Good morning. That is right. We have Central Banks and the two largest economies in japan. The boj is steady as she goes. They are looking at getting rid of something old. Interest rate reform. I will be back with details later. Whats the view for the update. Watchingata and we are mark carney posta testimony. Testimony. Neys is it a bubble . Inthe London Property market a bubble . A big debate there. The futures were higher and took a little turn in the last half an hour. This is the open. 100. Ave it up 2 10 of it was lower for the past two days. We are waiting for the price on the dax. It is better than expected. The exports are higher and the importance have more signs of that. They are over four percent. Ring this up. It is pretty flat right now. One dollar buys you ¥103. In april, we will get a sales tax hike. Does the bank of japan need to step in and do more . They started the policy 12 months ago. Check out copper. Look at this. The biggest twoday slump in 24 months. Lower concern over china. We are getting a slowing. That is something we will watch through the morning. Thank you so much. Jonathan ferro with the latest look at the markets and these commodities. Joining me now is charles siegel, the head of Market Strategy at lloyds bank. Give us a sense of how optimistic you are about valuations and how optimistic you are about growth in general. Where do you see the most might be made . The key aspect is the investment world coming into this year with bullish expectations and how this year is a different year from the years that we have had because of the weather affects and events in the ukraine and thailand. There have been a suppressing effect on growth and this is hard to distinguish at this point in time. Whether there will be a rebound when the weather improves or whether in fact we are dealing with a continuation of the previous years, where growth is more fragile. That is what i am in. It is an inventory buildup that you had in the second half of last year and that is partially responsible for the weekend data. It is not of the world is going into a big recession or. Ataclysm we are in a slow growth story. The valuation and the stock market has not fallen at all. Is beingorrection recuperated. You are looking at areerterm measures and we not at the year 2000 feet. We are at second order peaks isds the equity market looking from a longer tour longerterm point of view and is richly priced. You can sign other asset classes. Is there a correction question mark do you still want a place where valuations are cheaper . Exactly. That is right. You need to have an Asset Allocation process going on and the u. S. Has better deals in europe as long as you believe that europe will get through the structural reform process. I do believe that but i think it will take a long time and i was surprised last week. I think they need to give the economy a push and i think Something Like asset purchases or some form of nonsterilization gives it a bit of a left. We will talk to china in a few minutes. What is your favorite pick . Biggest winning of a medium risk portfolio . I would have government bonds and more distressed debt. With the yield curves as steep as they are, there is a lot of carrier rundown and i think that is the best way to make money in a world where we are not certain about the prospects. Do have to pick . And are sold off in one go Structural Reforms look weak. Yes. That is right. It is on a country by country basis and two years ago, it was a simple asset class. That is not the case anymore and we need to say if the valuations and thailand are correct based on the political risk. Will there be a resolution to that . What is your favorite country . I like thailand. I think others have been hit worse. Potentially, brazil, when they get their Interest Rates under control. Stay with us and we will talk about china. Here is what else is coming up. Mark carney faces a tough ready forday and get a heavyweight fight. A bank president. Snowden speaks. The contractor calls on Tech Companies to lead the fight him privacy. Keep it here. Welcome back in london, this is on the move on Bloomberg Television on your phone, on your tablet, and are. Com. And bloomberg. Com. From hong kong. Anything new . No. Nothing new. That is all. Back to you. I am kidding. It is steady as she goes. I have a statement here and they are keeping the current pace of expansion, as far as the Monetary Base is concerned and they are continuing on a path of using until they reach the two Percent Inflation target and keep that stable. 1. 25 and where they think the economy is right now, they think that japan has recovered moderately and they believe that the recovery will remain intact in 20 days from now. Problem markets are a and the pace of recovery in the u. S. China has been left out and that is interesting because a lot of machinery, exports, machinery, or parts, they are a big deal. Lets switch to china where we have had a lot of headlines over the last couple of days and today we heard from the central bank governor. Absolutely. Today was about financial reform and to sum it up for you, two things, he was talking about Interest Rate reform and the ceiling. They have a timeline of one or two years and there is a floor in lending and a ceiling on deposits. How they plan on doing that or will they do that in a go, no details there. When they lifted that, they can be compete for deposits and attract clients by hiking deposit rates. Obviously, that takes out the traditional margin that banks enjoy and that is the risk is part with financial reform. They pointed out that Interest Rates will initially rise once the ceiling is taken out. Another comment was on the recent drop of the currency and he says it reflects a growing role of the markets in the economy. Thank you for that update. Now, lets go back to charles, the head of Market Strategy at lloyds bank. Thank you for sticking around. We spoke about europe and emerging markets overall. Talk to me about china. This is the most difficult to read across because we do not know what we are looking at. That is right. It is worth keeping in mind that they are the second largest economy and they are in a process of trying to carry out shape the economy for the next 1020 years. Currency andcheap ask for driven model, theyre moving a juggernaut into another direction and the fallout from that and the impact from that is going to be more dramatic than people think. There is a lot of overcapacity in china and they have built to much to produce. Certainly, the basis of them moving to more consumption and less production. Time, things like reforming the shadow Banking System and the amount of credit contraction that they are presenting is significant. While that may be appropriate for the longerterm, that has implications and that can be exported to the asian region. Having seen japan weaken their currencies successfully, they are in the process of suggesting to people that we are pretty much done with appreciation of the yuan and this is about the right price. That is what theyre trying to say. If that is the case, you could can yuan we can we weaken. The other problem is credit and we saw that. This was taken as a positive because they thought the government had a good handle on it and the markets take their course was small companies. How do you protect yourself question mark it is difficult to do so, to be honest with you. The reason being is that that is almost like a trial balloon and lets have a default and see what happens. It was not of a sufficient size peoplele that, you know, presumed there is a backstopped with chinese assets and if things get too bad, the chinese will step in and ease the Monetary Policy and bailout levers required weber requires that. Whoever requires that. Default . He small what if it signals that is not the case and the much larger credit that is more vulnerable , perhaps the government is like, we warned you. You. We warned we could be talking about a weaker story then anticipated. But it is difficult to read. Message . S the in theink china is process of exporting weaker growth and inflation to the region and that will have global implications. Speak to me about japan. We are running out of time. It did not pan out as we thought it would. You know. It is few we qe. Deflation is hard to break as a mentality and there is substantial demographic problems. There is a debt to gdp ratio. In the population that is getting old, these are people who do not like that. They like equities. Its hard to say that japan will grow at a massive rate when you have demographics as they do. It will be hard for them to achieve sustained strong growth and inflation. Quantitative easing, while it is cannot go ony indefinitely. Thank you for all of that. The head of Market Strategy. Mark carney faces his toughest challenge today. Nowmarkets and are joins us from westminster with the latest. This is the second big nonregulated market and libor was a debacle for them. The Fort Exchange market does not get bigger than this. At the heart of the issue is the eight years ago. There was a form of manipulation and all was not well around 4 00 p. M. In london. That information was known within the bank of england and why was that not as collated . Who is responsible for that information and where it went wrong . Banks billions of dollars and carney had his messages. D instant is the internal investigation enough . That is the issue. That is the issue. What are the details about . These are part of a investigation. It is. Lets put this in context. We understand from sources that we spoke to that a dealer at of an order details with a trader at a company and the trader is named martin. 2013, where itto is alleged that the chancellery revealed the details of it and it is alleged that he shared that with bp. At this stage, we have a number of information. It would be inappropriate to speculate on the outcome. Bp says that they strongly refute any suggestions that they have engaged in inappropriate trading activities. And its been suspended shows you the stories are coming to the front. They certainly are. Thank you with the latest there on the testimony. Up, Edward Snowden calls on Tech Companies to lead the privacy after. We have the details from the sxsw conference next. Welcome back. Im francine in london. At the south by southwest conference, Edward Snowden called on Technology Companies intake a leading role protecting user privacy. Hans nichols, he caused point a stir. He caused a stir and it was a rare and well received appearance. There is a fire going on in the attempt to burn the internet and he wants people to be the firefighters. An interesting point is that he made it clear that Tech Companies have the right to gather data of their consumers. I want to say that you cannot collect any data. I want to say that you should only collect and hold the data for as long as necessary. Whether you are google or facebook, you can do these things in a responsible way where you still get value out of without the abuse. The constitution behind him is clear and the sound is spotty because they bounced around from server to server as he spoke from an undisclosed location in russia. He called on entrepreneurs to have a Tactical Response to this and he said that they would have more responsibility or more thanty to do this legislators. Snowden the nsa still does not know what the journalists know. Are companies that profit on gathering as much consumer data as possible. The aclu is advising edwards noted and made the point when they spoke was noted that having Big Data Companies guard consumer data is not the most obvious safeguard and there is going to be tension there. Techpeed at which companies can react, that is what snowdens point is. Mark carney faces his toughest challenge yet. Welcome back. We are in bloombergs european had corners in london. The fate of the missing Malaysian Airlines jet baffles investigators. Routeight of 370 was en with 239 people on board. In a News Conference earlier today, the immigration professional identified one of the suspects as a 29yearold iranian who intended to migrate to germany. Rates will be liberalized in 12 years. A majority of economists predict that policymakers would remove all restrictions in 2016. Dealer is saidcy to share details. Alerted the other traders that they had received to swap pound for dollars and the investigation is ongoing. Bp says that they refute any suggestion that any of this affects traders. It has been a good start for a profit that reported up 56 . We are joined with the latest and this is a sickly a state agent in london and it is the first results we have had. Let us be clear that it is an estate agent that is a pure play on the London Property market. We see the profit up and the revenue up against continued expanding. They are pushing hard on this and as most people say, this is about London Property and that is the underlying story. It is not the company itself. You have two sides of the argument. One said that it is in a bubble and it is a bubble that could burst and 1520 years. Another says that this is not a bubble at all. Limited supply is being talked about this morning. In september, i got tweets and emails that this was a bubble and it is up over 60 right now. You are not seeing a sign of it popping. The market is interesting and there is a big debate over whether it is a bubble or not. People are saying that it is going to change. Limited supply is going to continue to carry on their. I want to talk about property and london and what you see is a massive transfer of ownership from domestic owners to foreign buyers and we have seen leverage declines. Theyre coming into london and buying with cash and theres nothing the bank of england to do to pop the bubble or contain the price. On the other side, there is a speculative nature to the market right now and buyers come from asia and are buying properties. They are doing them before the profitability is built. I will leave you with one line. The average flat is 36 Million Pounds. That is echoes of dow 40,000. You remember that. Softening the Property Market to foreigners is a way of saying that they are open for business. Theyre going around and saying that london is open. Russia, china, bring the money over. Thank you. Lets get back to the big story. Mark carney testifies on the currency scandal. It is a major test of his leadership. Man is cranny is at westminster and standing by with lawmakers. I have a conservative mp. Would have a lot to discuss this morning. Thank you for taking the time. What do you want to really get out of mark carney today . A lot ofovernor the issues did not happen on his watch. Theres a lot of speculation going on at the moment and from a Treasury Committee point of view, we want to understand what that, weon and beyond need to look at what is andening as a fair independent process. There are a number of instances with the governor of the bank of england and this is the first real crisis test for the since the implication of the 2012 Financial Service act. Robust interrogation and there are stories with thousands of emails and a great deal of groundwork. This is an investigation with integrity so far. So far, we do not know much and we know that that the the court is doing independent reviews and is looking at it. Until we get the report, we do not know much. Has a different freshe and this is a very and independent set of eyes looking at one of the oldest institutions we have. It will be interesting to see what they think about the howncial services act and we have done the bank of england. You aref the words talking about is governance and we have the libor scandal and investigations, as you said. Made a globalhas perception of what is going on in london. For gooda roadmap governance and this is about reputation for london. It is important. I cannot stress how important i think it is. London is a Global Financial center and is wellknown if you want to have a big bank for small bank and the problem is that what we can dictate. We cannot dictate the rules. They come down our way from europe and it is important that london is a leader from europe and we have to engage well. If the rest of europe are aoking and saying, hang on second, youre the banking crisis, there will be serious watches about our ability to create these regulations. This could be a problem and the governor has a real challenge in europe over financial regulations. Do think that there is too much on the late, in terms of the amount that they have to look after or regulate . Can you see a case for structurally changing . We have gone through an extensive process of changing and it is a good point. We have these investigations and i understand you have gone back. Problems looking of that started before the these arecrisis and emails. We need to have a robust regulatory regime. Crises. T have any more lets change it. It is going to step down. Have spent the last years analyzing this in depth and have scrutinized the process. And i hopearliament to bring that experience to this process. England is at the head of this and we are looking at the consumer interests and nuts and bolts of the system. And wellto be robust defined regulatory structure. Once you have the police force in place, you had to make sure that we do not have any new and fresh problems coming out. We can cut them a little bit of but, anything that happens now is on their watch. Ongreat to have your take that mark and we look forward to the opportunity. Thank you so much. Mark carney is on the treasury subcommittee and he has a huge day ahead of him. Forward guidance and establishing independence. Back to you. We certainly will. Coming up, more on the Japanese Company plans to promote competition in the u. S. Is coming up after the break. Welcome b