Company recalled more than 6 million vehicles. Subaruac car and also a car. More details later this hour. We have the fed and quite a lot of freeform in europe with matteo renzi downgrading the forecast. We are watching ukraine, corporate news, what else are we watching . We are watching the markets. It is time to check it out for you. Losses in europe and overnight in japan as well. The japanese yen got a little stronger. This is the open in europe. The dax not showing us a price yet, but we are expecting higher there as well. From here . Go you look at the s p 500 in the u. S. Ths. Orrection for 22 monh the guy that Goldman Sachs say there is a 66 chance of that happening in the next 12 months. If you look at the fx market, eurodollar significant because this is back to the preecb levels. Where does it go from here . Lower, agoing to go lot of people say it is not about ecb action, but what happens with the Federal Reserve and when you get the first fed rate hike. Look for color on that debate later this evening when we get the release of those minutes. Thank you so much. Jonathan ferro with the latest on the fed and the currency markets. Joining us is the chief Investment Officer at London Capital group, where he helps oversee almost 4 billion in assets. Great to have you on the program. Give me a sense of what is worrying you the most in the markets. Eu reforms. Fed, the we have the specter of inflation. China is not going great. Uneasy . Making you feel the fact that we have a little bit of a perfect storm in the next couple of months. You have the fact that central bankers are fighting to establish credibility. , in europe,bankers he has been here for a while, but he might be forced to act and not just use the rhetoric that he has been using. India, there is a new central banker and they do not want to make the mistake of appearing to be too hawkish, but they need to continue to support the markets. That is combining for the almost perfect storm. , pivotal earnings season. We will talk about that. And the fact that you have valuations, which, for many stocks around the world, are offering the extra cushion of safety. I am worried in the very shortterm. Overall, stocks should continue to do well. I am not too concerned with the possibility that the fed might make it possible the biggest possible mistake in history, which is increasing rates sooner than 2016. But there are so many things that can go wrong in the next few months. We need to be very careful. What worries you about earnings season . We have heard from a lot of analysts who have been trying to talk earnings down, i guess so that they can have the leg up and wow them a little bit. A lot of people have been unconvinced by this. You look at actual what is embedded in the pricing and the consensus estimate is still very optimistic for your average company. You are looking at a situation where investors will not be willing to pay more price for earnings. The Interest Rate normalization in the u. S. Is telling us that everybody will have to see earnings coming up. Smallou still have singledigit Earnings Growth in the next two quarters, you look at the rate of high singledigit growth as well and it makes me worried. We have a record of delivering on those earnings. Taking advantage of the fact that a lot of people were underweight equities. Those stocks . Pick we have a couple of names. There is a bit of tech with intel. A little bit of pharma and a little bit of emerson. Is it on p e, Growth Strategy . There are two fundamental issues. We do not want a lot of leverage. In europe, leverage means access to banks. Banks will not be willing to lend much at least until october. A lot has been said about Mario Draghis intention to force banks to lend. I think that looks extremely unlikely. , lending is happening. As rates normalize, it will become more expensive. The last thing you want is a high reliance on leverage. The second thing you want is a longterm record of delivering. A company that is not trading at huge valuations compared to semiconductor multiples. Importantly has a track record of delivering. Dividend yield, which is not too bad for that space. Thenvestors gravitate from new i. T. Into the old school, legacy i. T. , they should benefit. Emerson, on the back of infrastructure recovery, it is spending again. Low leverage, good income generation. Thank you so much. Keep it right there. You mentioned some of these big stocks. Rebounding as little bit on these tech stocks. I will ask you about that shortly. Here is a look at what else is coming up on on the move. Losing the logo. Lvmh tries to win back its exclusive reputation. We will break down the brand ahead of the results. And toyota recalls more than 6 million vehicles around the world. Meanwhile, another car takes off, literally. The first car cleared for the air as well as the streets. Stay with us. We are just adding started. You can also follow me on twitter. I will see you in a couple of minutes. I am Francine Lacqua in london. Ons is on the move Bloomberg Television, radio, streaming on your phone, your tablet, and bloomberg. Com. Now we will find out the latest policy decisions from the u. S. Central bank later today. Winning us now is jonathan ferro. Joining us now is jonathan ferro. We will get more details this evening. The taper was the big debate from last year. The big debate this year will be on the first rate hike from the fed. Everyone was focused on Janet Yellens remarks. Six months after qe ends, rates might rise. Many people were talking to a lot of analysts and investors and this is well in line with the feds own rate projections. This should not surprise anybody at all. The big news from the fed last meeting was there projections for Interest Rates. Of 2016. The end these were raised from the last projections made in december. They could be looking for even higher rates. It will be the debate that you get from the minutes on that that will be telling. It is setting us up for a hawkish set of minutes later on. That is where the expectations are in the markets and now. Thank you so much. Is the chief Investment Officer at London Capital group. Thank you so much for sticking around. I want to come back when we started the interview, you said you were concerned about the mediumterm. You were mentioning the fed as one of the things that worries you the most because you were concerned that they would raise Interest Rates for 2016. Is that now a given because of the sixmonth reference . It is not a given. One of the lessons we will learn is that they will hopefully be independent. When you look at Interest Rate projections, they are moving forward. Having said that, we assumed these rates would move in a linear fashion. I would assume that the fed would delay the start of these to do it very gradually. Recent data coming out of the great. Not entirely manufacturing data not looking great. You have a Housing Market beginning to exhibit some of the consequences of the fact that longterm rates have been coming up for the last 18 months. You look at refinancing. Sales. Mortgage applications. Are takinge numbers trend and i believe the fed might not be too aggressive in terms of the rhetoric and managing market expectations. They are trying to establish a reputation. Same time, there is too much at stake. What is the impact on fx . Interesthave diverging rates but this should have happened over the last 12 months. The dollar should have been a lot stronger than the euro. That has not been the case. This will probably impact the earnings season that is coming in europe. What is your take . When will the dollar b at the level it should be given what the central bank is doing . The moment that the market the ecb will be forced to act. I think we are closer than we were a year ago. You will see the ecb having to blink. ,eople will be convinced that going back to the fundamentals of looking at Interest Rates, iswth potential, how much qe in front of us as opposed to behind us, this is all bullish. If there is a lesson to be learned 12 months from now, it is that it is not sustainable for the euro to be at 1. 40. A lot of ceos are getting ready for higher Interest Rates. Does that mean we will see a lot or m a . Ex in europe, credit will not be flowing. That means that for those cashrich they may start spending. There might be organic opportunities. A lot of time, it is precisely those Good Companies that are the most vulnerable. M a, theremende will be plenty of opportunities for Good Companies. Forhey are forced to look things to propel them forward. M a might go to the victims of financing. It is quite scary. Maybe it will be a Good Opportunity for investors. Stick around, because we are turning to geopolitics in ukraine. The u. S. Is accusing russia of sparking unrest. Ukraine sends its security forces. Ryan chilcote has the latest on the story. Can we talk about escalation . In a sense. The Central Government asserting its authority with a security crackdown and antiterrorist that isn in the city the second biggest city in the ukraine. They have been successful. They have capture the Regional Government building from the armed men that were holding it. Menher hot spot, armed continue to occupy the security , the successorng to the kgb. Ukrainian authorities said they were holding 60 hostages. All but 4 have been released. Negotiations continue. You have another big city with armed men Still Holding the parliament. Talks are underway there as well. Who is to blame . That is the big question. The u. S. Says russia. Clear that Russian Special forces and agents have been the catalyst behind the chaos of the last 20 four hours. Some have even been arrested and exposed. Must be thelear reality that the United States and our allies will not hesitate to use 21stcentury tools to hold russia accountable for 19thcentury behavior. Withindebate continues the ukraine itself. A fight broke out in parliament yesterday. The leader of the communist party at the podium. He was blaming the party in power for creating this situation, reminding them that they seized and occupied government buildings in the west of the country in the runup to taking power, forcing the ousted president s hand. That is what we are seeing in the east and yet they are not letting these people remain in these buildings. You can see the scrapping in ukrainian parliament. Obviously a difficult time in ukraine. There has been some economic reaction in russia. Are they starting to take their toll . There is a little bit of evidence of that. The russian economy minister lowered his forecast for growth from 2. 5 to somewhere between. 5 one percent. They have lowered their forecast and part of the reason is capital flight, which has russiansed since the moved into crimea about a month ago. Another interesting thing the kremlin said, based on economic security, Russian Companies t theirthe list delis shares on russian exchanges. This is a push for the russian government to foster its efforts to build moscow into an International Financial center. We get this crawl this call from the kremlin yesterday. They are saying it is not mandatory and it is just a recommendation. If they want to list on a foreign exchange, they are welcome to do that. We will stay on top of this story. We talked a little bit about central banks, fx, earnings. I know it is difficult to predict geopolitics. How does an investor play Something Like this . Tensions could escalate. Should try not to predict what you cannot predict. Politics will always catch you by surprise, whether it is middle eastern tensions one point five years ago, ukraine and russia now, whether it was chinesejapan relationships around a year ago. , becauseway to do that , lets not getct it wrong when it comes to emerging markets. You will get it wrong if you focus on countries that do not have a huge reliance on foreign direct investment. Countries which do not have a massive amount of current account deficits. You have this fragile, more sensitive to flow economy and you will be ok in the long run. Emerging markets might be the only listed public equity space which offers you something resembling good value. , atrest of the equity space best, is fully priced. The main message for investors, adjust your expectations. This volatility is the kind that we should be expecting going forward. Financial repression gives us the illusion of lower volatility. When you say equity markets are fully priced, are you seeing a bubble . Tech stocks saw quite a correction. I am sure there is something resembling to a bubble of social and these upandcoming tech stocks. The market as a whole, no. You are not seeing the symptoms of a bubble when you look at the positioning. When you look at market sentiment, you are not seeing overbought situations where people are being extremely complacent. The fact that we do not have a bubble does not mean that stocks are very cheap. Be selective. To there are always good stocks out there. Bea whole, it might not attractive, but the opportunity is always out there. Coming up on on the move, are big profits in the bank for lvmh . Burberrys star designer takes over the top job as chief executive. Does he mean business . Is set to post a gain in sales when it posts firstquarter results later today. Will this be a turning point as the company tries to strip away its logos and earn back its exclusive reputation . Caroline, i guess there is a trend that we want more things that are understated. Exactly. A cautious luxury field. We want the exquisite feel, the make, craftsmanship, but not blazing with logos as they used to be. This is what is hot at the moment, stripping away logos and new stores as well. Making stores more exclusive. Also, higher prices. Using more luxurious materials. To lure backing the chinese buyer and making sure it has that burberry effect from five or 10 years ago. That thosenk feels are the trends for Louis Vuitton and lvmh in general. At the moment, what is not hot still remains very present. China is very tough as a place to do business. Still cautious in terms of spending. Japan could look a little bit stronger. Ukraine, russia, volatility. We want to hear what lvmh says about that. Fashion is all about and leather. That is where most of their sales are coming from. This company is reporting around the closing bell. It is a bellwether for the luxury goods sector as a whole. What we see with lvmh, largely we are going to see with gucci. Gucci had very similar problems. It or craftsmanship. Thank you. Still to come, we are talking burberry. Welcome back to on the move. I am Francine Lacqua at Bloomberg European headquarters in london. We are 30 minutes into the market open. Lets have a look at what markets are telling us. They are a little bit on the upside. Gaining a little bit of momentum. You can see some between. 2 and. 5 . Stocks gained as we saw a recovery of u. S. Technology shares that were down the previous three days. Lets dig a little deeper. Caroline hyde is that the touchscreen with three stocks that are on the move. Lets start off with this sweet to taste read still more pain for the sugar maker. Yesterday, a profit warning. Today, people worried about the demand for sugar in europe. They say a significant decrease in profit is on the back of that lack of demand. On a more natural no, thats move over to christian hanson. This is on a more natural note, lets move over to christian hanson. Asia is where they are finding real strength. Chr hansenfor overall. From sweet things to cars. Volkswagen up this morning, raised to outperform. Europe, there is upside for volkswagen. They say the market is continuing to recover. Best, certainly in comparison to bmw, their competition is far harsher. Shares surging for bmw in march. Thank you. Caroline hyde with some of the biggest movers in todays trading session. These are the Bloomberg Top headlines. Toyota is recalling more than 6 million vehicles worldwide. The recalls include 27 models, the pontiac vibe. Company is trying to improve this process after regulators punish toyota for delaying recalls in 2009 and 2010. The European Union is moving to overshareholders a veto pay packages for executives. The Financial Services chief introduces the plan today. It will require a shareholder vote on pay policies for Company Directors at least once every three years. Approvedlators have covered leverage caps for americas biggest banks. Eight lenders will now need to hold capital equal to at least 5 of their total assets. That is higher than their overseas at investors, who much hold who must hold at least 3 . We await the latest minutes from fed policymakers later today. As janet yellen leads the u. S. Out of qe, the ecb may be leading europe intuit. Have you onreat to the program. My first question is a simple one. What is more interesting, what europe is going through, the , or is it deflation what the fed will do . There is the risk that if they raise Interest Rates too soon, it will scuffle the recovery. Difficult to pick a favorite between these two. The fed is a year or even two years ahead of the ecb in terms of the economic recovery. Whatever difficulties they face in exiting stimulus is kind of a precursor what europe will face a few years down the line. Ecb coming out of growth. One crisis, growth not as fast as expected. Still lots of after effects of the crisis in the economy. Given the institutional framework of the ecb and how many Different Countries are involved, that is also very interesting. We will be watching both of these. What is the most dangerous. Has the the fed advantage that the economy is growing. It