And crude reality. Discuss 20 per barrel in that it if that is off the table. Here is what is getting the going this morning. Im kind of looking at it, im fairly underwhelmed delegates a regional bias. So how am i viewing what is going on in china. Its another factor that he has got to think about. Clearly they showed robust job growth. The question is really one for steve major. Is the policy diversions basically priced in. Thats a key question. You see no doubt from goldman that the shares are pricing in but not much more. Here is the thing. If draghi disappoints this week you could see one heck of a move. We saw what happened in the european curves. This week, its one of the more pivotal that we have seen so far this year. We are 28 minutes away from the European Market open and at this stage we will have a little bit of disappointment in terms of the market. Let me show you the fair value calculation down by around 0. 4 . You get this line here. Its a smart piece of technology and it tells you roughly where these markets will open. The looks like we will start on the back foot. Hans except on the oil story. We see brent surging. The uti also heading up. We have brent close to that 40 per barrel count. Pound holding on its strength gaining against the dollar after those job numbers on friday. Thank you very much. It fell for the second month in january. Latest find at the global slowdown in week domestic pressing power. Hong kong Residential Home sales plunged 17 earlier. Amid the uncertainty of the. Conomy at home and in china plans by the government to boost supply in the next five years. This iranian billionaire has been sentenced to death after being found guilty in a fraud case involving an oil front. They would pay a quarter of the money they laundered. They can appeal the verdict. Hillary Clinton Bernie sanders clashed over there corporate bailout. In the debate, clinton said the American Auto industry wouldve collapsed. Both agreed that michigans republican governor should leave office. Hans boy Economic Development is to take a priority in china city officials meeting at the Peoples Congress gathering again today to outline National Priorities at a time of slowing growth for the country. Lets go to haidi lun in beijing. We can looking for clarity. What is it going to look like and what kind of reforms do you see . Abovelooks like growth Everything Else including these painful structural reforms. They are hoping they would come up with a game plan on how the plant implant them. But the 7 gdp target, the first range weve got since 1995 a lot of a, say it doesnt give beijing the space to deal with overcapacity. More disturbingly, the widening of the fiscal deficit in the expansion of the Monetary Base is much higher than even nominal gdp. It will continue to add leverage to the economy at a time when most say they should be deleveraging. Guy we are due to see a crackdown in the space. It is interesting because this shows how hard it is for policymakers to target the one side of the economy or certain parts of the country where they want to revive growth. Essentially a very patchy recovery. A number of his top tiered cities which are overheated to begin with, lets face it, shanghai, beijing, shenzhen. Theyve grown over 50 in the last 12 months and a lot of it has been due to the down payment loves. Borrowing for homeowners has search to a record high. There are indications that regulators are becoming increasingly concerned about asset bubbles being built up. Indeed. Nk you very much lets bring in hsbcs global head of research. Good morning to you stephen. Put that into your world. How does it affect the market . If you put china in the global picture you have to sit that growth is less than people previously expected. It has to come through somehow. I think that it tends to move yields downward rather than upward. The detail is still coming through on this meeting. But i think the direction is quite clear. It is softening. Guy give me how that affects the upsidedownside risk. The markets have been focused on the outflows. So far it seems to be matching quite well and a more benign backdrop seems to be favorable to all markets. The global picture includes china, japan and the euro zone economy. If you add it all up, i find it hard to see how we will get back to previous levels, back to where we were before. It seems very unlikely. You just give us your call for the 10 year and take a look at what bill gross is talking about, this big yield spread. I think the big yield spread as part of the reason the treasury yields come down. Flow. E degree, there is a there are other mechanisms that matter here. For example, the u. S. Dollar. The fed is looking at the global scene and you can see it in the stress test from january. If you add it all up, it is hard to see how the fed will hike as aggressively. Guy we will come back to you. I want to talk about those growth calls as well. Particularly going back to april of last year when bill gross talked about the story. Up next, we will go back to zero. Than zeroscuss less and discuss the impact of negative rates ahead of the critical ecb meeting later this week. Next. Hans welcome back to on the move. I am hans nichols. Lets get the Bloomberg Business flash. Caroline bss said to be working with advisers and financing on the accounts bid, according to people with knowledge. The german chemical producer has not made a decision about proceeding with the offer. They agreed to a merger with dow chemicals in december. Commerzbank has named a successor to their ceo. They are not entirely done to investor flight. It studyccording to that says the outflows were driven more by denominated debt in anticipation of a stronger dollar. Gross on it toy first of last year called the german tenure in this tweet. That was a while ago. Nearly a year ago. Gross said that actions from the ecb and the boj are currently going down u. S. Yields. Next week it continues to grow into negative territory to the extent that the boj continue some of down into negative territory. The treasury is supported to some extent. Stephen from hsbc is still with us. In a most sounds like you. The actual pulling down isnt. Ust about the flow if you look at japan or germany to explain the moving treasuries, it is about the policy reaction and there is no way the fed can tighten sing because of the rates going down in japan and europe. Bloombergeople in made up. This is where gross made his call and trying to figure out why that call was made. Its the kind of where are we now and what does where are we now tell us about where the bond market is going next . That will give you some kind of measure of whether the bond is rich or cheap. Post tapering, the yellow line when done more than the fed one. That is the point where bund yields went to five basis points guy and and sprung higher. This is where and sprung higher. Guy this is where gross made the call and you think this is why he made the call . I think it was part of the explanation, yes. If you look back, there were other things to do with solvency. But boones were rich but bunds were rich. Fastforward to the present and you cannot say the same thing. Guy when you talk about the price of what is happening with 10d, has the price going negative, is that are we going to see a further move . Its difficult to know what has been priced because as you know there are possibilities on the quantity of money and not just the price of money. They could do all kinds of things on credit. Looks forward at 10 basis points but there is plenty of scope for surprise. Imagine if they did some kind of system like in japan or switzerland and that rate could be anything. Just imagine for a moment that they tiered it and they could have a penal rate or marginal could go as low as 17 or 100. It depends how much of the excess reserves you want to go through at the margin. Rateso it could be ok for to go 10 for the upside but not the downside. The policy is about signaling and getting the Capital Markets and the term structure lower and deeper than zero. If that is part of the strategy as well as trying to drive inflation up, then signaling is what it is about. It does not have to be a simple 10 basis point adjustment. There is plenty of opportunity to go beyond a simple 10 basis point move. Guy a couple things i want to talk about. We spoke earlier with Goldman Sachs where they are positioning for a further flattening of the german curve is a risky strategy. This is what the ecb often talks about. Is probably generated by what were seeing in oil. You can see it moving further to the upside again. Backhe market is pricing in inflation. How big a problem for johnny is this data going to be this week . I imagine he will use it in the right way and say we at least have some momentum. For the last two to three weeks. If you look at it in the context of the last few months, its going the right way. They will be encouraged by that and it is mainly down to the oil price but they will do whatever they can to nurture that move and get it higher. Stephen, you will stay with us. Time. You for your we look at the potential for corporate movers including bsf were said to be weighing a counter bid for dupont. Uy a lovely morning in london how is the market going to trade . Move. Caroline starting off with the biggest chemical giant in the market, could it be muscling in on the transatlantic deal between dupont and dow chemical. We have information according from people who are familiar. Could they be coming out saying they would struggle to pull in the 72 billion probably needed by them to buy their rival. A little bit is being called on it but the synergies are less than you have between dupont. Would you allow the number one player to have any more of the Chemical Market . It push down a little bit more . Ive seen calls down two to 3 . This came in on friday after the bell. It could send this stock soaring. We are sing one of the wealthiest men in the world potentially eyeing up to building up his stake. They are being offered the likes of 7. 6 euros per share so we could see a real pop in the share price. Bloomberg shows that you can dig into the holders this is what he currently has. Suddenly add to the whole holding and make a bid for s cc in its entirety. And lastly, another bit of talk of m a in the air being recorded from the u. K. Press. . Ould we see the boosted offer this is their home retail share price and you have seen it strengthen as the bidding war and suing. The giving us a cash proposal of 175. Could we see even more being caroline, thank you very much indeed. Stephen, would you be gearing up your Balance Sheet if you are a big corporate question mark absolutely no. The bas report of last year shows that corporates work one of the sectors that took on the most debt. The problem with the debt is that it is not particularly productive and if there is a single explanation as to why the Growth Numbers are not cominging to stimulus up, the market open we are four minutes away and european stocks are little bit lower this morning. It is a lovely day in london. Guy good morning. You are watching on the move. I am guy johnson, alongside hans nichols. Here is your morning brief. China under wells the National Peoples conference. Expectations surge in europe. And crude rallies. 45 amarches towards barrel, the highest level in 2016. Hans take a look here. The future is mostly negative, entirely negative. Touchscreen the with Caroline Hyde for the market open. Caroline we had a relatively good day on friday. More than a percentage point on the ftse 100. In the same way, copper is trading lower. All eyes in china of course, over the weekend. We had the National Annual peoples conference. Focus,re talking fiscal as they looked towards the foreign economy. All eyes were also on the u. S. After that stellar jobs data cae me out. 6 10 of 1 . P by only two companies are in the green. Commerzbank is higher as they named the next chief executive. The ftse 100 will open lower on the downside. Miners were the are performers of last week. The performers of last week. German factory orders are showing two months of declines. The market had been worried about something worse than that. Risk aversion is pulling into the gold market. Once is moving agaiin again. Say, is coming into overbought. The technical indicator is showing there may be a little money coming out of copper. Money though, continues to go into oil. Nevertheless, we are at 30 a barrel. It seems the supply side of the equation is lining up with production. That is why oil is going lower. Lets have a quick look at some of the stocks to watch. Fcc is up 17 . They are taking control of his company. He is looking to buy into this. That came in after the bell friday. Of 1 . Tail is up by 3 10 overall, home retail is only down side of the market. We can see one of the worst performing german stocks, basf. Will it be wanting to get its hands on dupont . Guy let me take you to the bloomberg imap. The market is mainly negative. Oil is actually trading higher. , down is not doing badly by 3 10 of 1 . Utilities are up. Materials are coming down. Telcos are up. Materials had a stunning week last week. If you invested in angloamerican anytime that one one and you timed that right, you could have made money. Health care is one of the out performers today. Generally, financials are negative. Hans we will see what draghi does to those safe havens. The ecb is expected to deliver a package of easing measures. But what can draghi due to support the banks . Earningsross said bank powers are limited. Curve appears to at, and willy fl continue to be flat for a long time. To me, that means that banks, are not a bad investment, but lets face it. We are in a new age with limited ability to increase earnings based upon this flat yield curve. Hans i know you are never shopped, sometimes surprised. Do you agree with bill gross . Im just thinking that there is so much that can be done at this meeting of the ecb. I think it will be dangerous to underestimate mr. Draghi. The track record is one thing, going back over the years, but the scope and the tools and the potential to do something in the market is still enormous. I am of the opinion that you do not bet against draghi. Hans so, when you look at potential ways they could surprise, are you looking for increase in an size in the asset purchases. It is complicated. The quantity of money, as you mentioned, in terms of how much they buy each month and which types of bonds are eligible, all of that can be adjusted. It has been mentioned that capital could be looked at at some point in the future. But on the rates they are reserves,or the the tiering would allow that to go much lower, if they so chose. Guy does he care about protecting Bank Profitability . I think by going gently they can actually deal with both of these challenges. It is quite clear that Bank Lobbyists will be putting pressure on the ecb not to go too far and too quickly. Thatng does provide opportunity. We have a year or so of data and awitzerland, denmark, sweden. We can see the impact on banks. So, the data is there and the ecb has it. When it comes to this discussion, the tiering does seem to work for these other countries. Guy how do negative rates affect the worldwide system . Every banker i talked to says they cant pass them on. Seenoking at what we have from the evidence so far, Mortgage Rates went up in switzerland. Bizarre, isnt it . Part of it is due to the fixed floating rate. The bank is passing this negative floating charge onto someone else. There are all of these quirks at the zero bound. In fact, banks will try and make back that margin by maybe charging more. We are at a very interesting stage. We have break below zero, first of all. And for the markets to start clearing on both sides, we have to get clearly through zero. I think it is still very early days. I think this negative rate policy is only the beginning. We will look back in a few years time and discussed together, did it work or not . Qe is seen as part of the Central Banks talk head. Back at the beginning, people said it would be inflationary, and would not work. But here we are. We have qe and negative rates. I think we should go with it, rather than sitting around complaining with it. If you go with it, you can see the central bank has the power to take the rate where it wants. I am saying negative rates as a natural extension of zero rates. Hans stephen, you talk about the other side, what banks are saying. They are complaining about their inability to turn a profit. How much of that takes place publicly and how much of it is actual private conversation with Market Participants . Is there that much lobbying of the ecb going on . Clearly, there are always these lobbying moves. All i can do is look at the data based on public information. I dont actually have any private insights to offer you, hans. But the numbers we have crunched for places like switzerland show the cost is not that high. The facts speak for themselves. Optically, it looks very difficult for banks. That when you come to the actual numbers and you look at it as a proportion of total assets, it is not that high. Guy on Bloomberg Television last week, talking about the fact that there is a danger that the banks overextend poor credits because of negative rates. Is that correct . Again, we will wait and see. I expect banks have their own credit policies. My understanding of how banking works, the causality is not that you need the demand to borrow first. Then, you decide whether or not you extend credit. The fact that money is cheap in terms of price does not necessarily change whether a bank will lend it or not. There is a fundamental question about because elegy. Because causality. Ofont think it is a case stocking up with cheap money and lending it. Guy steven major, thank you very much. Attacks. Fresh brexit heavyweights fro speak out. Guy welcome back. Let me quickly show you what is happening with the markets. Then, i will show you a piece of data. European markets are 12 minutes in. The ftse 100 is absolutely flat rightg now. I can show you this on the bloomberg terminal. This is the latest here. Let me just say the delta is changing a little bit. Surface, but ise relatively good news. What we never get to see is the breakdown. A lot of the outflow from china is repaying loans. Repaying or iss it household money rushing out of the company . It is ha