Of the month was your conversation with ubs. Did you see that big bonus coming . Francine i did. His was the only major bank in europe to go up in terms of bonuses. Deutsche bank cut. Tom i would say it is the only way to retain your upper 15 percentile. Good for ubs. Its a good way to start the show. Francine youre right, and we will have plenty more on what it means for competitors with Michael Moore. In the meantime, lets get to the first word news. Caroline good morning. Another show of defiance from north korea. Kim jongun fired at least one Ballistic Missile in the northern baltic strip after the United NationsSecurity Council in postwar sanctions. Brussels, the European Union may have a showdown with turkey over refugees. To fasttrack asylum decisions and sent those who dont qualify back to turkey. In another 3. 4 billion, assuring that turkey would be able to join the eu. Russia wants the u. S. To push syrias opposition toward mines. Talks aimed at ending the fiveyear civil war are undergoing in geneva. Say you Opposition Leader should be more flexible. For demonstrations in brazil against the president. They are angry that he has added a former president to her cabinet. A judge has blocked the appointment. Meanwhile, congress has revised impeachment proceedings. Senate Republican Leaders are trying to shut down talks that they might have a vote on Supreme Court nominee Merrick Garland. He met harry reid and other democrats. Republican senator orrin hatch says he would consider a vote, but not until november. Global news, 24 hours a day. Tom thank you so much. Francine, it was something less night to see Caroline Hyde react on wichita state. Wichita state beat arizona in the brackets. Caroline hyde through a Guinness Francine [laughter] tom she threw a guinness off the mirror at the bar. Wichita state it was unbelievable. Lets get to the data check. For those of you worldwide, a lot of fun with our brackets here. Im pleased to announce i am in last place. Thank you. Currencies, and commodities. Fractionally, yields up over the last 24 hours. We feature it, and the wall street journal does as well, with real dollar weakness at the frontline. Nymex crude when i walked in the door was 40 per barrel. The braves in the control room today the bund and 0. 48 . That is a quiet story about german negative rates, becoming more negative since draghis centralbank meeting. Francine lets link markets to the march that this. We have had a huge week, probably the most chaotic four days in Central Banks, and it is the saver basketball, r ight . European stocks flat, thanksgiving to 0. 4 . Huge losers in the nordic banks. It is interesting that it is so close to 40. Japanese yen is interesting. We are expecting kuroda to intervene. Yale in one of our brackets. We went with yale because of stephen roach. We want to thank him for demanding that we go with yale. That was pretty cool. Over the terminal, the yen is the story. This is about that bank of japan bombshell, and what they wanted was this. They wanted a weak yen, and it didnt happen. Over we go with the shock of that strong yen, before this week. And here is the new leg down of yen strength. You really wonder if that was the outcome that janet yellen wanted. James sweeney will be with us in the next hour with Credit Suisse. Francine tom, we are on the same page. I shared something with japan today. This is what i chose the japanese 10 year yield, dropping to a record below the negative deposit rates. This is the deposit rate, the blue one, and you can see now, this is the 10 year. This is the 0 line in look at it. This is the brave new world. Tom it shows that the orthodoxy of monetary theory is out the window, to say the least. There we go. Francine a pretty big centralbank week. This he currency traders trying to figure out what the next movement should or shouldnt be. With us is Morgan Stanleys head of global fx strategies, on his record. Hans redeker. No matter what kuroda tries to do, the yen is not budging. You look at eurodollar, there has been such huge swings on the back of a dovish fed. Is this rest in peace, dollar rally . You mentioned eurodollar, and i have to say that they are in highyielding environments. There we have seen the dollar weakening considerably. Eurodollar is still in range when you look at march, we were at 105. In august it was 117. The question concerning eurodollar is can we afford a higher euro under current circumstances . What does this do to Inflation Expectations . I think todays Producer Price is coming out of germany, and other disappointing numbers there. I think that a strong euro is not a dangerous possibility. Ask where it is maybe it is lower, and that takes us into the japanese yen. In the case francine before we get to that, do you think janet yellen was trying to move the dollar . Because the rally was getting uncomfortable . Well, the central bank is dovish. People are trying to make a igh did to the hg we see something similar . Was it all about to break the u. S. Dollars uptrend . Shortterm, there is an elemental set, but you have to consider in 1985, when we did see the agreement, the fundamentals were so different to the current fundamentals. You have huge output differentials; the United States closing the output gap. In asia, you have a wide output gap. If you try to coordinate policies in order to keep the u. S. Dollar from rising, how long is this going to be in an environment where you are showing higher return . Tom hans, when i look at this, i know i can value shares go down, people lose money. When we seet money the yen go ten big figures since that meeting a couple weeks ago . Who has been the loser of yen strength . Well, first of all, you have to think about what does a strong yen do . Abenomics is the loser. We came out of the end of last year with the trading record. We had five trades in which we were recommending yen longs. The reason we were doing that is we said, well, you have a real, Effective Exchange rate, trading at the 45 year low, and at the same time, you have japanese investors running the highest asset position on the currency. Then you need to be alert that the currency trend may change, and it did. The riskopment on situation in february has been seen as the first and i can that, but when you look at the equity markets, they are back in the green. Where do you tradedolla dollaryen . Tom we are thrilled to have hans redeker of morgan stanley, particularly after the busy week we have seen. Right now, breaking news. Caroline . Caroline executives of porsche have been acquainted in a stuttgart trial. This is an Ongoing Investigation in germany, where it was thought that the chief executive, the previous ceo and cfo were accused of manipulating shares all the way back in 2008. They bought out options to take control of vw. It was thought that they have manipulated the share price. Prosecutors,w to who have been citing these two managers all the way from a trial since october. This dates all the way back to 2007 and 2008. They wanted 30 month prison terms, 27 months for the previous cfo, and one Million Euros worth of fines. Shares are already rising in premarket trading. Tom thank you so much. Well have more on that through the european day and into the next hour. James sweeney will join us. ,e was adamant that deflation were inappropriate particularly for the United States. We review sticky inflation into new inflation of Credit Suisse. Francine im Francine Lacqua in london; tom keene is in new york. Lets get straight to the Bloomberg Business flash with Caroline Hyde. Caroline thank you. Transcanada is expanding into the u. S. Natural gas markets, buying Columbia Pipeline Group for 10. 2 billion. It gets the bulk of its revenue from gas shipping. The deal gives us access to pennsylvania and parts of new york, ohio, and west virginia. One of the worlds biggest makers of auto parts may return from mexico to detroit. They want the United Auto Workers to agree to lower wages, according to the wall street journal. If they agree, about 1000 jobs could move to detroit. Vladimir putin is moving in on tuf claims. He has started a Credit Rating firm in will Start Publishing opinions in the second half of the year. Oodys has said they will stop issuing opinions in russia. Francine possibly, my favorite story of the week. Crazy, right . Just start euro ratings company. We know why they did this; this is for local issue banks. It is tricky, and that is a whole other story. Lets get to negative rates. The spectrum of negative rates, of prolonged negative rates, and what the ecb can do. Today, the ecb is saying it has room to cut Interest Rates, should the euro areas economic recovery faltered. Lets get to paul gordon in frankfurt. Hans redeker is here in the studio. Paul, we heard from the ecb last week, since we have a dovish janet yellen, saying that they look at ri negative rates as a real possibility, a lot of banks have gone negative. Does it put more pressure on the ecb . Paul thats a good question. Its difficult to say. Youll remember that last week the ecb changed its tack. That had been using negative rates and was welcoming the weakness in the euro that was a result of that. Its moved away from the Exchange Rate channel as a mechanism for transmitting policy, and is focusing more on the credit channel, lead by its targeted lending program, which could pay banks to take centralbank cash and led it to the real economy. Hard to get your head around. At the moment, the ecb thinks it is in a comfortable position, but that could change. Francine paul, we had a reversal of the u. S. Dollar in the last five or six minutes, advancing against the euro. But the move on the dollar was definitely on the lower side, and we saw the steepest decline in four years in terms of the last three weeks. That must be heading for mario draghi. Dollar goes down, euro goes up. Paul yes, although you have to remember that when he started his most aggressive easing, the euro was trading almost one dolla 1. 40. That is a big change, in the ecb has made comments in the past saying it would welcome pulls of 10 or 20 , which would help get inflation back to cold. This, be thinking about about pushing money out to the real economy as aggressively as you can. What is the polarity in frankfurt right now . We always know the bundesbank is not contentious but has an interesting relationship with mr. Draghi. What are the different constituencies in frankfurt right now . Paul there is clearly some tension, no doubt about that. Germany is a net savings country, and savers get hit by a zero deposit rate. Some of the biggest customers in the corporate sector may have to pay negative rates. Thats where the tension comes. Draghi gets a lot of bad press in germany. The bundesbank has been skeptical about whether qe will ever actually work, and we have noticed that Angela Merkel is not pushing forward on banking unions aggressively, because that would mean german bankers are underwriting deposits. Tom that is an important insight. Hans redeker. Hans, what is the most optimal euro level or mr. Draghi, if he is going to go at this alone . If he doesnt get banking, if he doesnt get a fiscal reality across europe . What is his best euro level . Paul i think that may be in the shortterm, the ecb can be ok with the current eurodollar level, but when you look at the longterm outlook, i guess you need to stay bearish. You have to look into what is the inflation outlook, and where did european inflation surprise to the downside . When you look into the Growth Potential of the european economy, that has come heavily down. You can estimate the Growth Potential between 1 and. 8 . Against that, you have Pension Funds and others which need to make 2. 5 . The outcome will be that europe is going to become a major exporter of capital, and that means that the euro is going to become a funding tool Going Forward. You may compare that with the situation of the swiss franc in 20022006, and if that is right, then the euro is going to trade at parity, and next year, the eurodollar it will continue its downside move. Tom hans redeker. Paul gordon. Thank you so much. Well continue this friday look in what we saw across all of central banking. This week, we will also take a look at something a bit ignored by Us International relations. In our next hour, tusk university. We will speak with the admiral james sabrius on pugin and america. America. And francine im Francine Lacqua in london; tom keene is in new york. European shares advancing a touch, but i want to get to the morning mustread. I have a little bit of a soft spot for this bloomberg article. They spoke with paul back macnamara. Lets get straight to hans redeker. Overall, what created agency purpose do you look at when looking at currencies . Are they lacking too much . Youre absolutely right. When you look back to 2007, there was a substantial credibility of writing it, of rating agencies. Often wasidnt see that rating agencies were adjusting down to levels already predicted by the market. That, of course, has decreased the importance in Market Recognition for rating agencies. Itw to restore that, i think, can only be regained by trying to be ahead of the curve, which enable market is easier than a bear market. Francine if you look at russia, it is an oil story, a geopolitical story. Have we seen the bottom for oil . Is this the new normal . That u. S. Oil production has come lower, but that you have iran continuing to increase production. You have a very positive Market Sentiment concerning oil. You have positioning accordingly. Were currently running into a major resistance. Is so stretched in the oil market that we have to think about retreat in that market field. We have seen a rebound of oil, the russian ruble against the u. S. Dollar the bestperforming currency in the past few weeks. When oil is going to turn around, that is the major drive for the russian ruble, and that means it is going to weaken. Francine thank you so much. We will get you the ruble chart and talk about the yen, next. About the eu crisis. European shares advancing, automakers gaining, outweighing the drop in energy. Stored banks are down. No stock gains in europe this year. Tom a2d move in the markets. Call it a two day moving the markets. Where it across the front page yen, 110. We saw that briefly yesterday. I do want to point out that german yields are lower on wednesday and thursday and mobile. 48 is not us is not a small deal. On this friday with our bloomberg first word Caroline Hyde,. Caroline thank you. The European Union is presenting turkey with a plan aimed at controlling the flow of refugees. Eu leaders have agreed to sweeten the deal, to give turkey next or 3. 5 billion for refugee facilities. The eu water down assurances of the chance of turkey joining the organization, and has backed off their demand that its citizens be allowed visa free travel to europe. David cameron wants to extend the eus campaign against people smugglers in the mediterranean. Eu should send military ships into territorial waters, aimed at smugglers who keep close to shore to avoid capture. The kremlin is unhappy with a new video posted by donald trump. The video mocks the democratic frontrunner hillary clinton, saying she is too weak to deal with Vladimir Putin. The kremlin says the demonization of russia is a mandatory feature of the American Election campaign. Says a California College student who went on a stabbing rampage was inspired by the islamic state. He acted alone last november when he stabbed for people after being shot down. A congressional hearing on the flint, michigan water crisis led to multiple calls for resignation. Democrats want rick snyder, who testified, to step down. Republicans blame federal regulators and said the head of the epa should quit for not acting quickly enough. Global news, 24 hours a day. Francine thank you so much. Lets get back to one of our top stories. Its happening in brussels. Ryan chilcote is there with the very latest on how eu leaders are planning to manage the refugee crisis. The eu is basically risking a showdown with turkey over how to handle a refugee crisis. Ryan thats right. Clearrks have made it that they want three things one is money, and it looks like they have got that agreement from the eu. They wanted additional 3 billion euros, the eu saying ok. They want visavis travel by free want to the south by june. Travel i think they would like to do a deal, but they need to feel that they are making progress on the eu membership talks. They have been going on forever. Francine so we get a deal. Is it going to be watered down or strong . Ryan well, it is going to be water down. We already knew that. The original deal that was discussed before the last eu meeting was to take all the people that come from turkey to greece via boat and immediately deposert them. That is off the table. The idea is now that they would have an expedited asylum process if they wanted. That the turks say that will not work; you have to send a clear message to the refugees that if they take a boat over the sea, make that perilous journey, they were not going to get Refugee Status in europe. They have to be officially processed back i