Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20170223

Lets get to the breaking news. A number of corporate reporting this morning. We start with Peugeot Citroen. Listing their midterm outlook, thats one of the headlines coming through on the release today. Its said the net profit for versus70 3 billion euros an estimate of 1. 72. 15 by 2021. Not just getting the earnings coming through, also getting new targets for the business. Listing their midterm outlook, the purchase of gms europe assets are the focus of the business at the moment. Reporting in the last few minutes a. M. To reach an open agreement by the first week of march. Talkingthe ceo has been to leaders in germany and the. K. Prime minister we know those conversations are ongoing. We will get further analysis of what is happening with the french carmaker, taking that their position they lost recently and taking on other brands. We will get details as we get through the program. The ceo will give up press conference at 7 00 a. M. U. K. Time, live here on bloomberg. Numbers coming through, just the basic so far. Giveandgo 4. 85 a dividend of 4. 85. That is based in zurich. The challenge is the company is facing, theyre been a few large sincel catastrophes japans synonymy. A few more details, the net number for the Fourth Quarter net income, 570 million, lower than the estimate of 50. 9 million coming through. Offline on the french insurance company, 2016 net income 5. 80 3 billion euros against an estimate of 5. 90 6 billion, looks to be a touch the low. Those are the headlines coming through. The secondlargest insurer in seeking to preserve its profitability by cutting costs, tapping demand for Health Insurance and stepping up digital investment. Theyve been facing some of the same challenges, near record lows. Some of those factors weighing on the business. We will discuss all these things live at 8 50 london time. Various assets, we mention the fed at the start of our conversation. That looms large over the risk radar. The msci asia pretty flat, the s p futures suggesting flat at the start of the u. S. Trading day. Threat,in inflation lots of trump uncertainty, of course. We are seeing moderating anticipations around march. Oil prices moving higher yesterday. Government data later, will it show the first contraction this year. Some of the bigger market themes, lets get to bloomberg first word news. Juliette u. S. Federal reserve officials have expressed confidence that can raise Interest Rates gradually. The latest meeting shows a move soon might be appropriate to avoid the risk of an overheated economy. A one in three chance of a rate increase when policy meters policymakers meet again next month. Steve mnuchin has had a strong dollar signals confidence in the American Economy in the currency depreciation is a good thing. With the wallw street journal, he added that shortterm dollar gains can have not so positive effects. The message is similar to the one he devoted deliver during his confirmation hearings when he sought to clarify suggestion by donald trump that he preferred a weaker dollar. The president is delaying banninga new version of travel to the u. S. From seven predominantly muslim countries. Thats according to a white house official who did not give a reason for the delay. Trump etc. Revamped executive order tailored to address legal issues that blocked his original travel ban would be released this week. South korea has pushed back against u. S. Pressure over its foreignexchange policy. Speaking at the central bank cap monsey policy unchanged, the governor said the nation only asked to check extreme swings in the won. Nasa has announced the discovery of seven earthlike planets orbiting a nearby star. The new worlds could hold live. They are less than 40 lightyears away in the constellation aquarius. Three of them are in the whereled habitable zone liquid water and possibly life might exist. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Find more stories on the bloomberg at top. Lets return to one of our big corporate stories of the day. Peugeots throne out with earnings this morning Peugeot Citroen out with earnings this morning. Ministerhope to prime theresa may after meeting with german chancellor Angela Merkel on tuesday. Both conversations were about protecting jobs protecting jobs in their respective countries. Caroline, great to have you on the program this morning. Oflooks like a positive set earnings, lifting their midterm outlook. Thats right, Profit Growth withugeot for 2016, operating income of 18 , beating estimates. 2011,e First Time Since presenting a dividend of . 48 euro per share. Turnaround like the over the past three years is really starting to deliver. We will see if this is enough to give them enough support for the acquisition of the General Motors operations in europe. We will find out more about this in about one hour from now with the press conference here in press conference with the press conference here in paris. They have a track record of turning around brands. It did not prevent psa from falling behind renault last year in terms of delivery. In 2016lion vehicles versus 3. 184 renault. This acquisition would make psa go back to number two. Anna you mentioned some details around what the deal would mean if psa manages to drive it through. Will we learn more about the purchases . Its just a word of caution. Yes, what weve learned over the past few minutes, they hope to reach an agreement by the first week of march. Certainly face a lot of questions today about the evaluation of the deal. And about possible job cuts. Over the past two days peugeot has pledged to protect jobs in the u. K. And germany. How he can deliver that willrotect obese jobs, obviously be asking the ceo in the next hour here in paris. Thank you very much, caroline. She will be staking out the ceo and following that press conference later. We will bring you that here on bloomberg television. Great to have you on the program. When we look at the story of consolidation around the sector in the auto space, does it seem to make sense of you . All these all automakers want reach thewant to scale. We are probably seeing the Positive Side of the Political Uncertainty in europe. We usually talk about it in a negative context, but jobs are rare commodity and have a lot of jobs to a lot of value to politicians today. Countries are looking to attract those jobs. Anna countries want to attract those jobs. Also made pledges around the type of government we are going to see in the way its going to work. Its quite a lot of pressure on theresa may for that region for that reason and for Angela Merkel. The companies are in a position to take advantage of that, i think. We will see that impact their scale and margins as well. At the same time, we had some concern that more broadly, we may be seeing a peak in terms of positive economic momentum in europe already, which can also have an impact on these cyclical sectors. Themewill return to that in a moment. Do you see anything in the auto states that makes you want to get involved in that sector . Any carmakers that excite you at the moment . We find better ideas elsewhere. A lot of these stocks have rerated on the back of positive trends. A lot of it is china driven as well. Recovery in the Consumer Sector in china, which a think is anding out its full course, unlikely to follow through terms of positive momentum. Move on to more macro topics in our next conversation. For are some highlights your day ahead. In the u. K. There are closely watched elections taking place today. In the northwest of england and in the midlands. Newnter meeting to elect officers today, including the next party chair. Lockhart is scheduled to speak at 1 15 p. M. London time. Up, the market says may, the fed says fairly soon. What is the outlook for u. S. Rates . We break down the fomc minutes. Could glencore be about to reinstate its dividends . And french president ial , doesate Emmanuel Macron he . Have an edit in the polls . We were break down the latest in french politics. This is bloomberg. Anna welcome back. You can see very little out that window. Its a week section for the hang seng, down. 4 . More details in a moment. First, lets get the Bloomberg Business flash. Barclays has the bonus pool for its Investment Bank by a similar amount to last years declined when it was reduced 7 . Its in part because of job cuts in a hiring freeze during 2016. The londonbased bank is due to announce earnings at 7 00 a. M. U. K. Time and we will talk to the barclays ceo here on daybreak. Teslas elon musk has said he still plans to deliver his electric sedan in july. The country said the model three electric sedan remains on schedule and will reach production of about 5000 units per week by the end of the year. Reassurances on the cars timing should ease concerns over whether the company can overcome its long history of product delays as well as the impending departure of cfo Jason Wheeler who joined from google. The chairman of nissan will remain, title he holds that Alliance Partners and mitsubishi motors. We will take the mantle of president and ceo of nissan while his longtime boss focuses on revamping is struggling affiliate, mitsubishi motors. South africas wealthiest individual will bear the brunt of higher taxes introduced by the Prime Minister to apply the revenue shortfall as Economic Growth falters. The rate will raise to 45 from 41 . His annual budget raise the dividend withholding tax to 20 from 15 and increased levies on fuel, alcohol, and tobacco. We have a very narrow tax ace. You have to do the best that you can. On the one hand, but at the same time finding opportunities to broaden the base on the other hand. Your bloombergs business flash. Its been about 20 minutes since japan closed and it was a flat session there on the end. We did see a little weaker movement in the session as the yen started to gain against the dollar. Downward pressure coming through from toshiba today. In korea, quite an interesting session. Bank of korea leading the Interest Rates on hold at 1. 25 . There was a lot of comments on the currency wallowing that from the bank of korea governor. He said its very unlikely youre going to see korea labeled a currency manipulator by the u. S. Shipping down 60 as it resume trading after a court found that it will be delisted in march. Weakness coming through in hong kong but youre still seeing Property Developers well supported as theres expectation that despite the property cuts from china you will still see Strong Demand for home prices. The shanghai composite down by. 5 . A little bit of weakness coming through from some of those aching stocks today and in australia the asx 200 up by. 4 . A quick look at currencies, the and thetronger by. 2 aussie dollar was also in focus today because business spending numbers came through and the overall aussie down. 10 . Point 93, the weaker dollar of focus for asian investors today. Details of the asian trading day from hong kong. Fed officials expressed confidence they can take their time raising rates and there is little threat inflation will suddenly accelerate. The odds for an increase in march retreated to 34 . Thats the probability of a hike at the march meeting. Lets get to our guest on the set here, he still with us on bloomberg daybreak europe. When you look at the fed minutes last night, there seems to be a lack of urgency coming through in the minutes because they dont necessarily see an urgent threat for inflation. There are too many uncertainties around trump. The uncertainties on the fiscal side is definitely weighing on their decision. This is characteristic of chair yellen. I dont think this is a time where she feels the need to jump the gun. I waiting until may perhaps, it gives more time to see what comes out of tax reforms and other fiscal policy. It gives more certainty to work with. Nicelyhis chart shows the diverging expectations around march and may. May seems to be much more on the markets radar. Is that your expectation . That would be of busy year for the fed compared to the last couple. It would. Its touch and go in terms of two or three. The way we look at markets, the approach we take, the direction is clear and has important implications for value in fixed income versus other asset classes. The rest is really noise. They will get some more noise before the march meeting. More employment data, inflation and spending data. Do you think it is the details of what trump wants to do . Even that might take a long time to know. I think the data can move the decision but it is a very high bar. If we get a very hot employment , that could swing the probability a little higher. But i think its really much more driven by the fiscal side. Anna one of the divergences weve seen in policy has been maintained in the wake of trump s retreat, the fact that the ecb is still on its quantitative easing path. We can talk about that in a moment. You say its on a particular trajectory. U. S. To year yield over germany is at its highest since 2000. We have been flagging this as well. Reflectingt this is is concerns about Political Risk in europe. You see france fall off but that ends up with rotation into germany as a safe haven. Thats partially leading to this widespread level. Riskink there is a real that the ecb has a policy error here because political pressure for them to normalize before we actually see inflation on a selfsustaining path. I think this is going to start to narrow. On the other hand they faced political pressure to keep things on an even keel with all these political events on the calendar. Yes, but out of germany theres a desire to see the end of all the things that make them very uncomfortable. The qe program before mario draghi exits and gets replaced with someone from germany, i think they want to see the end of those programs already happened. Thats the bias they will sort of pressure him towards. Misread. Hey dont you will see Inflation Numbers improve in the coming months, but part of that is really just commodity price normalization. Its not really coming from core inflation on a sustained trajectory. Anna we will get german gdp confirmation, but unemployment at a record low. The gdp numbers are due out in a half hour or so. Thank you for joining us. Andext, we get numbers u. S. R bits, will discuss banks and other sectors that are very much in the spotlight at the moment. This is bloomberg. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Anna a warm welcome back, this is bloomberg daybreak europe. Breaking news from various corporate. , anything from skincare to wallpaper manufactured by this company. Fourthquarter adjusted operating profit, 765 million euros, ahead of estimates. 2 4 . Sales growth of they are expecting 2017 growth. They propose a dividend of 162 per reference share. We had some analysts talking about continuation of decent momentum in laundry care and cosmetics to continue to do well and grow. We will look for the breakdown of the various parts of the business shortly if that comes through. Telefonica, numbers coming through shortly. So far they are telling us a little bit more about the extension of their london venue sponsorships. We are waiting for some details from them. It europes most indebted phone company, heading into 2017 with by ratherduce than relying on divestments. We are waiting for a few more details on how telefonica business is performing right now. Thats the view of the breaking Corporate News stories this morning. Plenty more coming at 7 00. Daybreak isn of available on your bloomberg and your mobile. Lets look at some of the stories that have made it into todays edition. The Federal Reserve said its going to raise rates fairly soon. Many officials according to the minutes of the Central Banks and fomc members said there confident they can gradually tighten amid little threat of inflation accelerating. The next story is barclays Investment Bank, with Deutsche Bank analyst forecasting an increase in fixed income currencies income. The bank reports earnings at 7 00 a. M. U. K. Time, and we will have an interview with the barclays ceo 20 minutes later. Daybreak focuses on the strong dollar doctrine, remaining in play. Thats what secretary Steve Mnuchin told the wall street journal. Appreciation over the longterm is a good thing, the dollar a little stronger this morning, up. 10 , thats the dollar index. Lets get a check on the markets. Were seeing how the Asian Session is digesting those minutes from the Federal Reserve. Fed officials saying they can take their time raising rates. The market interpreted this is pretty dovish. We saw treasury yields fall. The bloomberg dollar index is unchanged and slightly stronger. The 10 year treasury yield pretty much unchanged as well. A real mixed picture looking through the equity space in asia. This is how different currencies are performing against the dollar. Yields coming down in the sovereign bond space. Real weakness in math metals. Aluminum and shanghai down 2 . The msci asiapacific index retreated a little earlier and is unchanged right now. Some technical signals showing that perhaps the could be overbought. It continues to trade above the moving averages and the 14 day relative strength index is above 70. We will see if it reverses course at any point. This is a chart i have been focusing on this morning. The two year yield most sensitive to fed policy. Yesterday the german twoyear deal dropped to a record low. Since 2000. St its about haven demand, concerns about redenomination risk and ecb buying, a month other things. At what point does this yield premium start to come down as treasuries, more attractive . Something to think about as the european on markets open in just a half hour. A report showed u. S. Crude stockpiles fell. We will see if that continues to be reflected in chose the first drop this year. Wti above 54 a barrel. Anna a look at some of the Market Dynamics to be aware of. Interesting comments about consolidation within the sector or lack of it in the nearterm. Bitda, targeting a 2017 a high its higher than the 2016 number. They are talking about that now the cfo saying theres no talks underway for french consolidation. Saying consolidation will happen when rents one day. We will wait and see when that finally does come to pass. Lets move on to what we are expecting from the Mining Sector this morning. A lot has happened in 12 months. A year ago the company was doing everything to preserve cash and limit losses on plunging commodity prices. Now glencores talking about restarting dividend payments. David stringer joins us from melbourne. Hes been following the travails that glencore. What are investors looking for when glencore reports . Today . In a room for surprises . For surprises . What a difference a year makes. Exactly as you said there. What we will see is a continuation of the team we have been seeing from the minors. Its an extraordinary turnaround by the sector. Weve seen profits surge as prices have gained through the past year. Weve seen returns to shareholders boosted. That will be a key focus when people look at glencores earnings later today. The company said in december resume plans to dividends. It did suggest it will be 2018 before we see a more generous return to shareholders. Lets wait and see if it will be a case of delayed gratification. But we seen so far is they have outperformed and beaten expectations on those dividend payments. The likes of rio tinto announcing a buyback, also bhp announcing a bond repurchase scheme alongside its earnings. The story so far has been of expectations being beaten. Anna we will see where they get to. The company has brought itself back from the brink of the 2015 crisis. The end of 2015 was embroiled in crisis. They began selling assets. Since then there have been two key factors. Halved the figure through things like streaming deals. Along with the rest of the by the its been buoyed rising commodity prices. Chinese stimulus, great activity in the infrastructure sectors. Its all about boosting demand for raw materials. Thats been a huge room for all its key rivals. I talked to a cfo about what expects to see on pricing in particular. What our competitors saying about the outlook for commodities . Is the rally going to endure . Its going to be fascinating to hear from him. He is a contrarian, someone whose opinions stand against those of his competitors. It will be interesting to see where he sees the outlook. The news from his rivals is they are still wary. Yes, prices have rallied and there is Strong Demand at this point. Prices,ested iron ore it sees them moving lower. Some concerns over the outlook for china. There are unknowns around the reform of certain enterprises and whether chinas iron ore mines will come back online. There is certainly caution around the Mining Sector and it will be fascinating to hear his take on what it is. That i should point out peter is the chairman of bloomberg lp. Our guest is still with us here in the studio. Give us your thoughts on the ongoing debate on whether the rebound in commodities pricing thats lifted the fortunes of many will continue. I would be very cautious right now. Your colleague was mentioning about the potential for prices to correct from here. Main things have driven the price recovery. One is just china rebooting its Fiscal Program your credit growth thats listed commodity prices. That is reaching a peak. The second thing is, lets not forget the direct intervention into markets like coal and steel. To put production limits in place, to prop up prices. A seriousotivated by level of potential defaults in the sector that they were very afraid of. I think the market is quite distorted. Up by itpped doesnt give me fundamental strength to rely on. That thought, lets get back to the telefonica numbers we were waiting on. They have come through now. Coming in atome 3. 2 billion euros. Just below the 3. 3 billion that analyst had penciled in. They talk about seeing Stable Revenue in 2017. Net profits coming in at 145 million euros. Its europes most indebted phone company. Theyve been trying to get more cash out of the business. Divestment still part of the story over at this business that operates in spain and brazil and other places. Also talking about confirming shareholder remuneration this morning. We talked about a lot of things that youre not backing. We can put the Mining Sector in that bracket and also the auto space. You do like u. S. Financials. They are buoyed by increasing volatility. What is it about u. S. Financials that grabs you at the moment . We have to remember how leveraged these Business Models are. Even small adjustments to rates in margins make a dramatic impact on their earnings potential. The second thing is, we think deregulation across the u. S. Economy and in particular financials is something the market is talking about, but we think it is underestimating. Horizon,iyear time just how strong an impact it can have on earnings potential from this sector. Thats another strong driver to us that you will see come through earnings growth. And i think you will see consolidation in the sector as well, particularly regional. Anna what businesses are you talking about their . The more regional level type of banks that are still struggling with cost of regulation. They will see the cost basis come down as a result but in order to compete, they will see there is no alternative but to consolidate and have mores scale to compete with the larger banks. Even as the deregulation imperative is removed a little bit. Don trump talking about rolling back some of the regulations. Still underare review. What are your expectations there . I think we should be realistic. Inont think we should price a full repeal of doddfrank, but we dont need that. Even a partial delivery on just of those, the interpretation of some of those regulations, can have a dramatic impact on a sector that has been really beaten up since the crisis. Its been essentially converted into a utility as a sector. It will start getting its mojo back. Anna incorporates, why the enthusiasm . Is it about a belief of what he is doing . Both a macro as well as a microstory. On the macro front, there will still be a lot of fiscal and monetary support. The yield curve control will help the currency remain weak and very supportive for earnings in japan. Theres also a bottomup story happening with micromanagement changes in terms of Corporate Governance in japan. Its raising the return on equity which is also powerful for earnings. Anna you are a believer in that story. Coming up next, a News Conference with the ceo live from paris. Will he provide more details on the opel take over . , the ceoays numbers will be with us to talk about how that Investment Banking business has been doing through the last quarter. This is bloomberg. Anna welcome back. This is bloomberg daybreak europe. 1 49 in the morning. When we get to the start of the u. S. Equity trading day, were not expected to go very far, the equity session over in asia entirely flat. The msci asiapacific rounding out the day with very little movement. Lets get the Bloomberg Business flash. Barclays has cut the bonus pool for its Investment Bankers by a similar amount to last years decline when it was reduced by 7 . Because of job cuts and hiring freeze in 2016. It comes as the londonbased bank is due to announce fullyear earnings that 7 00 a. M. U. K. Time. We will talk to the ceo here on daybreak. Elon musk has said he still plans to deliver his massmarket electric sedan in july. The company said the model three electric sedan remains on schedule and reach production of 5000 units per week by the end of the year. Reasserts his on the timing should help ease concerns over whether the company can overcome its long history of product delays as well as the impending departure of cfo Jason Wheeler who joined the company from google. Handing on the daytoday running of nissan. With renaultlds and mitsubishi motors. His longtime boss will focus on revamping struggling affiliate mitsubishi motors. Thats your Bloomberg Business flash. For thank you much everything you need to know about the corporate agenda. U. S. Oil rose after an Industry Report showed u. S. Stockpiles fell. U. S. Government figures out today may show the first contraction this year. Program, it of the said i was trying hard to find some assets on the move and oil is the only one that qualifies this morning, up. 9 on the back of these expectations of what we might see in the data later. Yousef pretty high in terms of what constitutes a market move. Mixed signals as to what to expect. Drawdownet to report a. Ill pull up this chart to remind ourselves of where we are at. Saying weecretary have excellent implementation but it will come down to those inventories fight their. That is the blue line, the u. S. Crude inventory. Circled in red is when opec starts cuts start taking effect. It builds all the way to the week before. The highest let go level in three decades. Data, itto the api will be interesting to see what really happens. Ive looked through some of the estimates from the analysts and there is no mention of a drawdown in that survey. Citigroup coming out and saying u. S. Shale is a threat would completely derail the oil rebound. With thank you very much what you need to know about the oil price. More about french politics. The races is in full swing and things got a little easier for independent candidate emmanuelle macron yesterday. Agreeing to an alliance following speculation that bayrou might join the race himself. Heres the Market Reaction to the news. Youre looking at the yield. Pread during the announcement our guest is still with us to talk about where we go in europe. You were mentioning some of the Market Reaction we have seen, the nervousness around european politics at the moment. This was a decent size move yesterday in terms of the risk retreating around the french story as you saw these centrist candidates coming together. How do you see the chances for Marine Le Pen . Butm happy to see this, its way too early to get comfortable. From these coming candidates is still relatively pensompared to le message. Shes trying to ride the wave which is more of a global wave. The brexit and trump, that still has a lot of resonance with a lot of people across europe. I think it is too early to take a lot of comfort from this. Watching the markets around france, do we get more nervousness around the dutch elections . You seem to be the market seemed to be focused on the french story. Is it taking the edge off the dutch story at the moment . Getting that is right. It really is about france. It will be very problematic for the markets if she were to actually win after the second round. Although i think it really matters to look at the details. , then ithe were to win comes down to having a potential referendum. For that to actually come through, she wouldnt need to have a parliamentary majority as well, and that is a much higher hurdle to jump over. Anna you mentioned you were concerned that the ecb might tighten too soon and take away from qe to send. You not see strength in the data that merits the ecb taking its foot off the quantitative easing pedal . Its important to understand what is causing that to happen. Weve had a confluence of positive factors coming together in a very synchronized way. China rebooting its Fiscal Program through credit growth. Weve had an industry cycle kick in and in europe which is flattering those numbers. I would be very cautious about extrapolating those numbers in a sustainable way. Thats why we are relatively cautious in europe. Basis,rwardlooking theres a lot of potential for disappointment. The market is extrapolating in a straight line. Anna thank you very much for your time this morning. Next, we are moments away from barclays earnings. We will speak to the ceo. A lot to talk about on what kind of performance we will see. Will it justify the decision to hang onto that business . This is bloomberg. Anna how soon is fairly soon . Confidence, but doubt march. Barclays said to cut payouts for a third year. The bank records. We speak to the ceo. The road to acquisition, post peugeot takes over gms assets. A press conference now in paris. Anna a warm welcome to bloomberg daybreak europe from here in london. I am anna edwards. Waiting for numbers from barclays, focusing on the Investment Banking part of that story. Numbers coming through, pulling your adjusted net income 2 billion against an estimate of just 1. 59 billion, so this mining trading business does look to have delivered numbers are ahead of estimates when it comes to that net income for the full year. Ta 10. 3 billion. . 14 fromasic eps at glencore. This update, commodity trade in mining business headed by the billionaire, a rebound and coal, copper, and sink prices going no doubt to boost the performance of the business. Look out for the net debt position and what more they have to say on the dividend. In december, they announcing a plan to pay out 1 billion in dividends this year ahead of a more generous offering in 2018, so we look for more details from glencore. To deal with the small print, as chairman of bloomberg lp is a senior independent nonexecutive director at glencore, so we should make that clear. Lets move on to what we are getting from barclays, numbers coming through this morning, ct one ratio 12. 4 . Their final Dividend Per Share had come in at a share. This is a company one year into the tenure of daily. These numbers marking the first year in charge. He has fended off calls to shrink the Investment Banking business and focus on what will be the investment business. Instead of shrinking that part of the business, he opted to sell down the Africa Business that had been prioritized by previous management, and this morning, some comments around the Africa Business. Approval to cut their africa stake to below 60 , some more coming through there. Waiting for the details on fixed income. On market volatility has preferred by the brexit vote and donald helping the u. S. Competitors in that space. How much will it have helped this part of the business . Here we go. Numbers here, pretax profit coming in for the Fourth Quarter at 330 million versus a 2. 0 8 billion loss the previous time around im us of things looking better on that front for barclays. The adjustedg pretax profit number, 284 Million Pounds versus an estimate of 646 Million Pounds, that pretax profit number coming in light of estimates. We will talk about Investment Banking, bond trading, and how they are doing on those fronts. We will also talk about the bonus pool and how much they are shrinking that as reported has suggested. What they are doing with the doj in the United States. What their plans are with africa. Pretax profit 280 4 Million Pounds, below the estimate of 646 million. Lots to talk to about later on this morning. Lets get to some german data. John glenn data coming through, domestic demand bolstering growth and a strong final quarter. That is the headline from the cheeky reading, domestic demand drove German Growth in the Fourth Quarter, trade down on europes largest economy. Private and government spending, 0. 2 percent growth according to federal statistics. Net trade subtracted 0. 4 gdp from output. Adjusteda seasonally 0. 4 in the three months through december, matching exactly the february 14. T on so we were just waiting for confirmation around that german gdp number, coming in as estimated. Just be aware we are covering the auto story this morning. Peugeot releasing numbers today. We are on the ground at the press conference, the ceo racing around europe to shore up angelaal support from merkel for theresa may for what he is trying to do with the gm assets. That the press conference, any headlines from that we will be sure to make sure we bring those to you. Lets have a look at the futures then, europe, a little bit positive at the start of the equity trading day. Flatsian session overnight, lackluster session coming through. Lets get the first word news with juliette saly. Juliette thank you. U. S. Federal reserve officials have expressed confidence they can raise Interest Rates gradually. The minutes of the fomc of the show a hike soon to avoid the risk of an overheated economy. Traders are pricing in a one in three chance when policy makers meet next month. Steven mnuchin and has said a strong dollar signal confidence in the American Economy, and the currencies appreciation over a longer horizon is a good thing. In an interview with the wall street journal, he added shortterm dollar gains can have not so positive affects. The message is similar to his confirmation hearing when he sought to clarify a suggestion by donald trump that he preferred a weaker dollar. Meanwhile, President Trump is delaying until next week issuing a new version of his order restricting immigration and banning travel to the u. S. From seven predominantly muslim countries. That is according to a white house official that did not give a reason for the delay. Trump said an executive order addressed legal issues would be released this week. Has pushed back against u. S. Pressure over its foreignexchange policy and current account surplus. Speaking of the central bank, governor lee said the nation the comments reflect the concern about the intentions of the trump administration, mostly with regards to korea, and it is the largest trading partner of china. Nasa has announced the discovery of seven earthlike planets orbiting a nearby star, and these new worlds could hold life. They are less than 40 lightyears away in the constellation aquarius and clustered around a dem dorf star. Three of them are in the habitables own, where water and possibly life might exist. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Stories on there bloomberg at top. Anna this is bloomberg. Fascinating story that one, thank you very much. Has a steel pipe producer full year net loss that missed estimates come but sees ebita increase this year. Joined by the ceo from paris for an exclusive interview appeared great to have you with us today. Thank you for joining us on the program. Aur business is in transformation phase. Tell us how far through the Transformation Plan are you and how much success you are having. Of whatld say that most is under our control, we have achieved. We have complete the massive restructuring of our operations. We have divided our capacities in europe by two, and prior to two competitive production hubs in brazil and in china. All this done is behind us, so what is under our control is done. The benefits will come through depending on the markets and depending on how fast that markets, especially the oil and gas market, recovers globally. Would you say the worst is over is the worst behind you . Year was they last tough year for our sector and company, especially the level of the debt which is much lower than what many would have it, shows we have the worst behind us. How fast we recover will be seen. It depends on the market recovery. Anna may be on pricing for some of your customers. When you look at the oil and gas market, what is the outlook . See . Do you many people trying to work out if the rebound in prices is sustainable. I think it is sustainable. There is obviously a real good discipline amongst the producers , especially opec producers, to control the price of the barrel, and so confidence is building up, but it is pretty slow. We have suffered from two years crises, nothing similar happened over the last 3040 years in the oil industry come us of the confidence will take time to rebuild. The good news is that the one market is already recovering very fast. It is the north american market. It is the shale oil and gas activity, and it is really booming at the moment. Anna what is the test metric to look at in terms of how much that part of your business is booming . Take a picture of how strong that is for you in north america. Thatll, it is pretty clear the number of rigs operating is a good indicator of the activity. The end of may 2016 an alltime low of around 400 rigs operating in north america, compared to 1800 just 18 months before, so the trough reached in may, and now at the we are around 700, and as i speak we are already at 750 come a so we can anticipate north American Drilling activity will be increasing by at least 15 in 2016 compared to 2016 on average. Anna can you link rig counts . We count those recounts religiously here. Can you link them to topline growth or profitability in your business very directly . Time lagell there is a in terms of pricing, how fast we get on top of the volume edition. We get some pricing benefit. We are in the process of increasing our prices in north america. We need to do this because the price of the raw material, namely this graph metal that we used to make our own steel, is going up quite steeply as well, so i would say this scenario for us is first half, the benefit of additional volumes will be offset by increase of the cost of raw materials. The second half, we should see some benefit from pricing increases. This is north america only. Tell me, unfortunately, that is not the story elsewhere . That is not the story of the rest of the world. In the rest of the world, the story is about offshore, and of course offshore investment and investment in offshore production are much more in ,erms of size, costs, and risks much more difficult to decide in the unconventional jumping in north america. That is fundamentally why the swing country for oil is north america. It is easy to stop. It is easy to restart. For the rest of the world, making decisions to develop new offshore play is really something still difficult, so the good news is there is a discipline on the price of oil. This is a must. Without discipline we have no chance of the recovery, but it will take time before everybody is ready to decide to move forward, and i dont expect true to be taken before the second half of 2017. Anna what is the competitive environment like at the moment for vallourec space and oil elsewhere . What are the competitive factors you see in those . We have a couple of competitors which are proposing products and Services Equipment to ours, lets say the premium products, a partner from japan need one steel and sumi moto metals, and another base in argentina and mexico. The other players are really dealing with a much more commodity type of product, so they are impacted as we are by volume kleins in the oil industry, but as well by prices, margin, and low values, and strong pressure from oil companies. Thank you very much for your time, up next, we break down the barclays earnings. Jes staley joins us. This is bloomberg. Anna welcome back everybody. This is bloomberg daybreak europe. Barclays just posted their numbers minutes ago. It posted fourthquarter profit that ms. Testaments as the firm recognized higher cost. We are joined now by the ceo of our clays, jes staley. Thent to start with one of positives you are pleased with from this report this morning, closing the noncore part of your business early. Tell us why you were able to do that. Strategy last year 2016 was to accelerate the closure of noncore so we can Free Barclays from the legacy and focuswant to exit on transatlantic consumer corporate and Investment Banking. We made a lot of progress last year, getting out of Retail Banking in europe, all the efforts of last year means that in june of this year, we will no longer have a noncore Business Unit in barclays. In the second half of 2017, this bank will be what it was to be in the future and allow us to look forward, so we look to in the restructuring of barclays that has been going on for years in a matter of months. I think our shareholders will respond well to that. Anna tell us a little bit more the businessrts of you definitely have been keen to hold on to and to maintain, uped income, i see revenue 33 there, not quite on par with u. S. Majors or what the estimates for your business were. How happy are you with the fit performance . I am very happy with the performance. Some areas of barclays did very well across 2016. If you look at our credit and fixed income trading across the entire year of a we tend to have less a test to the market. We tend to have less longterm decisions, so when credit markets rally strongly, we will underperform those that tend to have more capital focused on that business. An agencyre much of profile, and so when markets traded off like the First Quarter of 2016, we did very well against u. S. Competitors, but overall very much like have the Investment Bank performed in 2016, if you take underwriting fees, equity underwriting fees, we were up year over year, one of the few Investment Banks that accomplish that, so we think we gained market share in 2016 and we like how we performed in the Fourth Quarter. Commentators may be even shareholders wanted you to more aggressively shrink or reposition the Investment Banking part of our clays. You were very keen to hang on to it. Are you happy with the decision . Ive you happy with the way you have taken the strategy . , going back to the core Investment Bank revenues, we write fifth in the United States 2016. That was up one from 2015. We were third in the u. K. We like the progress we made. We very much like the balance of having a strong consumer business, particularly the u. K. , where we have a said adel position, if you will come up balanced with a wholesale business or corporate Investment Banking business, anchored in london and europe with a global presence, so we like the balance that is to our profile as a company, and i think it is a strategic advantage for barclays. Mention some progress around your stake in Barclays Africa this morning. Up to eight us on the time horizons. What do you expect to get done when in africa . Separating two institutions that have been together for over 100 years is a very complex thing, so we can announce that we reached an agreement with our clays africa last quarter on a definitive separation agreement, which is now in the hands of the regulators in the u. K. And across africa. Once we get that regulatory unfetteredhen we are in our ability to sell down our stake in africa to a d consolidated level, which is our ultimate goal. We have given ourselves two years to do that and would do it when appropriate, but we look forward to in a short time having the ability under our control to determine when we will make those sales in africa. As we said, even with the expense of separating from africa, that will release 75 basis points of capital. We had a strong year and print at 12. 4 , so you can do the math in terms of 75 basis points, so theink this has resulted question. I think africa will be an important component. Turn ourant to attention to the United States and the Regulatory Environment you face there, and expectations of growth in the economy. Feelrclays were able to emotions as an institution, would it be more nervous or excited about President Trump . Verythink we are encouraged by the trajectory of the u. S. Economy. Clearly the markets are. I think we are very encouraged by the fed getting back to a more normalized policy. I think we are ending the days of accommodation. About zeroy talks Interest Rates, and i think that is a healthy thing, so we look for to where the u. S. Economy is going right now, having our presence, whether the credit card business in the u, corporate banking, Investment Banking in the u. S. We are encouraged by the trajectory there and like our foot rent there. If u. S. Bank regulators decrease the amount of regulation in the United States, are you going to call on u. K. Regulators to follow suit . Ever since the financial crisis, the g20 has as theysistent reregulated the financial industry, whether the fed, the boe, the ecb, i think the regulators have been consistent in reregulating in a way that maintain parity between financial markets, and maintain the free flow of capital, whether in the United States, the u. K. , across europe, or across the globe, so if there is tweaking in terms of the application of doddfrank in the u. S. , we hope that would be considered such that there is parity around the globe in terms of how the financial industry is regulating. Anna are the u. S. Regulator setting the agenda or is the International Community . The regulators have been collaborative across the board. I think the g20 has played a Critical Role in the tone and setting of reregulation. Basel has been very important, and we would hope the g20 continues to be a collaborative regulatory native environment, whether the fed, the boe, or the European Commission or whatnot. We hope that continues to be consistent around the world. On the u. K. Riefly business, youd cave retail, consumer lending, credit cards, to see any Brexit Effect in your numbers . I think everyone is encouraged how consumers have responding. Consumer spending is up actually. Consumer credit is up. We do not think it has gotten to a level that would generate any necessary concern come but inflation is up, and one has to keep an eye on Consumer Confidence as that inflation number goes up, but if we can keep the confidence level in the economy going, we are in good shape. Anna jes staley thank you for your time here great to speak to you this morning. Barclays jes staley. That is it for bloomberg daybreak europe. This is bloomberg. Well come to Bloomberg Markets european open, where we bring you the first trade of the day. Anna Central Bank Officials say they can take their time on raising rates, questions remain over trumps fiscal plans. Bonds and bonuses, barclays misses expectations on profit in the Fourth Quarter, but is the worst over four Ceo Jes Staley . He tells us restructuring should end in months. A