Anna welcome to the program. It has just gone 6 00 in the morning here in london. Focus is going to be on the question of exit of brexit, the future of the u. K. Nervousness over the weekend of how weak the pound would be. The mayor of london decided he was going to back calls for a brexit. Moodys saying that it would be credit negative for the u. K. A lot of volatility in the currency markets. Manus the brexit campaign, will it be a campaign of fear . Euro sterling trading at 77. 78. Lovely one. This this is about volatility taking back to the u. K. Election in 2015. We were way above that level. The volatility is high. What it will be in six months time is rocking higher. Strategists say that dollar sterling will go to 1. 4080. The short positions in the marketplace. The least bearish on sterling since january 12. Anna lets talk about what Boris Johnson has said, the waves he created over the weekend when he announced that he wants to back a brexit. This comes from his article in the telegraph. There is only one way to get the change we need it raises the question as to whether he wants a brexit or whether he thinks that this vote would be a way to get some sort of other aim. He is the most likely candidate to be the next leader of the tory party. Another widelyred paper here in the u. K. That is the blockbuster headline from the sun. Saying he is now on the wrong side of history. A lot to play for in terms of maneuvering our opinion. Are you in the 19 of undecided . Do you believe cameron or do you believe bojo . Mr. Johnson . Anna lets get the first news now. Surpriseas reported a or scored her pretax loss of 858 million. Estimates had been for a 1. 95 billion profit. Their ceo had been accelerating plans to scale back, seeking to boost profitability and reversed a share slump this year. The pound has on the most in a month against the dollar after Boris Johnson said he will campaign for britain to lead the European Union. To leave the European Union. Reversing a gain made on friday when David Cameron secured a deal with eu leaders in brussels. He said a june 23 date for the referendum. Oil is on the rise after russia said talks should be done by march. Nigeria is backing saudi arabia and russias decision to freeze production. Africas biggest producer says iran and iraq should be given some room to win back market share. Bombings in syria have killed at least 140 people. That came as the u. S. Said russia agreed to the terms of a limited ceasefire. Islamic state said it carried out the attacks in the southern suburb of damascus. China stocks have risen to the highest in a month on speculation the new Securities Regulator chairman will take steps to use the worlds secondlargest equity markets. His predecessor was criticized for mismanagement that helped deepen last years rout. Global news 24 hours a day, powered by 2400 and more than 150 news bureaus around the world. Manus lets check in on the asian market session. Aidi a very good day to you guys. We had asian markets reversing direction after quite a volatile start to the trading day. We are seeing gains building on the rally we had recently. This is being led by japanese markets. The nikkei closing up by a must 1 . Also seeing gains on the day. A bit of a respite for the yen, under pressure with three weeks of gains. A littlee yen weakened bit, so that the pressure off of exporters in particular. Strong gains coming out of the mainland market. Shanghai up by 2 . We are seeing those gains being driven in the property sector in particular. That the newpes head could placate the market. Of course, he was removed from his post in dramatic rest fashion on friday. We are seeing a relief rally on the back of that development. Property developers. The government announced it would be cutting tax on certain transactions. We are seeing very strong gains from the likes of greenland. We are also seeing that being tracked through Property Developers in hong kong as well. We did see losses across the energy space despite the renowned for oil above 30. Not much has changed in terms of what we are seeing in those names in particular. Iron ore miners, prices have started to climb again. The chinese steel mills restocking after the Lunar New Year holiday. That has boosted prices to the highest since october. Fortis q climbing close to 10 today. Earnings outetting of a number of these big iron ore miners later on this week. On the, i want to touch stock of the morning for you guys, hsbc. It is pretty evident. We had that drop come through when the earnings came out about midday and continuing to take that leg down as well. It is down about 1. 8 on the day. Toing a look at that year date number, it is off by over 20 . Performance is broadly satisfactory, investors in hong kong not feeling quite the same way. Thank you very much. China trading higher, then be after months, the battle for the brexit comes home. The greatest target may lie ahead for David Cameron. He wasted no time in beginning his campaign to stay within the eu. I think what is best for britain is staying in the reformed European Union because we will be better off safeguarding opposition in the massive market we have in europe. I think we will be stronger in the world, being able to get things done. That is making sure our country is safe and our people is safe. I think we will be safer inside the eu because we are able to work with our partners. Meanwhile, Boris Johnson has thrown his before that his support behind a british exit. Ther a huge amount of last thing i want was to get David Cameron or the government. If there is anything else i can do, i will be advocating to leave. Want a better deal for the people of this country. To save them money and to take back control. Anna so he is taking back control. Manus he is scrubbing up. Of course, he is the mayor of london. Anna lets bring in charlie, head of rates. He joins us in the studio. Good to see you this morning. Give us your thoughts on the weekends development. Assets as au. K. Result of the uncertainty. Charlie that is the key word, uncertainty. We have plenty of examples recently of how opinion polls and the view on anything such as the Scottish Referendum can be misleading and can change quite a lot in the whole process. We have a threemonth run, which is quite a long period. By the time we get to june 23, we will probably be sick of the word exit, i would brexit, i would imagine. The uncertainty is going to weigh on assets. You pointed out the volatility. That shows you how much he is already being priced in terms of the weakness and the caution in the markets. The thing is, we going to be trading opinion polls. Going to be trading this headline versus that headline in the next three months. Longerterm,s, there are very big implications if there is a vote to leave. The economic cost, according to all economic theory, would most likely be substantial. Markets, welk about have had a quick look at sterling. Here is what it has done over the past three months. My question to you, going across the asset class, we talk about the gilt market and equity markets. There are other formats at play terms of driving this. The euro up by 11 . There are many elements driving sterling. Do you think brexit trumps everything . I dont. It is a threemonth rally. That is a long time. If we get a clear trend emerging in opinion polls, the market will start to price in that outcome. You highlighted the moves against the yen and the euro. And a lot of that has to do with the broader risk outlook we have had. And has been a challenge sterling has had its own idiosyncratic cores cause for concern. Has seen it weaken against these other currencies. If we see a clear move in the opinion polls, you will start to see sterling recover strongly. Brexitoodys says that would be credit negative for the u. K. This comesan, again, back to what would be the implications . We do not know exactly what would happen. Hence my emphasis on the word uncertainty. We cannot say exactly what the Economic Impact would be on the u. K. , but it is unlikely to be great news. That means that the bank of england is unlikely to raise rates. Themything, we could see remain on hold for a long time or even go into negative rates if the impact on the economy was that severe. From the other point of view, there is a current account deficit in this country. If we have a lot of uncertainty and the currency remains weak, we might have funding issues read we might see the curve stephen. Steepen. If you start to move towards a positive outcome for the brexit, all of this will flip into reverse. It makes it very difficult at this point in time. Manus you have probably swallowed as much press as we have over the weekend. Really pushed by one of the main interviewers. His cabinet is divided. We have heard from the mayor of london, Boris Johnson. How do you think this campaign is going to be fought. Is it going to be fought on the fear of economic insecurity . Won some concessions, but he seems to be blinded by migration. Charlie one would hope that people vote on a pragmatic basis. If people vote on some side i would other matter, hope that the British Population is more intelligent than that and they will vote on what they are supposed to be voting on, which is this reform to the eu package. If they do not vote on that, that is a problem. Think the British Public is quite pragmatic and i would assume they will vote on what they want to vote on. Anna it will be interesting to see how the politicians involved tried to put distance between that and the other issues that are circulating around this. Thank you very much. Charlie stays with us. Withll be talking brexit the u. K. Foreign secretary right here on countdown. Manus today is pmi day across the world. France, germany, the eurozone, and the usa. Anna and bank of England Governor Mark carney testifies on the Economic Policy outlook. That could be interesting. We will also hear from the saudi arabia and oil minister, whose the in houston, texas. Friday, it is anna cpi data in europe. Plus ireland polls, the general election, and bankers convening in shanghai. So much. Up next, a surprise missed by europes largest bank. We are live to hsbcs hq for more. Anna welcome back. This is countdown. Lets get the Bloomberg Business flash. The billionaire owner of Arcadia Group says he is uncertain about what might happen with britains teacher in europe. He spoke to Francine Lacqua at London Fashion week. Again, as i said, most of our business in europe is online. I am hopeful that that is fine. Lets wait and see. Take a position on whether we should leave the eu or not . I dont want to get into politics. Retail is hard enough. Blackrock is bullish on japanese shares even after this years equity rout sent the topix into a bear market. The oj decision on negative Interest Rates punished banking shares. Blackrock says that will hold down the yen and help boost or bring earnings. Cutworlds 12 biggest banks staff by 5 in 2015 according to a report by a research group. It extends the trend that these banks reduced foreignexchange headcounts by more than a quarter since 2010. Europes largest bank, hsbc, reported a surprise fourthquarter pretax loss of 858 million. Estimates had been for 1. 95 billion profit. They have plans to scale down their vast local footprint, seeking to reverse to profitability. Much. Thank you very lets get more on hsbc. Hq. Lind chin is at their run us through the numbers. And is about loan losses that is what is concerning the market. Rosalind certainly, this pretax loss was a bit of a surprise. Year, when they made a profit of 1. 7 billion. Estimates of a 1. 9 billion profit. Look at the operating costs. 11. 5 billion in the fourth quarter. For the full year, the Bank Reported pretax profit coming in at 18. 9 million. That is a difference of 1 . Over 20 were for billion. The numbers have been surprising all around. Was 7. 6 n on equity against estimates of 84 . For the full year, it does not seem to be a loss in terms of the pretax profits. Is thethe main issues bank took an income hit in terms of lending. 18 . By loans bad loans. Meant that together the fullyear charges were 3. 7 billion. That thehas said groups Financial Performance was what they call broadly satisfactory. That is coming from the chairman. Shares reversed as the results came out today. Anna what about the role of asia . This is a bank that, for many months, was tussling with where take orders would be. We already know they are going to stick with london. What about the role of asia and the numbers and the strategy . asia still contributes a huge amount to hsbc. The results said that asia remain central to their strategy. 50 of adjusted profit before tax. They mentioned that a just asia continues to be at the forefront for hsbc. Anna thank you. Rosalind chin joining us from hong kong. Manus charlie is still with us. Story is perhaps a great example of no loss provisions, asia exposure. If we talk about the Banking Industry in general, it does fall into your work because it is all about bonds, credit default swaps, various tiers of debt. That comes home to roost in the rates market very squarely. Have we passed the eye of the storm in terms of being worried about banks . Are we overly worried about banks . Everyone has said, look, stop this panic. There is enough liquidity. We are all in a mass hysteria over banking. Think whereean, i the cause of concern is coming from is a macro story. It is Global Growth and the fact that you are not seeing the traction from policy makers you would have normally expected. Does that mean the eu should be really concerned about the Banking Sector . Probably not. Probably, the fears have been overdone the the reality is that we have not seen the macro followthrough to really start to see the Banking Sector and credit channels start to work properly, as we would have normally expected. Normally, post financial crisis, you would have expected by now for the Banking Sector and the recovery and the normal credit cycle to be going gangbusters. Anna we talked with hsbc and they talked about how the capital and Regulatory Environment has become there are. Clearer. Charlie regulatory pressure on banks in the financial sector, as a whole, has been one of the clear impediments to the normal sort of lending and credit cycles. Do negative rates help . I know we have not got them in the u. K. , but elsewhere in europe. Do they help when banks are trying to build their capital to live up to increasing expectations regulators . Charlie it depends on how they are structured. As always, the answer is, it depends. Going look at how it is over in japan, the Banking Sector has not been too adversely affected by negative rates. There is a tearing system. That was also in place in switzerland. H have allowed the banks they were not subject to the full force of negative rates. Environmentlatory is a key aspect Going Forward. You are going to put too many shackles on the ability for banks to do business. They provide the leverage. Manus they do, indeed. We will get into this perhaps after the break. The chairman said he would take steps to mitigate the effect on banks in terms of negative rates. Up next, we are going to talk sterling. Brexitohnson is on the campaign. Eua we look ahead to junes referendum. I wonder how may times we will use that term, sterling the takes a pounding. U. S. Futures, lets check in. A little bit of a rally is on the way. It is a riskon day in the equity markets. Rosalind manus lets get the bloombergs first word news with nejra cehic. Nejra hsbc has reported a pretaxe threequarter loss. Estimates have been for a profit. The ceo has been accelerating plans to scale back the vast global footprint seeking to boost profitability. In pound has fallen the most a month against the dollar as Boris Johnson said he will campaign for britain to leave the European Union. Sterling dropped below all of its 16 major peers reversing again on friday when David Cameron secured a deal on membership terms with eu leaders in brussels. Oil is on the rise after russia freezelks on an output should be done by march. Africas biggest producer says that iran and iraq should be given room to win back market share. Suicide bombings in syria have killed at least 140 people. The Islamic State said it carried out the attacks in the southern suburb of damascus in a mainly shiite area of the province. Chinese stocks every as and highest in a month on speculation that the chairman will take steps to boost the worlds secondlargest equity market. He was criticized for mismanagement that ruffled investors and deepened the gap from last year. You have been keeping an eye on the markets and we have been talking about brexit and the pound. Nejra it is for the pound this morning. If you look here you can see this gain that sterling made against the dollar which is after cameron secured that deal with eu leaders in brussels. That gain was short lived because when the market reopened, it reopened lower. Weve seen the pound fall the most in a month against the dollar. Saids after Boris Johnson he will campaign for britain to leave the eu fridays has undone gains and we could be in for a lot more volatility. This is six months of implied volatility at a 2011 high. It stayed up there at the moment, although David Cameron announced the tidings timing for that referendum which has become a certainty. There is a lot more concerned about britains place in the eu and the pound is actually weaker against all of its g 10 peers. That is looking at what the pound has been doin