Transcripts For BLOOMBERG Bloomberg Best 20170417

Became turkey and we worked on different fronts. My nation stood tall. We are not divided. We are not separated. Polls here ande abroad. Mike pence said that there should be action against the the administration defied the Trump Administration. The u. S. Wouldat act without china, if necessary. Not label china a cy manipulator has resulted in trump reversing on a promise in the campaign. Chinese growth accelerated and investment picked up and retail sales grew. And salesstment expanded with the industrial output up. This further cements the chinese rebound. A check of some of the things moving. The turkish lira is up after the president winning and you see the japanese yen up by another quarter of 1 . The yield on the 10 year note is off by 10 basis points and we are seeing the market reopened, following the barrel and we53 a did see crude oil have the weekly gain over the course of last week. We have more norse shortly. The stories that shaped though we around the world. A shockingines after video. Of over from the start a focus on the Balance Sheet. Is higher than anyone thinks it should be. Who will be the next french president who do you think will be the next french president . What will be the next coalition in germany . What will happen to the terms and conditions of brexit . Michael donald trump continues to promise big reforms, but opinions differ on if and when he will pull them off. I dont know when it is going to happen. If i knew that, if i would be pretty rich. To accomplish something in that area, there has to be something taken away. Michael it is all straight ahead on bloomberg best. Michael hello and welcome. Im michael mckee. This is bloomberg best, your weekly review of the most important Business News from Bloomberg Television and around the world. With several major banks reporting earnings on thursday, investors were poised for big news from the Financial Sector this week. They certainly did not expect the news about barclays that came out on monday. Francine Barclays Says they made a formal, written reprimand and they have made a significant cut to the ceos pay after he tried to identify a whistleblower in 2016. The bank says staley made an error in not applying perfect governance. We know that in 2016 he tried to figure out who and this came to the attention of the board this year and it seems to be a violation of rules surrounding whistleblower protection. He should have saw it to find out the identity and in the statement today, there were repeated attempts to find out the identity. That led to action by the board. Staley will be reprimanded. He has admitted his error and apologized in a staff memo. He said he should have let compliance handle the matter. He may lose 1. 3 Million Pounds of his bonus to show the appropriate amount of contrition. Why is he still in the building . Obviously, the board thinks he can survive this. They think you might be given a sympathetic hearing. The wells fargo accounts scandal is rearing its head again. This time after a sixmonth independent investigation found wells fargos executive shrugged off the scandal. They lay the most blame on the former bankhead. Today, through her lawyer, she struck back rejecting the boards conclusions saying we saying we strongly disagree with of the report. When did they know things . One of their main conclusions is that the woman that ran the community bank, that she knew of a lot of things and she was really this hard person who would not allow a lot of other people to make changes into the bank and they also had john stumpf, the former ceo, her boss directly. He had been slow to fire her and did not really give enough guidance at that time. What else are the additional consequences today . Or is that it for now . In terms of compensation, they also voted on friday to call back 47 million in compensation from her. In terms of other firings, the board found earlier in this investigation, they did fire for four people. Some were deputies, others worked in the regional banks, less strictly under her. Jonathan Federal Reserve chairman janet yellen spoke at the university of michigan and said the fed is no longer putting the pedal to the metal, but has shifted to hold in gains in growth. Chair yellen what we want to make sure of is that we sustain the progress that we have achieved and that the appropriate stance of policy now is something closer to what we call neutral. Jonathan we all love a story, but does the story ultimately matter . They tell us it is not tightening. It is the removing of accommodation. Do the words count . They do count when you get into the markets because the fed is still accommodative. It is still putting some stimulation into the economy. Just less of it. What we should start to see as time goes on is the effect on the markets of Rising Interest Rates and less juice for the stock market. We have not seen that so far, which is the interesting conundrum here. Michael geopolitics continue to take center stage for business and markets today. Secretary of state Rex Tillerson meeting with foreign minister lavrov in moscow secretary. Lavrov is meeting with Rex Tillerson right now. What are we looking to come out of these meetings . The u. S. Has low expectations for these meetings. What they are basically hoping for is for russia to say basically, we will think about it with the u. S. Proposal, which is that washington really wants moscow to reconsider its support of the syrian president , bashar alassad. The current state of u. S. Russia relations is at a low point. There is a low level of trust between the two countries. Russia is open, not only for dialogue, but also for joint action aiming for the results where it is mutually beneficial for both countries. Kevin heading into this, there were questions about whether or not foreign minister lavrov and secretary tillerson would be able to play nice, so to speak, politically. Rhetorically speaking, they vowed to Work Together to remove terrorism from syria and to Work Together to denuclearize north korea. But on policy, there was a marked difference. A difference that will no question reshape and mold President Trumps time in the white house. President trump says he is likely to back away from a key campaign promise, saying he is unlikely to brand china a currency manipulator. Speaking to the wall street journal, he also said the u. S. Dollar is too strong. He suggests it is because people are too confident of him. It would suggest tough trade rhetoric has faded. What does it really mean, domestically . This is actually a very big deal and a very big step for donald trump. He said he would label china a currency manipulator on day one if he were elected president. So, this marks a major reversal from that campaign promise. He also, in this wall street journal article, that a strong dollar is not good, a bad thing. That is a real move for the u. S. As a whole. For the past several decades, president s have said a strong dollar is in the u. S. Interests. Stepping back from that and reversing that position is pretty significant coming from donald trump. David we have heard from three of the five largest u. S. Banks. Are there any themes consistent across the banks that we should take away . The theme that i see is that the wall street side is doing quite well. Trading is buoyant. Even equities trading, which some people were not expecting to do so well is doing really well. Citigroup had its best quarter for fixed income trading in three years. That is all great. But, the consumer, the main street side is not as strong. The loan growth is not what people would have hoped, given the optimism in the market. There are a variety of reasons being given for this. Also, expenses are not going down sharply. In some cases, you are seeing some expenses rise, like at wells fargo, for example. A stronger quarter for jp Morgan Capital markets really drove the better part of that, fixed income trading. Equity trading also better than expected. We also saw some fees at citigroup that are than expected. Everything else seemed to align. What is interesting is actually we saw at all the banks, reserve releases this quarter. A lot of that was driven by energy. Last year, that was a big headwind for the company. They were being conservative in terms of reserving for losses. Now we see some of that being released since the outlook has improved. Michael still ahead as we review the week on bloomberg best, Christine Lagarde assesses the big risks to the World Economy in 2017, and Stephen Schwarzman explains why the devil is in the details for Donald Trumps tax plan. Plus, ford ceo sees Growth Opportunities in china and up next, more of the weeks top headlines. A viral video sets off a social media explosion and United Airlines deals with the fallout. The economics may have to be that they are willing to raise the price, they are willing to pay passengers to get off the airplane. Mike this is bloomberg. Michael this is bloomberg best. I am michael mckee. Lets continue our global tour of the weeks top Business News with a story involving a commodities giant facing a challenge from an activist shareholder. Bhp targeted for an overhaul. The Investment Firm called the worlds biggest Mining Company to unify its corporate structure, spin off its assets, and improve capital returns. Give us the details on what exactly paul singer is urging they do. There are three things the hedge fund is calling on bhp to carry out. One of them as you say there is a demerger of the u. S. On shore and conventional oil assets. Elliott reckons those are worth about 22 billion. He wants to see those assets bundled into a single entity on that would then be lifted on listed on the u. S. New york stock exchange. Theyre looking for bhp to simplify their quite complex structure. Bhp, essentially two companies, one in london and one in melbourne and the trade as a single entity. That has all manner of legal complications. It also brings up quite a number of complexities in the issuing of dividends. The third thing and wont be a surprise, here is another investor calling for improved returns to shareholders. Bhp says it is not worth the cost and rejected the suggestion of an overhaul to their business. What does it mean about Shareholder Activism in the Mining Industry . What does it tell us about where we are in the cycle . I think it tells us that management of these Companies Need to be acutely aware in the environment where Commodity Prices Going Forward seem to be stagnant. Investors will be looking at these hard, finding pockets of value they think management should be addressing more closely. This is a perfect example of that. Keeping u. S. Manufacturing jobs onshore has been a priority of the Trump Administration. Earlier this year, toyota pledged they would invest 10 billion in the United States and they followed through with a first installment, a 1. 3 billion installment at a plant down in kentucky. The president went out of his way to say this is a great investment that reflects real confidence in the economy. Under his administration, how long has this been in the planning stages . Is this something thats happened since the election . The tnga program for toyota is not brandnew, it is just an opportunity for us to start introducing it here in north america. There are only a couple different manufacturing plants and vehicles on this new platform right now, so we are honored to be the first one in america to be able to get this program. We have been working on this camry for more than three years. This is not something that is just brandnew and picked up recently. Today, at t made a deal with a health care provider, and in talks with the drugmaker akorn. Whoever heard of Straight Path . Essentially, it is just a spectrum buy. I think they have nine employees. So they are not the Biggest Company in the world. This is all about 5g. At t is trying to get ahead of where networks are going. Its also about the internet of things. Sometime down the road, you can use your phone and start your car before you get to it so it is warm. In general, at t has been very acquisitive. They bought directv and time warner. They have done a lot of these 1 billion and 2 billion deals through the years. The chinese text conglomerate has been forced to drop its 2 billion acquisition of visio. Just the latest setback to the Global Expansion plans. It is facing some huge challenges. I am talking about the u. S. And the plot of that is the sales pitch, looking distinctly murky. Absolutely, it is a pretty grim picture for the ford echo in the u. S. We are talking about the chinese conglomerate that does everything from smartphones to video streaming to electric cars. They set themselves a target of 100 million in u. S. Dollars in revenue by the end of 2016. The got 15 million. As a result, they are cutting jobs by about a third. They are pulling the plug on this deal. They have tried to push through to buy u. S. Tv maker vizio for 2 billion. That deal was really going to be part of their attempt to grow the brand and get a real foothold in the u. S. Market because in terms of brand recognition, it is still pretty weak. It really speaks to the cash crunch problems facing the company, articulated by the billionaire founder last year in a letter to his employees. It seems the situation is actually getting worse for their u. S. Business. Billionaire Patrick Drahi altice filed for an ipo. The european mogul hoping to exploit stock market gains to create currency for further expansion. So, what is going on here . Why now and what would they potentially do with this money . Altice is a Cable Company in the u. S. Formed through the acquisitions of cablevision and sudden link, which are two smaller cable companies. With this ipo, they can raise funding to potentially do other deals in the cable space. I do not think many people are thinking they would stop at acquiring those two smaller cable companies. One company they have expressed interest in is a Cable Company called cox communications. Cox has repeatedly said it was not for sale. That would probably be one of the last big targets for alstice. United airlines off by 3 as the video of United Airlines personnel dragging a passenger off an overbooked plane went viral. Walk me through what the real issue is here for united aside from pr. I think all the u. S. Fullservice airlines are looking for ways to make their operations more efficient. Filling the airplane more makes them more efficient. I think we are probably getting close to the maximum overbooking and what we call load factors, the amount of people on the airplane. We are getting to the maximum that they can put or sell into an airplane. Thats the challenge here. Alix if they are hitting against their max load factor, what does that mean for their bottom line . George i think it means we are not going to get a benefit to their bottom line from selling the low factor even higher. I think the challenge here is the airlines have to think about if they are going to oversell the airplane to the degree that they are right now, the economics may have to be that they are willing to raise the price, they are willing to pay passengers to get off the year planes they can get the priority passengers on. We can see it is a man of asian descent. What is the ramification in terms of passengers in asia . There is a blowback here. There is a very potential blowback here, because if the chinese population feels united was discriminating somehow against this passenger because of his race, that can be a severe problem, because united has the most nonstop flights to china from the u. S. Among the u. S. Carriers. Mark bombardier said to be in talks to combine train operations. That is according to people familiar with the matter. What is the logic . What is the industrial logic . Does this combination makes sense . It absolutely makes sense. It is a capital intense industry. It requires a lot of capital to roll in stock from producers. Joining forces does makes sense. We see a clear pattern over the last couple of years. Two years ago, china was the Worlds Largest producer of Rolling Stock and then we have seen hitachi snapping up an italian peer. There is a clear rationale for combining those players. Toshiba shares are slumping in tokyo after it warned it may not survive the enormous losses at its Westinghouse Nuclear unit. The stock down 2. 7 . The warning came as it reported delayed Third Quarter results that were not approved by auditors. How good or bad is this . It is a very unusual step for a company to take in japan. They have been trying to close the books on the december quarter. We are quite a few months past that at this point. They missed two deadlines. This was their third deadline for filing financial results. They said they could not get auditors to sign off on this Financial Statement so they did it themselves. They made the disclosure and did cite the risks of their ability to go as a growing concern. This is a big deal stemming from the billions of dollars in losses at their Westinghouse Nuclear business in the u. S. Mark tesco shares lower today, after the uks biggest supermarket vowed to keep prices low. Ratcheting up the pressure on an industry beset by shrinking bond profitability. At the same time, the company posting an adjusted operating profit rose. It rose 30 to 1. 2 8 billion pounds. They say they plan to resume Dividend Payments in 2018 fiscal year. We have beaten our expectations slightly which is good and pleasing. We are confident about the year ahead and confident that we are on track for the 3. 5 to 4 operating margin which we highlighted in november as our ambition. Michael welcome back to bloomberg best. I am michael mckee. International Monetary Fund will hold its annual spring meetings next week in washington, d. C. This week, bloombergs Francine Lacqua sat down in brussels with imf managing director Christine Lagarde to get her thoughts on the state of the global economy. Francine what is the one thing we should worry about more . Is protectionist measures as bad as we thought a couple months ago . Christine protectionism is clearly a threat. And one that if it was to be realized, it would really be a break on growth, a break on productivity, a break on investment. We are seeing both innovation and trade are conducive to productivity. Productivity is the agent for growth and better allocation of resources. As part of the risk that we see, clearly protectionism is one. The Political Uncertainty we see around the world, particularly in the european region, is also high on our agenda of risk and the potential for capital flows moving from emerging market economies to advanced economies as a result of the reinforcement of the dollar and a rise of Interest Rates is a third one. Those are the three risks that apply to a situation which is quite positive at the moment. Francine do you believe the Trump Administration could be less protectionist than we feared in the beginning of january . Christine as always, i do not think any economy would actually prescribe limited growth, limited productivity, limited investment, limited innovation. So, if policymakers, including the u. S. Policymakers, want better growth, more investment, more innovation and productivity, trade is part of the solution. Then, you go into the question of what kind of trade . Is it trade with restriction . Is it trade with distorted measures . I hope would agree we do not want distortion. We do not want restrictions. We want a trade that is open, fair, and inclusive to facilitate opportunity. Francine do you worry about french politics or the greek bailout . Christine i worry about the outcome of any election these days. What the economies do not like and what investors do not like is uncertainty. The track record in the last few months has been the realization of unpredictable results. That leads to a period of uncertainty now. Everybody wonders, who will be the next french president . What will be the next politician in germany . What will happen to the terms and conditions of brexit, visavis the rest of the European Union . The sooner those results are known, the better people can actually plan their lives and investments, location of business, their jobs Going Forward, and so on and so forth. Michael Francine Lacqua also asked the e. U. Economics commissioner about his plan b if brexit negotiations fall apart. You will hear his answer later in the program. Up next on bloomberg best, an exclusive conversation with James Bullard on the challenge of cutting down the feds considerable Balance Sheet. Plus, businesses is chomping at the bit for donald trump to deliver a tax reform plan. Stephen schwarzman says, take a deep breath. It is very complicated. If the numbers were easy, Somebody Just would have printed it and sent it to you. Michael this is bloomberg. Yousef look, the poles had said this would be a close race but most people would have expected more of a comfort margin in there. That did not happen. 51. 4 in favor of that motion, giving the president the power stay as head of stage. And more importantly, dismissed judges and get back to the leadership of the party. The reaction, let me show you what has been happening in the moment. But first, this is what he said. Wheel we said we would not now down in front of anybody. Citizens, i salute you with my feelings. We became lively and brothers and altogether, we became turkey. On alled together different fronts. Against all of these, my nation stood tall. Here and abroad, you exploded the polls. Yousef let me show you how the lira has been react into the story. We got the first indication and then the rally materializing. We saw some strengthening in the liradollar trade. That is another want to watch out for through the day. Let me give you the other stories we are watching out for. Vice president mike pence is in south korea. Demilitarized zone. One day after the north korean regime to spot divide the Trump Administration. The u. S. Would act without china if necessary was the warning. Label china to not as a currency manipulator is a result of it is a result of receiving chinas promise to help against north korea. Donald trump has reversed a promise he made during the election campaign. And chinas growth accelerated for a Second Straight Quarter as investment picked up and retail sales rose. Asset investment grew above 9 . March retail sales expanded by 11 with industrial output up 11. 6 . Here are some of the key traits we are watching. Dollaryen, slightly weaker. Crude down. This is bloomberg. Michael this is bloomberg best. I am michael mckee. Janet yellen said the Federal Reserve should adopt a more neutral policy stance and dialback its stimulus efforts. Also on the feds to do list, trimming its 4. 5 billion trillion dollar Balance Sheet. Needullard addressed the to bring that figure down. First of all, 4. 5 trillion dollars is higher than anyone thinks it should be. Someu want to create policy space for the future and at least have the option of doing quantitative easing in the future, you should start getting the Balance Sheet down to a reasonable size today. Another aspect of this is that all you have to do is to allow the reinvestment policy to end and then you can gradually run off some of the Balance Sheet size over time. Also, if you think it is lumpy, if you look at the pictures of what is maturing when and what month and that kind of thing, it does look kind of lumpy. We can manage that and smooth it out in such a way that it declined at a given rate. So, i do not think this is a matter of doing something that would cause volatility in markets. I think it would be taken in stride by markets. I think we could get to a lower number than 4. 5 trillion with a reasonable policy. I need to jump in here because i want to ask what is a reasonable size then . What is the number . Jim that is a good question. Before the crisis, it was about 800 billion, almost all cash with some reserves. Post crisis, i think, if i have my numbers right, cash is all the way up at 1. 7 trillion now. So if you add some reserves to that, maybe a couple hundred billion of reserves, you could get to a Balance Sheet size of 2 trillion. The point is the 4. 5 trillion we have now is way above anything like the 2 trillion range. So, we should allow it to run off, so we are making progress toward that eventual goal. The committee has not decided what it wants to do, but, even if we ran policy with significant amounts of reserves, we would only need a Balance Sheet in the 2 trillion range. The point is not to go to 2 trillion immediately. It is just to allow the run off to occur gradually over several years. Michael there was also plenty of conversation about u. S. Fiscal plans this week on Bloomberg Television. On tuesday, President Trump welcomed more than a dozen ceos to the white house for a discussion of economic initiatives and strategies. Blackstone group ceo Stephen Schwarzman leads the president s strategic and policy forum. He leads off our roundup of interviews on u. S. Politics and policy. David did you get a general sense of the timetable for tax reform . When will we have, not tax reform itself, but a plan coming out of the white house . Stephen i am not sure about that because it is complicated. If the numbers were easy, someone would have printed it and sent it to you. To accomplish something in that area, there has to be something taken away from other people to have the revenue to finance the tax cuts. There are a lot of different ideas. A lot of different people both on capitol hill as well as in the white house. They are all thinking about what the tradeoffs are. I expect a much more deliberate, logical approach than trying to Pass Health Care in 17 days. That is not going to happen in a tax year which is good for everyone. I also think there will be a circle back on health care. In other words, the publicity on that three weeks ago is dead and gone. It sort of has difficulty being dead and gone. I think it is worth working on in the house. How long that will take, i do not know. People are talking and ultimately, they should be able to get something out of the house, whether it goes anyplace in the senate, that is your call or everybody elses. David what about the sequencing . Do you have a sense that they will hold health care up in order to get tax reform . At one point, the president indicated that was the sequencing he had to follow. Stephen it would be better from a scoring perspective if they could do that. I think that is in the land of the unknown. Prudently, you would plan for that not to happen. If it did, it is a huge bonus and makes life easier for tax reform. David from what you said, it sounds like the president is looking at a comprehensive approach. Tax reform, not just tax cuts. People say we could get tax cuts faster provided we are ready to borrow the money which you raised. I assume you would rather have comprehensive tax reform even if it takes longer. Stephen when youre dealing in months, that is not long. That is only long on television. It is not long in the context of the kind of legislation and other issues. I think just just reducing taxes is that is sort of a fallback, as opposed to reform. David is there any element of the tax reform package that you, as head of blackstone, regard as essential . If we dont get that, it is not worth doing . Stephen i do not look at it that way. One, i am not charge of that world. I do not know that anyone is. Is exactly in charge of that world and we sort of work with what comes out of the system. It is individuals are somewhat powerless to affect that overall outcome. Francine what specifically do you see the administration getting past congress . I specifically see Corporate Tax rate reductions. That is the key to rest economic key to Economic Prosperity in the short run. We have the highest tax rate and in the oecd. We have one of the lowest revenues in the oecd. We are of the only country that has a global tax, not a territorial tax. We have bad depreciation rules. If he can get that rate from 35 to 15 and have 100 expensing of capital purchases, this could be one of the most explosive growth periods in u. S. History. Mark there was an if in there. And there was an this could be in there. Those of the words i am interested in. When is it going to happen . If i knew that, i would be very rich. Obviously, i think it is going to happen in this administration. I would expect some of the big tax cuts will not happen until next year or the year after. If you remember with reagan, the really big tax bill was 1986 when we dropped the highest rate from 50 to 28 . We cut the corporate rate from 46 to 34 . That is when we unleashed growth in the economy. It may take some time with this administration, but i expect it sooner rather than later. Mark why should i be patient as an investor and wait for something that will take one or two years . Because you have no choice, to be honest with you. Two years will pass and it will pass for all of us. If you sell off your stocks and are impatient and take your gains right now, someone else will get the real profits you do not have. Kevin do you think we could actually get some kind of comprehensive tax reform this year . I think the chances of that are below 5050. But, they are below 5050 every year for the past 30 years. It will take a concerted effort by the president of the United States to say this is what i want, this is what is good for the american middle class, this is why i came to washington, to improve economic performance. That kind of effort is necessary to get tax reform done. If you dont have that, it himif you dont have that, it simply wont happen. Even with that, it could be quite difficult. As you point out, just because they are republicans does not mean they agree on the nature of the reform. We saw that in health care. We will see it in tax reform. You need an enormous amount of Political Capital being spent by the white house to get this done. David deregulation is something we hear about from a lot of market leaders and Financial Market leaders and Business Leaders. Particularly in the Financial Institutions area, we hear that they want to cut back on doddfrank and on the other side they say maybe glasssteagall will come back. You were a treasurer and you were enforcing these regulations. What do you make of that set of proposals in terms of what they would do for growth in the United States . Glasssteagall was a 2500page piece of legislation developed in a year in the midst of a major crisis. Excuse me, doddfrank. It is inconceivable that there shouldnt be changes made to doddfrank. It is surely much too burdensome on a set of Community Banks and smaller banks. There are other provisions that are probably having some adverse effects. I am worried about what is happening to liquidity in the bond markets as a consequence of the changes that are contained therein. Hopefully, we can go about it in a rational, thoughtful kind of way. It was only a few years before the financial crisis that you had an administration that was doing photo ops where they would take books of regulations and they would take saws like you use for wood and all the major officials would be pictured taking saws to the books. That seems to me to be very much the wrong philosophy toward financial regulation. It is a kind of mindless deregulate for the sake of deregulate philosophy. In some of the statements i hear from the administration and from some of its supporters, i worry we might go back to that. That would be a grave mistake. Tesla hit a new milestone after it surpassed General Motors to become americas most valuable auto company. 51 billion in terms of market capitalization. This is more of a symbolic moment where tesla crossed the line of being more valuable than gm and ford. You really have to look at why. Investors are seeing tesla as this possible future dominator of electric cars, maybe a leader in Autonomous Vehicles and maybe a leader in electric storage. It has a lot of business with potential and that that is that is what everyone is playing for. It is a longterm play. Michael you are watching bloomberg best, i am michael mckee. Lets revisit more of the weeks most compelling conversations with Business Leaders and policymakers. Bloombergs thomas kent caught up with fords ceo thomas shields in shanghai and talked about the automakers ambitions in china. Mark there are huge, enormous mutual ties between the the two countries from a trade standpoint and we have to tread carefully on that because the economic relationship is the basis of the overall relationship. I am glad to see both leaders meeting early on in their 10 tenures. The auto area is one area where china could level the Playing Field in terms of joint ventures or the tariffs. Is that something you think is possible now . Mark for u. S. Businesses, china is a very important market. Tangible reforms and openings are needed because the thing there is, how do you make sure you decrease policy uncertainty, boost business confidence, and, at the same time, create equal opportunities for each nation . I sit on the Manufacturing Council and we all share the same objective. We want a very healthy and vibrant u. S. Economy. What are the opportunities in china in terms of sales and how much is that going to be reliant on a relaxation of the rules we see in china . Mark if you look at the chinese market, less than 2 of the market here is pickup trucks. Even with that, it is the fourth largest in the world. What we have seen is the government is thinking about potentially changing some of the restrictions, which we think would grow that customer appeal for pickup trucks. A couple of provinces have done that already. The research we have done, the initial orders we have on our new f150 raptor, is a huge opportunity for us to continue to grow the ford brand in china and our business in china. Francine how will brexit go . Lets say there is no deal. What industries in europe and what countries will suffer the most because of this . Frankly, i refuse to speak about no deal. Why . Because if you Start Talking about plan b, it means you do not believe in plan a. And second, because it is two years from now. Third, i am convinced we can make it. If we negotiate on principles what are the principles . First, everybody must defend its own interest, second is about citizens, the freedom and movement of citizens. There are 4 Million People from the e. U. Who work in the u. K. London is among the biggest the 10th biggest french city and third, there is the financial aspect, which we will discuss and then fourth, discussing the future of our and relationship needs to be very close. This must include a trade deal and operations in research and defense. And the fight against climate change. I would say it is not that im optimistic, i am a volunteer. Francine you are optimistic. Lets all say you believe in plan a. Reassure me, there is a plan b if it does not work. No. We would have to think about it. But here, everyone is energized and mobilized to succeed. A it will be difficult at times, obviously. Obviously, it is a complicated divorce and we have so many links together and so many interests there, but everybody is mobilized to succeed. We want an orderly, clean brexit and a strong relationship with the u. K. Lets talk about the president ial election in france. Youve got the far left candidate melenchon catching up with fillon. Melechon, where is he getting the most support from . Where is this renaissance coming from . Everywhere, really. We are doing a happy campaign. That is why it is working. We are far, far from the pessimistic pictures that some of the candidates are giving. This is a very grassroots movement. We are trying to install in france, far away from the traditional Political Party stuff. You talk of melechon not wanting to leave the single currency or the e. U. Straight away, but wanting the e. U. To change. Is melechons ambition to propose that france leave the e. U. . Is that his ultimate ambition . Sophie absolutely not. Our ambition is to change europe for the better, for better cooperation between our people, but also, because we all agree, left or right, from different parties, or basic citizens, we all agree on one point the current e. U. Is not working. Basically, what we want is plan a, to rebuild a different europe and plan b, if that does not work, we want to new tactics launch new types of corporation and join forces with brussels. What is the top issue for melechon in terms of change . Crystallize what he wants to change first and foremost from the e. U. Sophie we want to bring back democratic sovereignty. That is in a nutshell what i would say. Treasuries have rallied after President Trump says he likes the feds low rate policy and would be open to renominating janet yellen as fed chair. What we saw overnight, it was a pretty spectacular day when it comes to the treasuries Market Action that we saw. Do you expect this story, this trump and china story to continue driving these moves . It is the only thing that is. There is no reason in my mind why yields in the u. S. Or rest of the world are as low as they are. The reflation trade going on well before trump is embedded for at least another year. The geopolitics is the driver right now. Every time we get ranked to that 230 u. S. Level, we test it, and it does not hold. That would be the key important level for me as i think the next week goes through. What breaks it out of that range finally . We need to see the employment side of things coming through really in terms of wages more than anything else in the u. S. We have had the growth bit and we have had the shift from , we need tofiscal see demand shift and lift inflation to get upside in terms of yield. From the downside from yields, more military action here in asia i think it will drive people into more and more safe havens. It seems that is the major script we are looking at the moment. If you had a barge pole what would you touch . Would you touch french bonds at the moment, 10 days away from the first round of the president ial election there . That spread between german and french bonds is pretty wide. Pretty wide. The things i worry about the french election, there are a lot of undecided voters. Every poll, you see le pen or maybe melechon coming up. It is not enough to really stop the concern, it just feels the digital outcome you get with these elections and mentally, with the french one, at least you get a second attempt. I would not be chasing french spreads at the moment. Theres enough returns elsewhere in the world that you do not need to get that little bit of extra return over germany that france gives you. Yes it is still wider, but really not enough to offset the volatility you will get if you get le pen and melechon go through the first rank. That would be a volatile period for france. Alix check out what we have seen so far this year when it comes to m a. Orange line, average premiums moving higher. White line, the deal counts moving lower. Michael there are about 30,000 functions on the bloomberg and we enjoy showing you our favorites on Bloomberg Television. Maybe they will become your favorites. Here is another function you will find useful. Quic. It will lead you to our quick takes, where you can get important context into timely topics. Here is our quick take from this week. Europes common currency, the euro, has been Cheating Death for years. Now, with the u. K. Heading for a european exit, greece in potential crisis, and discontent economic discontent fueling nationalism across the continent, can the euro, the most ambitious financial experiment survive . Here is the situation. Voters are fed up with the economic failings of some e. U. Countries and the loss of controls to brussels. Withdrawal from the euro has become a rallying cry for the nationalist movement, including italys fivestar movement and Marine Le Pens National front in france. Meanwhile, the greek tragedy continues. The government is struggling to meet creditors demands to keep the bailout funds flowing. Germanys insistence on war austerity leaves the lingering sense that greece may have to leave the Currency Union sooner or later. Adding to the problem is the euro areas slow recovery from the worst ever recession. Unemployment for people under 25 has been stuck above 40 in greece and spain, causing what some call a lost generation of european youth. Here is the argument. The Global Financial crisis exposed the flaws in the common common currency. When it was created by 11 countries in 1999, they agreed to a shared, central bank and a set of Interest Rates, but only a limited unified approach to Government Spending or bank regulations. When banks began to wobble and countries like greece and spain were pushed to the brink, the common currency meant they were tied to the euro, leaving them with little option but to accept massive government bailouts from the euro area. Germany, the biggest economy, paid the lions share. Since then, euro area leaders say they have strengthened the rule book to make the common currency more resilient. They argue that even if greece falls out of the block, the euro will survive. European leaders have shown they time and time again, they will do whatever it takes to keep the currency going. And then, there is the politics. The euro, unlike other currencies, is more than a means of payment, it is a symbol of europes aspiration to unite in peace and prosperity, but, some Business Leaders, analysts, and politicians suggest the currencys deficiencies mean the its demise in just a matter of time. Mike that was just one of the many quick takes you can find on the bloomberg. You can also find them at bloomberg. Com along with all the latest Business News and analysis 24 hours a day. That will be all for bloomberg best this week. Thanks for watching. I am michael mckee. This is bloomberg. Yousef in istanbul, the big story is the outcome of the referendum. The turkish people have given a yes to the constitutional amendment. Voting in favor of the motion. Two things to watch out for. One is that the results are being contested by the opposition. They argue there were some irregularities. A big european response. The assets are trading like this. Lira trade giving back some of the initial gains which were as high as 2. 4