14 Revenue Growth. Is the worst behind the business . We are going to speak to the ceo in a moment. And a german newspaper reports trades are lower in early trading despite the company saying no complaints have been filed. Let me reinforce that. Lets turn to the wei. We think we are going to see a start. 0. 3 ,nk we will be up 0. 4 , 0. 5 . It is president s day end the states, so a positive start as well. But sticking to the gmm and show you what is going on there. This is the picture. Nikkei up by 9. 17 . Lots of asia still closed for the lunar holiday. They will be back later this week. Strength trade started to run out of steam . Lets get a first word news. Updates. Start with the united states, where President Donald Trump criticized the fbi, democrats, Robert Muellers investigation and his own National Security adviser over russias efforts to sway the election in 2016. Tweeting 14 times within 24 hours, he focused on defending the validity of his victory and insisting neither he nor his campaign colluded with the russian misinformation effort. Meanwhile, the l. A. Times is reporting rick gates, a former Campaign Aide indicted with Paul Manafort has agreed to plead guilty and cooperate with robert mueller. U. K. Prime minister theresa may and her ministers are together for a brexit away day on thursday as it she seeks to unite the proand antibrexit factions in the cabinets, it is becoming clear the u. K. Wants to stay close to the European Union in some areas while breaking free and others. Meanwhile, and employment numbers scheduled for friday and thursday. Ue on we will see what that means for the path of u. K. Interest rates this year. Japanese exports and imports will registered strong gains in january. Overseas shipments rose from a year earlier, well ahead of forecast, while imports grew 7. 9 . That resulted in the first Monthly Trade deficit in months. Eurozone finance ministers will be voting today on a candidate to replace ecb Vice President with. 3 the head of lot the of the head of latvias central bank has been detained. There are calls for the governor to step aside to prevent harming the countrys financial sector. He says he considers the move against him clearly illegal. Havef irans regional foes delivered twin warnings against the country, telling a Global Security conference it is time statesont the islamic impact on the middle east. Ben netanyahu described the aggression as the greatest threat to our world and warns that israel would resist it. The Saudi Foreign minister has chipped in. He says iran needs to pay a price for its aggressive behavior. Sweden is well on their way to becoming the world first cast society. Rst cashless more than one third of swedes claim they never use cash, with accepted signs becoming increasingly common in the shops and restaurants. 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. Guy . Guy manus thanks very much. Manus guy thanks very much. Japanese stocks raising strongly today. The s p 500 cap its best days since 2011. Futures trading up across the board. Oil trading a little bit higher, but with u. S. And Chinese Markets closed, european trading will take center stage today. Studentmore is a former to who could be the vp over at the ecb. He joins us. Lets talk about the yen. Has that trade run out of steam . Look like it has run out of steam. It was very stretched last week with the Options Market and there is a general feeling. The boj has made clear they are not happy with these moves. If it does go much further, a threat they may take action more than making statements. I am not sure we will see the yen weaken here. There is a lack of believe in that the boj can six significantly weaken the yen. Faith that lost easing will do more even though kuroda has been reaffirmed as part of the boj and the fact they have recommitted themselves to be very aggressive to asian policy. No one cares in terms of wanting to sell the yen right now. Guy we have got lighter volumes today with a bunch of holidays to factor around the world. What will drive investors . Are we sitting back today and watching the ball go by . What is going on . There is asure today lot of admin in a lot of markets. There are some big catalysts. There are two things to think about. The dynamic of where we came from, which is violent moves across assets. They have all had really big shifts in the last couple of weeks and people are wondering what is the next leg of from here . It is not obvious. People are looking to the next cap list. On the rates to the next catalyst. That is a big issue. The issue has been well marked and hyped up in advance. It is not priced in. Two things to affect the market are the ecb minutes, which will give us more color on how they are doing and how hawkish a will get. Guy the ecb gets very upset when you call them minutes. The cftc data was quite interesting. It is not me, it is them. Datacb the ct cftc indicates that the steep is on. In the u. S. The market is getting really short and is capping it trade to the front end of the market. What are the implications of that steepening trade coming back into the story . Mark it is interesting. If this really is the start of a proper sustained move, that would imply we are toward the end of the cycle and a recession imminent. It is quite clear when you look at the curve in history, normally recession comes after the curve has inverted and starts steepening again. Anobviously did not get inverted curve, and i dont think the overall cycle is over. I believe we still have this lush economic cycle. If you believe i believe we have this bullish economic cycle. Guy this is a bit of an on one. An interesting debate in europe about who will be the next Vice President of the ecb. I know you are on passing terms depending on how many lectures you went to. He looks like the front runner to become the next Vice President of the ecb. A bunch of stuff over the weekend, talking about how mispriced the peripheral bond markets are in europe. Is it that italy is trading where it is and the u. S. Is trading where it is, in terms of 10 years . As we start to work our way through this year, you bring up the accounts. How big a problem could there be in that peripheral trade . We have got a situation where yields are being pushed yellow lower by the ecb. I wonder how the dynamics will start to play out. Mark the markets are almost divided into two very clear camps, and one camp is made of people who believe europe did not fix the structural problems that led to the euro prices. The fact they still do not have fiscal union, which is the big issue and will become a problem again once the whole qe program starts. That is a really big bandaid. An amazing bandaid, but it is covering up a problem that is not cured. It is a bearish year overall economically, and they feel that when we ended the qe program, it will come to life again. Who aree other people more in this camp, more constructive. They accept that structural program, but the main statement weekend take is the political will in europe is superstrong. They always bent the rules enough to keep them together. Looked like a really bad situation a few years ago for greece, but they are all in the eurozone. Things are improving, and we have not created a fix for everything, but europe is still together, the euro is still together, the economy is recovering. Just trying to put it into context with what the rest of the year will look at. I think it could be an interesting one and the beginning of the appointment is what you speak to, the politics front and center in todays decision. Mark cudmore joining us from our mliv team. You can join the insights of the rest of the team. Mliv on your bloomberg. A company says it will bounce back from its worst year ever. We will get his view in a minute. This is bloomberg. Guy 15 minutes to the start of european trading. We have a look at our new building here. Lets start with one of the focus in one of the build one of the businesses in focus this morning, Reckitt Benckiser. The u. K. Based maker of painkillers. They are expecting Revenue Growth from 30 to 40 on the year. Lets speak to the ceo, rakesh kapoor. Nice to see you. It is 2018. Better than 2017 . Rakesh absolutely. 2017 was a tough year where we had these tough macros. But during that year, we made two moves. We sold part of our business for a good price. 50 of our business now comes from higher growth and margins. I look forward to 2018 and i think it will be a better year for r. B. And that is how we are guiding the market today. Guy is that what you call it . R. B. . Rakesh r. B. Is a better name because a lot of people have a hard time saying Reckitt Benckiser. Guy you talk about the acquisitions you made last year. There is another big business out there that could potentially be on a Shopping List and that is the Consumer Health business. Price tag like what you paid last year. Can you give us any guidance on your thoughts on that business . What it fit well . Is the price too high . Closet is it too to the last m a . Criteriae apply our very diligently. Is it the first ones is strategically competitive . We sure we cane be better owners of the asset . The third is what is the value for shareholders . Deals, butumber of equally we walked away from a number of deals, too. Some of you may remember, we walked away from merck a few years ago publicly because it did not fit. I cannot prejudge any other deal that comes into the market and where we will be with these deals. Those. Ot comment on but what i can definitely confirm is we will apply these as diligently as to anything we see. Guy the cost of capital is going up. How does that affect valuations . Rakesh the cost of capital is where it is. Weighted average cost of capital that we see, the combination of our equity and debt. Factor in thee to cost of capital in everything we do, and i am not going to disclose what that will look ake, but we have not just disciplined approach, but a fantastic track record of making our deals work from a value point of view. We havejor deal done has created good value for shareholders. Guy lets talk about the share price. You looked over to the other side of the studio and said, you should run that share price chart over a longer period of time because it reflects what the market has done. So lets bring it up. Shall we say the yellow line there is the price, and the white line is the price target. Were long time, those two pretty well correlated. As we already indicated, 2017 was not a great year. Where do you want that number to be . The white line number . Rakesh i dont come to work thinking about where that line should be. I come to work thinking about how i am going to outperform the market. Guy you have a reputation for being quite close to the share price. Rakesh i know that if you look at the share price over the last 5, 6 years, every thousand pounds you invested in a january 2012 would have been worth 2004 hundred dollars today, which is higher than what you would have earned in the ftse 100. The company has done it for now a well has done extraordinarily well. But really, i am absolutely serious. I do not think about share price on a daily basis or a monthly basis. I think about our business and how to serve customers better. How to make better innovations. If i can do those things well, i know my performance is going to be fantastic. If the performance is fantastic, the rest is itself. Guy can i ask you another question . There is a much stricter approach when it comes to social s spend. D the company what is your idea on how that is spent . Do you think it will change in 2018 . Rakesh we have to be a live to the fact that consumers are on social media, and therefore brands have to engage with consumers on the social media. But we also know everything involved available on social media is not as strong as we would like it to be. We have taken the same hardline approach to this kind of opaqueness and that the markets, as you referred to from another company. Having said that, social media has been very deliberate. If i pointed a number to you which is quite staggering, 50 of our business in china comes from online sales. 50 , one half of our business. Without usetransfer of good social media. So we are expedient in this, we know the benefits of doing this. Equally the challenges of the opec this of the opaqueness. Talking with media agencies to make sure we can do it better. Guy thank you very much. R. B. s ceo. We are minutes away from the start of european trading. Up next, we will take a look of the stocks we need to be watching at the open. Siemens is another. It plans to ipo its health care unit. This is bloomberg. Guy six minutes to the start of european cash trading. Some stocks that should be on your radar this morning, stocks to watch. Good morning, paul. Siemens confirming it will be ipoing its health care business. How does that go and how do they spend the money . Ul good questions. This has been on the cards for a long time. They have the initial plans to do this in 2016, so this has been a long time coming. It has taken this long to say they will do an ipo and it will be a meaningful minority. Guy that is the mechanics of the ipo. What does that mean . Paul they tell us they will raise between 6 billion euros and 10 billion euros. There is lots of colorful language, corporate speak in the Statement Issued this morning, but the detail is quite limited. We will find out a lot more in due course. This morning, the shareholder reaction is likely to be quite limited because there is very little detail here. Guy r. B. As we should now be calling about it, lets talk about reckitt. Paul the results from the Fourth Quarter seem to be a little bit like on the hygiene side. Plus 2 . Analysts have been looking for more than that. Flu season was particularly strong for them, so 2 like some of the analysts are saying, possibly this is a little bit disappointed. There is a chance you might see some weakness in reckitt shares this morning on the back of that. Guy the aa . Paul there is a big downgrade this morning. They are cutting their rating, and have also cut their price tag. It is the lowest in the market right now. They have a strategy date. It comes up on wednesday. Berenberg says they may have to cut the dividend. Guy go to your bloomberg to find paul and the rest of the teams dots. The open is four minutes away. Keep your eye on daimler this morning. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. We use so why do we pay touters thave 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. Guy monday morning. A minute to go until the start of cash trading. The u. S. Is out today and lots of asia out today as well. Trading. Where we are the nikkei having a solid session. The yen is down. Thats the Critical Link between these two. Oil is trading at 65. Look for the oil stocks of the get go. The s p last week at its best week in five years. Futures are trading. There will be some indication of what is going on. Much oh you what is happening to the wei board. Are up by 1, we 2, 3, 4 10 of 1 . Individual stock stories will be interesting today. Keep an eye on daimler. Keep an eye on the aa as well. Lets get into the numbers and show you what is going on. The ftse is expected to open up. We will let the Market Makers push that one around a little bit. We are going down. Interesting to see what the individual names are. And positive start. But we are within 2 10 of 1 point 2 . Expected open a little bit stronger. Could be ready. The ibex is up by 3 10 of 1 . 3 . Health care look strong. Consumer staples, some signs of weakness. Materials are little bit mixed. Financials are reasonably well bid. Health care looks strong as well. What turn our attention to is happening with the individual names. Lets go to the move screen. I want to see if the dax has opened up yet. Dax still taking its time. With year from djokovic are in a moment. I also want to hear about what is happening with this daimler story. Bit longer a little than it normally does to get things going. Lets show you that in give you an idea of what is going on. Allianz. Trading strongly. Interesting to see how the oils generally do. Lets get a quick look at the losers. Trading down by 2. 28 . Rb not trading very well. Season seems to have caused the market to take a little bit of a fright or catch a cold. B. A. T. Trading down as well. Unilever softening up as well. A bunch of things came out of the munich security conference. There, the ceo of siemens. We asked him, we are talking to him about the raid dalia short position. 22 million bets against some of europes Biggest Companies including siemens. His is what he had to say on that. Its a free market. I have always been very strong aspects of sustainable on a very High Performance level. Areously, if companies against something they would have their reasons for doing it. There also are fundamentals. We are looking at topline growth. I feel pretty good. Fundamentals still look strong. The relationship is not exactly a hundred percent it will be interesting to see how investors do with the issue of fundamentals, earnings, and relative valuations. Good morning. Reallyket bounceback strongly from the movie couple of weeks back. Last week it had its best week in five years. It seems to be a strong mentality out there. The fundamentals, do they backed the market up . Look at growth in the u. S. Looking at growth the u. S. , growth in the world, we see great numbers. All the macro leading indicators , measured production, coming out really strong. It will be tricky because we have seen it already. Which companies are able to harness that and do with the earnings for investors. Guy we knew all this, didnt we . We have a lot of qe and a lot of stimulus. A lot of things going on. Definitely in the u. S. , the s p 500 has given us several hundreds worth of total returns. Think, are we buying . Are we looking at the right kinds of stocks and indices . They are not sincerely the places we are saying look at that. Its finding the longerterm trends. If there is a recession in the next two or three years, which stocks can ride through that the best and which can perform up nicely quite up until that point as well. Your senses, it was largely technical. Is 13. 8 . Rage fall what we have seen is, 2016 is not that far back. We had a great year in 2016. We are getting towards the end of the point or we have seen growth and positive stock market returns. Point or you the have to start thinking about other ways to hedge that . Guy how do you do that . The most convincing answer ive had back is cash. Thats one option. You can look at obsolete returns. Infrastructure, alternatives. An absoluten return. Any kind of hedges. Things that help ballast when things are going wrong. The most classic of them always bonds and equities, now doing well at the same time. Its definitely a conversation we are having a lot. Looking at other real assets as well as an interesting thing. Cash can be an added diversifier. The reason markets freaked out so much, thats the fear. Dozens of sara lee seeing the best asset cash to combat rising inflation. You get real yield a kicking out of the states. It is in the way to fight the longterm or mediumterm prospects. Guy has the market changed . Its a little more awake and aware. Central banks raising Interest Rates amid levels they are telling us theyre going to do. Or this, i wouldnt say complacent, but a little more happygolucky. Coming inthings are strong. We can ride the cycle to the end without any volatility in fear. We notice of the conversations the market are leaning towards that. Being aware of inflation and being aware when the cycle is going to turn. Taking the fed for its word. We are going to see three or four interest hikes this year that has not been the case in the past 12 months. We are now not at exactly three or four beretta higher level. Three or four. We are at a higher level. Guy she will stay with us. We will bring you some the stocks on the move including daimler. Done by nearly 2 this morning. This is bloomberg. Minutes into european trade. Youre fairly mixed this morning. Trading a little softer. Here are some of the stocks you want to be thinking about. Siemens trading ok on the back of his health care ipo news. The market still doesnt know enough about this. Record, rb, playing soft. The reason for that, lets go back and show you the numbers. Season and the metrics around that maybe not as good as the market was hoping for. It has been quite the flu season. The stock is trading down by over 3 . Daimler is down 1. 366. Reporting sunday about this diesel story. Software fixes, etc. , etc. , therepany is denying has been no response on this. The company is pushing back fairly strongly. The stock is trading down. Lets turn our attention. Lets look at the metro. Metro trading down strongly. Lets look at what is happening in brussels today. The two contenders go headtohead today. Philip lanedos and competing to become the Central Banks leader. Lane is the frontrunner. Is this guy qualified . Question. The we know hes a very well regarded economist. Hes a National Bank governor. Does he have a political background . We know lawmakers dont like this. Seespain really wants to those profits. We think hes going to get it. Is a qualified . The reality is, we dont know. Hes trying to betray himself as a hawk if we go back to his background, he comes from spain. They have a history of qe. He may sound hawkish but we may have a dove. Come back to the point about spain. How important is this for spain . Importantcredibly because the country feels its very under representative represented across europe. Tell you,spain will we did all the hard work and we never get any reward for it. We are very underrepresented. The Prime Minister has also put his reputation on the line. If he doesnt get this, it will be total humiliation for a boy. As also a little bit of situation in terms of reputation and what this means for the country as a whole. Guy thank you very much, indeed. Will keep us uptodate with what we need to know. Lets get a wider picture. Lets kick off with this. Lane vs. Rsus de guindos. Work me through the mechanics and politics surrounding it. He goes to parliament, who is only had an informant hearing with the candidates, and in the full parliament is to have a vote for the vote is nonbinding. Usually they just say, yes, fine. It is a political decision. The voice of parliament, the voice of other central bankers put it out there that theyre going straight from the euro group to the executive board of the ecb. It would be a break with president. Those who are sitting on the toce may have found reason consider. The doses they frontrunner but its not close race yet. Laying raised his profile lane raises profile. Guy what else could he be doing if he doesnt do this . Ireland is a Founding Member of the euro and the only Founding Member that never had a seat on the executive board of the ecb. An incredibly Important Role is coming up perhaps for newell. He could be a leading candidate for that role. If he doesnt get the vice presidency today. Terms of what this will mean and the tone of how the ecb will operate as it moves into the next phase, how important is the vp role . How important is the position that he may be feeling . Traditionally, the Vice President is also in charge of Financial Stability. It will be a key factor as the ecb exits from qe and extraordinary symbolists thats stimulus. Now that a concern bubbles are building up. Charge of in Financial Stability is the person who has to look out for that. An incredibly Important Role. There may be pickups and volatility. There may be tension on the way out from stimulus. The economy needs to readjust. It is in there behind it with the qe. Thats another concern. As an aside, how does the catalonia story feet into this process . Officially, not to talk. It is always been said that catalonia is an internal spanish s concern. But of course, the leaders have taken a hard stance against catalonia. Its going to be in the minds of the finance ministers. Whether its going to be a factor, we cannot know. They know the politics. Ecb doing with a number of issues today. Walk us through what happening in latvia. Its quite extraordinary. The leader of the central bank was arrested on sunday night and its not clear why. And hisn his office private home was raided. He was question for eight hours. He was whisked away in a van. And then, now he is detained. There is going to be a press Conference Today where he will clear up what are the charges if any. Its the extraordinary situation and is very complicated for the ecb. The course of justice ran its course and they have to do with a have to do. But the ecb is always concerned about attacks against its independence. It will have to take a stance and he will see whats going to happen. Guy great stuff. Thank you for covering the angles. The latest surrounding the ecb. You can use tv. Follow the charts, the functionality, and suggest questions directly. We will be talking more about what is happening with the Central Banks. Youll be talking about whether the fed will deliver three or four rate hikes this year. Thats next. This is bloomberg. Guy 22 minutes into the market section session. This is the picture we are looking at. London going nowhere this morning. Much of asia is closed. The u. S. Is closed. In spain, only one stock in negative territory. 2, 3,st of europe up by 4 10 of 1 . We are watching quite carefully to see whether or not london comes back. To call ite told acting as somewhat of a drag. Lets turn our attention back to the markets. A little bit of detail now. Were talking about the ecb but lets talk about the fed. In this four rate hikes year. What is it take you . We are expecting a higher push on the 10 year yield. Between threeng and four rate hikes. It could get a big higher. You have to watch a lot of elements. Mostly that deficit number could mean that the yields get a bit more pressure upwards. You also up pressures across the world. This pretty strong accommodation phases. In terms of keeping the 10 year treasuries there. It could have a global effect. Ins some, 3 seems a good place for it over the course of this year. Guy talk to me about the shape of the curve. People may decide to hide out. The banks in the states obviously will be a derivative trade. The expected to stephen a more . Not too much more but we expected to keep this level of steepness. I think the question first is, does the flatness or steepest indicate larger issues as we are trying to think . Does a flat curve mean recession is imminent . There are several elements now that say it might not be the best predictor. Is that global monetary policies keeping the long and down. If the fed is raising Interest Rates three or four times, you do need a bit of a higher long end. We take a step back from using that as a primary indicator. Overall, thinking where do we going. Short term ended it does not have to absorb the fact that the fed is doing another hike. We do still like the level where it is now. One of the levels reasons we like u. S. Financials is the range between the long and the short end. We want to have that benefit. Lets draw the line between the bond market and what happens with stocks. Is that an issue with stocks the way that 350 would be in terms of the yield . If you look at the longterm correlations, equity market has to get to a certain threshold be stored before it starts to hurt. If you look at the short end of the care of, the twoyear needs to be closer to 4 and where it is now to start really affecting u. S. And european stock markets. This is historical data. Guy that number could be a bit lower. If you even take that 1 lower, we are still quite a bit away from that point where higher Interest Rates are really going to hurt the stock market. We have monitor several things. Consumer spending. These are not things we are completely blind to but we are still in a point where the fallen economic fundamentals tell us stock markets can continue to do well for the nearterm. We will talk about volatility next. Shes going to stay with us. Coming up, back to normal. Are we done with volatile markets . Are investors in danger of getting burnt again . This is bloomberg. Guy eurozone finance ministers vote in brussels for the ecbs next Vice President. Overcoming the pain. After a tough 2017, Reckitt Benckiser targets 13 to 14 Revenue Growth for 2018. Is the worst behind the business . Judging by the share price reaction, maybe not. A healthy ipo, siemens confirms it will ipo its Health Care Division. How will the ceo spend the money as he tries to reboot this industrial giant . Weve talked about the headlines. Lets talk about the markets. Good morning. Im guy johnson. You are joining us from bloombergs european headquarters. Banks are the leading stock on the stoxx 600. What else is moving . Travel and leisure looks pretty good. Financial services good. Chemicals trading stronger as well. Crude is trading a little higher. Where are we seeing weakness . Two stories stand out. Daimler under pressure in germany. It is helping to drag the auto parts sector. We talked about what is happening with reckitt as well. Rb is trading softer. After the flu season, it hasnt maybe capitalized in the way we would have hoped it would have done. The stock is trading a little softer this morning. The food and beverage sector down by 0. 2 . Lets get the bloomberg first word news update. Sebastian donald has criticized the fbi, democrats, Robert Muellers investigation, and his own National Security advisor over russias efforts to sway the election in 2016. Trunk focused on defending the validity of his victory and insisting neither he nor his campaign colluded. The l. A. Times is reporting that rick gates, the former trump Campaign Aide, has agreed to plead guilty and cooperate with special counsel robert mueller. U. K. Prime minister theresa may and her ministers gather on thursday as may seeks to unite the factions in the cabinet. The u. K. Wants to stay very close to the European Union in some areas while breaking free in others. Employment numbers scheduled for wednesday and gdp due on thursday. We will watch for what they mean this year. Japanese exports and imports both gained in january. Overseas shipments rose 12. 2 for the year while imports grew 7. 9 . The increase resulted in the first trade deficit in eight months. Finance ministers vote today to replace ecb Vice President constancio. Spain and ireland in the running. The head of c as central bank has been detained by the countrys anticorruption bureau. There are calls for the governor to step aside. His lawyer said he considers the move against him clearly illegal. Two of irans foes have delivered warnings against the country, saying it is time to confront encroachment on the middle east. Israeli Prime Minister netanyahu described Israeli Aggression as the greatest threat to our world. Iran needs tod pay a price for its aggressive behavior. 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. Guy thank you very much indeed. Lets get back to the subject. Since volatility crashed, bringing the rest of the market down. Investors it seems are either quick to forget or to forgive. Prodex tracking futures are in vogue again, growing tenfold over the past couple of weeks. Daniel berger joins us on set. Still with us, from jpmorgan. Why are we here . Because i love these etfs. Apparently investors do, so im not the only one. Im not the only one who still wants to talk about these. The past two weeks have seen record inflows for this product. What happened before that . These things crashed. Clearly there is still a desire for investors to short volatility. Despite the fact that we have the vix spike, one of the most popular products being taken off the market by Credit Suisse, people still want guy you say people. A little vague. It is not as much retail as it used to be. We see firms like fidelity. No longer can you buy these products off of fidelitys platform. For the most part it is institutions buying this, which is a little more comforting. The fact that people are going into these shows that short volatility is not dead. Earnings are not volatile. Economic data still looks solid. The macro picture is nonvolatile. It is not that short volatility is dead. Risk controls were problematic. If you can figure out a way to short volatility but have risk controls in place, perhaps there are other ways to short volatility, but perhaps some institutions are looking, but it is still a trade that is profitable right now. Guy in some ways it is logical. What we are going through is maybe a migration to a new era. It was largely technical. But it is not like we are going through incredibly low volatility. It is just that probably we were a little low before. We are going to swing somewhere around the middle or the bottom of that range. Now, have the discussions where is the appropriate level for the vix . We dont think it will be elevated in terms of where it was in the past few weeks. As we were saying earlier, the stock market does move around. That is the point of how markets work. Having very low volatility was unrealistic to continue, but it is not going to be at guy is the vix a more useful product now . Any kind of derivative or option to have access to moves is always great for diversification, which is our favorite phrase. But is it an interesting product . Certainly. As always, the risk is very important. Regulators going to be a little more comfortable with this new era . Is this theoretically professionals who should know better, institutions that have deeper pockets, that are now the main players . Is that going to make the regulators more comfortable . If not the regulators, the providers themselves are going to step in. Already theres a lot of concerns about etfs. We hear people raise a lot of providers bonds, and have had to really go out there and say these products are safe. They are not going to blow up on you. They are providing some relief for the markets. The fact that we did have some products blow up kind of tarnishes that message. You might have providers saying, we need to do a better job educating our investors. Perhaps if we have a big retail clientele, we are going to be more careful. In terms of regulators, there are etps on the market. In terms of their being enough assets, that threat has somewhat subsided. That wont necessarily be a concern. Spx why is the main way you can get exposure. I would be surprised if regulators step in at this moment. I would not the surprised to see some selfregulation from the industry. Guy lets talk about the industry. When we go through phases like this, do you look at what is on the books . The story is very different in the states. You guys must constantly be going through the process, where is our money, is it has is,rsified as we think it are there any aspects to be thinking about have you been through that kind of process . Investors need to be actively doing that. What are we overweight, underweight . Are the fundamentals supporting those asset allocations . Also, stress testing and asking questions. How narrow can it go . We try and ask these questions. Theres various elements of modeling and stress testing you can do. Clients may not be looking at the screens, but are now asking about valuations. Do i need to be allocating to parts where earnings look stronger . Diversifiers, the vix is part of that story. It has been an interesting one the carry the way trade element of the vix has been there. Have clients asked questions about, do we understand how these things work . Do we need to be worried, and even more, what can we do to anchor or support ourselves when bonds, equities, and traditional assets dont do well . We have got a lot of interest in hedge fund return strategies. Seeing that in chart form is quite striking. We need to get more of that in our portfolio. You cannot expect the bond and equity correlation to be as it. As in the past. Guy great stuff. Thank you very much. Not quite done yet. Shes going to be joining us on bloomberg radio. We will be carrying on the conversation. Up next, sweden is on the way to becoming the worlds first Cashless Society. Is the change happening too quickly . That is next. This is bloomberg. Bid, butpean equities only just. We are 45 minutes into the trading day in europe. The u. S. Is closed today. Lets turn our attention to the nordics. Sweden on the way to becoming the first Cashless Society. Dropped to its lowest level in nearly 30 years. More than one third of swedes claim they never use cash. Some are concerned these changes are happening too quickly. Lets join our reporter, amanda, in stockholm. Why is sweden so far ahead in terms of cash usage . I guess swedes are quite tech savvy. They use mobile payments a lot. They use cards a lot in shops and banks. They even stopped accepting cash in many cases. It is happening quickly. Guy it is happening quickly. In some ways this is good for Central Banks. Central banks want to use nontraditional Monetary Policy like negative Interest Rates. Cashless Society Works for them on that front. You get more data very quickly and we have a better idea of what is going on in the economy. Why is the riksbank worried . , in a way, itk was positive when they wanted to lower their Interest Rate below zero. At banks cap Interest Rates zero in savings accounts, so even though there was a negative Interest Rate, Bank Customers kept their savings in the banks. Riksbankher hand, the sees that this is happening too quickly, that the infrastructure of payments may be threatened in some way. If shops dont hold cash, if banks dont accept cash, you may where iftuation theres a crisis, you dont have that much cash available. Now they are considering how to handle this situation. Guy how are they going to handle it . I see in your reporting the e krona being talked about. What is on the table . Option, buts one that is going to take time to figure out. How will you figure out what will work for everyone in society . Now, it needs to also keep normal cash in circulation. There may be people who dont want to. What is there for them . Againstve been protests the access to cash in society and so on. Guy going to be interesting to see whether or not how the riksbank reacts to all this, and whether it ends up having to force banks to keep the atms open. Thank you very much indeed. Amanda, our reporter out of stockholm on the Cashless Society that is developing quickly. Here is seb salek. Sebastian siemens says it plans to ipo its Health Care Division this year. According to people familiar with the matter, the ceo says it is likely he will use the money to help acquire companies and pay down debt. Siemens says it will retain a majority stake. U. S. Investigators have detected software in mercedes cars which may be used for passing diesel emissions tests. A spokesman for daimler said the documents have selectively been released to harm daimler and its 290,000 employees. If the matter result in charges, it will be another blow to the german car industry in the u. S. Its firstas dividend. The Worlds Largest producer of platinum will pay a dividend of 3. 9 rand a share. Operational improvements and cost cutting measures helped the company more than double annual profits. Londons Property Market has moved out of its boom phase. Warning sellers to be more realistic. A new report shows asking prices were down 1 from a year earlier. London was the u. K. s worstperforming Housing Market in 2017 and theres little to suggest any upturn is in store. Movierst marvel superhero with an africanamerican in the title role and a largely black cast has set a record. Took 192 million over the weekend, the fifth biggest open ever in the market. It was the most successful movie worldwide over the weekend. That is your Bloomberg Business flash. Guy Credit Suisse talking about the fact that midcaps in europe or small caps are a by relative to big caps. Were going to talk about those smaller and midcap stocks when we come back. The Computer Software provider seeing solid growth across all regions last year. It is up by nearly 8 . Take a look at the charts on your bloomberg. It is up by nearly one third. Ftsi is the line to plug in. This is bloomberg. Guy 53 minutes into the session. Lets talk about that made cap movers. Podesta is a company out of the u. K. That is trading strongly. Take a look at the januaryfebruary charts. Rising. Special dividend coming through. The stock is up 8 this morning. Since the start of the month, of over 25 . Limited, down by 3. 54 . It has a capital day coming up in a couple days. It has been cut to a cell. The dividend remains something of an issue. Effect that could be the to shareholders. Dart group, the Company Coming out with a positive statement. One of the reasons why the travel and leisure sector is trading so strongly. One of the stocks we are focusing on his Reckitt Benckiser. Falling around 3 today. In the companye has maybe not done quite as well as some analysts anticipated. The ceo told me that after a torrid 2017, this year is going to be better. 2017 was a tough year. Made tohat year, we transformational moves. We sold our food business for a good price. We acquired me johnson early last year. Business now comes from higher growth, higher margins. As i look forward, i think it will be a better year. That is how we are guiding the market. Guy the stock is trading on reasonably decent volumes. Volume. Normal you can see on the righthand side of the screen, the little blue box. The stock was trading reasonably strong. Maybe a slight miss and a slightly cautious flu season is what has really done it for us. Stock is trading down by around 3 . One, 8108. This we are currently trading at 6363. Definitely down towards the bottom of that range. Certainly a factor for its ceo. Lets talk about the week that is coming up. We still have holidays affecting trade in asia and president s day in the united states. Euro finance ministers will vote in brussels. Ireland lane out of steal it . We will wait and watch. On tuesday, germanys democrats will open a twoweek period to vote on the Coalition Pact for angela merkel. Wednesday, minutes for the january meeting. Stay with us. Surveillance with francine lacqua. Im going to join caroline on radio. This is bloomberg. Francine President Trump lashes critics. S he sends 14 tweets in 24 hours. Traders brace for more than a quarter of a trillion dollars. How steeply will borrowing costs rise . Detailing the divorce, the u. K. Prime ministers postbrexit vision is starting to emerge. The island riddle remains unsolved. Francine m