Supplementary budget . Brazils Largest Party pulls away from Dilma Rousseffs coalition. Is impeachment all but certain . Good morning, hans. Front andnter center once again. There are a number of questions that surround that. Does yellen have control, and where are the hawks . Hans if she doesnt have control, the markets to. That seems to be an interesting flip of the script, and we should also talk about brazil. I thought you were going to make the suggestion that you and i host this show from the beach. We are here in the dreary months of march, but i suspect you have other highminded plans. Guy lets go. I think that is what we should be doing, get us going down there to brazil. I guess the second point in my mind about the fed brazilian beaches sound much more attractive lets talk about the fed. Page, and youfed look at the speakers over the next few days. Doves. E all for the next few days, the conversation is going to be dominated by the dubs. The doves. Its many days until we start to hear from the hawks. I think that really is going to be important for the way the markets trade. Question is, will the markets listen to yellen . Will that stay firmly planted in their cranium, or will they listen to these other fed members who are going to discount what yellen had to say . In a lot of ways, this is like when you and i talk in our editorial meetings. Cleverp saying a lot of points, but you speak last. You have more sway. You have a deeper baritone. Everyone listens to you. In this analogy, you are janet yellen. I am deadly. What you say matters. What i say doesnt. Guy im not entirely sure that fits together. Yellen, baritone, i think that is not where she is speaking from. We will talk about what she sounds like a little bit later on. Theres a good joke in my mind. Lets leave that theyre firmly. Lets talk about the european open, i half an hour away. Europeanee that the markets are likely to pop on the back of what yellen had to say. You have euro stocks up around 6 10 of one thing percent. A chart shows you that european equities are trapped in a range at the moment. Maybe yellen can do what mario draghi cant. Hans that gets us into the equity story. Iss take a look at what happening in japan. Mostly positive in asian territory, but in japan, the topics is down. 1. 13. Ollar punch through take a look at the 10year. 1. 81. T about thats a remarkable low. Lets get the bloomberg first word news from camus the ramanathan. Kumutha thank you. Japans Industrial Production has dropped the most since the march 2011 earthquake. That is as falling exports and a steal no explosion halted domestic car toyota. On at output plunged 6. 2 in february after rising in january. Brazils embattled president has suffered a new blow ahead of the vote on her future with the countrys Biggest Party leaving her coalition. The Democratic Movement party held six ministries in Dilma Rousseffs administration. She denies wrongdoing amid a Corruption Scandal that has reached the highest levels of government and business. A vote on her impeachment is expected in the middle of next month. Shares in airbag maker takata have plunged after the Japanese Company is said to have estimated that a comprehensive callback of its airbag inflators would total 24 billion. The worstcase recall scenario would involve 287. 5 million inflators. Global news 24 hours a day powered by our 2400 journalists in more than 150 newsrooms around the world, and you can follow more stories on the bloomberg top. Guy yellen has insisted that Interest Rates will be raised at a cautious pace and one of her most detailed policy discussions. The fed chair gave investors a list of conditions they need to watch for future rate hikes. Miss yellen i consider it appropriate for the committee to proceed cautiously in adjusting policy. This caution is especially warranted, because with the federal funds rate so low, the fomcs ability to use conventional Monetary Policy to respond to economic disturbances is asymmetric. One must be careful to not overstate the asymmetries affecting Monetary Policy at the moment. Even if the federal funds rate were to return to near zero, the fomc would still have considerable scope to provide additional accommodation. In the event oil prices were to fall again, either development could have adverse spillover effects to the rest of the economy. If such Downside Risk to the outlook were to materialize, they would likely slow u. S. Economic activity to some extent. There is a consensus that chinas economy will slow in the coming years as it transitions away from investment toward consumption and from exports toward domestic sources of growth. There is much uncertainty, however, about how smoothly this transition will proceed and about the policy framework in place to manage any Financial Disruptions that might accompany it. Guy fed chair janet yellen. Guy lets bring in our guest, stuart richardson, Founding Partner at rmg wealth management. You are a bit of a bear. Corporate earnings are declining. Economic growth is declining. Global liquidity is tightening. None of those things are good. Is yellen doing enough to get over some of those hurdles you mentioned . Stuart clearly, the markets took a positive tone from yellens dovishness, but its not going to change the bigger corporate or economic picture to any meaningful degree. Im not quite sure what her message is. A year ago, she was talking about trying to normalize policy. Now she is emphasizing the Downside Risks. She is trying to change her sage, and im not sure why is she concerned about the downsides . Is she concerned about the strong dollar . To me, she has been flipping her message a few times, and this has caused confusion about Monetary Policy. When we look at the bigger picture, we dont think the real economy is responding to the low bound or negative rates. How are they going to get growth going . Her words dont tell me guy you arent buying it . Stewart i think you have to be fairlystewart pragmatic that the market goes up. However, i dont think the language she used is good to have any meaningful impact on the economy. The corporate picture continues to deteriorate. Who is in charge . Is it yellen or the data . She made it clear that she is looking at a raft of global data. Is she calling the shots, or is the data calling the shots . Stewart i think that is part of the confusion. Realistically, she should have been tightening policy much more than a year ago. The fact that they got to the first rate rise in december, the u. S. Domestic economy was weakening by that time, and of course, we had Global Concerns spilling into q1 this year. When she says she is datadependent, her two main mandates, she has met those mandates, and here she is, giving us increase dovish commentary on her policy stance. Some people say that she is still datadependent. Some people are saying, she is looking at the markets and saying, we cannot allow the markets to go down. Theres a concern that they are just reacting to the data d jour. Unfortunately, i dont think she is in charge. Guy lets put this all together. Dont fight the fed, is a refrain we hear quite a lot. You are fairly bearish at the moment. You are concerned about what is going on p review can argue that well. Is, as my question is, how do you position yourself for this negative frame of mind youve head at the same time as looking at the various markets that may benefit . Give me the portfolio strategy based around your bearishness. Stewart in terms of when we look at the u. S. Economy, the data continues to be disappointing. When we take the dovish fed on us of that, its easier for to have a more positive view on u. S. Fixedincome. They are probably not going to be raising rates for maybe this whole year, but also at the longer end, we see 1. 8 guy buy or sell that . Stewart we are long. To put the nuance on this, when we look at mispriced assets, theres a chance they are going to be mispriced. The biggest miss price is probably in europe. We have european exposure, because we think and a soft Global Environment with the fed following an easy policy, with a pick up of germany or france, its pretty attractive. That is one way to play it. You dont take a big directional bet, which would be against the fed. To be pragmatic, you cant fight the fed too hard. Long u. S. Over europe makes sense. In terms of trying to fight the fed, this is hard work, but there are times in the cycle when it is right to fight the central bank. 20012003, or in 2008 when the fed was, cut, cut, cut there are times to fight the fed. U. S. E last 1218 months, equities have gone nowhere despite a continually easy fed. To us, this looks like a topping process than consolidation. Equity valuations look so high. This is not an environment where equities would normally be performing well, but they still get periods of support from Central Banks. If that support is taken away, the downside would be pretty big in particular for u. S. Equities. Its about trying to play the riskreward. The risk on the downside looks pretty large. Guy asymmetric risks. Draghi is going to be buying more dummies on friday. Up next, japan suffers a big drop in Industrial Production. Just a blip, or is it a sign of weakness . We are live in tokyo to find out what is behind the decline. Guy hans welcome back to on the move. I am hans nichols in berlin. Japans Industrial Production slumped 6. 2 in february. Its the biggest drop in output since the earthquake in march 2011. Lets get more with Jodi Schneider who is in tokyo. Thank you for joining us. Explain this decline for us. What is behind it . Jodi february had a couple obviously notere expected. There was a big one that there was a steel mill explosion that caused toyota to halt its the mystic production of automobiles. Domestic production of automobiles. That was a factor in this. There are other factors that give cause for concern about the path forward. There have been five months now of smaller than expected and and also, wets, have sluggish domestic demand. You add all of that up, and it was not a good figure in february and one that was worse than forecast. Guy put this into the context of abes decision. Are there questions being asked about whether that was a mistake . Jodi i think there is some debate about this. The real debate is, will this be a quarter where there is another contraction . To last quarter of 2015, the economy contracted. If theres a contraction in the economy we are about in the quarter we are about to end, that would be a recession. It would be six quarters of contraction. That is a concern. China and with chinas slowing economy, they are japans largest trading partner, so that is a concern. The question is, how does this play out with the other Economic Data we have been receiving . There are some economists who say they expect a pickup in Industrial Production next month, that the orders are looking better in march and april, but clearly, the path with the exports is worrisome. Hopefully, we dont have to wait until next month to talk to you again, but we will come back to you. I have some breaking news for you. Metro ag, the german cash and carry supermarket, they are ,lanning to split their Company Creating two independently listed companies. That is all we have now on that matter. When we talk about metro, were talking about consumer products. It looks like metro wants to have a slightly different exposure. Guy its interesting. Maybe you get the feeling that the market isnt fallowing the stock well, and maybe they can get more value out of it. It is a theme running through a number of businesses as they try to extract value. You look at some of the hotel companies. Tets bring in stewar richardson. I want to take youd back to japan. Japanese stocks, cheap, not cheap . This looks like it is the yen trade to me. If the yen goes up, the stock goes down. T that feels like exactly what has happened here. Japanese stocks were relatively cheap a couple years ago. We had a pushup due to abenomics. Abenomics is just not delivering here. , that part ofform the three arrows, we havent seen major changes, so it looks like the policy is about weakening the yen. That came crashing down when the yen strengthened on the back of the bank of japans move negative. Theres quite a bit of expectation that something may happen. You are thinking, they are going to offset this, because they raised taxes, and it was a shock to the economy. What is going to kickstart this growth spurt in japan . We are not sure. When you look at the demographics, this is going to be difficult. Just what as demographically challenged economy does. Its about how they can make a real difference. Clearly, negative rates are a big concern for domestic people in japan. Its just not working here. Yet when we see a downturn in when we see equity markets underperform, theres going to be the call for more negative rates. The central bank is in a doom loop when things dont go right, they do what is not worse. Its a stream macro battle. Hans speaking of that doom loop, if we can extrapolate that to what is happening in the eurozone, japan cant get this right with negative rates, and does that mean that rocky dra ghis experiment is doomed to fail . Stewart at the moment, weve got the economy that has been slowing the last couple quarters. The real economy is growing at just over 1 . Months. Had qe for 12 we have had negative rates for longer, and yet lending is barely picking up. The economy is not picking up. Many economies in europe have deteriorating months. Demographics. Productivity has not been kicking in at all. A debate about, what can the Central Bank Policy do for the economy . Theres a case to be made this is bad for savers, bad in terms of creative, district of growth. If we have this easy policy, we keep this hanging over. We are beginning to go into the where people are questioning central bank policies. Are they good or bad for the economy . Guy if you look at japan, look , agingdemographics population. They are in a situation where they have a high savings rate, negative rates. What happens, is in japan more important than what happens in the United States . E those sabers start savers start spending this wave of money into the Global Economy, im wondering what kind of impact that will have. Stewart in japan, most of the savings sit within the corporate sector, not the household sector. Guy the household sector is still pretty high. Stewart i thought it was a lot lower. Savesas a country still or that capital does flow out still saves. That capital does flow out throughout the world. When we look at this picture of global savings, is there a savings glut . The savings glut comes from Central Banks printing currency. All it is doing is chasing asset prices around. When it comes to individuals, we all have different plans from Central Banks. If we are getting more towards retirement, were not going to speculate on equities. We want safe income. Central banks are forcing people to abdicate to assets they wouldnt normally go to. This is opening up a broader debate about what are the longerterm goals of central banking and are the current policies able to meet those goals. I think we are able to say no here. Hans now its time for the battle of the charts. First, may i compliment you on your time, and second, may i tell you \ [laughter] both going to be showing on our screen here, im going to weedy and old lead talk about palm oil. Up is the price of palm oil, a good commodity indicator. Because of dry weather, we had el nino you are seeing palm will get more expensive. The white line is grapeseed oil. That is falling in line, chasing what you see with palm seed oil. It gives you a sense that these two commodities are moving in tandem. Its the entire commodities story. What are we talking about today . Commodities, a weaker dollar. Its all correlated even though guy himself cooks with olive oil. Guy im a big fan of all of trees olive fields. This is my chart of the morning. I have flipped around the offshore yuan and u. S. Dollar, and as you can see, we have seen this depreciation that came through in august and this the offshoref rates. My point is, if you look at the yuan basket, its crossed over. Shows that think, the chinese authorities may be doing some sort of stealth devaluation, but because the headlines are grabbed by what happens with the u. S. Dollar, nobody is noticing. You have 10 seconds to come up with a winner. [laughter] stewart in terms of market impact, i would have to go for the yuan chart. Guy i think that is the right choice. Stewart yuan is a macro driver. Guy good morning and welcome to on the move. We are right here in the city of london, alongside hans nichols in berlin. We are moments away from the start of european trading, and heres your morning brief. Yellen takes control. The fed chairs is recess gets are higher; she puts the horse back in the box. The question is, how long will they stay there . Disappointing data. Japans Industrial Production plunges by the most is 2011, when the earthquake happened. Shinzo abe has ruled out a company to rebut it. And brazils Largest Party pulls away from the ruling coalition. Is an impeachment now all but certain . Hans neither of us know the answer, but we do know that the markets will open. We see the cac 40, the dax pointing upward, ftse down. Lets head over to the touchscreen for the european open with narrow change. With nejra cehic. Nejra we start with the dollar; this is the currency we have been watching post yellen speech. A dovish yen meant a drop in the dollar. We are seeing it holding its losses, down almost 2 10 of 1 after it had its biggest loss in the week yesterday. Crude oil is interesting because we saw that drop after yellen spoke as well, that it is rebounding as well. Wti up 1. 2 ; some of that rebound down to that weaker dollar. Asia, a mixed trade in japanese stocks falling on the Industrial Production data,