Good morning, everybody. You are watching the pulse. We are live from Bloomberg European headquarters in london. Also coming up is one of the deadliest jobs. Why crab fishermen risk injury and death. First we will begin our top story today. That is barclays. The bank announced a strategy revamp. I asked the ceo Antony Jenkins in the last hour if the bank can still compete on a global stage. We absolutely believe that we will be competitive as we are today. In the market, with the clients we choose to serve. Thatready have positions we are going to retain in the u. S. And u. K. And that is where our focus is going to be. We are confident we can continue to compete. We created barclays noncore, a set of assets we believe are no longer strategic for the group. We are confident that we can reduce those assets over time from about one hundred 15 billion pounds of risk weighted assets to 50 billion in 2016. If you are shrinking it by that much, how do you think you can still compete . You are basically saying that the fixed income business and the downturn we have seen is not only cyclical but structural. Basically you want out. The essence of this is about focus. That is true for the whole bank, not just the Investment Bank. We are focusing where we can compete successfully. The parts of the business we are going to be focused in our the much less capitalintensive businesses. Is why we can free up the capital i have described, run the bank with less capital and deliver higher returns for our shareholders. We think the strategy is very compelling in the new world we find ourselves in. You have lost some of the top bankers in the past couple weeks. Is this what a death spiral looks like . No, what we see there is colleagues making decisions to go and do Different Things with their lives. In many ways, this is a generational shift. We have a deep bench and the actions we took to protect that bench where the right actions given that we knew we were going to go into this very significant transition. I am confident we have got the talent to do the job going forward. Staying on barclays, lets get over to manus cranny. Basically the Investment Bank is getting crushed. For want of better words, over 26 is going to go. What we have to ask ourselves, and this may come through in the strategy when jenkins talks to investors, of those 7000 at the ib, how many are in fixed income . Are you doing a ubs . Are you pulling out of real key areas within fixed income . A great number of these could be client facing. They are also creating a bad bank. You spoke to Antony Jenkins about that. A great proportion of the bad assets, they are going to run that down. 90 billion of that is coming from the Investment Bank fixed income areas. There is execution risk in that. These are assets that barclays doesnt want. There is not a great deal of proclivity for risk in the other Investment Banking houses to take those assets off their hands. Stock is up. Just shy of 5 right now. You look at where it has been of late. That is not a big bounce. That jenkins is doing almost the bare minimum here. He has had to cut aggressively but the targets he is talking about, this is what he has got to do. He is not going any further than that. I think you are right. This statement is very much a jenkins statement. This is an Antony Jenkins strategy, not the legacy of bob diamond. Or of that legacy, for good for bad, whether the bank can Carry Forward you might reduce the Investment Bank. Of riskl amount weighted assets is going to fall to 30 . They wille is that deliver a return on equity of about 12 . Is going to cost about 3 in terms of return on equity for the shareholders. Next year or the year after. A lot of promises. I think there is execution risk in this. It is about trimming the Investment Bank. As fran put it, you trim a quarter of the bank, can you a truesay that you are Global InternationalInvestment Bank any longer . That is not what jenkins wants to the anyway, is it . I suspect there is a guy that is watching the situation very carefully. I have had a number of conversations with the ceos. Running down risk weighted assets is not easy. When i get into those rooms and look at these press releases, it is where are the risk weighted assets . What losses have you taken . How are you doing . Everything else is moderately immaterial. Manus, thank you so much. I think that was a very interesting point. When i asked him, are you in it for the long run . It seems that investors say, we are going to give him time. In theaid, he has been job for two years and it is the first time he can implement a strategy with his team in charge. We will have to see. At least it is his. E can take ownership lets see if he can deliver. Paris difficult as ubs has proved. Lets move onto decision day for the European Central bank and the bank of england. We are joined by Jonathan Ferro and jennifer ryan. Jon. Start with you, the expectation is we get no change from draghi today. Is pointingn data in the direction of further action at some point. There are several reasons we are not expecting anything to happen today. We get forecast next month. What i will say is inflation, lowflation, call it what you want, not low enough. On the periphery, we have seen better data in the likes of spain and italy. I think the larger point to make is that on the governing council, is there any agreement on what tool they are going to use next . What are they going to do about bank lending . To use are going unconventional tools, which tools are they going to use . Inflation not low enough for germany and the euro not high enough for germany. All the exporters are screaming in pain. Near 1. 39,me we get mario draghi tries to talk it down. It gets to the point where it is time to walk the walk. Talking the talk has not worked for six weeks. He has used pretty aggressive language and it has done nothing. Conference, he is going to give it another go. Will it be enough . Again, we are waiting for new projections to come through. The 14th is when we will get those. Anythingly wont get today. A very different problem. Everybody is talking about rate hikes. Thing everyone is talking about is the Housing Market. That is going to be the focus of todays decision. As you said, no change today. The bank is in a new regime. They have the Monetary Policy committee. Now it is the financial policy committee. They are not one to hike rates to deal with the housing problem. They want to do macro credential policies and that would come in june. That is the next report from the financial policy committee. We are expecting an announcement about something. You have had economist today looking at the data saying it is time for the bank of england to do something. We focus on the housing data because it is strong. The data from the rest of the economy is fairly strong as well. It is not like this is a single problem. The economy is gathering speed. Most of the data point to the fact that slack in the economy is not the problem that it once was. Is there a case for rates to go up . We are in for a guyto. Phase two. Ance every same token, what one is focusing on is slack in the labor market. Those indicators havent recovered to the point where somebody like mark carney is going to say this is the time to start thinking about tightening. How difficult is it going to be for mark carney to come into the markets to convince the markets that rates are not going up . The rest of the economy is pretty strong. It is going to be a communication trick. We will see at the press conference. They are going to have to roll out what they are looking at with these labor market indicators. They have done it before. They have had a situation where the market didnt believe them, but they went out and sold their message and the market came back. I think the big risk here is that you have a bank of england that is saying, we dont want to use bank rates to address the Housing Market. There is almost a blind faith in macro credential talks. We look at the case of the new zealand economy. They implemented macro credential talks last year. Highlimited the amount of loantovalue mortgages. It worked to some extent. Guess what it did six months later. They hiked. It doesnt put off the hike forever. This year we are talking about the fpc doing something. It doesnt mean youre not going to get it. There is already disagreement on the amount of slack in the economy. We can see it. It is in the minutes. When they meet today, it might not be in the vote but in the beating itself, i would love to be a fly on the wall. Another thing we have got to talk about is next month. What we get is a change in the composition of the mpc. I have talked to a lot of educated people about this. How do they vote . Does anybody know . There is a lot of unknowns. Things get very interesting for us. Does that depend on the aggressiveness of the policies . What new zealand it, the governor was saying it was like having a peashooter to deal with a bazooka. Aggressiveon how they are with the policy. There is one issue. There is a supply problem with housing in the u. K. This is what everyone mentions. Until you deal with that supply problem you are going to have this issue with house prices. Why are they worried about putting up rates because of the Housing Market . There are a lot of people in this country with what is called a floating Rate Mortgage. Rates came down to zero and then mortgage dropped to 200 or 300 pounds a month. Since then, energy has gone up, food has gone up, disposable income has been eaten away. Most people on a floating Rate Mortgage get decimated. You are assuming there is no way growth. If there was wage growth to counter that that is one point. It would have to be very aggressive wage growth. It is hard to see that coming through. There is a case for other things being equal, the economy may need that. The output gap, whatever that is is smaller. The 2007 am saying is legacy is still there. I am not sure you want to be a fly on the wall. Dont they burned a fly on the wall two weeks later . Moving on. Thank you so much. Coming up we are going to stay on the boa. We will discuss that with the chief u. K. Economist. How to survive on the high seas. A boat captain shows us what it takes to do one of the worlds most dangerous jobs. Welcome back to the pulse. We are live from bloomberg tbn radio. The bank of england announces its Rate Decision later today. The decision will be the first since unemployment dropped to avoid mark carneys signature decision. This was guidance 2. 0. We talked about unemployment. Thats get a take on where we stand with the u. K. Economy and the bank of england. Rob would joins us now. Nothing today, wait for the 14th. What is the bank going to say on the 14th . I think it will raise its growth forecast a little bit. We had growth the First Quarter a touch below its short term forecast. Indicators point to much stronger than that. Continuing to is remain strong. I think they will raise their growth forecast to reagan for inflation, pretty much unchanged. Does it mean that it is going to be more difficult to find consensus on the fpc . I think so. Voting for ther increase after the august Inflation Report. The economy is growing quickly now. Inflation is a little below target but the economy is growing above trend. Interest rates are at a record low. I think a rate hike of 25 basis points will start to seem reasonable. The first will see hike in q1 2015. I do see a chance of it happening in q4 if growth remains this strong. Quarterpoint rise until the end of 2016. I think 2. 5 by the end of 2016. Is there a big concern that the market will jump on this and predict a rate hike far sooner than then . In someound is pressing more aggressive rate hikes. They are talking about mid 2015. With this Inflation Report, i think we will see that brought forth in the quarter again. It is not high in a longterm sense, just a bit higher than a very low point about 12 to 15 months ago. I dont think it is an enormous deal. Dont think it is the beall endall here. What is the potential growth rate for the british economy right now . 2. 5 , i would say. We are going north of 3 . I think it is considerably low 3 . I think we are improving towards that level. I dont think it is 2. 5 today. We are still emerging from the financial crisis. I think we will get up to 2. 5 in another year or two. I think we need to slow the economy. What is your take on the housing crisis . We have been talking about macro credential tools. Will they work . I think they are largely untested and that means the bank of england is going to move slowly with them. I dont think you start with them on full power. You start gradually introducing things to see when it works. They are not going to crush the Housing Market but they will try to take some heat out gradually. I dont think it will be a massive deal. They doargin, if something aggressive with macro credential policy, i would expect the Interest Rate hike to be later. I dont expect an aggressive move. Interest rates targeting what . For thethey want to do british economy . How do they actually work . Once we start seeing both of them functioning, rate hikes are coming through, what will they be delivering with the rate hikes . I think the idea is to slow the economys growth rate as you start to use up slack. Approach a point where you think slack is roughly normal. Maybe there isnt any left. The labor markets, this is a wage story. If that is what we are talking about here, can they do that this side of the election . I think they can. The bank of england is independent. If a rate hike is needed, it needs to hike rates. It would send a bad signal if a rate hike was clearly needed and but it is going to be a marginal call. We are a year away. You are saying q1 next year. I am talking q1 next year in part because of the election. I think august would be too late. You onei am looking at with a risk of q4. Thank you so much for all of that. We are back in just a couple of minutes. Right, it is time now to look at your asset check. Manus, what do you have for us . Up she goes. Janet yellen speaks. We can all breathe a sigh of relief. That woman is not moving newsere towards a tighter flow from the fed. One thing i did see in our stock reports, earnings for this quarter were supposed to rise by about 14 . Not anymore. 8. 3 . Whatever you might see on that map, some of the earnings that came through, it is not going to be just as strong an earnings season as we all think. Metro did deliver. Wholesale and delivery doing quite nicely. Barclays on the move now up over 5. 6 . Bt adding more broadband customers. When it comes to issues of inspiration, motivation, there you go. I have a whole new career at of may. 1. 3926. All you have to do is see eurodollar track its way up to 1. 40. Somebody around the European Central bank desk will ring a bell and say, this is going to kick into our earnings. This is going to begin to erode the recovery. At thell bit of recovery bottom of this map and the closing of the disparity, that could be eroded. And china, china is going to save us all. Exports rise, good news all around. Back to you. Thank you very much indeed. We are going to take a break. Welcome back to the pulse live from bloombergs European Headquarters here in london. Im Francine Lacqua. Im guy johnson. These are the top headlines. Stock markets rose after fed chair janet yellen said the economy still requires stimulus. In light of the degree of slack that remains in labor markets and inflation below the 2 objective, a high degree of monetary accommodation remains warranted. Putin says his troops have pulled back from the border in ukraine. The u. S. Says it sees no vidence of the move. And barclays will cut 7,000 jobs at its Investment Bank by 2016. The c. E. O. Is trying to revive profits. In the last couple of hours, we spoke to the c. E. O. And asked him if the bank can still compete. If the Investment Bank can still compete on the global stage despite the job cuts. It is about focus. That is true about the whole bank, not just the Investment Bank. We are focusing where we can compete and compete successfully. The it is the much less capitalintensive businesses which is why we can free up the capital in the way that i have described and run the bank with less capital and deliver high eturns for our shareholders. Anthony jenkins talking to francine earlier on this morning. Good morning. Has he gone far enough . The Market Reaction is positive, and yes, it is a strong plan, especially looking at the cost issue in the Investment Bank and certainly he size of the runoff, less profitableable, weaker on the riskadjusted basis. It is basically a quarter of the bank, almost half of the Investment Bank in asset terms. It is a sizable program for sure. Why should shareholders believe this time is the right one . By now, roughly we know all of the retirements that the p. R. A. Is imposing on barclays an other u. K. Banks as well. With this plan you can see a reasonably clear path to that others are meeting as well. Lets not forget that barclays was on the weak side. Stress pests, especially on the leverage ratio was lacking. That is a big driver behind all of those announcements and changes. U. B. S. Was heavily rated when it made this announcement. Barclays is up 4 , 5 . It is stillwell down on the year. Am i sboing to see the same share price spike that u. B. S. Delivered . Well, i would be surprised if it was to the same extent as u. B. S. Clearly the Investment Banking and especially the assetheavy low return, low margin type of Investment Banking with fixed