Anna good morning everybody this is bloomberg daybreak europe. Lets get to the numbers from Credit Suisse, this was powerhouse giving us their numbers the swiss powerhouse giving us their numbers. , 12. 8 . Uarter they say that is a strong start to 2018 market dependent activity. Fullyear Dividend Per Share is 0. 25 and swiss franc in swiss franc. Also veryn trading much in focus, that is still 30 of this business, even though they have pivoted towards what management. Of this business, even though they have Wealth Management. They had to liquidate the products related to vix. Getting down the profit and loss 2. 14 2. 1 3ss 2. 13 billion, which looks to be smaller than expected. We will speak to the Ceo Tidjane Thiam later. We will bring that to you in the 6 30 portion of our program. Agricole got credit bucking the trading trend. That is an unexpected increase in their trading revenue. That has defined the trend of the overall industry. 32 ome comes in up 33 . Provisions fall by 15 . The french Retail Business has been resilient excuse me, a 4 drop in low rates. It is that unexpected turnaround , in termsding revenue of trying to balance that bank with Wealth Management. Here we are with credit agricole. 1 revenue gain in the trading business in the Fourth Quarter. The markets expected this to drop between 4 20 . Revenue increased 5 versus when year earlier. Ying the overall trend from the french bank and institution. Certainly a nice delivery of numbers for the french make. Net income is up 33 , bucking the trading trend. Anna weve heard tentatively some of things they might do, so it is interesting getting a line from them. That is an interesting Silver Lining to any bank that suffered at the hands of the move downward negative markets. Specialty Chemicals Business the swiss specialty is one tobusiness watch at the start of trade. Lets tell you whats been going on in markets. Monthgot the yen at a 15 high. How much will the japanese government tolerate this . If that is the right word, but this is another move downward for the dollar and upward for that yen. The chief secretary said it is important to have stable currency. Msci asiapacific is rather divided around the subject of the yen. The japanese equity markets trading lower today. The rest of the asian market helping to give a little momentum to the asian market. Manus we will hear from Tidjane Thiam very shortly. The global economy, how its doing, anna recapped the numbers. What is going on with his cash flow, with his debt . Weve also got the ceo of thyssenkrupp, guido kerkhoff. Again,ainly posted bucking the trend. Well have that conversation and we will see what is happening there on that site of the business that side of the business. Juliette saly gives us the first word news. Juliette Jerome Powell has suggested the central bank will push ahead with rate rises. Firstmments were pals since severe work powel first since severe volatility. The white house is considering cleveland fed president as a potential vice chair of the central bank. The Trump Administration has been searching for your placement for Stanley Fischer for a replacement for Stanley Fischer, who stepped down in october. U. S. Rates would be problematic, according to Goldman Sachs ceo lloyd blankfein. He spoke to bloomberg at the Small Businesses some some its summit. Higherhat is driving Interest Rates is a better economy, there is good and bad. Probably in the nearterm, the shock of higher Interest Rates will be an immediate negative. The longterm success of the economy will be just that, longterm success. You have to take both of those things together. Juliette japans economy expanded for the eighth quarter in a row, but growth fell to the slowest pace in2 2 years. Israeli police have recommended charging Prime Minister netanyahu with bribery. They alleged that he received many gifts from wealthy friends, including a hollywood producer and an australian businessman. Netanyahu denies any wrongdoing and claims he is the victim of a leftwing witchhunt. If the charges are filed it would be the first for a sitting israeli Prime Minister. Boris johnson kicks off a series k. Speeches by u. Cabinet members today. Johnson is also expected to comment on life outside of the eus Single Market and customs union, saying that the economic benefits of both are overrated. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Players have been gaining momentum and consumer stocks big dont just been dumped. Being some upside coming to her once again from hong kong and Chinese Markets today. Australias markets closed lower today. In terms of stocks that we have been watching in detail, we saw the surprise overnight. It has weighed heavily on a lot of companies. The head of corporate Analysis Firm has told bloomberg that the growth of lottes business could be stagnant. We have seen the strength of the yen weigh on yamaha motors. We could see future pain and stock ink in that the future. Anna thank you. A gradual pace of Interest Rate increases still remains the correct cause. Said extrasident growth from those over this year and next year will. This is what she had to say. Manus meanwhile, Jerome Powell has said we are in the process of gradually normalizing. They will remain alert to any of the developing risks to Financial Stability. How do you read that statement . Simon french is the chief economist at Panmure Gordon. He joins us now. What did you make of Jerome Powells rhetoric yesterday . Phraseology ofe setting this up, he is vigilant, watching risks. You read it again and maybe think hes sticking to the script. He is sticking to the script. I dont think that the fed wants to surprise markets with Monetary Policy unless it really has to come this year. Has to this year. Years ago they promised three rate hikes and only managed to deliver one. Last year they pushed through with three. They want to be in that mode so that markets can believe the path set up by the fed. I think in Monetary Policy was very much a status quo, continuation from janet yellen. The efficiency of financial breadthon is a great of movement. Anna expand on that a little bit. Think, when i say under pressure from the white house, there is a path of regulatory toolinglink down going on. Certainly it is that direction of travel. The rest of the u. S. Economy is tried to generate a comparison comparative advantage. Chart we put together a from one of our clients. This is the output gap in the United States of america. If you look at what she said on the 19th of january, she is talking about three hikes this year and next year, getting us back to 3 . That reverses the major cuts that we saw in 2007 and 2008. The output gap is now. 5 . This is about getting to normalization. Know, belligerently, i think. She could possibly be the next deputy chair is what i am hearing as well. Simon she could and certainly lend out a pathway towards those longterm Interest Rates. The fed believes the estimates. It is helpful for markets. The challenge that i would have with an output gap chart is that we very rarely know in real time when an output gap looks like. This is such a huge topic for all g7 economies are now. Right now. We dont know where to employment is where full employment is. Justify [indiscernible] simon correct. Participation rate in the u. S. Has been falling. Will it be responsive to a pickup on the demand side . That is a great uncertainty for the fed and all commentators. I dont think you can cast too much uncertainty to estimates too much certainty to estimates on the output gap. I read that data releases have symbolism to it. I have a chart that asked the question about the risk of overheating in the United States economy. Mrs. Small Business Owners eager to expand this is small Business Owners a good to expand eager to expand. Were back to regulation, are arent we . The Trump Administration is poking on tax and regulation focusing on tax and relation, and that is what Small Businesses want to see. Simon four inflation dynamics, what is really important is whether that optimism is passed through in terms of pay settlements. Pay is key for the inflationary story. There remains structural concerns within the Federal Reserve that there is a disconnect between eight tight labor market and inflation but tight labor market a tight labor market and inflation busting. Simon, thank you very much. Simon french from Panmure Gordon stays with us. The companys cfo joins us for the first interview of the day. This is bloomberg. It has just gone 3 20 in tokyo. Date three of the rally, and we have broken some critical levels. Yen is strengthening. Why . Juliette saly has your business flash. Toshiba is bringing in an outsider to lead the alec tronics maker after accounting scandals Electronics Maker after accounting scandals. The current ceo, who will now become the cfo. They had an operating loss of ¥182 billion in the period. Anis paying less for premier league games. It is the first time the price has declined, signaling a more rational approach by forecasters after years of rampant inflation. That is your Bloomberg Business flash. Anna lets talk more about japan. Japans economy expanding for an a quarter in a row, the longest tch and eight quarterg for an eight in a row, the longest stretch since. Joining us now is bloombergs james mayger. There are troubling signs in the gdp. Tell us the negative. James as you said, this is the best growth that japan has had since 1989. What we have seen is, like in other countries come consumption countries, private consumption is just not very strong. Really, notelow enough to pull the economy forward. One of the factors there is just that peoples wages are not as much as theng government wants and as much as the bank of japan has been pushing for. When wages are not rising people are not free to spend like the government wants. It was not a particularly bright spot. You saw weakening business investment. The export performance of japans companies did not do much to pull gdp growth up in the last quarter. Cursedovely headline, by the yen. When can we expect proper verbal intervention . Movement,re is some some comments from the government yesterday about watching micromovements for speculation, which is on the low end of their verbal intervention in the fx market. I dont expect the boj to be coming anytime soon. Apart from their formal press conferences, they dont comments on the day today market movement. It is going to be concern for them, just because it undercuts the inflation there trying to generate in the economy. As again gets stronger as the yen gets stronger, imports become cheaper. If the yen continues to strengthen it is a big concern for the government and bank of japan. Manus james, thank you very much. Simon french from Panmure Gordon is here with us. Since 1989,growth but private consumption and Capital Investment are not too bad. I know james points out the negative. It is hardly what you call it collaboratives moment call it a calamitous moment. Simon what is quite interesting is that as we head into the crucial wage negotiating round later, is the degree to which corporate earnings in japan, which has been incredible strong, 39 ahead of expectations, whether those profits start to feed through into pay settlements. It will hinge on the private consumption story and the pastor from corporate earnings through consumption story. Anna stocks have been recovering, but investors still getting into yen. When does the boj, when does the government may be start to start to this maybe object to this . Simon i think governor kurodas confirmation for another term would be a helpful intervention. I think one of the things that you need to look at is the degree to which this is just the flip side to the u. S. Dollar weakness story. And the degree to which the boj is not fully in control of these dynamics and will want to potentially topdown the yen talk down the yen. Quantitive easing is running at about ¥42 trillion at the moment. Anna up next we will talk about pricing groups profits about tyssenkrupp. Back. Welcome live shot of singapore there. You got stocks in singapore managing to rally this morning, despite the fact that you have got yen heading the highest hitting the2015 highest level since 2015. Danone will sell about ¥195 billion worth of shares in yak ult. Anna lets get a market check. The key Economic Data from asia to watch is the u. S. Inflation report. We see that markets in asia are mixed. Investors are struggling to work out whether the rout has run its course or is causing pausing for a bit of breath. Gdp rose in the Fourth Quarter, but still fell short of estimates. Marketsthe auction in the dollaryen, we are seeing bubbles that we have not seen since the u. S. Election in ing levelss see that we have not seen since the u. S. Election in november of. Lets look into the cpi data. Given the current climate in the market, it will be closely watched and dissected to understand what is happening. While investors are acting like faster inflation may indeed be coming, current forecasts are not pointing to it this month. Analysts predict that cpi will be up. It is a modest decline, and you can see that here in the blue chart. Anna reminding us of course that it is valentines day. Thank you very much. Thyssenkrupp s profits rose. Joining us now on the phone from theany is guido kerkhoff, thyssenkrupp ceo. Profits rising 52 , beating estimates. Are you sitting with the previous timeline of signing the still joint venture steel joint venture . I can clearly confirm that. We are still working on the Due Diligence and of course on the other side, agreement with their union and workers representatives need to happen to finally come to a signing. We stick to the timeline, signing expected for the end of 18 2018. Anna you have faced opposition from some organized Labor Movement on this. Is there any way that this deal gets sidetracked by those objections . It would take a look back at the noise that we have had here in germany around the negotiations, i think that belongs partly to the communication that you will have their. I would not bet not take that too serious. The overall strategy is promising and supportive for the steel sector to address overcapacity. I think by the end of the day this storyline should prevail. Anna you talked about the Transformation Program this morning. Is this the end of the transformation process for thyssenkrupp . Is delivered, or will there be more streamlining to come . Guido strategy is never over. Let me reemphasize. If the joint venture is to come through, then we have changed the group dramatically. We have come down from eight business areas down to 4 and, not just by lifting something for a small percentage. Reducing thedress volatility in these businesses and the dependency of that, because that was too much for thyssenkrupp. This is always the underlying fundamental that we do see. If we see that businesses can be run in a better way and the markets need changes because theres overcapacity, we will always address these issues. Going forward, you will always see changes. Therefore, strategy is never over. It is going to be unimportant step that we are focusing on. People did not believe that we would be able to address this issue in this group. Anna you are making progress there and strategy is a work in progress. I hear what you are saying there. Them, whenou said to they say that thyssenkrupp shares to double could double . Guido we have reduced to 4 business areas. Have seen such i dramatic changes and any of the other dax companies. I think we have consistently delivered on what we have promised. We plan to continue on that route and keep to our promises. ,nna on the subject of tariffs ,o you think if they do that steel, that on chinese steel will . We have not seen such big changes in volumes ever since. With all of the measurements we have seen so far, the pricing levels have come to a level that these companies are not only making by exporting into europe. We are ready to compete on a level playing field. We are not for to rifts ta tariffs inneral general. Anna thank you for your thoughts this morning. We appreciate it. Guido kerkhoff, the thyssenkrupp ceo joining us from germany. Manus the bank of england is expected to raise rates in may, but it will be a close call. Just over half of the economist that we surveyed here at bloomberg said that they saw a move up to 75 basis points. Economists have become even more vigilant. Last year they did not foresee a november rate increase until one month before the decision, while after desk while after the markets have price didnt well after the markets have price didnt had priced it in. How high is the bar to no hike in may . Simon i think the data would be to deteriorate would need to deteriorate quite markedly. I think there is two things that have come to the fore in the recent weeks that have changed expectations. We have had some wage data out of the u. K. , realtime wage data. They suggest that Wage Inflation is somewhat higher than the official measure, closer to 3 . We are on the cusp of real earnings growth, which is a more comfortable environment for the bank to raise rates. The second is the risk to Financial Stability of Consumer Debt still growing at 9. 5 . That is quite difficult. If they have done all of their projections and it is still growing at that pace, they feel that Interest Rates may be the message that consumers need to hear. Anna we are back to talking about output gaps. Those areas of concern. Ive got this chart on the bloomberg, which has to do with hedge funds and how they are positioning very bullishly around the pound. Does that sound sensible, given what you have just said . One single rate hike in may. We think it gets harder for the u. K. Economy when we head into the second half of 2018. To be bullish on the pound is more of a brexit trade and the expectation of a compromise. If any of the more hardline stance,rs soften their but actually i see more to the risk of the downside in terms of the economic slowing. I think there is a real concern that the u. K. Economys Growth Potential is heavily constrained in the second half of 2018. Balance tying daytimes day valentines all of branch all live olive branch. Have a look at this. If you look at where he was on the spectrometer and moving directly into a much more hawkish camp. We are in a new trajectory. You cant get clearer than that. I think this is quite a shift on the bank of england. Simon it is a huge shift from him. To shift to that position i think suggests that there are more Financial Stability concerns on the npc, and it is that efficacy of macro potential policy. It has started to shift back to the npc being a more interesting committee. Manus simon french is from Panmure Gordon. Lets turn our attention to israel. Prime minister netanyahu has been recommended to be charged with bribery. , net yahoo t time denies any wrongdoing and claims he is the victim of a leftwing which i netanyahu denies any wrongdoing and claims he is the tchtim of a leftwing wi hunt. It is too early to say that it is the end. He is a politician who seems to have nine lives. To see if he has a 10th will depend on the attorney general to review the case, which could take several months. In the past that have been 2 previous cases where netanyahu was investigated and the attorney general ended up dropping the case. Major locus of power will be his government coalition. Nobody really wants to go to new elections right now. He seems solid for the time being. Manus very quickly, domestically come what is the reaction domestically, what is the reaction there . It is very polarized here. He has very skillfully recalled the trump playbook. He idea thatrs buy t this is a witchhunt and he has been unfairly targeted. It is a very heated political atmosphere here. Anna thank you very much, our chief. Rg israel ams warning. I we will bring you our interview next. Manus a little bit later, another Big Conversation just after 7 00 a. M. U. K. Time. This is bloomberg. Is bloomberg daybreak europe. 1 48 in theyork, morning. S p futures suggesting we will be a bit higher in the trading day. Rand youve got the gaining. South africas hawks conduct an Early Morning raid in johannesburg. Market attention remains on jacob zuma. Will he resign . Will he stay, will he go . Anna lets turn our attention to Credit Suisse. Fourthquarter loss narrowing at the swiss bank. Tidjane thiam talking about volatility in markets as a doubleedged sword. The Ceo Tidjane Thiam has been speaking to bloombergs francine lacqua. They talked about volatility, they talked about the pivot in terms of what the business is doing. How successful have a been have they been . This is Tidjane Thiam. Tidjane well see volatility as a negative. It creates opportunity. The kind of people that we work for. Participation went from 50 to 75 . They are sophisticated investors that understand markets. More, weually trading have increased our trading revenues. If you take Asset Management, which has more than doubled, 60 16 billionlows of inflows. Are there certain units that hold back . Tidjane it is hurting the primary market. We see a lot of activity in the secondary market. The primary market is reluctant to issue when volatility is site. Things seem to be settling down now. We dont believe that will we see is a major disruption. The correction was unavoidable, i think. We look very closely at the credit market in those situations. Investment rates in the credit market have helped very well. The fundamental economy are healthy the fundamentals are healthy. Growth in europe is coming back, growth and emerging markets is very strong growth in emerging markets is very strong. We dont see a downside scenario in this economy. We can credit markets will hold, because the economy is so strong. The underlying economy is so strong. You dont see any indications of such negative developments. Going back to your turn on capital. Your target range is between 10 15 . Does the volatility make you more confident . Tidjane several things are helping. It is helping our revenue line. It is adding the 100 basis points to our original tangible equity. That is a big boost. Storiesis really the 2. Perating leverage and after that you can see the power of the franchise coming through. Talked them in little bit about the etm . Tojane i want to go back. It says it is a daily trading tool for very sophisticated investors to help them manage their daily trading risk. We also say that it has zero longterm value. We also say that it is not an appropriate investment and should not invest in it for any amount of time. You risk losing all or a substantial portion of your investment. It is a tool used by hedge funds and sophisticated investors to manage the risk. It was not sold to Wealth Management clients or retail clients . Tidjane we dont sell it, we manufacture it. We sell it to Market Makers only. Really, that is all we can say about this. It is crystal clear. It is not a proper investment vehicle. It is a Risk Management tool. It should not be used as an investment vehicle. What is it look so quickly . From 17 to vix went 38, the value of the instrument went down. There is no prospect of recovery, so that is why we close it. Even when vix went back, the value will go back. Once you hit the bottom, the structure of our means there is no recovery. When the conditions were explicit come it will be trading until february 15. Investors will be paid on fedora 21st february 21. All of that was laid out in the literature. Manus Tidjane Thiam there with francine lacqua. The correction of the market was unavoidable, according to him. Simon french is Panmure Gordon this morning, listening to Tidjane Thiam talk about the market. What are the other great swans you in swans for 2018 . Simon we dont think it translates into the room economy until later. I think he was spot on in terms of rising gilts and rising inflation rising yields and rising inflation. You start to get an inflection point. In thisabout environment with confidence so strong, and infrastructure plan, a budget plan for 2019 the has some fairly ambitious spending proposals, if that all starts to move bond yields towards that level at great speed, you get procyclical action. Anna thank you so much for your thoughts, simon french at Panmure Gordon. We will have another conversation next. This is bloomberg. We use our phones and computers the same way these days. So why do we pay to have a phone connected when were already paying for internet . Shouldnt it all just be one thing . Thats why Xfinity Mobile comes with your internet. You can get 5 lines of talk and text included at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And now, get a 200 prepaid card when you buy an iphone. Its a new kind of network designed to save you money. Call, visit, or go to xfnitymobile. Com. Good morning from bloombergs headquarters in the city of london. Im manus cranny. Anna here are the top stories. Manus japans economys expands at the slowest pace in three years. Could stimulus be here to stay . Recommend police charging the countrys Prime Minister with bribery, fraud, and abuse of trust. Manus market swings play belindas advisory. Plague the lenders advisory. If you look at profits, we are at 85 of that target after two years. Are well ahead. Anna manus welcome to daybreak europe. Breaking news. At. 6 on a fourthquarter basis. Banged on with estimates. Europe having the strongest growth performance in decades. Estimate. You have a driver in terms of the gdp and this is where youre seeing Industrial Production really challenged by the value of the euro. You are seeing a strong gdp number. Cpi comes in at 1. 6 year on year. Its pretty much in line with the estimates. The harmonized comes in at 1. 4 . It was driven by a strong increase in exports. This is the top line from germany. Year on year 3 . It is exports that have driven the growth year. How does this play into the European Equity markets . There is the euro against the dollar. Up. 18 at the moment. We are up and running. We should have a higher open in the european market. We have london, paris, and frankfurt all rallying. The sharp selloffs, its good to be hard to have a rapid recovery. It cpi day in the United States of america. That german data will help the overall sentiment as we start the trading day. Anna lets get breaking news out of china. , to raise about 2. 5 billion u. S. Dollars by selling its stake in its logistics unit. These are coming in a statement from the company. They say other backers include china merchants. They are going to raise about 2. 5 billion selling that stake in to investors. This is news from the beijingbased ecommerce operator. Jd. Com will retain an 81 percent stake after the deal is done. Bit about a little what has been going on more broadly in the asian equity session. Currencies. What divides the winners and the losers has been the strength of the yen. 5 u. S. Dollar is down against the japanese currency. Might be some buying at dips here. Msci a asiapacific is up. 33 but winners and losers divided by how much you are reliant on exports in japanese currency. S p futures are little bit higher at the start of the day. Suggesting a little bit of strength. Just how high is cpi relative to the indicators we have . You want to be fully hedge to going into this. Faster inflation is coming but the market may be exaggerating its timing and its minute to. You are just seeing the u. S. Treasury bond futures. 10 year notes are rising slightly. Lets see how that german data plays out into the marketplace this morning. Juliette saly has your first word news. Isiette the white house considering cleveland fed president as a potential vice chair of the central bank. The Trump Administration has been looking for weeks to find a replacement. San francisco fed president John Williams and muhammad ali area and alarian are also considered. Japans economy expanded in the Fourth Quarter but growth fell two years. St pace in police have recommended charging Prime MinisterBenjamin Netanyahu with bribery, fraud, and breach of trust. It is estimated he received around the 83,000 in gifts including champagne, cigars, and jewelry from wealthy friend. Friends o if the charges are fired, it would be the first for a seated Prime Minister. Powered by more than 2700 journalists and analysts. You can find more stories on the bloomberg. Map,g a look at the world as we talk about the surging yen, thats all Japanese Equities close lower today. A pickup in seoul. Led by samsung. Still some positivity in the china and hong kong markets. Late trades in good moves coming through. Australia seems to have dropped off the map but it closed down by about. 25 . We had the surprised jailing of the lotte chairman. This leaves the group in crisis. One of its conglomerates are down 6 in seoul. Singapore Airlines Jump to a sevenyear high. Some weakness for Dominos Pizza down under. Even though the firsthalf numbers were good, the second half look challenging. Manus thank you very much. Banks Beat Estimates fueled by trumps tax cuts. 7 tradingeported a decline. That is smaller than the drop compared to some of their european peers. Lets get to paris now. The Credit Suisses ceo says he couldnt be more pleased with Global Markets. Goldman sachs says the risks have not change that much. How do you describe the first six weeks of 2018 . Laurent good morning. Markets have been much more volatile for the beginning of the year compared to what they were at the end of 2017. We say that volatility was one of the reasons we had the lowest reserves in the Global Market in this return of volatility is offering opportunities for banks like ourselves to provide solutions to our clients. We see pretty good activities is beginning of the year. Your variance at risk, without pickup . That pick up . Laurent we have always tried to have low risk out there. What we are trying to provide is more and more solutions to our clients and keep less risks on our books. Surget expecting to see a in our value at risk. We are managing with a lot of books, tohoughts, our keep potential risk minimum. Manus Morgan Stanley says the 30 year business is done in the United States of america. We you buy more businesses in or unite states for america do you think its are growth in the United States . They represent today 35 of our before tax contributions to profit. Its a significant part of our revenues. Significantly in Asset Management. We have a very strong business out there and we keep on growing it. We dont have to buy. We are looking for opportunities when we see them but already its a significant part of our business. We will continue growing their. It will continue. Manus everybody likes a target or benchmark. Set thisyou probability target for 2020 and revenue targets. Given the complexion of what we saw in a strong set of numbers in terms of inflows, are you sticking to those profitability targets or revenue targets . Are you tempted to guide us a little bit higher . Verynt we have been ambitious in our plan. True that the numbers we had in 2017 are very encouraging and thats a good start to our new that mention plan which is running to 2020. Want 14 by 2020 and are currently at 12. 3 . Its a good start but i dont think we can change the target. The only thing we can changes the target tax cost to be because of the change of tax law in the u. S. Will provide more on the higher part of the target. Thats all we can say. Manus bucking the trend there. Can i talked to more about the u. S. . You have a nice tailwind from the tax. Taxou see the landscape of sentiment change in the United States, is there a palpable change in your numbers . Do you expect to be at more delivery and more lending in 2018 and 2019 as a result of tax changes . Isrent i think what we see a significant amount of money will be reinvested in the u. S. So thats good. We have significant business. We are doing a boost of ciba and infrastructure. Its one of our core businesses there. We take advantage of that and are focused on global expertise in that area. We make sure you will have the right people and talents to capture that opportunity. We see huge opportunities in Asset Management. In this world of more volatile seeronments and markets, we that our nature of active Asset Management to be a great value to our customers. Manus dividends are always big issue with ceos. We lining up for a special dividend . A share buybacks . What institution ceos like yourself are doing to sate the shareholder demand. What are you doing in terms of that . Pose to thewill General Assembly to increase the dividend compared to where was the past year. To . 37. Ratio. 37 payout i think its an illustration of our policy which is to be an asset line company. Distribute as much as we can but keep a little of what we create as free capital to make some and some external growth investment. Wish to continue growing our business and distribute a fair amount of our earnings to our shareholders. Manus thank you very much. Xis. Ceo over at nati anna this is what the futures have in store. U. S. Futures have been pointing higher for much of the morning. Asia has been divided by how you fare with stronger yen. The yen at a 16 month high. We put in the round as well for you. We see it gaining against the u. S. Dollar. The Political Drama continues to unfold. We will watch a briefing in around 45 minutes time. Lets get a Bloomberg Business flash. Juliette Credit Suisse reported a smaller fourth order loss than expected. Revenues came in at 5. 2 billion francs ahead of the estimate of just about 5 billion. Investors about the downside of volatility after wild market swings had a negative impact. You look at profit and the target that we gave, we are 85 of that target after two years. After cost, we are 75 after two years. We are ahead. Toshiba is bringing an outsider to lead the Electronics Maker after scandals and downside. The representative of cbc Capital Partners will become ceo and chairman. The former ceo will become coo. Their roles become effective from april the first. Toshiba is no longer including the chip business in their operations. Bt are painless to paper merely football matches through 2022. They are paying a combined 4. 4 6 billion pounds. That compares to 5. 1 billion pounds in 2015. Sky is keeping the bulk of its rights but will page 16 less per game. It signals a more rational approach by broadcasters after years of rapid inflation. A french open yogurt maker is selling shares in japans ya kult. Yakultsill remain largest shareholder after the sale. Loretta mester says that tax cuts have added upside risks but that a gradual pace of Interest Rate increases still remains the correct course. I put a quarter of a percentage point on at your growth. Given what ive seen so far, and how many people have said they reacted to the tax cuts, i think it could be bigger than that. Thats the upside risk to the fourth forecast. The powell says we are in process of eventually normalizing our balance sheet. Lots of adjustment on the Monetary Policy front. We bring in larry hathaway. Great to have you with us. Thats the context in terms of the fed conversation. Lets put that market in context. The s p correction versus other corrections. You think this is significant. You think we are exiting the new normal. Larry we are prepared for more uncertainty. Episodes not to similar to this one where there will be doubts about inflation and doubts about Monetary Policy. It might even be doubts about the longevity of the business cycle. The initial phase is simply undermining the ability of the Federal Reserve and other Central Banks to provide us with clarity, assurance, and predictability. Manus that predict ability seems to be wider than the wofford gap. Powell has a lot to do. He has to settle the road ahead for us. From his testimony to congress, what do you think the possible a powell a towel put . When you look at williams or dudley, they are not perturbed by what has happened. They see this correction as overdue. Concernsnot expressing about this kind of a market set back in terms of having to adjust Monetary Policy. To your earlier point, im sure jay powell would love to be able to set policy in the same way his predecessor did. That he could tell you steady as she goes. I suspect that will not be his legacy. Anna what will it be . Larry he is an inflection point. The end of the new normal. Remains to see how fast the acceleration will take place. And need to go beyond perhaps normalization. To contain growth so we do not get an overshoot on inflation. Thats a different environment that anything in 10 years. Anna not just taking rates back to a medium level but having to hike past Market Expectations . Chairman hes probably going to have to restrain growth, not to be accommodative which is what janet yellen and ben bernanke did. Balance between restraint but not too much to have an unnecessary recession will not only be his biggest task but it will also be the biggest challenge that confronts markets over the next few years. We have a host of voices that come through. Abby joseph cohen and said that the markets are priced to perfection. You come back a little bit lower. 16 and a half. We are nowhere near the lows in pe that we are back to the last correction. Are we in the right place are we junkies looking for a what put . Theres so much about this world that is not normalizing at the same rate if used to. For example, earnings, which have been elevated and supporting for the market. I think the bigger point here is this. Supported in 2017 had three factors. Growth, earnings, and predictable fed policy or overall centralbank policy. The latter is in doubt and because of that theres a warranted the rating of the market that israel wired. Is it enough, thats a harder question. How we find the tradeoff between equities and bonds . Dtv 6126 on the bloomberg. We have seen bond yields and equities rising together. Then bond yields rising spooked equity investors. Where does this go . Larry it depends on why bond yields are rising. Me whenk point came to the rising yields was validated like theate data employment report and the hourly earnings. If what drives bond yields higher is rising inflation, its bad for equities. Inflation is subdued, equities can perform. The other chart is this. Credit card balances are the second highest since 2007. Delinquencies are the highest since 2016. There is this gorging on Consumer Debt. Credit cards at the second highest since 2007. How tenuous is the u. S. Recovery . Larry the overall credit in the u. S. Economy is a mixed picture. Weve seen the Financial Sector go through a decadelong. Of deleveraging. The public and corporate sectors have leveled up. For a long time, people talked about student loans, credit card debt, and auto loans. We will probably have pockets of that. Those are areas where eventually we will see a problem but we need to see it show up in cash flow rather than Interest Rates. Economic when you see weakness and you begin to see the vulnerabilities and income that you will see the credit events. I dont think Interest Rates alone would do the trick. Manus this anna the situation you describe sounds like a lot more volatility. Is this good for active managers . Its a doubleedged sword, the volatility weve seen. Larry i think as investors we have to now begin to believe that the sharpe ratio has shifted. That wonderful. Of rising equities against low volatility, i think, is over. We will see higher levels of volatility with episodes that spike above that. As we move away from the selloff, types of within factors, within asset classes, thats of course onus for active managers. Away. Yen is rocking what does that signal to the market . Tough one. Ink its a this is not a generalized risk off move. Generally the yen does that. Anna we will see what they say about governor kuroda and his future. There he hathaway. Hatheway. Next. Ean open is up manus keep an eye on oil. Volatility in the oil market is unfortunate. Could it be that they have some into say . Good morning. Welcome. Youre watching bloomberg. Im guy johnson in london alongside matt miller in berlin. Cash trading is less than 30 minutes away. Guy upbeat. Credit suisse reports a smaller than expected loss. The ceo tells bloomberg that the start of the year was very strong. The profit and target we gave, we are 85 of the target after