Product profit increase but can it be sustained . Well find out when we speak to the cfo in 45 minutes time. We are now half an hour away from the european open, caroline lets take it look at where we think it will take us this morning. It looks like a mildly negative start for the european day. This is the fair value calculation. The dax 00 it will be just positive, Everything Else looks like it will be negative but only just. It looks like a fairly flat open. Rebound iny we saw a minors when it came to europe and that seems to move into asia, helped by copper trading up 0. 8 . Brent crude oil is currently flat. There have been concerns about nigeria and the niger delta being evacuated and concerns about the safety. There seems to be a supplydemand dynamic. Yesterday andckup it seems that commodities go higher and so do stocks. We will be digging so much more into the dollar index because its down a quarter percent but goldmans sex says go long on the dollar. We are underestimating where the fed could go. Also on japanese debt, it is still negative on the tenure but they say a tantrum could be in the waiting and we could see japanese bonds starting to sell off yields go higher and this could sell off and the rest of the bond market as we see japan get real on its fiscal and monetary stimulus. Lets get to bloombergs first word news with shery ahn. President brazilian Dilma Rousseff says she is facing what may be her last day in office. The senate is gearing up for a vote that would force her out impeachment in battle she looks unlikely to win. Least 50 votes more than the simple majority they need to move toward impeachment. Donald trump has won the West Virginia and the prescott primaries a week after driving his competitors out of the republican race for the white house. Ted cruzs name was still on the ballot and he said he might reenter the contest if he performed well. Bernie sanders is a projected winner in West Virginia, the only primary on the democratic side. It would be his 19th state victory but has just 37 delegates up for grabs. Canadian Oil Facilities representing more than 90 of production taken offline during the Alberta Wildfire have emerged unscathed. Operations are already bringing back some of the roughly one Million Barrels per day of supply. Officials say that although Fort Mcmurray lost almost 2. 5 thousand buildings, the vast majority survived, including the airport, Water Treatment plant, hospitals and schools. Britonsthan half of think that the only way to curb immigration is for the u. K. To vote to leave the European Union and the referendum. That is according to a poll by ifs is maury. 95 of people backing brexit say its the only with the cut immigration. Even one and five who want to remain in the 28 nation bloc feel the same. Toyota has said annual net income will probably decline for the first time in five years. Japan Largest Company predicted the net income dropped to 13. 8 billion dollars for the fiscal year ending in march. That is below analyst estimates and comes as currency swings have spurned record rough its a now pose stiff headwinds. The list with four hours a day powered by point 400 journalists in more than 115 years fewer news bureaus around the world. Thank you indeed. Lets dig more into that Goldman Sachs call saying that the dollar slump is over. The greenback has rallied almost 1 from a yet one year low reached last week. Goldman says that the post payroll rally shows that Market Expectations for Economic Growth and fed Interest Rate increases may have fallen too far, too fast. Positioning the currency for a rebound. The bank estimates the dollar will advance 15 during the next two years. Very pleased to say that joining of benson. He cio lets get straight into this because we really want your take on whether the market is getting too negative on rate hikes. Are you anticipating one at least because the market doesnt see one until 2017. I think youre right, there was a lot of negativity in terms of rate expectations but if you listen to what the fed chair is saying, she was a taken very gradual and she is very cautious against the backdrop of what has been strong economic data. Shes looking further afield outside the u. S. At the macro headwinds it could cause a slowdown in the pace of Interest Rates. Disagreed that it is poised to rally from here. A what happens. Walk us through what the trajectory is going to look like. To get the dollar call right you get premuch anything else right. What is going to happen . If you say the underlying thesis is high rates or a rate pass over the next couple of years that will lead to a dollar rally the expectations are at the fed will be lower for longer. And a huge debt over to hang in a fragile economy that is not as robust as the fed would like to see. With that undermined the dollar is likely to remain under pressure or there could be a scenario where it doesnt move for the next couple of years. Guy how bad is that for emerging markets, European Growth . What does that mean for the chinese . You pivot off back for Everything Else. A stronger dollar is good for the emerging market. It weakens their currencies and allows them to push on their export strategies. For them, what they are looking for is a stronger dollar and what they have seen is that the weakness has been counterproductive. Guy you think a stronger dollar is good for the yen . Works it weakens their currencies. Them paint them all with the same rush. Debt,ve others with huge dollar debt that will come under pressure because they have to service that debt. Thats an interesting take didnt announce that the total return fund is going shorter and shorter. Been about a quarter of their holdings a few years ago. Which asset class is he looking at or should one be analyzing. Is it the credit market or the equities . Emerging markets are as a whole, whether its the debt or equity are attractively valued relative to develop markets. They offer attractive yields and from a valuation standpoint are still quite attractive. That comes with risk whether its currency risk or geopolitical risk in some of those countries, that will drive some of the shorter term sentiment but a longer time horizon theres definitely value in the emerging markets. The what about europe on dollar . We have the euro trading at elevated levels, maybe too elevated. If you are mario draghi or try to figure out what to do. You would probably like the euro to be a bit lower from here. If you are an easing central bank you want your currency to be weak. That definitely helps you and in europe that is definitely the case. The two major Central Banks this year that have pushed on quantitative easing have had a counterintuitive reaction. Guy so what do they do . They carry on doing the same thing and whats happened is that has backfired in the short ,un, but the hope for them because it is a trial and error strategy is that will reverse in the medium term. Guy mohammed will stay with us. Up next were joined by the cfo of elians after the insurer announced its profit dropped on outflows to pimco. Caroline welcome back to a very sunny berlin. This is on the move. Alliance reported profit in its management vision did drop due to pimco outflows. Joins us now. Wonderful to have us on the show. Lets dig into initially some of the cost basis we are seeing within the business because we are starting to see continued worsening in your cost income ratio. You have been saying this is due to net revenue falling but how are you going to drive down costs not only at pimco but at elians allianz . Thank you for your question. I hope you can hear me because your voice was cutting in and out. Askingstood you are after our cost position in various areas. Revenue management a dropping with continued outflows. The outflows are actually now at market level at pimco i think its clearly fully on track with this in the field of active fixed income management. The cost will naturally be better in the following quarters as we have still some special incentive plans which we are booking in the first half of the year which we will not book in the second half of the year so the cost income ratio builds a natural improvement. Pimco very confident that will return to positive net inflows in the second half of the year. Although it is very much in fashion in the banking industry, which are not announcing any special costcutting programs in our businesses. Our lifeue to bring businesses back to a 10 level. By entity and the entities not making it were going to dispose as we dispose korea announced a few weeks ago and we announced that we dispose of half of our business. You said that this is a great start to the year amid a challenging environment. Give us a sense of what you are starting to see . In our pnc business we are fully on track with our midto longterm growth which has a 3 growth rate which is ahead of gdp for all of the markets where we are active. So therefore i think we are doing fine on growth. On the life side we are in transition with guarantees to modify guarantees which are fit for purpose in this difficult financial market. Things whicheate allow us to invest more in real assets and not fixed income. Which is returning nothing. Guy i have a couple of questions on that, but first of all i want to take you back to what you said a couple moments ago. You talked about it being fashionable in the Banking Sector to cut back on fixed income, why these to the world differently than the rest of the Banking Sector. What are they sing that you are not. Where is your Business Model so significantly different that you dont face the pressures that they do . On expenses not fixed income. Guy i misunderstood. On expense we are not announcing an expense cut program as many did. On fixed income, we are changing the volume in a way that which allows us to invest more in the real assets, alternative investments real estate, public and private equity and products which are suited to this in our capital regime will stop thats the challenge and todays world. Fixed income is not an area where you can make money from. We are also absolutely in line with the forecast that we dont see a recovery of Interest Rates so soon. On whatt to followup you talked about in terms of changing the nature of the portfolio do think you are making it more risky as a result . The portfolio yes naturally will be more risky but it is a sharing with the customer and the question is how can it be constructed in a way that we all benefit from the longterm return of these real assets and not having to bear the quarterly volatility. Riskiness on our own Balance Sheet means quarterly volatility where old age provisioning and savings for old age you can spend as a private person a lot of volatility when you have 30 years until you retire it doesnt matter whether prices are down the next couple of weeks. The question is how much return you make in 30 years. Guy just a quick question to wrap up, spain will be selling fiftyyear maturity paper. I think france is done and belgium has done it all stop are you comfortable buying fiftyyear paper with the kind of yield this will have attached to it . That is a very good question and actually its better not to have fiftyyear liabilities than being forced to buy fiftyyear papers where we have liabilities of this nature from the past then we are also buying fiftyyear papers to match it but this matching we have mainly completed in the past so there is less need to buy fiftyyear papers. Guy thank you very much indeed for your time. Allianzs cfo. Guy up next to look at the potential corporate movers. Guy that is london. And that is berlin. Caroline hyde i think i will be following you to berlin very shortly because it looks lovely. Caroline it is dreamy. Its been solid fun since ive arrived. Would like to say its down to me but i doubt it. Overall it is sunny and we will see how the dax performs on the morning. Have heard a rumor that you have a bicycle that we will talk about that later. Arounde hyde pedaling berlin but we need more information. As you say, its a lovely day in berlin. Whats been happening in asia here is shery ahn. A mixed picture here in asia. Lacking clear direction, japan giving up its earlier gain, it did manage to figure in positive territory. Percent200 rose half a gaining for five consecutive days and we are also seeing surges in the philippines with more than a 3 rally for the second consecutive day after the declared victory in the president ial race. Despite experts showing the declined more than 50 . A few minutes more to go for the shanghai composite getting hortense of a percent but the hang seng index declining half a percent. We are seeing chinese stock seeing a tough week they are headed now for another loss for the second time in eight days. The cost also finished done 1 10 of a percent. We have bit be ok Rate Decision coming up this week. Were seeing it falling more than 4 after saying they will seat tough conditions ahead. It is our earnings season in japan. The peak approaching quite soon. Today we are seeing 180 companies on the topics reporting. A little bit ago had toyota and that we are seeing earnings sing their profits do not look too toyota is now, a stronger five year. Net income make up to 14. 8 million in these are companies that also announced earnings. Earnings,looking at it will be affecting the market open here in europe stop minutes away. Lets check in on the stocks you should be looking at. The french Telecoms Company could fall 10 on the open. Many of the reports im seeing are from its numbers. Also, look how for the likes of carlsberg we could see a 1 gain on its feet. It is been rallying into these numbers. Still lackluster in russia. The could rise on the open. The german stock likely to bounce after we found out it will be selling off another asset. Some 50 brands. A few key stocks to watch. Guy talking of the stock market, it its like will see a negative start across europe. Germany may be one of the bright points but the euro stock is down by 0. 1 . The dax is turning into negative territory as well so we have a negative start penciled in here and europe but a lot of Stock Market News to you with. Youll see how the market works its way through. Guy good morning and welcome. Im guy johnson and european headquarters. Caroline hyde is over in berlin. Were moments away from the start of european trading. Caroline has your morning brief. Caroline i do indeed. Gildans last day on the job. Dilmas last day on the job. Backing the buck. Goldman sachs thinks traders are mispricing the fed, and it will rise of the next two years. And delivering on growth. Deutsche post has a doubledigit profit increased, by canopy sustained . We will find out in 15 minutes. Meanwhile, we are seeing a flat, will open at the futures. We are looking at the screen, down about 2 10 of 1 . Thecac being pulled lower, numbers really disappointing. Dax 10 flat to lower0, inching into the greens. Were 10 seconds after the market open, so lets get to nejra cehic. Nejra thanks. In asia, we saw the msci asiapacific index unchanged, but it was materials leading the gains. We will have to see whether it is metals leading gains in. Subduedit looks pretty as futures are pointing to the stoxx 600 pretty much unchanged, same for the ftse 100. We are still waiting for the tax to get moving and the cac 40 as well. Lets move on to some of the stocks you watching this morning a lot of earnings to keep an eye on. We start with carlsberg, the worlds fourthlargest brewer. Sales Beat Estimates on the rebound in Eastern Europe. A restaurant percent, double analyst estimate. The office said that currency movements unless adverse and before. We delivered a solid start to the year is what the ceo said, although it looks like we are seeing the move higher at the moment. We got earnings here as well, saying it will sell to focus on mass tourism. Arsthalf revenue was beat. The first half underlying a loss, not as great as analysts had expected. Profit slipping on Lower Commission income, so were waiting to see if that opens. We will throw it back to you. Caroline we will be keeping a close eye on the french stocks. Lets dig into some more industries. Unicredit chief executive fritter we could does any faced a torrent of questions over the banks capital strength after it led to an erosion of the buffer the third quarter. And he says he is not worried about unicredits financial strength, and he is confident they will meet earnings targets. Mispoke to us in th the lan. We keep working to boost capital. We are ahead of schedule. We announced a plan about six months ago. We created capital organically, and we continue in this way. The plan our capital is not profitable enough and we are working. We never gain any number, but that isnt to say the target is met. Firstquarter, a loss after an increased provision of bad loans. Gain approval for their merger. Lets talk about italian banks, bringing back our guest, the cio at clymer benson. I just want to get the numbers on unicredit. Trades at. 37. That is cheap. Is that enough . Well, all the banks are trading at discounts. I guess the case in italy specifically is that theyre facing the big headwind of bad loans that they accumulated over the recession in recent years. By some estimates, close to 400 billion euros. Combine that with all the regulatory changes, what European Central bankers are doing, it becomes a very challenging environment. There is discounted valuation in italy. Guy what will it take investors to get convinced that they should be investing money here . There was an ipo last week, unicredit was the underwriter. Yet this new fund had to take the bulk of the stock because investors on the open market werent interested. How do we change that . Does the government need to do more . Theres so many questions surrounding the story. Yeah. You are absolutely right. If you think of the single biggest reason why they are trading at a discount the only way to resolve that is to have some reform in the way to tell you banks can offload the loans. If you look at the repossession