Im francine lacqua. We have been looking at the eurodollar all week. For the first time in 14 years it briefly touched below 1. 05. It has retraced some of its movements. 1. 0597. Bank of America Merrill lynch expect parity by the end of the year. That is the latest on eurodollar. We will keep a close eye on the Foreign Exchange markets. In an exclusive interview with bloomberg, the Ecb Governing Council member said that negative bond yields are not here to stay. He spoke with Jonathan Ferro in frankfurt yesterday. They spoke about the Bond Buying Program. One has to be aware that on the other hand, for the central bank there is an inherent risk of future losses if we buy at negative yields. So, basically, because one would like to avoid this kind of future losses by buying into long opportunities. Francine jonathan joins us now with the latest. It is a great interview. He was trying to warn the markets. Jonathan in a way. You are guaranteeing a loss for the ecb if you are going to hold negative holding Debt Securities through to maturity. They have not decided how to manage that risk yet. Maybe you can avoid negative by buying longer maturities. The big issue 50 of the debt in finland almost half of the debt in germany with a negative yield. The ecb have got to try to manage this risk. That is difficult to do. Francine was he surprised . He is linking it to inflation. Jonathan exactly. You compare this to the fed with the ecb. The fed wanted yields to go lower. The ecb, yields are already low. If youre are going to generate higher Inflation Expectations yields should go higher. Maybe, in a weird kind of way, the measure of success is yields going higher because people are pulling out of this stuff and Inflation Expectations are building. Francine some of the things that we talk with guests is when you look at the level of the yields, you are not pressing risk. Jonathan i was looking at the 30 year german this morning. I looked at it against the 10 year irish yield and both are below 0. 7 . Which one is the bigger distortion . That is what i asked myself. Im not so sure. He calls it a distortion. Maybe that exactly what it is. These can go on for a while before anything happens. This rally keeps going on. They told us it was priced in and it is not. Francine the market often price things quite wrong and then there is a panic move. You were in frankfurt. What was the main take away from mario draghi . Jonathan it sounded like a victory lap and maybe i am sounding cynical. Better forecasts, things are less bad, things are getting better. The forecasts are implemented on the full condition of implementation of policy. It has been very quick. In typical journalistic fashion im going to ask the question what is the level they are comfortable with . What are they uncomfortable with . Way below one . Francine a lot of people said that qe was going to play on the currency. How much is the Dollar Strength is this Dollar Strength . Jonathan a lot of it. A lot of it has been Dollar Strength. How tolerant is the fed going to be of the stronger dollar . Expectations for a hike they are getting closer and closer. Will we get one in the summer . That is a big focus. Francine thank you so much. 1. 20 is where it should be. Parity will not hold. Jonathan that is not the french first french policymaker to make a call like that. Francine thank you so much. To greece and stillness sign that the country can reach a longterm agreement with creditors in sight. The great finance minister told local television greek finance minister told local television that the ecb is applying pressure to his government. He had strong words for germanys finance minister. Lets go to berlin and hans nichols. What did he say about germany . Are the comments getting attention . Hans they are getting a lot of attention. What he is essentially saying is that he does not have or at least the german people have lost trust in him or do not have it at all. Here is the quote from an interview. He has told me that i lost the trust of the german people. I have told him that i have never had it. That is not starting from a great trust basis. The background to all this is that they are going to need to build trust and relationships if they are going to have some sort of deal to release that 7. 2 billion in additional funding that the greek government clearly needs. They are drawing on emergency liquidity. 69 billion is the limit that is set. There is going to be a Conference Call about potentially raising that and some officials in the ecb are opposed to raising it. The greek finance minister did not help his case with this comment about the ecb. Here is what he said. He said the ecb is pursuing a policy that can be considered us fixie aiding asphysxsiating to our government. They want to get a sense of how much money is going into the great treasury and how much is going out. One important note, it appears that athens has reserved the right to approve every visit when you have officials coming down to athens to ask inspect the books. They apparently are going to have to get the goahead. Francine you just talked about the numbers and the situation. We had a former italian Prime Minister and one of the big lawmakers in germany and both of them were saying they were fed up with the rhetoric from the greek government. Is that fair . Hans in some ways, the rhetoric is not all that material because the german position has been remarkably consistent, that greece needs to fulfill the program the initial bailout program, if they want to get an initial 7. 2 billion. They are going to need that money. They are going to need additional money to make some payments. They are going to need to follow the program. The rhetoric is not helpful, but the germans are shrugging it off because their position is unchanged and has been for the last 10 weeks. Francine you are right. Thank you so much. That brings us to the twitter question. Do you agree that the ecbs stance toward greece is asp hyxiating . Who better to talk about greece i sat down with the former french president in an exclusive interview and i asked him where the euro should be trading. The real zone for the euro should be between it is now 1. 08. It should be up to 1. 20. We were too high at 1. 45. It was too high. For some exports. Now we are devalued by 15 . It is enough. Francine would greece be better off outside the eurozone . Can greece create additional wealth for its citizens . Probably, with a currency lower than the euro to be competitive. In a normal situation, with tight competition they have good tourism, they have good industry for shipbuilding and restoration [indiscernible] i think they should have the freedom to use a national currency. [indiscernible] francine what does it mean for the rest of europe if they decide to leave . It is not a Lehman Brothers moment . The euro has nothing to do with the greek situation. Sometimes the euro goes up. [indiscernible] even when the greek [indiscernible] a few years ago, it was different. [indiscernible] francine lets continue to talk currencies. Jeffrey joins us on the program. This former french president was saying that there is such a thing as a euro that is too low. You dont agree with that. I do. If you look at the model, the euro is well above. This is a competitiveness windfall for markets on top of the current account windfall that they have already have. This can start to exacerbate some of the imbalances. Francine what is fair value . Anything that can bring the german and dutch down to below 5 . Francine we are on parity watch. You are not. I dont think it is going to happen. My neck is on the line. [laughter] francine geoffery stays with us. He is one of the few strategists who do not expect parity. Here is what else is on our radar. The imf has approved 17. 5 billion loan program for ukraine. They will receive an immediate 5 billion disbursement to stave off default. Their economy is expected to shrink by 12 because of the conflict in the east of the country. Chinas centralbank has a lower deposit rates, which they had raised to maximum allowed levels. That is according to people familiar with the matter. They conducted window guidance earlier this month to encourage banks to lower the rates. They were concerned that some banks were moving to aggressively on raising deposit rates. Alibaba is planning to invest in snapchat in a plan that would invest the start up at 15 billion. They plan to put 200 Million Dollars into the mobile app that allows users to send each other photos and videos that then disappear. Coming up, we talk more fx. Lets check on the single currency. We broke the 1. 05 level earlier on. It is that 1. 05 at 1. 0592. We will have plenty more next. We also have some numbers before we had to break. The operating profit for fullyear 2014. It is less than analysts expected. The 2015 outlook is more cautious. Francine welcome back to the pulse. We are live on tv and radio and streaming on your tablet and phone. Lets continue to talk currencies. We are back with geoffrey yu. Before the break you were telling me that you dont see parity and this is not fair value for eurodollar. We are currently at 1. 0588. Geoffrey two things to bear in mind. When the fed talks about International Development they are supportive of ecb policies. I dont think the euro matters as much as the Canadian Dollar and mexican peso for the fed targets. If you look at where the mexican peso and Canadian Dollar are going, they will be a huge headache for the fed. They may wrap up the rhetoric slightly. That is one calculation we have to look at. Secondly, with the euro here, you are going to see trade numbers to the upside. Crucially for the central bank to drag a currency away from value to keep it undervalued, that is not going to last long. Francine how much is this Euro Weakness and how much of it is Dollar Strength . The markets are expecting the fed to hike rates sooner than they were a month ago. Geoffrey from 1. 40 down that was Euro Weakness. The most recent figures were Dollar Strength. You are seeing the correlation between strong u. S. Data and higher yields coming back. Francine when are you expecting the fed to raise rates . Geoffrey we are looking for a june move. Francine does it matter if it is june or september . Geoffrey i dont think it is going to matter too much in the grand scheme of things. They are a technology that the u. S. Economy has healed and they are moving away from emergency levels. If the latter is the case, the dollar could precede verbally perceivable he go much lower. Francine do you think they will go cautiously . Geoffrey we think they are going to go toward a full cycle. Follow the dot plots. If we are going to follow that, we are going to get a refresh. Why should we doubt them if they can do that . Francine Jonathan Ferro give an interview yesterday. They were talking higher inflation. Do you think the yields early temporary . Geoffrey we have upgraded the eurozone forecast. If they do get there with the euro where it is, all the risks to the upside, they can get there early. Francine how much are we pressing the potential . The rhetoric with greece is still heating up in the markets are ignoring it. The could be an accidental greece could still potentially move the eurozone leave the eurozone. Geoffrey there is always that risk. Markets can afford to ignore it right now. They probably have a short euro position anyway or they almost all have a long dollar position. It is not like they are not protected against it either by accident or design. From the fx side, i doubt that many people dont have a long position, so they should be happy with it. Francine think so much for joining us, geoffrey yu. Coming up, to banks failed the u. S. Stress tests. Details after the break. Francine welcome back to the pulse. Streaming on your tablet, your phone, and bloomberg. Com. The second stage of the u. S. Stress test results of come in and the banks did not all pass with flying colors. Notably, it was the european units that let the side down. Caroline hyde this year with more. Caroline it is quality, this time, not quantity. Last week all of the banks, all 31 passed in terms of when you stress them with scenarios such as 60 drop in share prices. They all whether that particular economic storm. They were Strong Enough to survive. When you get into quality this is where the banks started to fall over. The two that failed were our side of the atlantic. It was Deutsche Bank and second there santander. Deutsche bank was labeled with significant deficiencies across risk identification, the measurement, and aggregation processes. Santander had deficiencies in terms of Capital Planning practices. They are not led to give out dividends and do share buybacks. Bank of America Merrill lynch slightly tripped over. They got a bit of a rap on the knuckles. They have to resubmit. The rest of the banks all did well. Francine what are the next steps for the banks who did not do so well . Caroline they are already promising changes. They are going to make meaningful changes at santander. Theyre going to address qualitative concerns. Deutsche bank says they are committed to strengthening and enhancing capital plans. But they are saying, the u. S. Is already 5 above global assets. They are saying, this is the first time we ever did this. The others have had five goes at it in previous years. They have also hired. There is criticism being labeled that even the ones that passed. Are the stress tests tough enough . Francine that is the question we always have for stress tests. Coming up, we speak first of the chairman of john lewis following the companys results, Charlie Mayfield. Stay tuned for that interview. Follow guy and i on twitter. It is all about the ecb. Francine welcome back to the pulse. Im francine lacqua. Time for the top story. The Ecb Governing Council member said that negative bond yields are not here to stay. He said that the ecbs Bond Buying Program should push yields higher. The tension of the program is that we will get into the territory of higher inflation rates and higher Inflation Expectations. That could cause should translate into higher yields. Francine south korea has become the latest country to join the monetary easing bandwagon. They cut the key Interest Rate to an alltime low to counter slowing inflation and a weak economic recovery. South korea joins more than 20 nations. Two Police Officers have been shot outside the Police Station in ferguson, missouri. The shooting followed riots. Fergusons police chief stepped down after a government report concluded the city fostered systematic racism. Lets have a look at one of the main stories of the week. Lets have a parody watch, as we like to call it on the pulse. The currency dropped below 1. 05 against the u. S. Dollar for the first time in 12 years. We just spoke to moncler geoffrey yu of ubs. He said he does not expect parity. We had a call earlier from bank of America Merrill lynch and they expect parity by the end of the year. They expected by around and of 2015 early 2016. When you look at the pound it is significantly strengthened against the euro, over the last couple of weeks. Keep a very closeeye keep a very close eye on the Foreign Exchange markets. John Lewis Partnership is just out with results. Lets go straight to anna edwards, who is standing by with the john lewis chairman. Over to you. Anna welcome to the john lewis store. I am joined by sir Charlie Mayfield of john lewis. Thank you for joining us here on bloomberg. Run us through the numbers. We had a great sales year. Sales are up in both brands. We have seen a great performance [indiscernible] profits are up by about 25 million. It is netnet. [indiscernible] anna how is it performing . In the most recent figures, we saw that the market share was down for the First Time Since 2009. Why is that . It is because it is comparing against very heavy promotions. Actually, they have outperformed the market. [indiscernible] we have seen great growth. Anna we have a slight problem with microphones. We are going to go back to francine in the studio to see if we can fix the problem. Back to you. Francine we will get the technical issue fixed and then we will get back to anna. John lewis is a british retailer and it is still relevant head of the u. K. Budget story and only six weeks until the u. K. Election. Coming up, u. K. Gets a 17 billion lifeline from the imf. Is it enough . Francine welcome back. Lets get straight back to anna edwards. Anna thanks very much, francine. Lets try that again, shall we . You were telling me about the pressure, you were comparing the numbers. Losing market share, is that just a blip . That was just one month and it was a month when we were heavily promoting our online business. It is about the comparison between that period and this one. The 69 months we have been in the market have been at a record we are proud of. It is down to the innovation and the work we have done to pursue this change our perception. Anna how is the business performing . Is this an industry that will feel the full benefit of the u. K. Economic recovery or will some of the recovery pass this business sector by, if you like . It is a mixed picture. We are seeing a great recovery and home goods in home goods. We have seen a good move back into good growth back into the home side of our business. Other parts are looking pretty robust. In food, it is tough. It has been very well documented. The grocery sector is going through a tough period. It is more about deflation. The fact that prices are going down. B