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tv   The Pulse  Bloomberg  April 4, 2016 4:00am-5:01am EDT

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cook's will berlin blink on debt relief for greece? anothereading for summer of crisis? ? a shortl rally over position in oil increase. saudi arabia backs away. who is afraid of a brexit? about 75% of britons cfos are. we will talk with the referendum means for the city of london. ♪
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9:00 in london. where live. guy johnson. let's look at the markets. oil front and center. unsurprising given the story that bloomberg has received. oil moving lower. the saudi is only interested in physics apply if the iranians are on board. moving back below that 114 level. the telco sector being battered. that doesn't do it justice. i will say the french stocks in a few minutes here and the stoxx 600 flat this morning. stocks are going to be focused later on this week. the markets are just kind of waking up and taking action. . here's the bloomberg first word news with near chance. nejra: saudi arabia is -- is having its biggest shakeup since the founding of the kingdom. deputy crown went -- crown
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prince said the measures include more taxes and accelerated subsidy cuts would raise an extra $100 billion a year by 2020. that as the country and to spread the burden of lower crude oil prices among its population. a late -- linked files from a panama shall firm shows criminals and celebrities have used banks to hide their finances. that is according to a series of reports. one report says at least $2 billion in transactions involved people and companies allegedly tied to russian president vladimir putin. brussels airport is accelerating activity today after starting services yesterday. flights resumed to new york city, africa and the six major european cities in the wake of last month's deadly terror attacks. the heightened security will restrict plant -- outbound flights to 800 passengers per
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hour. global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . guy: international monetary fund, christine lagarde has said it is a good distance away from agreeing additional loans for greece. concerned over imf officials handling negotiations. we are joined by the silly as -- weminus just basileus have intrigue, the rustic we have domestic politics, global politics weird what are the mechanics we are seeing? politics. what are the mechanics of what we are seeing? global politics. >> they were close to a staff level agreement.
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now saying we are far away from a deal. -- the fiscal targets which are set forth from the bailout. tsipras the ethical going once more. it has to do with greece's polling votes.es you have the main opposition party up by a percentage points. that has a lot to do have -- that has a lot to do now with how see brisk indicates. -- how tsipras communicates. he is not going to call another if he hasn'tcause learned anything, -- guy: the
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imf is being vigilant with its strategy thus far. we got two different stores surrounding greece. it is interesting to see how they are overlapping, the migration story. it is now underway in the islands. how do these two stories interact? how are they going? how does it feed back into the financial crisis? you've had more than one billion immigrants coming over to the greek islands over the past 15 months. it is a huge number. sending the regular immigrants back to turkey, this is a huge task. at the moment we have not had any balance -- any violent eruptions on a very rough scale. greek government official has said that is something that we
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will be expecting. we have to see how the greek authorities will deal with that. the islamic crises, it is not the easiest task that greece has to face, given the fact that maybe some people say that tsipras will use that to get some sort of debt relief. it is unclear at the moment. i would like to see how they go through this week. then we can have a more clear picture on how this story will go down in the future. guy: thank you very much indeed. updating us out of athens about two stories affecting us and greece. chris wyllie, good morning to you. is the impact of another greek crisis going to be significant lee less desk significantly less -- significantly less. storyopher: the greek
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gradually losing its power. whole said that, this kicking the can down the road which has gone on since 2010 surely must be reaching some sort of endgame. particularly at this point about the imf which is already been on the side saying they are a reluctant to spend in this program and they would like to see that relief. just see debt relief. -- see debt relief. this could be that moment. maybe this is this moment where we cannot dodge that big question any longer and with the overlay of the immigration policy of greece, it puts a lot of pressure back on the germans to say is this the moment where they come out and say we are going to have some debt relief? guy: if you were to get greek would the imf be
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putting of the hand is saying we want a bit of that as well? chris: that is what they have been wanting to avoid all along. greece is a special case. guy: it is not a private sector. chris: debt has already been nationalized. the numbers speak for themselves. there is no other case like greece in terms of sheer unsustainability of the debt. guy: the second question, you talk about the ability to shock. we have a summary which the eu is going to be in focus, one of which is what is happening with greece, its membership in the euro. we have the issue of the brexit. you put those two stories together in the middle of the summer, and you are looking at a difficult combination for the market to manage. chris: absolutely. they would not want any key decisions being made before a u.k. referendum.
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i think that is a huge risk factor around the british referendum is the news flare and the few weeks running up to the vote -- in the few weeks running up to the vote. --get it passed that point it could have a significant -- it looks as if the result is going to be -- they have been pretty inaccurate, but it is all that we've got to go on. it is a bit closer. guy: you just go i don't want any of this. i am a u.s. investor, i'm going to go i don't want any of this. chris: the risk premium on europe has gone up. the big issue for europe at the moment, the big issue is currency. the currency has gone absolutely the wrong way.
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113 -- 1.13 this morning. deteriorating, but we've got this major economic problem which is euro is back at the levels where at the past -- euro trade weighted early 2013. the ecb trying to jawbone it lower. talking about qe to get it down. they just got out of this got out their big bazooka -- got out their big zynga. -- their big bazooka. it doesn't look great for your. guy: you're not a fan of negative rates. we will talk about that. stay with the pulse as well. coming up, kuroda's monetary program. as the end closes off, it looks like japan is looking for a
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celebration relating back to the euro story. we're going to turn the spotlight on stimulus in spring. stay for the emerging markets, goldman sachs says the agency has maybe picked out. -- has peaked out. saudi arabia is $100 billion flat. .- $100 billion plan that is what we are talking about surrounding saudi arabia. a lot of politics. we will talk about that. ftse 100 up. we will be back next. ♪
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guy: 14 minutes past the hour. --temporary nationalization stress that he does not see nationalization as the answer and is competent that he can find a buyer for the business -- is confident that he can find a buyer for the business. >> i don't think nationalization is the solution. goodo think it would not to rule anything out. i do feel for lots of reasons after talking to many others involved that there will be enough time to find the one buyer working and be able to take it forward.
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guy: let's talk to a potential buyer for half of the business. signs a group that joins us from our paris bureau. thank you for joining us. have you talked to the british government about these assets? yes, we have had some contact and continued the dialogue. guy: what is the nature of that conversation? everybodytuation took by surprise. it is the beginning of a dialogue did how the dialogue progresses will become clear. guy: what is the tone you're getting from london guy: -- london? what kind of compromise are they prepared to make? committedernment is to finding a solution to this problem. what that means is not clear. in, you are interested
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which bit of the business are you interested in? give us the circumstances because you're not going to give me the details of how you could be interested? >> let me explain the difference between the rest. slabs.urnaces make steel if enrolled in the product which is rolled into downstream product. if we divide the problem into two, we talk about the mills which roles it into product and all of the downstream businesses which is galvanizing, color coding. all of those businesses are more easy to solve because you can import slabs from countries which have cheaper slabs. you can make all of the steel production.
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all the steel product which is made big -- made, and even more. business is the solvable. it has been done before. we have done it in the midlands. that is already a proven strategy that it can be done under the right management and with the right model. what is more difficult is the blast furnaces which is the liquid. this is quite simple. it is not difficult to understand if you apply your mind. -- that was not the case. these plans were set up on domestic raw material. we import iron ore from brazil or australia, africa and so on. we import three tons per year. when we compete against
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producers, we are not going to be competitive. this is much more of a challenge to sustain. there are two solutions to this problem. one that we import slabs from suppliers from brazil, russia. or there's a homegrown solution which is tougher. which is we use the mystically available slabs. -- we use domestically available slabs. instead of making steel from iron or we could make melting local scrap and making a long-term sustainable business model. it is tougher which means we have to close down furnaces. it will be a transition that will take several years. erect newt -- and furnaces. it would be tougher but it is a sustainable solution. guy: would you be interested in
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the second part? it seems like you have experience in the first part of those two problems. it is the second part that people are questioning. you just laid out very neatly with that problem is. isn't that a part of the business that you would be --eresting in acquiring interested in acquiring? and under what terms? >> that is what we need to look at. there is a model that we transition overtime. it will sustain all jobs. it will mean large retraining but it will restate -- it will sustain all jobs. .t is a bigger undertaking it is something we need to discuss with the government and stakeholders and work out what the plan would be. when he talks about a temporary nationalization, do to cover that process that you have to work toward to getting the business, train the people, do you think
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-- how long would that take? guest: i don't think it is necessary. he is a responsible seller. whoever else tries to do this, i think it can be carved out within the time scale. i don't think it is necessary for the government to step in. maybe the government can step in to negotiate a deal as the scottish government did for us. i don't see any need for the government to have a period of time. if there was enough time. guy: it is a duration. it is about getting the deal done rather than the industrial process? guest: if it can be done, it can be done. this is a week old. it needs a lot of work.
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it is a massive undertaking. when -- that is something that needs a lot of work. it is something that needs to be worked out. it can be done. if there is going to be deal, there is time. if it isn't, there isn't. guy: one final question, how much would it cost to make that transition? what kind of cost of capital do you think any buyer would have to work with? do you think that scenario that the government could work with a potential buyer to lower the cost of capital to make that happen? guest: how much it will cost is something to be looked at it it depends at what speed you do it. whether you do it one at a time or both together. it needs proper analysis. outcost has to be worked
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and yes the potential the government could play a role in assisting with that. guy: great to have you on the program this morning. we will look forward to hearing from you again. japan's monitor policy turns three. is it working? we have charts that maybe call that into question. next. ♪
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guy: 24 minutes past the hour here it is been three years since every ito -- since kuroda announced his plan for growth. yen had one of its best quarters since 2009. overs building questions the limits of monetary policy. you definitely see limits. negative rates, negative. >> we discovered that in the last couple of months because the two central banks and negative rates, first japan and europe, both immediately so a rebellion from markets and driving up the currencies rather than going down. people have figured out that negative rates will kill the banking sector which is the mechanism for the economy here that is the reason white rates have reached something close to
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their endpoint. than being seen as the next go to policy, people see the policy -- people see the hurdle. mario draghi told us. guy: wasn't the timing bad? chris call -- chris: there is both going on. there is a wider syndrome of a risk-off environment. i don't think anyone has been convinced that the global growth efficiency has been solved. assets why we are seeing still quite buoyant. that is the japanese yen, the euro, there is a risk off currency. we are seeing other bond yields still extremely low. it is all a part of that bigger context. when we look to the future, then
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probably what mario draghi is hoping his we will get those rate rises from the fed to take the pressure off the euro. for chris wyllie thank you joining us this morning. up next,. ♪
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guy: welcome back, you are watching the pulse live from bloomberg european headquarters. i am guy johnson. let's get a bloomberg fire -- speaking on the bbc's andrew marsh show, they do not see naturalization as the answer. >> i do not think toionalization is a solution
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this. even for a few weeks or a few months. i also think it will not be prudent to roll things out. ofo feel that after a lot reasons that there will be working with the government and being able to take it forward. nehra: orange has abandoned its attempt to buy the phone business. that would have eased competition and one of europe's toughest market. -- bleak -- shares in both companies are trading lower this morning. goldman sachs says it is time to sell asian currencies after that monthly rally -- the best monthly rally and more than seven years. currencies will resume their declined with further easing in china and japan.
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that is your bloomberg business flash. guy: thank you very much indeed. companies saytish brexit is the biggest risk their businesses face. the 120 cfos polled say it would be favorable for the u.k. to remain in the european union. delight chief economist told bloomberg a short while ago that uncertainty is there a key concern. offrom the bar assumption having a referendum and renegotiating and having another referendum joining wto. you are talking about a period of two years where there would be a lot of uncertainty in the nature of britain's relationship with the world. guy: let's talk about how david thomas is here.business
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good morning, david. what are your members telling you. david: it has been very interesting because we have that two surveys of our members, one directly and we had over 1000 responses from individual businesses, and the second one is being done through our members with the chamber of commerce around europe. they have all pretty much unanimously stated they all recognize the eu is a work in progress and therefore there still has to be quite a bit of work done to improve the situation, which is actually a reinforcement of our evolving europe survey that we did about four months ago. muchhey also showed very that despite that, it would be such a major negative impact on european business with brexit that they very much hope that the vote will go for actually
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staying in the eu. guy: let me just delve into the detail a little bit more. when they say there will be such a negative impact, that negative impact outweighs what? is it a europe as it is now or a formed europe? most businesses seem to talk about that but it is kind of, currencyaling with a eu, a reformed -- a formed eu? david: one of the big things they were bringing out in the survey is they do not believe the eu what reform much if the u.k. left. their plea really is for the u.k. to stay in europe to actually force reform because they see the u.k. as the major catalyst for reform in the way that the eu works. guy: that is a slightly different spin on what we are talking about. you're not saying they're worried about written departing, they are worried about what will be left behind. david: they also believe that
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britain inside the eu will take you much further and develop the eu to a much higher level, and make it a much more competitive .lock within the global economy and probably a more competitive block than the two powers working separately. of: what about the impact dealing less with reform and what would happen in or out, what about the actual impact of britain leaving? david: they see it as a direct negative impact on their business. we did not ask them to quantify it. i think it is very difficult to put statistics on it but they very much believe there is going to be a significant negative impact on their business going forward. it ishe 7.1% that say better for the u.k. to withdraw from the eu, what is their rationale? able to am not really
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say that, one, because we did not ask them for their rationale. we just wanted to pull their members and garner their opinions, and present that back to us. to be frank, i have not got that answer. i did not ask them either. guy: i am just curious to know what the argument on the flipside is. just more broadly, when you talk to your members, when you get an idea of what is going on, in a scale of the problems that they face right now, how does this stack up? low global growth, problems with manufacturing around the world, issues with the chinese economy. their i think one of priority problems, number one or in the first division, and they are having to plan and make contingency plans
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one way or another. guy: do you think there is a lot of contingency plan happening? .avid: i think it is beginning i do not think there is a very large amount being done. i think everyone is sitting there hoping that it is not going to be required. they in more recent times are going to do more serious work. guy: we will wrap it up there. in other central bank news, reader pratt is giving a speech in rome. he says the persistent low inflation would deeply damaged the economy. back to the brexit, questions have been raised about the assassinate of the policy -- the necessity of the policy reform. i am not sure i understand that. to ensure the price ability if needed. we will talk about central banks a bit more.
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morell talk a little bit about what is happening in the telco sector, we will check on the markets will make it back. ♪ ♪
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guy: 40 pass the hour, all come back. you are watching the pulse. nehra: saudi arabia is planning its biggest economic shakeup since the founding of the kingdom. outlining his vision in an
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exclusive interview, deputy crown prince said the measures including more taxes and accelerated subsidy cuts would raise at least and asked her $100 billion a year by 2020. they aim to spread the burden of lower crude oil rices among its population. brussels airport is accelerating activity today after restarting circuses yesterday. flights resume to new york city, africa, and at least six major european cities in the wake of last month's deadly attack. will restricta outbound flights to about 800 passengers and hour, about 20% of its usual capacity. leaked files from a animal law firm shall that politicians, criminals -- a panama law firm show that politicians, criminals, and celebrities -- one report says at least $2 billion in transactions involved
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people in companies allegedly tied to russian president vladimir putin. eb ceo of russian banks the strongly defended. just strongly defended mr. putin. >> the fact that his daughter at theebrating a wedding ski resort, which is actually not expensive, and he has weddings for dozens of people, i do not how this would relate. global news 24 hours a day powered by our 150 journalists. you can find more on the bloomberg. guy: stocks in europe slightly higher. they have firmed a bit since the get go. dark barton will check it out. mark: they were coming off a three-week losing stretch.
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check out the bottom of your chart, the bottom five are all phone stocks. orange abandoning its attempt to today, phone business we the talks broke down. although shares getting absolutely hammered today. notmsci emerging markets is getting higher, it is coming off its best month ends may 2000. march. 13% in the rebounded today from friday's 1.3% drop. brace yourself because the rally in emerging-market assets could hit a wall, according to bears including barclays and ubs. contracting manufacturing in a developing economy, which leads
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me to asian currencies, because it is time to sell asian currencies after their best monthly rally in almost seven years. this is the bloomberg jpmorgan asia dollar index over the last six months. goldman sachs says you have to get out of asian current. they are going to resume declines in japan is likely to push the yuan and yen to their leak is -- weakest levels since at least 2008. developing nation exchange rates completed their strongest month since at least 1999. this is a fascinating chart showing how speculators are boosting their barest -- bearish bets on wti crude oil. hedge funds have boosted bearish wages for the first time in eight weeks, showing that money managers are losing faith in the recent rally. bearish bets rising by almost to200 contracts or 70%
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75,598 position, short positions before last week were actually at the nine-month low. fell by 7% after rising for six weeks. the big news in the last 24 hours is our interview with the saudi arabia and deputy crown prince. he says that his company will freeze its output only if the iran and other major -- if and other major producers do as well. oil is down. guy: brings us nicely to what is happening to oil prices. as you say, following this about two things. butdata that mark mentioned that is kind of feeding on the back as well of what is happening in the buildup to the dough our meeting. arabia, saying it will
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effectively freeze their output iran follow suit -- if iran follows suit. elliot gotkine joins us. it? is all a preview isn't that meeting on april 17, it was a tough enough job getting some of these -- to agree on when and where to actually hold this meeting. now they have agreed to have this meeting and they need to talk turkey. the deal on the table is to freeze output at their current levels it a bit to try to reduce dust a bid to try to -- in a bid to try to let the oil prices rise. saudi arabia and its interview reiterating saying what they have been saying all along, but coming from the mouth of the deputy crown prince, carrying more weight that saudi arabia
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simply will not freeze their oil output in order to see somebody else come on and still the saudi's market share. the other thing he said, another reason they refuse to freeze output, they may even increase output if iran increases output. the saudi's could increase output further, putting more pressure on their prices. also interesting is we have got this conversation surrounding saudi arabia and maybe it goes to the bond market. maybe later on this year talk about restructuring the economy. saudi preparing for a very long term, drawnout story and maybe this is the beginning of that. mark: i think that is right. i think saudi arabia has made no bones about it and was very clear in the interview that it
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is looking to a world or to a time where of course oil will no longer account for some 90% of government revenues. , accordinge saudis to the minister, saying, we do not need the money right now, but they are looking at perhaps holding their first ever international bond auction. what bloomberg understands is that it would be about $10 billion and would have a two to three-year debt program. they do not need the money right now but they want to go to the market, yet some kind of track record in the market so when they do need the money they will have less trouble actually raising it. this is part of the overhaul of the saudi economy to try to wean themselves a little bit off oil and the fluctuation in the international oil price, and really this talk of the first ever international debt sell of getting money and drying down
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from their foreign reserves would be one piece of this puzzle that they are looking to put into place, including further reductions on subsidies and getting some more revenue from taxation. guy: thank you very much, elliott got to. up next, banking on russia. our exclusive interview. ♪
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guy: earlier this morning we spoke exclusively to the ceo of russians set -- russia's second-biggest lender and the updated us on the rushes -- on the russia government passed plan to privatize the bank. >> third two main reasons. first, over the last couple of years, particularly due to the wesis and sanctions considered more than 50% of the russian economy belongs to the state. it is important for the government to show that there still attempting to decrease the role of the government and the price will play a more important role in the russian economy. secondly, the russian budget seats in cash and the government is trying to raise some money for the budget, which is losing because of the low oil prices. i agree with you the situation is quite difficult. midsize royal question
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,ome -- russian oil company definitely the domestic demand for this kind of us. i think the government would not have a big difficult in selling this asset. as far as companies are concerned, i think that is a more difficult question because minority states shall the government is planning to sell and both on the sanctions. guy: who would be an obvious higher? >> i think we are more focused now on domestic consumers like pension funds like private companies. the government is now in the process of selecting agents for this job. the results should be announced today or tomorrow. then i think those banks which receive this mandate will have to do this and of course the
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bank management will be supporting this. but at the moment we are at the preliminary stage of this process so it is very hard to say how and when. even this year or next year. so it is too early to say, but sanctions as well as the general economics of just situation do not help much -- economic situation does not help much. andre carson sitting to me a little bit earlier on this morning. let's check in on the telco sector. this orange deal has fallen apart. what i love this morning is that orange is actually the least biggest loser from this, despite the one that was effectively buying this business to try to get some benefit. saying orange is to be the least impacted as it benefit.e the least
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. we are not going to see consolidating. it is actually orange that ironically seems to come out of this best. a strange day in the telco sector. let's talk about what else is moving the market this morning. emerging market has the best month since 2009. know that goldman sachs is saying it is time to sell asian currencies. what about stocks? if we look at emerging markets stocks, they are rebounding today but the gains in march for em stocks boosted the combined value of the 31 biggest emerging markets by $1.8 trillion. that was the largest increase in market cap since at least 2007, and the biggest increases in value were seen in china and india.
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just before the month closed, the msci breached two major technical barriers. 200 day moving average, which i have tracked in green. the white line is the msci emerging market index, but also the fibonacci level. it indicates level of support or resistance. there are a number of key ratios, one of which is 38.2%. this benchmarks are a 38.2% recovery from this year's low to last year's high. it stayed above the 200 day moving average and has dropped .ack to low that fibonacci line they will have to break through again to get to the next target which is the one year average. does the technical science, a big question is how far does this rally have to go? -- a commentmment from peter fray. he says that central banks cannot be passive when their
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mandates are under threat. he is worried about low inflation d angry. surveillance is next. tom keene, caroline hyde up next. ♪
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tom: april in the second quarter, oil goes in search of a bit. just a bid. madame lagarde suggests it is nonsense and greece, they are incensed over speculation. iceland into russia, as a tax haven, it is over. i am tom keene in new york. out, carolinea is hyde is in london.

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