Welcome back.

You’re watching “the pulse.” business leaders are gathering each month to debate key issues and financial markets.

Asset managers will be to challenge the ubs house view.

He is black rocks investment strategist.

Good morning.

A lot of things are going on at the moment.

A lot of geopolitical tensions that are very hard to map out an understand.

Banks are hard to understand.

Let’s look at what you are taking to that meeting and the relevant things we should be thinking about right now.

How concerned should i be about the next six months in europe?

I’ve got deals on the floor.

The curve is flattening down.

I get a central bank that is looking incredibly hemmed in.

I have politicians that don’t seem to have a grip on what to do next.

This is a great cocktail.

Expectations are low in terms of european growth.

The german numbers set that pattern.

Over the next six months , you may need a microscope to do it, we will see marginally better economic trends in europe area we know that the housing firm in france picked up in the last month or two.

Temporary employment numbers are up in the zone.

Intermediate goods in belgium tend to be a lead factor.

They’ve shown a bit of a pickup.

This is not victory.

But it is not a continuing defeat.

We’ve priced in europe.

We understand europe.

Is that right?

I have said that things will improve a little bit.

The currency , the impact on the economy is minimal.

We are focusing on the dollar.

The euro and yen hardly changed.

Secondly, it is not a terribly price sensitive vein as far as currency goes.

129 is better than 139. in frankfurt, they are cheering.

They are worried about every tick up.

It is a market event.

How should i worry about your?

This is a bit of an old question.

We understand the dynamics of what is going on.

We can see that there is a little bit of market reaction and it will be interesting to see ultimately if yields get dragged even lower.

I am wondering how i should think about it.

This is a very long haul.

With the demographics and the labor situation, all of that kind of stuff.

It is going to take a long time.

Spain, we were writing off a couple of years ago, has done a lot of good things.

The economy is not too bad.

It’s the lack of action to address structural issues that is the slow strangulation that we are concerned about.

In that category i would put germany’s fiscal status.

They spend a lot of money over the last 25 years in the east . the infrastructure in the west is beginning to wear a little bit.

This is something that if the — does that have a ripple effect?

It depends on how big it is.

The objection that merkel had to bailing out the rest of europe was understandable.

I’m not sure that i take on more fiscal risk.

You can borrow and a tenure basis at less than 1%. this is where you should be leveraging up to do that.

I don’t understand the political barrier to that.

Where — which area, if you look around the world, where is the area when i look at the distribution curve of views, where are we most undecided about how outcomes develop?

People are always undecided about china.

Will it collapsed?

Will it not collapse?

It is taking a long time to collapse.

It’s got massive reserves.

I don’t imagine that they are thinking about it without making an intelligent assessment.

There demand for run materials will continue to grow.

That economy — the model where it over borrowed and under delivered is still much in place.

It is a slow slow down rather than a dramatic one.

That is where it exists.

What about deficits?

Are we concerned as some seem to be about areas of over leverage?

Some of the credit guys are nervous.

The tires strength in the high-yield market has everything to do with less attractive stocks that have come before.

In september, there was a big calendar that was a bit lumpy for supply.

I think that is a small cloud.

You know very well that it takes two to three years for this to go bad.

If the default rate starts to deteriorate on september in 2017, it is a long way out.

It is more of a valuation issue.

They are starting to look moderately attractive again in a world where low growth equals low terminal bond yields.

Low terminal bond deals mean there is still a search for yield.

Yields of six or above, it is beginning to be attractive again on a price point.

I am looking for bank for buck?

India?

Great idea.

It is not going to be a straight line.

It is all about reform.

We call it under new management.

They are under pressure to deliver.

We have had a lot of promise.

We will see in the winter session a number of reform measures coming through.

Inflation seems to be getting under control.

They can contemplate a rate cut in the first quarter of next year.

This is a cyclical pickup in business.

A lot was held back by the election.

The evaluation is not that high.

Earl — earnings growth is 20%. there are challenges.

They have to recapture the public banking sector.

There are fundamental reforms to get through.

It won’t all get done.

As long as a big chunk of it gets done, it is a win.

It’s now the 10th largest stock market in the world.

The wind is behind it.

They’re going to be bumps along the way.

Those are opportunities.

Thank you very much indeed for your time.

Still to come, we are going to