A little bit of breaking news just to bring our viewers to spain, spanish gdp has been released. That comes in lower than the market estimated. A rise of 0. 2 . The markets were looking for a gain of zero point read percent. That is a mess on spanish gdp. Yearly look at that on a annualized basis. Lets talk to caroline. A little bit of a turnaround. Keep an eye on the Worlds Largest publicly traded hedge fund firm. Assets are up 3 . The unit glg partners is bringing in profitable trade. Also much to shareholders delight buying back 150 million worth of shares. We are going to look for man Group Credit Suisse you were saying 10 . Morgan stanley is saying about 2 is how much we could see it climb. This is all about the turnaround. I soon as you get that am keeping and i on wpp. They have banked 46 billion pounds worth of billings in 2013. The stock was about 3 lower. That was a mess on the headline number for the Worlds Largest advertising company. It was Foreign Exchange that actually didnt help the numbers there. They should have a good 2014 with the sochi olympics coming in, the brazilian world cup and the midterms in the u. S. Thing that you have got a for german unemployment today. I am very excited. I know you are excited about janet yellen. Caroline is excited. Futures were lower at one point the we were down yesterday. Lets see if investors are happy. Cac 40 up 0. 1 . The ftse 100 largely flat. The dax pretty much flat. German unemployment comes out in about an hour. Cpi out of germany comes out in the morning. Spain disappoints with gdp. Later, 3 00 p. M. , janet yellen faces down the Senate Banking committee. Are those remarks going to be changed from two weeks ago . The market doesnt expect them to but it remains questionable. Have a look at euro dollar. The view is coming into next week, what will the ecb do . They expect more easing. At2, right now where you are 1. 36. 0. 18 . German cpi, look out for that. If this inflation story has not just been about spain and italy, it has been broadbased. If it hits germany hard than the ecb we will keep an eye out for that data later this morning. Joining me now to talk about the lacaille, theick chief Investment Officer at state street global advisors. They manage more than 2 trillion in assets. Always great to have you with us. I know you have been traveling. We are two months into the year. Tell me what the conversations are with clients. What is on their mind . We have got clients really sk whenever we see u. S. Treasuries to about 3 . If they are at 10 , we have all got issues. You have people taking their money off the table, putting money in fixed income. In Northern Europe is is a different story. There is more of a risk appetite. They are for more opportunities. They are skeptical about whether they are earning the liquidity premium. They are interested in going into less liquid assets. They are concerned that they are going to get paid properly. They are still exploring new opportunities. It is interesting the way they are trying to diversify. They are interested in risk premium strategies. Extracting the premium available in markets. They are doing new things but the tone has been a little bit less concern about tail risk even though we have seen this turbulence. That is about diversification. Is that a big shift . You have been in this business a long time. That is a new shift in thinking. There was a time when the precipitation was greeted with skepticism when diversification was greeted with skepticism. It doesnt mean you want to look for more opportunities and that is what they appear to be doing. It has been a month almost since you and i spoke. The s p makes records, the london market, the broad market at a 14 year high, europe at a sixyear high. When you look adequate in markets, you were quite convinced last time. Do you still hold that . Do we have further run on the equity markets . We do. We think we will have positive returns for the rest of the year. Were going to have a fair amount of volatility. We will talk about the causes later. The valuation story is still attractive enough. The underlying growth we believe is going to continue. That takes me now to janet yellen. She is going to do some testimony today. The whole market wants to know, thehe still convinced that Economic Growth story will trump tapering . Tapering seems to be pretty much baked in the sense that unless thingss change very dramatically, we are going to see tapering continue. If tapering did begin to end i think it would be a challenge for people. I think janet yellen will continue on the path that she set out. We havent heard too much. We are looking forward to hearing what she has got to say. When you look at the data, retail sales, consumer confidence, bad weather, all of these issues that are being thrown at us over the past month, how do you look through that noise . Is there a bigger issue at play for you in the data in the u. S. . Household Balance Sheet are in good shape. The Housing Market seems to be recovering. The inventory issues and the weather issues, if they prove not to be temporary it would be more of a challenge to our review that the economy will continue to grow. We are going to watch out for any sign that that is a more permanent issue. Ok, youre going to stay with me. We are going to travel around the world. Rick lacaille, state street global advisors. Here is a look at what is coming up. Rbs post the biggest fullyear loss since 2008. We will talk about the results after the break. Credit suisse, how did brady dougan perform . All that after the break. I am manasquan in london. This is on the move on bloomberg television, radio, streaming on your phone, tablet and bloomberg. Com. Here is a stock that is on the move. It is man group, one of the biggest publicly traded hedge Fund Companies in the world. The stock up just under 9 . Byets under management grow over 3 in the back quarter. They are seeing a nice turnaround in terms of assets under management from glg. This is a story of trying to change from computerized trading to perhaps less reliance on that. Man group also said it plans to buy back 115 million worth of stock. It is on track to cut costs by some 270 million by the end of next year. Good news if you are in man group. It has been a tough ride on that stock. Rbs, they posted their biggest loss since they received the biggest bank bailout in history back in 2008. Youre still dealing with legacy issues. John ferro has more on the issues. Here is a stock moving in the opposite direction to man group. One number you need to know, a pretax operating loss of 8. 2 billion pounds. Estimatesd of the were looking for a loss of 7. 7 billion pounds. We got the biggest loss since 2008 and a sixth annual loss in a row. Bys is a huge loss driven precrisis issues. The Strategic Review is another big focus. Theyre going to cut costs by 5 billion pounds over the next few years. They are shrinking the security unit, reining back from Investment Banking as expected. On corporatefocus customers, business lending, retail banking. They need to raise more capital. You and i have been talking about this. They have been shedding assets. Theyre going to sell much of the remaining stake in direct line to raise about 1. 1 billion pounds. What is the plan for Citizens Bank . Of the ipo beess accelerated . It is a big loss and many people are going to be talking about the bonus. That is going to be smaller than last year. Does that take some of the contention off the table for russ mcewan . Maybe. I can almost guarantee that it will be on the headlines of every newspaper in this country. It is a 576 Million Pound bonus call. In the world of banking, that is not a big bonus call. For a bank that is 81 owned by the government reporting its biggest loss since 2008, one question is on everybodys mind. Justify it. If you look at the headline number, there is an argument. It is a pretty strong one, that on an individual basis, there will be many people at that bank who are incredibly successful and without them, the losses could have been bigger. What are you going to do . Lose talent . Russ mcewan says we have to be pragmatic about this. That is the dilemma for rbs. This is the biggest bank bailout in u. K. History. , guessents break even where we are at now . Lower again. Down by over 4 . This one is heavily politicized and it will build and build ahead of next years election. That is a debate that is going to run for the next of the year. John ferro on rbs. Still with me is Rick Lacaille, chief Investment Officer at states global advisors. We have just heard the rbs story. I spent a bit of time with brady dougan, they have big issues in america. Banking is hard. At goldman sachs, they seem to love banks. What is your general feeling on the industry . We cant judge every geography can we . Some of the issues are transitory. You have litigation issues that are transitory and you have the european challenge, the ethic quality review, the recapitalization. I think there will be opportunities for profit in europe. Have neglected or overlooked some of the opportunities. They have seen eurozone banks being undercapitalized. The lesson was, when you inject new capital in and you have a plan that is credible, you can get pretty explosive returns. This was when the americans cleaned up their Banking System. Absolutely. When the capital is not needed, it eventually gets repaid back to shareholders. If it is needed, it is a cushion that gets you through that difficult era. It is politically difficult as you try to pick apart the severance from the banks. The interesting opportunity is maybe not just in europe. ,hen we look at opportunities they are often in uncomfortable places. We are looking for opportunities where others are not. Sometimes they are painful. Where are those . Some of the value opportunities are in emerging markets. Some of the things we have seen more recently, concentrated value strategy, have been banks in emerging markets. Theging markets emerging market, i dont know how you would phrase it, but down 5. 5 on stocks. Currencies still under pressure. There is a bit of reengaged in. You say emerging markets we need to be cautious could offer value. Where is the value play . To us still appear overvalued. There are some exceptions like mexico, but generally currencies are expensive. The equities may not be expensive but it really depends how the fundamental is going to turn out. In latin america, there is still a very weak return on equity. In asia, unless we see dramatic changes in china, they may be better opportunities for emerging markets. The equities look reasonable. Currencies are still challenged. It may be too early to say, here is a really strong call on emerging equities. Fixed income, if you look at yields, you have some very sharp yield curves. You have real yields available through the inflation between 1. 5 and 4 . Fairly appealing. Theyre also discounting a lot of trouble ahead. Interesting opportunities in emerging markets but they have been overshooting. If you have to differentiate, dont worry about i am still more concerned about this. How do i differentiate as i look the key issue for me is who is dealing with a budget deficit or who is not raising interest rates. What is the critical issue for you . Willdonesia for example mark itself out as different from the others. Elsewhere,ine and dont be too concentrated in emerging markets. Political risk is large and it is not very wellpredicted by investors. Do be well diversified. Take some overweight and underweight positions. We tend to be overweight the small countries and underweight the largest ones. Underweight the brics historically. That can be difficult when china is on a strong rally. Good stead over the long term. What is going on in china . I come in everyday, we have the yuan on the move, we are trying to lure him the currency . There is something very interesting in the past couple of weeks in china. They have to squeeze the excess is out of the system and it is going to be painful. We talked about volatility earlier. We can expect that to spike up later in the year. There is going to be some Headline News out of china as this credit excess is squeezed. I think the bad loans, the nonperforming loans and losses are going to be taken from the Banking System and put some how within the state that. Youre going to see debt to gdp in china rise. That may not be positive for the currency because it is a weakening point for the u. N. For the yuan. The currency will be a longterm appreciation story. This year may be different. We are going to take a break. What i want to pick up on when we come back is how we play that. Stay with us for that. We will have more with Rick Lacaille after this very short break. Welcome back to on the move. I am manus cranny in london. In terms of some companies on the move, australias Biggest Airline qantas will count 5000 jobs cut 5000 jobs. That is after news this morning that there will be a 26 million loss. The stock fell the most in almost three months. The chief executive is making a case for government assistance. The airline cant compete in the domestic war with virgin australia. Cent, alibaba and baidu are seeking targets to plug gaps across their businesses. Writingp sees the trio internetrelated deals in china to a record this year. Shares in baidu surged more than 7 in afterhours after the Company Forecast a sales job in the first quarter. Huawei forecast it will sell as many as 100 million smartphones this year, twice as many as in 2013. The worlds thirdlargest smartphone maker plans to focus on higher and devices. Lets get back to Rick Lacaille, he is with me. He is head of state street global advisors. We were just talking about china, emerging markets, how do you translate what we have just talked about into a strategy . We still believe in value being very important. I think the challenge in china is that value is not necessarily working. Particularly after the third party plenum. They tended to be pretty expensive. There are a couple of ways you can do it. One is just be patient and stick with value. I think that is going to work in the longterm. The other is, look at more neglected areas like smallcap and midcap. Exposedbe a little more to that restructuring of the economy but i think if you can avoid the expensive stocks, that may be a good strategy. Not going for australia, canada or brazil as a proxy. Is notthink that china going to have a hard landing and is going to turn around with volatility, you have to continue to search for value in stocks. Lets turn our attention to europe. We get a little more data today, money supplying data sometimes doesnt grab the headlines the same way as the inflation data. You say it matters a great deal. It does. Maybe because we grew up in the 1980s, but money supply matters. That is the challenge for eurozone in particular, getting credit moving. M3 growth has been very weak. I am not sure we are going to see an improvement in the data that comes out today. That is the challenge for the ecb. Up,ink with the aqr coming banks will be hesitant to take too much risk before they get through that. I think there is an Urgent Mission to get credit moving in europe. The ecb has to continue to think in as radical a as they can. If you had a conversation with mario draghi and he said, give me something radical that the germans will accept, what should he do . We are not in the business of advising Central Banks. The german viewpoint is obviously one that is pretty well established. Is a goodri ltro mechanism. Stimulating the structure credit market is a good way of taking assets off bank Balance Sheets where appropriate. It is not an easy problem to solve. You need a very loose Monetary Policy and you dont need to worry about inflation. Last year you said, we need to be nimble. You felt that the referee of , bige had already squeezed moving story and italy since we last spoke. In terms of on that italy, spain, the periphery . There is still a risk premium for the earned. Both in bonds and inequities. Ithink some of those markets have been more worried about like portugal. There is still some momentum and returns to be had from that. Cracks always good to get your view. Rick lacaille from state street global advisors. Thank you so much for being with us this morning. Coming up, it is pressure, it is mounting, it is from u. S. Tax evaders. We will talk Credit Suisse after the break. Welcome back to on the move. I am manus cranny at bloombergs European Headquarters in london. These are the Bloomberg Top headlines. From being thene most attractive carry trade that in the emerging markets to the worst in the space of two months. As the Central Banks efforts to weaken the currency caused volatility to search. The Exchange Rate tumbled the most since 2010 earlier this week. Losing money for investors who borrowed dollars to buy the yuan. Angela merkel is expected to call for a Stronger European Union during her visit to the u. K. Today. The german chancellor arrives in london later. She will address both houses of parliament and have tea with her majesty, the queen. I think she is going to try to convince the u. K. To stay in europe. That there are more advantages to stay in than to get out. You cant really pick what you like and not take the rest. I think that is the main message. Yatsenyuk won the support of ukraine protesters in kiev to the an interim cabinet and averted a fraud. He says lawmakers are set to approve him as Prime Minister today. Secretary of state john kerry says the u. S. Is formulating a 1 billion Loan Guarantee for the ukraine. Kerry also warned against intervention by russia. Kiev inlcote is in Independence Square last night. He filed th