Good morning. Welcome. You are watching the pulse. We are here in london. Francine the ecb president mario draghi is speaking this morning at an event in frankfurt. He said he sees upward gdp revisions due to oil and the qe program. We have been talking about parity between the euro and the u. S. Dollar. Guy people are talking about it going further than that. Lets check in to show you what has been happening. It has been an interesting couple of days. The dollar story is beginning to have a story in this space. The ftse is being eclipsed by other markets. It does seem as if we are starting to see money flowing toward european equities. You look at what mr. Draghi has been saying. A bit of qe, a Lower Exchange rate oil all of those things should manifest themselves in Stronger Economic growth. Yesterday, not so good. This morning, the losses have been recovered. Francine definitely. We saw two days of losses and now have gained 0. 1 . We want to show you the french 10 year yield. For the first time, it is below 0. 5. Guy weird markets is the only way of describing it. Francine weird is a technical term. Guy in my view. Francine but that is exactly what it is. Guy lets talk about u. S. Credit in a moment. Currency, 1. 06. We are down by 0. 4 on the session. Francine it has weakened since the beginning of the year. Our twitter question when will eurodollar hit parity . You can tweet us. Guy it could be by the end of the show. You never know. Francine it could be. If you buy enough fx now. Euro officials are landing to look at the greek books today. If greece opens the books. Guy it was unclear late last night whether any appointments had been confirmed. As greece runs out of time and money and allies is it really in a position to push back . Lets find out where we stand with our International Correspondent hans nichols. Hans we have two separate meetings. We have meetings in brussels that take place today. Those are going to take place as scheduled. That is to negotiate about how you have a Bailout Program and reforms in greece that allow them to get some of the money out of the Bailout Program. Then there are separate talks scheduled on thursday, technical a talks, midlevel officials need to figure on what the books are saying. How much revenue is coming into the greek state and how much is going out. It is on the athens talks that we dont have any firm confirmation of any meetings actually scheduled. Yesterday, they said that discussions can only be started when people are welcomed in athens. There is a question on how long the greek government can continue to fund itself. 1, 2, 3 weeks . No one will know until they see the books. That is where the talks in athens are crucial tomorrow so everyone can be on the same page and have the same numbers and then they can start negotiating for greece to get the remaining 7. 2 billion in bailout. Greeces calls for world war ii reparations are not going down all that well. A local pull said that 86 poll said that 86 of germans are not ok with paying greece any sort of world war ii reparations. Francine what can athens due to meet their obligations without new money . Hans they can draw from their Social Security trust fund. That is one of the options under consideration. They could draw from the trust fund into the common account. The problem is that the trust fund needs to sign off and say this is ok and you are really just sloshing money around. You dont deal with the underlying problem. What are they going to do with bigger payments . April is not a tough month. May, june, july, they are going to have big payments that they are going to need to make and they will likely need the eu imf, ecb money if they are going to hope to stay current in their program. Guy hans nichols in berlin. Thank you very much indeed. Francine we will continue to talk about the developments in greece. We will be talking to the former italian Prime Minister mario monti coming up on the pulse. Guy as the greek drama plays out, were not sure if it is zero pities or aristophanes euripides or aristophanes at this point, eurodollar continues to play out. What will it mean for Asset Allocation in europe . We have plenty of time to get into the issues. Will we get parity . There is that expression, dont fight the fed. That is the guidepost i would use for this. For the next year, dollar could appreciate 5 to 10 . When you think about the divergence of Monetary Policy this is as clear a set of guideposts as weve got for how to navigate this year. Francine for such a long time everybody was saying that the dollar should be so much higher than it was. Lester, we saw dollar weakness and that was completely crazy. It is easy in retrospect to think that. At some level, we were all while we were altering to figure out how janet yellen would approach a role and understand economic landscape. You have falling oil price, falling currency, and qe supporting europe right now. Guy you get a massive pop of the confluence of those factors. How long does it take for that to manifest itself. Alexander good question. 50 of europes economic liquidity is export driven. Against that, you have sentiment issues which are still evolving in europe. The politics piece is probably not priced in. That is the big caveat i would put to the european story. Youre a valuation is 40 . Why shouldnt we be in europe . Greece is not over. Spain and portugal. U. K. Elections. Francine what would you be buying . Alexander i would be buying european risk assets cyclicals. I would not be investing in european sovereign debt right now because it would rather not give away the money. [laughter] francine that is a fair point. Guy how does that evolve . All of the guys i know would love to be short the euro. They dont know what to do with it. People keep gearing up. There are crazy things happening in the market. What do you do with the european governing market . Do you stay away from it . Alexander smarter people than i are figuring it out, happily. To your point, im not sure people really know because the Historical Context is so out of whack. We are in a very artificial situation. You kind of have to look at, beyond the government side, nestle bonds are trading at a negative yield right now. Unconstrained bond funds are probably only place you can go. Guy how does that end . How does the relationship work . Does it get more stretch . When does it ping back . Alexander it is unclear. To be really frank. The Monetary Policy path in europe is very and clear. There is a huge divergence in fundamentals and that should produce something we should be confident in volatility. Volatility is good for investors. Pricing deficiencies produce office. That is the only thing produce alphas. That is the only thing i can tell you with any certainty. Francine there seems to be a false sense of security especially with techno you wish are we on a massive bubble . Tech valuations. Are we on a massive bubble . Alexander the yield and the dividend are pretty attractive together compared to alternatives. Earnings generally have been rising. That is supporting some of the shift in assets. It is different than it was in the pre2000 tech bubble. Earnings are way up. Then there is the capex cycle. The inventory machinery and companies is that a 50 year aging cycle. There is a fair amount of replenishment coming through. That is what the fed has been missing. They have been missing the capex pickup in the labor wage pick up. I would not say it is a bubble. Francine when are you expecting the fed to raise rates . Does it make a difference . Alexander i dont think so. By the fall, you will see a move that is the expectation. Will oil chase that . I dont know. Guy people have been saying, dont worry about oil, this is a base effect story. What does the rate hike look like . And how does the trajectory look . Alexander i have no idea. I guess i have two assumptions. One that janet yellen and mark carney will be airing on the cautious side because the overall dynamic is uncertain and the divergence of Monetary Policy is something no one has lived through in a while. How that affects sentiment is unclear. Guy do you think we and up actually end up actually in a proper timing phase . Do we get near to the point where we are going to be in that type of environment . Alexander i think it will take a while. And we have not talked about china. Francine we will get to china. [laughter] there you go. You heard it from alex. Guy there is what else is on our radar. The 31 biggest u. S. Banks have gotten their annual report cards from the federal reserve. The fed will release the results from the second phase of stress tests. The first part of the tests last week showed that they do have enough capital to absorb losses. Francine brady dougan pasta parter from Credit Suisse may be good news brady dougans departure from Credit Suisse maybe good news. You can read more from that story at bloomberg. Com. Guy a loophole in irelands drug laws means a number of drugs are legal today. There is a motion and legislation to close the loophole, but it will not pass until tonight. Until then, the processing of a range of substances, including ecstasy and some new psychoactive substances known as had soft drugs are going to be legal for a very limited. Of time a very limited period of time. Francine what a loophole. Why didnt anyone think of this . We dont suggest you go try it out. Dont try anything we wouldnt. [laughter] you dont know how the police would react. Guy how big is that list . Francine im just saying. We can tweet about it. We will speak to mario monti in the next hour. Guy blurred lines. 7 million to marvin gays family for Copyright Infringements. We will have more on that program with caroline hyde. Francine welcome back. Credit suisse continues to trade higher this morning. A new ceo was announced yesterday. Guy at the press conference in zurich manus cranny was in the front row and had the opportunity to sit down with the outgoing ceo, brady dougan oneonone. Give us your sense of the occasion. Hans manus very well orchestrated. This was in conjunction with the chairman. It started last autumn. In many ways brady dougan is handing the new ceo low hanging fruit. I suppose the rap sheet and the guilty verdict from last year, but this is a man that started the work. Hit london, new york, tokyo, equities bonds they were all part of his career. Did he have any fun along the way . Brady dougan certainly, as you get into larger and marge are larger management positions, it becomes less fun. Running smaller businesses and having a close relationship with everybody who works in the business and growing and building businesses that is always in my career where i had the most fun, building businesses. Creating new businesses. There are number of businesses that we pretty much created from whole cloth, businesses that did not exist that we started. That is fun. It has all been satisfying in different ways. Even this job, with all of the challenges of the past eight years, a very difficult period to be a ceo of a global bank. There was a lot of interest. A lot of fast action. Manus got a real sense when he left that podium and came into the room to do the interview, there was a real sense of relief. He still has a number of intensive months to deliver and work with Tidjane Thiam to hand over. There was a sense of relief, i thought. Guy what did you make of the incoming ceo . Compare and contrast for me. Manus i would say emmy awardwinning, oscar in the waiting. He played to the gods, he played to the gallery. This was a ceo who kicked off in german, followed up in french, and he answered in english. Whether it was contrived whether they wrote the german out for him, i dont know, but this was a man, a ceo, who i thought, im going to play you a little bit of a piece now. Tidjane thiam i have reorganized many Investment Banks in my career. [indiscernible] manus fascinating his take on the world ahead of him, is that he can apply the mckenzie rules to Investment Bank downsizing to a market in 2015. If i was sitting there i would be thinking, this is a very interesting take on the organizing an Investment Bank. Back to you in london. Francine thank you so much. We were lucky enough to speak to him in london. It was unusual to have him come in and he was fairly tightlipped about it. Guy he is not afraid. He will get out there. He is a very bold character. Francine bold. Guy he did not answer any of the questions, but [laughter] francine thank you so much, Alex Friedman. When you look at the world around you, bonds, equities what is fundamentally going to change the next two years . We mentioned china. A lot of ceos may be people that come from outside the business. What is fundamentally going to change the way that we do business in the next 23 years . Alexander if i knew that, it would be the silver bullet. Francine multibillionaire. [laughter] alexander one question is what do we know. The known knowns, how is the u. S. Going to do, china, europe. China is slowing. They have policy levers. In the unknown unknowns there is always the technology question. What is a change we dont foresee . In the near term, it is more of a Political Risk question. Derailing would be something happening in russia or some sort of a political evolution in the next 12 months in europe. Guy you mentioned before the break that that is not priced in in europe. How does that manifest itself . Do we start to see a divergence in the performance of the various curves . How does it actually work . If you were going to try to figure out how to make an objective decision based on a political story which is incredibly subjective, when you sit there with your asset team and figure that one out . Alexander happily, i dont have to do that. We have investors who do it through their own strategies. I dont see it so much on the fixed income side. You see it on the equity side. You will see volatility, as opposed to the rising tide environment, which we have had in the last few years, true mostly by the fed i know by the ecb. I think you will see a lot more volatility by country and by sector. That seems to be the most obvious way it will manifest. Guy if i was looking at the way it is going to manifest itself you look at the traditional video and take a look at the distribution curve. How far forward . Alexander a truly depends on how some of these elections go. Lets rewind the clock two weeks. Greece did not move the market in terms of any downside. I dont think anything was actually resolved. The natural expectation of the market is that there will be no major fracturing of the eurozone. I think we will see in spain or portugal, a repeat of the greece leftist parties winning that would be a big surprise to the markets. 3 is that there will not be some kind of military escalation point three is that there will not be some kind of military escalation. Francine how different has it been . As a ceo, what are your main pitfalls . Give us a little bit of an insight. Alexander thanks for asking. It has been wonderful. It is nice to go to an organization that is an investment firm. I am an investor. Gam is super wellpositioned. Absolute return strategies are were most investors want to be in this part of the market. People go to passives and they go to very active, high position strategies. That has been great for us. Francine your main challenge . Is it retaining talent . Do you have to pay people enough . Motivate people . Alexander there are two elements to that. I have to make sure that we create an environment that the very best investors want to work at. Think about it like a university. Why would a talented University Professor want to go to a university . That is not to be underestimated. One can screw that up easily. The second is, frankly navigating where we think the puck is going to go in three to five years. If you go to the demographic growth of the world, it is in asia and africa. That emerging wealth buys the european version of useful funds. We are very focused on making sure we meet the trajectory was a demand is. Francine thank you so much. Gam holdings ceo, Alex Friedman. Guy stay with us. We are talking to the Vice President of the European Parliament. That is coming up shortly. That interview is right here on the pulse. Plus, the former italian Prime Minister mario monti. Francine welcome back to the pulse. Guy i am guy johnson. These are the top headlines. Francine mario draghi speaking this morning at an event in frankfurt, saying hes these upper gdp due to oil, exchange rate, and the qe program. He added governments must implement reform measures assesses centralbank can and will stabilize inflation. Guy talks at greece to take place in two cities. We think that will begin in athens probably more likely going to happen tomorrow. You officials eu officials. Today, officials from the ecb, youre being commission, imf are to begin discussions on greece in brussels. Francine Hillary Clinton breaks her silence about controversy surrounding her emails. She told reporters at the United Nations it was a mistake not to use government emails while secretary of state but says the use of a private email account and server was legal. The laws and regulations in effect when i was secretary of state allowed me to use my email for work. That is undisputed. Guy breaking news francine manufacturing output for the month of january in u. K. , falling to 0. 5 instead of 0. 2 increase. This ties to the fact that rate rises, the economy doing pretty well, maybe this is something im sure this is something mark carney will be looking at. Guy an important part of the Industrial Production number. Both data series are light after the industrial manufacturing. Francine as greece creditors attempt to take a look at the athens governments books, patience is running thin on the process. How real of a possibility is it . Lets get the view from strasburg. Guy our guest joins us for an exclusive interview. Good morning, sir. Thank you for taking the time to be with us. There seems to be an increasing sense in European Capital that greece can be let go wit