia, we are seeing commodity related shares declining. Take a look 8 10 of 1 . Tal mining down 13 on that stock. Take a look at hong kong today, really a story of propertyrelated shares. There, bigelopment developers in hong kong rising. Despite concerns that the Property Market here is in for a quite challenging time, these developers will have a lot of unsold inventory on the books. Prices are not where they would like them to be. And certainly, demand is anemic. And sellers are not able to match with buyers because the price. We want to watch the developers closely. The are taking a risk today. The macau casinos are down. Galaxy entertainment, after mgm reported a big drop out of revenues in macau. Watch that space closely. Taken altogether, you see the decline just under 1 for the asiapacific. Theuses see that the yen, risk aversion is back on in the market. Ist is why we see the nikkei down by 1. 5 . A lot going down, and this news out of china sure to catch investors here. Manus thank you very much. Zeb eckert in china. No deal for David Cameron yeah, the u. K. Prime ministers proposals were met with resistance from france and Eastern European states. Premuch as expected. Let us get to brussels more Ryan Chilcote is standing by. Do you have enough shirts with you . You could be there until tomorrow. I am not going to answer that question, manus. This is comic like you said, likely to go on until tomorrow. Caps they could get it done today. But i do think that generally speaking, people are not quite as confident as they were coming into this. They thought it would be done quickly. We caught up with a very weary italian Prime Minister in the wee hours of the morning. He said im a bit less optimistic of a u. K. Deal than i was before the summit began. That reason is because, in part, negotiating tactics. Think about this. To have the bosses agreeing a one Million Pounds salary. You have a draft contract that says you are entitled to that salary for four years. Pretty confident they will agree, and even though they will resist, they are just feigning resistance. The when you come into the room, i want a 13year deal. More specifically, i want a twonyear deal with threeyear periods where it could be expended. The british Prime Minister, with his socalled emergency brake on a period of time that migrants working in the u. K. From the eu would have to wait until they could get those benefits in the u. K. Everybody thought it was going to be four years. He changes it to 13. Eastern European Countries say five. On it goes into the morning. That is just one problem, of course. There are others for the french appeared to still be upset with some of the language when it comes to how the euro countries deal with the noneuro using countries. That gets into the banking system. That conversation continues. Finally, the belgians wanted to introduce new language saying enough is enough. This is a long negotiation, we need to make sure we do not come back. We need to preclude a second referendum and discourage people from having referendums in other countries. We need to make it clear in the language of this deal that this would be final, no more negotiating. So, there was a win to be a in the breakfast this morning. Now we are looking at a belgian brunch. We could be here for the weekend. Everybody wants to get a deal done. But it is looking more difficult than yesterday. Manus they go right down to the wire. And usually, usually they tried to agree. Ryan, stay tuned. You are there for the day. Well done. Ryan chilcote in brussels. Let us bring in saker. He joins me this morning. We will get the allianz number this morning. We aresten to hans, going down to the wire. Classic negotiation David Cameron is to come home with a kind of triumph rent opposition to turn the polls. Negotiation nobody really wanted. I dont think mr. Cameron wants to negotiate. He is not a euro skeptic. So they are all sort of going to the wire. The danger is, of course, you go to the wire and you cannot make a deal. And people are going to vote against being in the euro. And that, i think, people have not thought very carefully about. Out a paper, the only benchmark we have is greenland. That was 1985. That took them three years. You have raised some serious warning flags in terms of the paper you have written, foreign dprect investment and tg risk. Saker there are two issues. It is basically financial industry and media. The financial industry is the heart of europe. The city of london, essentially, ask as the Main Financial center. That will undoubtedly be expected by a brexit. A lot of foreign companies, vertically from the u. S. , think of the United Kingdom as the friendly part of europe that they can set up in. The language they understand. That becomes less attractive with time. So im not entirely convinced that this is entirely happening without overtime. The thing that will be noticed medially, over time, there will be something from it. Manus we have comparison in terms of the market dominance the United Kingdom has. This is what we own. We own the fx market. We own the derivatives market. Alley on thefund lane. This is the manifestation of risk. 180 billion pounds. 12 of u. K. Gdp. In terms of taxes, 66 billion pounds. I am not talking about the square mile. It is beyond that. Toer look, if you look people like us, investment strategist, whatever happens, we will continue to abide by european rules. Because we have to. The question is, we need a passport, what happens to the position of london as a whole. You do have a parallel. After 9 11, the United States of america closed in on itself. And very slowly, as result of that, new york lost dominance. And london took that dominance over. Manus there is always someone waiting in the wings. It is taken to the market. We have 90 seconds to get to it. This is volatility in sterling over the next six months. Would say the i market is positioned for brexit. Is there more to come . Saker they are worried about it. Manus 1520 drop . Saker you have to put a risk premium on selling. The currency will stand on itself. Manasquan how does it manifest itself in terms of guilt in our market . We caught up with pimco. They said 40 probability that if we vote for brexit this will have an impact and the bank of england will have to push hikes way into the long route, something in 2015. Saker it is interesting. Because, of course, sterling being weak means we have to import inflation. But they will be worried about Economic Growth in the u. K. And they might not raise Interest Rates. It is quite complicated. I think most people are assuming this will go to the wire, but it will be ok. I am not sure it will be either. Onus on credit swaps government bonds, we have not seen this is 2013. It is nowhere near that panic level. But the market is worried. Is markingmarket itself, saying the position of the u. K. Government will change if we have a brexit. There is a referendum, and if we have a brexit, the position of u. K. Government debt and of sterling will change and will weaken. And it will be more risky than it was before. Manus we like to deal in fact the bloomberg. You will stay with me. The rest ofe for countdown. For more on the conversation, to into bloomberg radio. Our colleagues on first work europe will be speaking to the institute of directors, as well as the confederation of british industries. That is a 9 45 london time. Here is your day ahead. In this hour, the governor of the peoples bank of china speaks at an event in beijing. They said they would raise the reserve ratio for some banks it thinks glenn to quickly. Retail sales out of the that kingdom. This afternoon, we get a reading of inflation in the u. S. The also hear from cleveland present. Then it is eurozone chief economist. More, after this break. Manus 6 21 in london. The peoples bank of china, as it was telling you at the start of the show, then determined that some banks have increased lending to fast. They have raise the required reserve ratio, according to people familiar with the fatter. Let us get to malcom scott. Malcolm, what do we understand . What is the significance . Is this prudent . Malcolm it does look to be prudence in play. But it should be distinguished from monetary tightening. Just yesterday, we saw the bank trying to guide Interest Rates lower. That is the money market corridor style rates, shipping towards the benchmark rate. Which we get the surprise announcements from later. The guiding Interest Rates on the money markets are lower. So this should be seen in the context of its new macro credential assessment system, which they announced recently. This is maybe one of the first exercises of that. So we had a big lending inch in january, two and a half trillion yuan. That is about 385 billion u. S. Dollars in one month. This seems to be recognition that some of that may have been a bit too fast. So there for and put the brakes on some the smaller lenders. Manus malcolm, thank you very much. Malcom scott in hong kong. Saker is still with me. When you see this kind of action this will jar against everything we think of ,timulus, not in rate cuts what do you make of this news . Your as we heard from correspondent for these are some banks. The ones they judge to possibly be the most venturing. Time,t the same continuing to simulate the economy . Manus one of the biggest news pieces was about the aggregate finance. This shows you the other explosion. Saker and that is what they are worried about. Manus this is what they are word about. The justification in terms of his blowout, credit and Chinese Companies are trying to pay off the debt. They gorge themselves in terms of dollar debt. Has been flipped great lets take a look at over five years, it has a fantastic story. The switch around or the huge trade in terms of chinese unwinding, you see the quarter strength all the way 3 trillion was borrowed. My question to you is, look, are we near the end of that trade . This is over five years. Saker i would say that this binge you just pointed to is trying to borrow local currency. It has gone too far. And theyre doing this and the companies are behaving this as if the company is doing normally. They are saying, hang on a moment. We are trying to soften where we want to. Manus in the break there, you were sort of saying to me, actually, what youre more concerned about is what i was talking about. The dollaryen trade. If we lookthis at this move that you see on the it will unwind, it is quite large. Manus my point is this. In oil,top freaking out but they do not tell us anything prophetic. The new rate of growth. Chin. China stabilize. Are you seeing snapback after snapback . Using this telling me something much more dramatic about Global Markets . Saker there are people with very big positions that might be exposed. That is what worries me. The markets are beginning to be affected by people on the periphery, dealing on positions which are taken and strategies that are either momentum or factor base. These signals become quite significant for them, and they have the ability to move markets. And that leads on the mental investors on the sideline. Manus how is this affecting you . Translate this into what it makes me do. Saker so we are looking at the volatility we have seen, and we do not quite understand where it is coming from. We understand the market is declining, we are expecting corrections in the market. What we do not understand is the degree of volatility that is happening, and why it is happening. We cannot link between. And what we think is happening, there are a lot of strategies trading on signals. But what happens t