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tv   Countdown  Bloomberg  March 24, 2015 2:00am-4:01am EDT

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anna: chinese manufacturing data balls to enter a 11 month low. will more stimulus be needed? we go live to hong kong. >> george soros speaks to bloomberg and he tells what ukraine's future is. >> if ukraine flourishes, that will tell the russian people that russia's problems are due to putin's policies.
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>> ukraine's finance minister says the war-torn country needs for more financial support. >> draghi versus the data. the release of pmi figures. caroline: the german chancellor angela merkel tells tsipras to stay the course. but our words and encouragement enough? life to berlin. -- live to berlin. ryan: welcome to "countdown. we go live with the regulatory burdens. what does it mean for the banks?
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chinese economy is showing further signs of a slowdown with manufacturing discipline falling to and from 11 month low. that has sent chinese stocks tumbling. shery ahn joins us with the latest from hong kong. shery: the reading came in as a bit of a surprise because economists had expected it to become a above 50, showing a slight expansion in manufacturing activity but instead it came in at 49.2. that is down from february. the index is weighted more heavily toward smaller companies. analysts say if the official pmi data which falls on larger company slides that will reinforce the view that further policy measures will be needed to achieve the 7% growth target for china. that official pmi is due out
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next week. the report is hitting stocks here in china with foreign investors selling a record amount of shares to this comes after the shanghai composite climbed about 10% in a nine date winning streak that ended monday. that sent shares to close at the highest level since may, 2008. with economic indicators continuing to weaken, analysts expect further measures to see a rrr cut as soon as next month and a quarter percentage point interest rate cut in the second quarter. ryan: despite the challenges facing the chinese economy the yuan looks like it might be a small step closer to becoming the fifth reserve currency, what is the latest? shery: china has been pretty vocal on the yuan's readiness to get that reserve status from the
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imf into the past couple days when christine lagarde was visiting china. they all pitched the resonance and finally, coming out with a statement saying that they welcome and share the objective of having it be included in the basket they can count toward official reserves and they will work closely with chinese authorities. there is still a long way to go for the approval of the yuan. the review is due out later this year and that hinges partly on the imf reversing a 2010 decision that said the yuan wasn't fully usable. jonathan: thank you -- ryan: thank you, that was shery ahn. caroline: greek and german smiles at a press conference yesterday. but tsipras did not walk away with anything concrete.
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while rolling out the red carpet, angela merkel did not unlock any of the 7 billion euros in emergency aid that greece may need to stave off bankruptcy. did tsipras witness anything at all from her? hans: he got that military honor roll goodwill and mr. tsipras has a better relationship with madame merkel which in some ways was the point of the talks. both sides were very clear that they would not do a lot in terms of directly addressing the crisis. mr. tsipras said he was not in berlin to quote bake for money to go they are trying -- to make -- beg for money. they are trying to make nice. >> neither are the greeks lazy nor the germans responsible or the maladies and drawbacks in
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greece. we have to work to break these terrible stereotypes on both sides. hans: mr. tsipras also said that in terms of a liquidity crisis they won't have anything concrete. he also said all of greece's problems are not external. mrs. merkel said she could not solve those liquidity issues. that is for all of the eurogroup. if there was any issue it was over this issue of world war ii truax reparation -- world war ii reparations. mr. tsipras said it was a moral issue and meta-merkel said it was closed from their point of view. madame merkel suggested the personality -- possibility of a humanitarian fund for greece. no indication of how that would be. a lot unstyled but little on
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substance -- a lot on style, but little on substance. caroline: talking of tension, mario draghi weighed in on the liquidity robbins from brussels. is it a sympathetic central-bank? hans: know, mario draghi is a frustrated central banker. he was asked this question, are you lack mailing greece and here was his response -- black ma iling greece? draghi: first of all, it is a bit rich when you look at the exposure we have. ecb has 1.4 billion of exposure. this is equal to 65% of greek gdp. it is the highest exposure in the eurozone. of blackmail is this?
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hans: you take these comments from draghi yesterday and add to what he was saying behind closed doors late thursday night, expressing frustration they were not giving him access to the relevant data in athens you can see that the ecb is not in a forgiving mood or a negotiating mood. the emergency liquidity assistance and whether to raise the ceiling, the ecb has as much say about liquidity as the eurogroup. jonathan:ryan: time for a bloomberg exclusive interview. george soros sat down with francine lacqua. he said the allies should do whatever it takes to save the war-torn nation. soros: it is a political decision on the part of ukraine's allies that they must do whatever it takes to help the
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ukraine not only survive but to actually make progress in the midst of war. if the ukraine flourishes, that will tell the russian people that russia's problems are due to putin's policies. francine: what do you think will happen to the cease-fire? soros: this is a difficult question because on the one hand putin would have reason to stick to the cease-fire until july in the hope of getting the sanctions expired. at the same time, he didn't actually achieve his military objectives of connecting donetsk
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and elsewhere. there are still ukrainian troops there. russia didn't finish that job also possibility that putin gives up the hope of creating dissent in europe, that he actually moves in to mario before, in the next 60 days. ryan: that was francine lacqua speaking to george soros and in just under an our i will be speaking with the ukraine's finance minister herself, here to talk for a whole half hour. interesting what mr. soros is talking about, the need for financial aid. caroline: 40 billion? ryan: the most recent financial
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aid package and visions $40 billion of assistance. some of that is get restructuring and some of that is why lateral assistance. clearly the ims plan is based on a rosy case scenario for the ukraine. many people think that even where the ukraine stands right now it will need more eight, including -- more aid, including the finance minister who ever since last week has been speaking about the need for more aid. if you prop up the ukrainian side you will need more help. also the idea that if you look at how much financial assistance that greece got, that is over 300 billion, then what the ukraine has so far it is peanuts. caroline: pails in comparison.
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what about restructuring? ryan: the $40 billion of financial aid is 17.5 from the imf and a significant amount of 10 billion that is coupled with the imf aid. on top of that $15 billion of debt effectively getting restructured. caroline: restructured or written off? ryan: negotiations have begun and your mesko is quite the -- y uresko is quite the negotiator. she is saying that you need the full cocktail. you need extension of debt maturity and a reduction of coupon and principal. this is something we will be discussing today in a lot more detail. to what extent she is finding creditors are prepared to do that. caroline: is that why she is here?
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to get creditors and front of her and to explain? ryan: it is all about that. another big creditor is russia which has lent -- yesterday she said they have reached out to the russian side of it and have not heard back yet. big concern among investors particularly those holding ukrainian bonds, they will call their $3 billion loan early. they could because the ukraine debt to gdp ratio would allow that. caroline: you have been on the ground in the ukraine, with a fight fire with fire or would they realize -- would they fight fire with fire over they realize it could create sanctions? ryan: anyone who tells you what the kremlin will do next does not know the kremlin.
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they could have done it already and haven't. the reality is that they recognize this is a tool that they have in their campaign, but it is one they have not availed themselves of yet. caroline: cannot wait for that interview. everyone should stay tuned. let's take a look at the top stories. hutchinson could seal the deal to buy from telefonica. the deal is worth 10th 5 billion pounds and could create the u.k.'s -- is worth 10th 5 billion pounds and could create the largest mobile carrier. euro's largest investment bank is looking at three options to produce possibilities. whereas the hsbc has to rewrite plans showing how they could not be unwound in a bankruptcy by submitting a living will to
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-- living wills are required by the dodd-frank act and are meant to show the banks can be closed without threatening the broader financial system. and david cameron who is campaigning for reelection rules out a third term in 2020. he named george osborne and boris johnson as potentials to succeed him. ryan: join the conversation on twitter and let us know what you think of the show. in general, feel free to spam us. i am ryan cho killed -- ryan chilcote, this is caroline hyde. caroline: apparently it is national puppy day-to-day. i don't know if i can respond to your barrages on puppies. ryan: special shout out to mark
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barton who is out today. an exciting event we will tell you more about once we know more ourselves. mark will be out and caroline and i have the honor of joining you today. caroline: stay with "countdown," because in under an our we will be speaking with natalie your mesko -- natalie yuuresko, sitting head-to-head with her. stay tuned. ♪
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>> it may certainly have an affect and delay the raising of interest rates, but it is liable to come and it will have an effect on the less developed world that has a lot of debt. caroline: that was hedge fund billionaire george soros talking about the impact of the dollar on any potential fed rate hike. the economy shows signs of easing this year and that could be china where the manufacturing gauge fell to and from 11 month low in march. let's bring in brandon brown. obviously, the impact of
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eventual rate rises coming through the united states will be hedging the rest of the global economy. it seems to have eased off of its strengthening road at the moment but talk to us about your viewpoint of what it states is doing right now. is it worth holding off on raising interest rate for the time being? brendan: the big problem is looking at this aim of 2% inflation. it is not clear where this 2% target came from. ideally we would have seen prices fall a bit and now they would be in recovery, so this has created a massive distortion. pushing asset prices up across a range of markets. the question now for u.s. monetary policy makers is, where do they go? having had all of these
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distortions? rate rises now could be another blow to asset prices. one has the 1987 scare scenario on the other hand they are so far behind getting back to normal, so it is a big problem. ryan: the problem is, you say the focus on inflation is simply because oil has been falling and that is why they are not getting the inflation they are trying to target? brendan: that is very much it and on top of all of this there is this huge monetary uncertainty. a lot of fed speakers and economists point out that capital spending has not developed any momentum. the big factor behind this is monetary uncertainty. everyone and their dog know the fed has been creating asset price inflation that will likely be some correction further down the road and there could be a recessionary cycle.
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so corporations, knowing this don't engage in long-run investment spending. what they do instead is buyout chairs and pay dividends and we have a fantastic amount of corporate cash payouts. transferring the discussion to japan you see the same issue that despite this huge monetary experiment japanese companies are not's epping up for investment -- are not stepping up for investment. they realize it is quite ephemeral. cheaper yen may not be cheaper for long because we are in this environment. caroline: so how on earth do we correct all of these imbalances we have had forced upon the economy? the united states has to start to normalize. is it the rest of the globe? we need to see the stimulus
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continue elsewhere to counterbalance any falloff? brendan: when you talk about stimulus, seasoned with chinese data this morning, the paradoxical sort of way it is the second largest economy of all not being stimulated. china has been going through a property crash which has many similarities with the 2007-2008 in the united states. yet the chinese monetary authorities have been dragging their feet in bringing interest rates down. largely because they don't want -- they have this idea of international is just internationalizing the foreign currency. so the markets look at what state is china accelerate monetary easing. it is a longer-term project. caroline: when does it? brendan: my central scenario for
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this year is that there will be a point at which the chinese authorities go to a meteor monetary policy. we get a big fall of the chinese currency which will have a profound effect on commodity markets in particular. ryan: what does that mean in terms of investing. you mentioned the manufacturing data. it was a bit of a surprise. so were you surprised by the data? brendan: not a great surprise because we have a great contraction in the data and we have the property market slowdown. in terms of investment outlook first of all one has to build in
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a further commodity price slide and oil price slide on the back of potential chinese currency do know you wish and. the other big issue is how much and when do we get further asset price deflation. we have seen it across away if of assets now. you haven't seen any asset price deflation and the advanced economy stockmarket sticking in the united states and you haven't seen it in the european debt markets like italy and spain. the big question is do we get to asset price deflation in the u.s. stock market and does that role on the sovereign debt in europe. does it deflate first? these are the big issues. ryan: what is your hunch?
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brendan: it comes in the next two years the high risk of some asset price deflation. normalization may not occur in this cycle. we actually go through this cycle without a rate rise. and the peak may already have been earlier in the cycle. caroline: not quite the optimist. ryan: the relationship between the falling price of oil and stocks, you didn't exams are -- answer the question exactly how low it could go but if we see brent fall below 50, what does that mean? brendan: it is overall negative because the fall in oil prices is cutting capital spending in the united states and corporate profits. in many ways, oil and commodities in this cycle is what housing was in the last
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cycle. i think the unwinding of the oil boon is fundamental to this cycle. caroline: thank you very much.
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ryan: you are watching "countdown," time for a look at the foreign exchange markets. the world's worst performing currency for the last 15 months or so. we are looking at because we will be talking to the ukrainian finance minister to she will be joining me live for a half hour right here. a lot of issues to talk about including the hryvnia. one year ago it was at 13 to the dollar and got as much as 40 to
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the dollar. it has recovered to just shy of 22. a lot of people say that is only because of very strict controls that the ukrainian government and central bank has put in place. one of the things i will be looking at with the ukrainian finance ministry is how long can this happen? i was just there and when i went to exchange currency there were black marketeers standing there that wanted to trade my money instead of the foreign-exchange point because it didn't have any dollars, to exchange with me, so take a look at pressure this is definitely a trade that a lot of people have been looking at over the last year, a real symptom of not only ukraine's own financial woes, but also the conflict with russia and the pro-russian separatists east of the country,
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again we will be talking to the ukrainian finance minister natalie jaresko right here on bluebird television at 7:00 this morning. caroline: let's check in on your top stories because a neighbor government will not increase vat. as part of the greek reelections. it will use a speech to rule out an increase in the 20% sales tax. central london prices would probably suffer if they give david cameron a chance to hold a referendum. the u.k. did quit the -- if the u.k. did quit the eu more than 60% of real estate investors said they would be less likely to put their money in the country. meanwhile, david cameron who is campaigning for reelection ruled himself out for a third term in
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2020, he named george osborne and london mayor boris johnson as potential successors to leave the conservative party. more on that story and many more on ryan: draghi and the data will get the latest read on the recovery with pmi figures from germany france and the eurozone with a support the optimism on the economy? david powell joins us with more. thank you for joining us, what are we going to learn. is draghi right? guest: essentially that's what these figures are going to show, the numbers will point to an acceleration of growth and the numbers from france and germany will indicate that germany remains the hotspot. and that france continues to lag the euro areas as a whole. caroline: the data show services
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and manufacturing on the up. you also had the consumer confidence up yesterday and the german eco-survey released, are these painting a rosier picture? guest: they're all pointed to an acceleration of growth in the consumer info points that shoppers are spending that money in the decline of oil crisis has given them. caroline, in our wallets and purses. >> exactly they say the real incomes are increasing and they are spending that money and the survey said they showed not only is the first quarter improving, but also the forward-looking component. the expectations component is suggesting that this recovery will continue throughout the course of 2015. >> if we get this signed as an
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improvement, how does the investor react, do they scale back expectations of qe and what is going to do and they started think this is going to expedite the rollback of qe? guest: there has been some chatter in the market did they need to come in or did they wait too long that really those expectations looked unfounded because the growth has been insufficient to put a floor under inflation. pressures remain very weak likely to be shown in the pmi survey, this morning at the last meeting draghi really went to a great extent to emphasize that the improvement forecast by the ecb is contingent based on the fact that all of the qe will be fully implemented. ryan: thank you very much. caroline: you can join the conversation on twitter and let
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us know what you think of the show and tell us what you care about and what you are expecting for the manufacturing and services data and the you think mario draghi would need to scale back his views for quantitative easing. do we need to be doing 60 billion per month? ryan: stay with "countdown, up next a look at what is going on in the global equity markets. if the u.s. would pull the rest of the world forward, will find out more.
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soros: there is quite a serious situation, because there is such animosity and anger and a mutual desire to hurt the other. greece's performance has greatly deteriorated so doing what they are doing their hurting themselves, and europe also if you push greece out of the euro would hurt itself. francine: is it a 50-50 possibility? soros: i would say so. it is a theory.
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the basis for finding a compromise is there, but it would require probably four months of negotiations point by point and then you don't need to write down the debt, now you can just keep on pushing it back almost indefinitely and keeping the primary surplus between 1.5% and 3%, but in the meantime there will be no primary surplus because greece is going down the drain. francine: can i ask you the u.k. elections, how worried are you?
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soros: i think just as scotland in the end did not part ways with britain, i think that britain will also find some way to stay in the european union, and actually, the threat from russia ought to be a powerful inducement for britain and europe to stick together. caroline: that was george soros discussing at large and the possible grexit and how greece is apparently going down the drain. tough things from george soros. let's get your top stories. the first u.s. company with a value above $700 billion. apple isn't done yet. according to one analyst, they are raising their price target to a level that would make them a trillion dollar company.
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evaluation valuation is based on apple's iphone portfolio intra-china and the electric car. and a bubble is about to burst. according to sequoia capital chairman. the billionaire investor told "the times" a considerable number of high-value exports could hurt sales in the coming months. and amazon gaming users twitch is requiring to -- requiring users to reset passwords following a suspected attack. twitch encouraged players to change similar passwords before. ryan: let's change gears and take a look at where global markets are headed. our next guest says it is the u.s. that will pull the rest of the world forward with china japan and europe writing more stimulus. john joins us now.
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if you look at u.s. equities, the question is is there still more value to be had? there are a lot of people when they talk about tax stocks saying the evaluations are beyond heady. john: overall, u.s. equities nobody could describe as cheap. on an absolute value basis. there was a lot of comparison between equity valuation and bond valuation. certainly in a balanced portfolio we are trying to get a balance between equity and bond holdings. as for is u.s. equity is concerned we think there is less value there than other places and we happen putting our money in europe and japan. which are the favored markets for higher returns this year. caroline: let's dig into europe.
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what sort of companies are you looking at? ones that are exposed to the export market? john: that was where we were looking at the start of the year. but there is slightly less value available. we would like to see more of the recovery seeping into domestic europe. it should start picking up. some of the european economic data has looked better recently. and as we see today, the pmi data should show europe in a slightly better state. ryan: can we expect m&a to be a driver for equity prices in europe? the upper rally deal yesterday -- the parelli deal yesterday. john: there should be more. we don't want to rely on m&a as
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a driver of valuations, but companies generally have the cleanest balance sheets and are in a better financial position than individuals or governments so they are in a better position to spend. they can raise cash easily to the bond markets. people want to buy fixed income products. thanks in europe are starting to lend again, so everything is set up for m&a to continue. as we know some of the rules and regulations in europe are more difficult to get your way through mergers than other parts of the world. that is a bit of a constraint. caroline: you were saying you want to see it seeping through the european economy outside of exporters. is quantitative easing going to push that? will we see it helping from the ground up starting to seed through into the smaller companies? john: certainly on accessibility
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to cash it should help and the fact that we have gotten through the asset quality review, the european central bank has given us a line in the sand. we see more recapitalization. we have gone a long way toward repairing the banking system. maybe not totally complete. not as the u.s. caroline: bnp told a have to go back to the u.s. and the fed and explain how they could be unwound if they could and deutsche bank looking at ways to sell off consumer elements as it hasn't done enough. john: i think there were two different elements, one is living wills in the u.s. caroline: that doesn't worry you? john: that is a capital problem. deutsche bank has to do things
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to restructure their business to get higher returns that i don't think that is a capital problem. caroline: hard work done. john: moore to do with making the bank more profitable. ryan: how big of an issue is oil? do you spend time thinking about the price of oil? john: it has been going up for the last few days. the oil price for us is a good factor certainly for the developed and western economies which are all consumers. it puts money in people's pockets. we are thinking of it as a positive effect, not a negative effect. it is a cyclical rather than a structural. so this time next year, those falling prices will have washed through it will -- and we will
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be back to the core levels of inflation. ryan: we will be talking to ukraine's finance minister in 12 minutes here. those conversations seem to have subsided. do you worry about a resumption of the pilots? -- violence? john: geopolitical risk is high on the agenda. there are things we look for called icebergs and geopolitical risk is one of them. it is like an iceberg because it is small on the surface but could be bigger the low the borderline. the problem is it is difficult to know how to handle it in investment portfolios and how to guard against it. as we seat with something like russia it spiked up and has gone down.
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what i find fascinating it was just over a year ago when putin went into crimea. now a year later, the minsk agreements any kind of return of crimea is not even on the agenda. it is amazing how things have crept forward. the map has changed already. ryan: absolutely. john wayne evans. thank you very much for joining us. caroline: coming up, we will be looking at our favorite stories from bloomberg's digital output. including a caffeine cocktail. you never know. ♪
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caroline: just over an hour from the start of european trading. just a few minutes from that great interview with a finance minister of ukraine, but first top choices of bloomberg's digital output. i am going caffeine cocktail. too early for a cocktail not for caffeine. this is a man renowned in the united kingdom. salvator calabres, he invented the breakfast martini. ryan: i like that. nice style. caroline: now we are getting
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caffeine in these and i am a sucker when it comes to the breakfast martini but he says that is too boring. in a new las vegas are he just opened he has all of this focused on vegas and the fact that it never sleeps. he has a negroni, or madame mocho, which is a champagne coffee cap tale -- cocktail and one called never second night which has red bull espresso absent and vanilla vodka. i might stick to breakfast martini's. ryan: i will be talking to the ukrainian finance minister and one of the stories we have on the terminal and is called ukraine conflict flares as they fight oligarch crisis. this is a new wrinkle in the events unfolding in the ukraine.
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we have been talking a lot over the past year about the conflict with russia. there are issues within the ukraine itself in particular with a billionaire in ukraine making headlines. he happens to fund a militia force that is fighting the pro-russia separatists. he also has stakes in a number of government controlled companies where he has been flexing his muscle. including with the assistance of some of the militia that he supports. we heard the ukrainian president say there will be no private armies or regional armies. it is a big concern. not only does ukraine and the ukrainian government have to fight this conflict, but they have to keep it together. that is something i will be talking about with the finance minister. check out this article, this is a space you need to watch if you are following the ukraine. we heard from george soros
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talking out it is not just punishing russia. ukraine needs financial assistance. caroline: to the tune of $50 billion. you say there is more to that financial plan? ryan: in kiev, they would argue the assistance they have got -- they wouldn't use the word peanuts, but it is not a lot in terms of the assistance greece got a few years back. caroline: not part of the eurozone though. ryan: exactly and there are a lot of differences and it is fair to say that the appetite for lending, given the geopolitical context of what is going on in the ukraine might be diminished compared to what it was with greece. precisely because greece with an exit still talking about the possibility. that is an issue. check out this story on caroline:or groups, they want to
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remain united. stay tuned, because we will be speaking to the finance minister. ryan: natalie jaresko was in new york and california and she has been one of the most aggressive interest selling the ukrainian story finance ministers in history and she will be sitting gracefully in four minutes to talk even more about the prospect of debt restructuring. a bitter pill. caroline: something she has to persuade her creditors, franklin templeton with a big cold on the ukrainian debt. ryan: they are not too keen. she said she has reached out but hasn't heard back. caroline: whether they will pick up the phone anytime soon, i don't know. it's fascinating to see where the opportunities lie and how much work she has to do to convince them. ryan: we are happy she is here. join us for the interview with the ukraine finance minister
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natalie jaresko. she will be with us very shortly. we are back after a very short break.
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caroline: chinese manufacturing data of falls and sends the stocks slumping. bolstering the economy and going live to hong kong. >> speaking to bloomberg in a unit of -- and an exclusive interview. >> if you cannot flourish, that will tell the russian people that the problems are actually because of vladimir putin. caroline: the finance minister
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joins bloomberg for the interview and says the country needs more financial support than what is provided already. that is coming up now. >> optimism in the eurozone recovery. the first test with p.m. figures. caroline: staying the course with european creditors. those are words of encouragement. are they enough? we go to berlin for the latest. good morning. i am caroline hyde and you are watching a special edition. ryan has a special guest. ryan: the economy is on a
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brink and the international reserves are close to depleted. the currency has been the worst performing. the imf granted a $17.5 billion bailout that may not be enough for growth. joining me for the first interview of the morning is the ukrainian finance minister. it is a real pleasure to have you here, following the situation very closely in the ukraine, it is troubling in your country. you have been on the road for 3-4 days in washington, d.c., new york california and london. you are getting miles. you have talked to creditors
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about restructuring the debt. part of the imf financial assistance for the ukraine and the $40 billion package that requires restructuring debt or finding it from creditors. what do they have to say question mark are they happy to do that? >> we're listening to major creditors and try to talk to them about the way we see the future and the common interest to ensure the sustainability going forward. >> you were in california and have talked to franklin templeton. the cocktail you talk about of extending maturities and principal reduction is something they are willing to stomach. did you get the sense they did
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not want to have the conversation? >> there are investors with wide varieties of interests. you look at the market pricing and the market is accepting this is necessary. the public -- the program is public. we need to achieve it over four years and the debt to gdp ratio needs to be achieved by 2020 and, i think anyone putting the pieces together gets a clear understanding of the situation. most understand ukrainians have had an extraordinary burden and are making sure the ukraine moves forward as a sovereign state. ryan: you gave yourselves a deadline to come to a understanding you could face
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with creditors. did you have to do a deal? you have to have the restructuring in place by the end of june? is that a must? 4natalie: we need to reach agreement. ryan: you have to have a deal. would you consider not servicing debt? for whatever reason, you are unable to find a common understanding with creditors. natalie: i'm confident that we will find the understanding and it is in everyone's interest. what you talking about, a moratorium is not worth thinking about. i want to find a collaborative agreement and reach agreement
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with the creditors over a reasonable span of time. their israel to access to be markets in 2017. -- there is renewed access to the markets in 2017. ryan: do you think so? >> we are committed to staying and tax policy and reform. making business easier. there are a variety of things flowing in to the restoration of abilities. >> you say you would not want to consider a moratorium. is it a scenario you could look at? >> of course. we do not have the ability to
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meet the payments coming through and we do not have the ability to move forward without a program. ryan: a lot of analysts say you need a haircut to make the $15 billion the imf wants you to get from the program. does that sound about right? >> there are pieces of the puzzle you mentioned and, how we come out depends on the conversation with creditors. ryan: is it enough to extend maturities? >> there is a target that cannot be fulfilled. ryan: returning to the 35%, what you are discussing with the
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creditors, i would like to understand what you need to raise the 15 billion. does 35% -- a haircut of 35% sound consistent with the economy? natalie: no way to say. depends on creditors discussions, and the guaranteed debt. it is all under one umbrella and will defined -- will define where we end up. ryan: russia led the.
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how concerned are you that they are going to do that? natalie: they announced they will not do that. ryan: pretty unpredictable. natalie: the situation is careful and complex. i hope they will be a party amp or dissipate in the talks. ryan cole -- hope they will or dissipate -- participate in the talks. ryan: had nothing to do with the loan? natalie: had to do with the loan and not the restructuring. ryan: on the ukrainian perspective, you are on opposite sides of a war. can you have a constructive dialogue? >> yes.
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>> and years since and the treatment of the russians will be it everybody else? >> we look at the process as one that needs to be completely fair and we will not treat any individual creditors differently because this is a process with equity. ryan: what if the russians say restructuring is not an option? >> we will do with that when it happens. ryan: i was in eastern ukraine for one week in the separatist part of the country. it was i-opening. i want to show you a clip of that and we can discuss that. have a listen. >> we are being driven to the international airport the most
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fought over piece of real estate. the only value is that of a buffer. >> it is destruction in demolition sites and war zones. i have never seen anything like this. >> it goes on and on and we did not see all of it. >> a burst of gunfire. the ukrainian front line is 2000 meters that way and ukrainians have set up in a coal mine. the idea of rebuilding the airport with the sides close and shooting at each other, even if it is only occasionally is unthinkable. >> there is a lot of concern out there right now that you see a resumption of hostilities. how concerned about that are
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you? >> extraordinarily. the cease-fire is fragile. every single night, there is the use of heavy artillery from the russian-sponsored terrorists. it should have been moved back. i'm concerned. ukraine has an incredible burden and we have 1.1 million internally displaced people. this is one of the largest humanitarian crises in european history since world war ii. >> and how would the resumption of violence affect the financial position? natalie: we invested into national security and law enforcement. it is a heavy burden on the budget and, i would guess that human life is critical.
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the cost to the economy continues. we spent $5 million a day defending ourselves. ryan: if i remember, the contraction was close to 15% and industrial output contracted 20% in january and february. what should we expect, in terms of the first quarter and the fact that some of the hostilities see a cease-fire now. it continues into the first quarter. natalie: the first quarter has been hard and it shows no robust growth in the region. in the occupied territory production dropped 90% and it influences the entire economy. ryan:, that was not including
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gdp. that was not including the separatist-controlled area. natalie: they are included in the measurement and if falls out when you compare back. ryan: will leave first quarter be worse than the fourth quarter? natalie: no. we have a hard time measuring, frankly speaking. it is hard to measure. ryan: you talk about restructuring and i know, you know, escalation is difficult to calculate. 10 you speak to what it means, in terms of creditors and what they can expect, if we get the resumption of violence, in terms of how needs might change? natalie: it changes the economic forecast and the program was
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built on a resumption of growth in 2016. ryan: and, no resumption of violence. natalie: it is a shocking that international partners need to take into account. it is why we need to build a cushion to strongly move forward in building sustainability. there are too many external shocks. ryan: you explain this is if there is no resumption of violence and, if there is, you will come back with more of a haircut? natalie: they need to understand how important it is to accomplish this and enable us to return to growth, given the potential for shock. ryan: you talk about the need for more assistance and it is not buttoned up.
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you have the 5 billion now. you are in the process of getting by. how much more money does the ukraine need? natalie: no magic number. i do not ask for a specific number. the package is enough to stabilize the financial system. nothing can happen until we can stabilize the currency and the banking system. we are looking for investment funds and credits that are investment-related. not fiscal and not monetary. we have priorities and infrastructure. assume we have peace. if we have peace, we will rebuild the disaster we just showed in the occupied territory. when i talked to the partners they require a certain amount of
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financial support. ryan: you know when a marshall plan might happen question mark -- happen? natalie: you have seen more of it than i have. i do not have a good sense of the cost of reconstruction. mark: in terms of stabilizing currency it was as much as 40 to the dollar or 35 to the dollar. it has strengthened to 22 to the dollar. there is a lot of pressure and capital controls keeping it where it is. how much pressure and how confident are you that level is
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sustainable? where could we see a weakening in? where could it go given the constraints and where it is? natalie: the administrative controls implemented were used to eliminate speculation and fraud being used to take capital out of the country in a volatile fashion. we are closer to fundamental value and i would expect that we move down the road of structural reforms that we outlined. we should be able to stay with in the zone and the program shows that we have 22 or 24 over the next years. ryan: you are confident? natalie: i am confident to that we can. ryan: 27% inflation is where we are at.
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does that go up? natalie: no. it goes down. we are suffering from depreciation. it is a necessity to remove oil and gas monopolies. it provides raising prices and eliminating rent seeking behaviors in the marketplace. that will all have an effect and we should come back to single digit's. -- digits. ryan: do you feel the ukraine is , because of the geopolitical conflict playing out on your soil, better positioned to get aid than it would be otherwise? i do not mean to be flip about it. do you think rushing countries -- western countries are happy
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to give you money because they want to show solidarity? natalie: i call it financial support. most of it is credit. there is humanitarian support. the ball is money we are borrowing and we will repay. i do not think taxpayers give away or lend easily and everyone has a certain amount of conditionality with whether or not they want to provide support. from the perspective of today, we deserve the support. we are standing on the front lines and defending the values that the free world has lived by and it has inspired the free world for decades. we stand for freedom of assembly and speech. sovereignty and territorial integrity. this is what the free world was
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built on and the ukrainian people deserve it. ryan: given financial assistance , do you think is the opposite of what i was asking? people getting shortchanged and being too reluctant to provide help? natalie: we are grateful for what we have received and i would hope for more and the ukrainians deserved more. you look at greece and there is no comparison. support is less. ryan: the issue is that greece might exit the euro zone and you did not have the leverage. natalie: not that leverage. we are standing on the border. ryan: coming up now, in terms of returning to the future if we get a resumption of the
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government forecast, it is between 5-7% for a contraction in 2015. we could see the rebels or separatist going and what would that mean for the economy in 2015? natalie: the ukraine will defend itself and the military is more prepared than ever. we have support with military advisers and other countries provide us with training and non-lethal support. we will succeed in holding them back. ryan: the comes at the cost of human lives and resources potentially, not just a bad economic situation there. throughout the country. natalie: the rest of the country
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is operating and open for business. it is attracting human business and many talked today about the recent sale that attracted the 3g. it was coming out and the rest of the country was open for investment. ryan: it is the most popular the are -- most popular beer in the ukraine-propped her. it is a little village and a woman said to me, none of them are popular and i am not selling any. she had just sold chocolate today.
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can you speak to me about the chilling effect? natalie: it is the ukraine going through the 10th quarter of a recession that started in 2009. it is years of reform and it is a level of corruption beyond anything we have ever seen. is $40 billion of debt with the ukrainian economy suffering. the consumer purchasing power is down. ryan: of course they were. there is a ukrainian billionaire
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that we are well aware of with a minority stake in several. the pro-russian separatists in the east went to a state-controlled enterprise and they said you cannot have private and regional armies in the country. what you think? natalie: there is no role for the armies. the government has moved to incorporate them and the process will continue. in terms of what is happening, i have been on the road and my understanding is that the minister will ensure private guards and nothing remains.
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it is first and foremost. ryan: some of the dividends have been blocked. >> involves access to that and it provides system -- fiscal support. in the end, looking at what is privatized. >> you mentioned privatization and he mentioned nationalizing. >> the government has no desire or intention to do that and it disrupts the market. it creates confidence.
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>> we wish you all of the best. that is the finance minister joining us for the good half hour. .
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anna: you are watching "countdown." a look at the aussie dollar outperforming. after that -- it missed estimates and china manufacturing data in the aussie dollar is trading lower. off of its initial lows. it has affected the australian appetite for raw materials one of the biggest trading partners is indeed china. the chinese economy is not performing as expected and
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contracting. just a slight bit of a growth in the manufacturing data. a bit of a disappointment and we are asked acting a further rate cut from the rbs. of course, seeing record low rates of 68% of traders feel like it will be another rate cut going forward up from 60% volatility on monday. they feel it this is overvalued. a little bit of a relief perhaps of the central-bank slightly, but not particularly good reasoning. chinese data. a look at the euro ahead of more manufacturing data coming up today. we have the pmi of france working at 8:00 a.m. and euro just earlier about 0.1% against the dollar. a bit of a caution. france manufacturing data likely
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to show a contraction. we have seen data across the board showing an improvement as we are talking to our economist earlier about how it is starting to see the ecb and perhaps the quantitative easing started to work. and data when it comes to inflation in the united kingdom later today and the united states. where is inflation going after we saw the federal reserve downgraded expectations and the interest rate increasing expectations as well. that is your fx check. now our top stories. hutchison, sealed the deal to buy from telefonica as early as this morning. the deal is worth 10.5 billion pounds and would create uk's largest mobile network. deutsche bank could shrink trading business according to a person familiar with the matter.
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it is revealed three options to boost profitability. rbs has to rewrite plans to show how they could -- in bankruptcy. the so-called living will to american regulators. current plans are not "credible." and they are required -- and they are required by the dodd-frank asked. and british prime minister david cameron who is recap painting for reelection on may 7 ruled outstanding for a third term. london mayor boris johnson are possible successors. deep diving other ukrainian economy that now one with a slight more rosier picture, the irish economy. looking to sell off some assets
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of the two states owned lenders. looking to sell shares. simon harris, wonderful to have you here. thank you for stopping in. i wanted to focus in on what movements you are seeing by the european central bank? they are trying to boost lending into the real economy and injecting bond buying. simon: we are already seeing a benefit of quantitative easing. it is very much welcome. a confidence coming back into the eurozone and availability. it is also important to stay it is one of a number of things that european central bank needs to do. quantitative easing refers to the monetary policy side and is welcome and we are seeing a positive reflection about 0.25% of 10 years.
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we also need to see a common sense application. a continuation of structural reform. while qe is welcome, we are seeing a positive impact across the eurozone. it is one of a number of elements. caroline: international banking and services of how about the regulatory outlook for banking? do you feel that your bank is strong enough and the rules are strobe enough to ensure something we saw in 2008 and 2010 would not happen again? simon: absolutely. some of the deep recessions we have endured that we have encountered over the past years. we have a robust system in place. in relation to international financial that is a promotional tool. you can come and do business in ireland and we are robust. caroline: and that's what you are coming to do?
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outline your new environment and the way your banking system is developed. talked to me about irish banks. belt out for 21 billion euros per finally, first annual profit. -- bailed out for 21 billion euros. simon: we made it a point to recoup every single cent of money of irish taxpayers put into the banks. we would like to see -- either this year or next year. it is very important we get a return for the taxpayer who put significant money into the bank. and private investment into the aib and separation of the bank. the irish government said we're not interested in owning banks into the future. in a way that makes us to the taxpayer. caroline: that will happen before an election?
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simon: this year or next year whenever the environment is right. it is something that will happen. carla then it is interesting goldman sachs is advising you for free print why are they doing it for free? simon -- caroline: it is interesting that goldman sachs is advising you for free. why are they doing it for free? simon: it is not that unusual. we want to get the best financial advice for the tax payers. it is quite a remarkable turnaround after pumping so much money into our banking system. we are seeing the irish bank making a profit and being able to recoup every cent the taxpayer put into the bank. caroline: what is at stake? simon bank -- simon: as yet to be determined.
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caroline: of course not recovering quite at the pace we have seen, is looking to raise more capital after it fell through the strata whether half a billion euros worth. how is that potential in terms of the sheer sell? you are committed to remaining a majority. simon: i believe it is going well. we are informed that the cell in excess of 500 million euros and it will pay back. and is moving in the right direction. trying to give back to what the taxpayer made in returning to the irish banking system. and it needed to raise more capital for the stress test. caroline: to investors like that you are remaining and majority shareholder? simon: investors are realistic and pragmatic. [indiscernible]
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this has to be in order to process. we have seen this may number of countries. the minister of finance has made it clear that the irish government has no intention to be a bank owner. but do not want to be rushed into a possible deal. a lot of money to recoup. we are encouraged that we can have a conversation. caroline: now, trying to almost sell yourself at the moment. something you can go after him brag about. what is your key first line? simon: ireland is the fastest-growing economy in europe and we were last year. the really exciting thing about the economic recovery, not based on one narrow aspect of the irish economy. the really exciting thing about the irish economic recovery story is it is broad-based.
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we are seeing an increase in manufacturing and international financial services. and the recovery on the back of our people. and a small irish economy. caroline: not too big? simon: we have important regulatory structures in place. we are moving on to higher ground. we are looking at the future with confidence. that is why i am prepared to promote our new services strategy. 55 people now 35,000 people across ireland. it was but have another 10,000 people working in the sector. caroline: enjoy your means. thank you very much. simon harris, finance minister
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joining us. of course, you can join in on the conversation and tweet me or tweet simon harris. @carolinehydetv. let us know what you think and tweet us about the ukrainian finance minister. coming up -- american regulators tell rbs and hsbc to rethink their plans for unwinding in case of bankruptcy. deutsche bank is said to be considering shrinking is trading business. a look at the future of international finance, next. ♪
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>> there is quite the serious situation of deterioration because such anymore and anger and a desire to hurt the other end it -- i mean, greece is performance is deteriorating so doing what they are doing, they are hurting themselves. and europe also, if it pushes greece out of the euro would hurt itself. reporter: is it 50/50?
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george soros: it doesn't need to be there. the basis for finding a compromise is there. it would require probably the four months of negotiations and then you don't need to write down the debt now. you can just keep on pushing it back almost indefinitely. and just keeping the primers at the -- let's say between 1.5% and 3%. in the meantime no primary surplus because greece is going down. francine: can i ask about the u.k. elections? it is a tough time for europe in
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the next month. how worried are you about the u.k. elections? george soros: just as -- scotland in the end didn't part ways with britain, i think britain will also find some way to stay in the euro zone. and the threat from russia ought to be useful for britain and europe to stick together. caroline: that was george soros discussing a possible grexit with francine lacqua and at the u.k. election in time for a look at the top stories on bloomberg. the government will not increase the at if they win in may. ed b will use a speech to roll at an increaseall in sales tax.
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central london prices would probably suffer if the u.k. voters vote for david cameron to hold a referendum on the european union membership. the u.k. didn't use more this is the percent of real estate investment and would be lackluster to point in the country according to a survey. and british prime minister david cameron who is campaigning for reelection on may 7 ruled out running for a third election in 2020 and said the chesler george osborne the london mayor boris johnson as potential successors to leave the conservative party. -- lead the conservative party. you look at a live shot of the city of london were equities are said to be 0.1% up. after the break, we'll take a look at what will be driving today's trading. all eyes on pmi data,
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manufacturing coming out of the euro. it kicks of 8:00 a.m. and inflation data out of the united kingdom and united states as well. ♪
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caroline: welcome back. pages be the, our -- hsbc me rbs have been asked to amend their plans if they were in a
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crisis. the record challenges facing the banking sector. our reporter is down there. anna, what will they be focusing on -- regulatory situation? are they worried about the hurdles they have to jump in the united states? anna: thank you. good morning. kicking off on the banks this morning. hsbc and you mention that bank is going to be here this morning appearing on some of the panels. a couple of reminders overnight of how the regulatory environment is finding its feet for financial services since the crisis and the post crisis environment. hsbc rbs, all being told by u.s. regulators to amend their living wills. how they would wind up their businesses if they got in trouble without too much chaos
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for the rest of the sector or the broader economy. these changes to the living wills by the fdic and the fed in the u.s. and more details required. an adequate analysis said the regulators when looking at the plans submitted by the european banks. last year, the u.s. thanks were told -- a banks were told to shape up and carry out similar changes to their similar will. another reminder how it is shaving post crisis is deutsche bank and people familiar, suggesting that business is looking to shrink trading activity especially around interest and some of the services of the hedge fund industry. a lot of moving parts at deutsche bank. one of the banks took care on the universal banking model the spy other banks facing with the increasing regulatory burdens and increasing capital requirements deciding to pare
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back. interesting to see the regulatory environment falling into place and that is topical. here it is 2015 and they will become a how far this to the finishing line. that seems to be a finishing line it will get into a later. on the agenda, u.k. competitiveness and other markets like the offshore trading markets, chinese currency, how much of a driver could it be? africa, india driving. and macroeconomics on the agenda and a low interest rate environment. caroline? caroline: quite a lineup of people taking to the stage. who will you be sitting down and being able to grill through the morning? anna: we are going to talk to the labor here and a professor. as about the macro environment. he will be moderating a conversation with the fed.
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and the london stock exchange, the ceo. he has transformed the business. and city u.k. will be talking to us as well. caroline: fantastic lineup. anna edwards live for us. more european review now and mario draghi will be getting the latest read on the eurozone recovery later this morning. pmi figures from france germany , and then the eurozone. will they support a ecb's president optimism? david joins us for more. pmi numbers, contractual, looking rosy, isn't it? david: the latest number supports the upward revision to the forecast is last meeting. an acceleration of growth from the expansion we found of the last quarter.
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caroline: i keep hearing the word "complacent" as people are calling get and george soros feeling a grexit. david bank -- david: ignored a grexit and they do not think it will happen by they are not to about the consequences. it supports the view of the german government that it would be a catastrophe for the monetary union in greece were to leave. caroline: many people talking about perhaps the ecb does it need to do as much quantitative easing as they were planning? is that the case? david powell: the growth we have seen has not been sufficient to really stoke inflation in your. growth is still below the precrisis peak. we have seen in the outpost flows. housing prices are low and mario
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draghi tried to emphasize that in the last meeting with ecb they increase optimism is based on quantitative easing. caroline: thank you. stay for "on the move." ♪
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jonathan: good morning and welcome to "on the move." i am jonathan ferro. eurozone equity markets stronger euro, weaker equity markets session. that was the theme of the day yesterday. another fresh record high on the ftse 100. today's session as straight to your morning brief. china slow down. the gauge of manufacturing missing estimates dropping to an 11 month low. the rally in equities come to a standstill. global low inflation. expected to drop to 0.1%. the least since it began in
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1989. dropping below 0% later this year. and downsizing. deutsche bank second to be looking at shrinking is trading business as it reviews options to boost profitability. and of course, we will bring you much more of the exclusive interview with billionaire george soros later. he said there's a 50% chance of a greek exiting the euro. the berlin showdown. someday heat and negotiations between germany and greece. nothing substantial from the other side. futures lower across much of europe. dax up by another 50.3 of a lot of data through the morning. i will break it down. the morning open with manus cranny. manus: rising to 7%. with the making game after game and the stock analysts has been trumped -- we have been making gain after


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