Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20170314

I cannot wait to get started. Like a racehorse this morning, coming back with a number. Thee find the position on holding in energy. They will produce the holding. Clarifying their decision because we are breaking issues on the anna dental deal. Anna the story we ran is the former french natural gas mama 77 owned by rwe. Also getting some numbers. 45. 8 billion. At 1adjusted net income billion and 1. 3 billion. The estimate had been 810. 8 million. Analysts looking for more detail on the strategy whether a that is different, cap what expenditure, on the subject of energy they are saying that they clarified they can cut energy to 51 . The oh 77 right now. Just to reiterate we have been reporting that it is said to be eyeing a bid. Manus 1. 4 billion worth, the split the rights are going to the one new every five existing. Price 42. 5. Finishing trading at 52. 5. The kind of discount youre looking at more than 10 euros. 42. 5 is where we are looking at in terms of the rights issue. The trading of a will be the 1520 ninth of march. 1. 4 billion euros worth of a rights issue for monday coming through. The fed meets today. The snow might have stopped Angela Merkel from getting to the United States. 17 inches on the ground in new york as we speak. It will not stop the Federal Reserve. 67. 65. Yields have arisen quite aggressively and we are now in an oversold position on the price and able position in terms of yield. This is the most sensitive to any move. A binary outcome, eight dovish hike or a hawkish fight. Lets look at the risk radar. This is a story coming through the overnight trading day. About where we go on debate ry, a dollaryen for you [inaudible] dollaryen plenty to deal with on the msci asia this morning. Fairly mixed, waiting. Chinese stocks increasing in hong kong. More analysis on that global stocks near record highs. About it just cannot get 150. Kittle at 122. 01. A potential scottish referendum. We can debate that through the next half hour. Barreltill below 50 per but a temporary hold for now to that losing streak. Juliette chinas economy started on a good footing as they gathered pace. For january and february declined 6. 3 from a year earlier ahead of expectations retail sales for the same poco missed estimates with a nine point side 9. 5 rise. A new estimate shows that 40 million americans could Lose Health Coverage by next year under the new gop obama proposal. President s doldrums of menstruation is been quick to challenge the estimate from the congressional budget office. Several Senate Republicans said the new analysis suggests the party may need to rethink its plan. The northeast of the new u. S. Has been hit by a winter storm, grounding flights and holding schools. Snow forecast for new york. Boston expect a heavy snowfall. The extreme weather has forced Angela Merkel to postpone her visits to the white house until friday. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries this is bloomberg. Not quite as interesting or probably more interesting, waiting for the fed. A little bit of mixed movements coming through asian equity markets. You are seeing the nikkei down. 1 . The first fall in four sessions as we see it strengthen. Elizabeth a downside coming through from Hong Kong Retail stock. Australia fairly flat. Have a look at the cost. Up by. 7 . This is a market that has been on a tear since we saw the impeachment being held on friday. Stocks in focus, toshiba a big one today. Some of its earlier losses now and the black on top of 1 . Down by as much as 7 . It did get an extension to report its earnings april 11. It continues to review shipping to a holding company. One of the frontrunners in the region, i report that looks like it has a hong kong buyer. Alibaba actually soars in hong kong. Around thetralbank globe this week, the boj in focus but it is interesting to averageneck a stock dropping. Even though were seeing japanese air rise, that shows we head of the boj. Manus the latest from market in hong kong. The Prime Ministers preparing to trigger brexit in the last week of mark march. Parliament passed legislation allowing the government to invoke article 50 anna of the treaty. House of commons overturned the house of lords to restrict her maneuver. She will start the process of getting permission for a second independent referendum next week. Joining us now, head of market strategy. Great to have you on the program. We face what could be an incredibly tense speed on many fronts. The latter part of next year in the First Quarter of 2019. That must loom large under the honor of u. K. Assets. The first part of this whole series was the vote and how the u. K. Economy would react. It has been very resilient and extremely positive. I think the fear of a farce negotiations punitive reactions has come down in the eyes of most people. Though theresa may is about to trigger article 50 there is a calm in the market. Even in the heart scenario corey is it that we dont think they will be a tough negotiation or that the markets have accepted that it could be a big part make sure of the heart of nature . Of the hard nature . Too much to lose and to much of a gamble. The antieuacing environment. Does not want to stress that more. Also important to point out. I hope that we do have the outcome that he suggests. Have a look at this. This is eurosterling. There is going to be many bumps and pumps through this. The heart of the brexit, you are deluded. [laughter] days wet about the dont know what the next two years going to be hardball. My solution is there is not much does this between here. I dont think we have seen the selloff in europe just yet. Went to the dutch elections and the french elections, there is some of Political Risk and the problem manus is that what saved sterling from my point which is that is a delusion . That is why in the new york dollar this is where it is. Theres a weight on the euro right now which is Political Risk and the way that europe is set up right now is that if one of these countries falls into the hands of the antieu sentiment, it is a game set match points. It is difficult to imagine france going into Marine Le Pen at 105ding a eurodollar and much longer. Really a strong weight of the Political Risk on the euro. Anna the pound dropping against the dollar and u. S. , down. 4 as well. [laughter] manus come on, youre killing me here. It is dropping. Analysis leads you to call it the longest currency of 2017. More thoughts. We think [laughter] sterling buy sterling if you look at the inflation outlook in the u. K. , going to really focus on the fact that it is high. That keep the expectations somewhat resilient. Think the trade negotiations between europe and britain will continue to do well and not be this punitive. Finally we think the rest in the euro will send capital back into the u. K. Manus and how to position yourself to a Bright Future as opposed to my version, if you are involved i think it would be significant manus im a journalist, not a traitor. This risk of a harder brexit would be significantly more than where we are right now. Here we are in the cusp of article 50 being triggered and barely getting up there. I think a lot has to do with monetary policy. Also i think it is the expectation. Manus i am not going to live this down. All i did was challenging thoughts. Anna that is what we are seeing now, certainly it is resilience during the press conference by necklaces surgeon. Manus have a look at eurosterling as well. Of. 4 . 87. 54 87. 54. Anna the former first minister of scotland that it 00 a. M. It u. K. Time. Coming up on the market open. Manus highlights for your day, 10 00 a. M. We get a survey out of germany. Seven point 7 30, the dutch are the final debate after the of tomorrows election. Fed meeting today ahead of tomorrows policy. China holds momentum as Investment Property and Industrial Production drive growth. The latest on the worlds secondlargest economy. Anna eight years after the banking crash and the nation lifting its capital control. Today we will bring you that story. The dutch decide on the eve of another key european election. Populism, Political Risk. This is bloomberg. Anna welcome back everyone. The hang seng is down by. 1 . A bit of a waiting move really in many markets. Not too much waitandsee going on right now. Manus keeping an eye on cable at the moment. There you go, down. 4 . Leslie from 6 00 a. M. From we started this conversation, waiting for theresa may to formally trigger brexit. She has the legal right now from parliament. Eurosterling getting knocked. Suggested she was ready to go for another independence referendum late 2018. Anna lets get the Bloomberg Business flash, heres juliette. Said to be weighing offer for the german renewable energy. According to people familiar with the matter, the former french monopoly speaking to advisors and not making a final decision about whether to succeed. Energy has a market value of 18. 6 billion euros. About 77 after splitting the company off last year. Client to comments. Toshiba considering the sale of a majority stake and its Westinghouse Electric Nuclear Operations as the company grapples with writedowns at the business. The conglomerate made the announcement as it delays the release of Third Quarter earnings still april 11. Westinghouse, could be written down by 6. 2 billion suspended the center of the most problems and may cost overruns on Nuclear Projects and related litigation. After waiting an outspoken foe dispense, its biggest champion has sold his entire stake as a loss and said he will leave the board. Lostns 2. 8 billion just on the chair that i would the end of 2016 with overall losses likely to be much higher. Citrix systems working with advisers to seek potential students. Sachs including private equity firms. Year and 30 in the last valuing the company at 13. 3 billion. Resident representatives did not immediately resolved response. That is your Bloomberg Business flash. About china. Talk Industrial Production climbed 3. 6 in january and february can bind for me gear earlier. That is about the estimates on the survey. Miskicking economist forecasts and Asset Investments include 8. 5 during the same boko. Helping untangling all of that data is malcolm scott. He leads our coverage of chinas economy for bloomberg news. Rates do had you on the program. Great to have you on the program. Any issue at the start story 17 . Malcolm lets get rid of retails first because there was some concern that the details show us that the overall retail not looking too bad. January, some tax benefits really ramped up purchases. An tax increase, that meant also sales of the start of the year fell by 1 . Pretty much all of the missed on the retail number is down to the one factor. Spirits coming back to the andomy, it has been citing citing last year as it went on. This year it seems to have come on again. Increase in private success. That is a good sign. Good to know there are live in china, the United States of america. What does mean for policy in china . A discussion about the reserve requirement that they might that back trim and thats back. Maybe even a tweak and rates. . What is your view certainly has plenty of tools. Finetune its policies by using these new tools. Rates on somethe of the purchase agreements. Incremental tightening. No big tightening yet. On the fiscal fronts, it looks like we may get further the support, the economy is wanting to grow 6. 5 or more this year. That probably still needs fiscal support. Plenty of firepower for that. Like the accommodation of continued fiscal support and continued increment tightening from the pboc. Thank you very much. The analysis of the china story for you market strategists still with us on did break europe. Your thoughts on the chinese story. 6. 5 , steady as she goes in terms of the data at the start of the year. Anchor relatively strong, and strong gdp. Having a resurgence in imports. Showing the investment momentum what we think overall the chinese economy is stable and improving. There are dark spots in china. The chinese authorities are ready to handle. An enormous amount of tools. Right now they are in the micro tuning positioning. And trumpget hairy starts a trade war. The ability to really step in on the fiscal side at 6. 5 . The 6. 5 ,port vicarious trade and people coming in. I want you have a look at this. 67. 60. This was on an live this morning thats really ramped up from january last year in terms of trade. The aussie dollar, never quite had the same kind of momentum behind it. I would like to belong quantity because commodities have come under pressure since the start of the year. The current Global Mission is increasing. If you go to the chart that you saw, the peso is gaining enormously. Telling us that the yield seeking behaviors coming back to the markets. I think the aussie have been pushed down because they were selling a low guilders and go back into the dollar. We saw ar that the whopping 38 improvement in imports. Whether the market likes it or not, aussie alongside with it. Anna what is the other thing that would lead you to believe to see in and to the predictions around the chinese currency . There is always going to be a segment that think the end of the world for china. Same way that there is a doomsday for the u. S. Iran are reading a paper in the early 90s where that was the u. S. Economy could never survive the twin deficits. Youre always going to find weakness in the chinese economy. To make a grown economy that will continue to do well. Manus thank you so much. This, going to check out 12155. The plan is getting smacked. Stocks are being triggered. They are not sure there is a huge amount of liquidity over at convictions. The latter is the issue. Down. 5 . Anna the pound against the euro, 114. 17 the nation drops all of its remaining capital and analysis in bloomberg. Manus this is a live shot of the emperors how is interview. Cant cut a break, struggling to get up over 1. 15. The Federal Reserve begins the twoday meeting. Guy johnson standing by to take us through the moves. Guy in some ways it should be incredibly quiet today. We are waiting for the fed, and that is the big move of the week in terms of the way the market will be set up. We all know exactly whats likely to happen, but nevertheless, it actually happening is important. Lets talk about where we are. The dollar is going absolutely nowhere, and i expect this is a result of the weather out in new york. Theas certainly taken meeting between the president and Angela Merkel out. Theres the pound, down by. 5 . On about whyter now for this referendum and what it will mean for scotland, the u. K. , and the rights scotland would enjoy it tried to rejoin the european union. Thats front and center, the british pound watched carefully. Heres whats happening with u. S. Futures, trying to get a gauge of where these markets are. May be too early to get a full price in on where they stand. But at the moment, it looks like u. S. Futures are pointing toward open, but notive a great deal of movement coming through in terms of the equity position. This is partly down to what is happening with the weather, with the fed. Those two factors combining to make everybody sit on the sidelines and not do very much. If you talk to people who talk to their clients, that is certainly the message coming back. The only thing i want to talk about at the moment is what is going on with the treasury market, particularly here. Lets take a look at this. Rsi is at the best of measures of their, but it is out there, but it is one. Weking at the five, it seems are getting up toward the kind of levels that are getting oversold. Back to you. Anna thank you. A new edition of daybreak is available on your mobile phone. Here are some of the top stories that have made it into todays edition. One step closer. That open door is the front cover story, Prime Minister theresa may moves britain a little closer to the exit from the european union, with Parliament Passing legislation last night allowing the government to invoke the brexit bill. People say she plans to announce the false start of the withdrawal in the final week of the month. Manus then we switch to china, the economy gained after old growth engines moved toward a batch of data showing the secondlargest economy is maintaining momentum. One analyst says the progrowth policies are going to be needing more of a boost in terms of getting consumption going. Anna and new yorks preparation for a winter storm. The east coast readies for a blizzard, with thousands of canceled flights, one of them that was supposed to take Angela Merkel across the atlantic. That meeting with President Trump has had to be postponed because of the weather. Manus the fed has already released the notice saying all federal agencies in d. C. Are open. The snow isnt going to stop the fed. Ce, iceland returning to the international market, the government announcing it will lift almost all of the remaining capital controls, full access to Global Capital markets. Anna that puts an end to an eightyear struggle to clean up after the 2008 acting collapse banking collapse. For more, lets bring in omar in reykjavik. Great to have you. Where will iceland go from here . Some signs that the economy is doing pretty nicely right now. It sure is. It will be interesting to follow the next few days for what will happen. Well see a lot of volatility in the krone, or possibly Treasury Bonds are going to be very volatile, and what traders are going to do. It will be an interesting time to follow. Manus do you think that the treasury is fully prepared for that kind of volatility . And what the market wants to know, is this complete removal of all caps on controls . Money free in money free out . A completely. There are some roadblocks. The government is trying to there are some remnants still left in the process for u. S. Funds, still locked in the capital controls. They have about two weeks to negotiate with the government if they want to get out. Anna it seems amazing, eight years after the crisis, that the government hopes that these moves, removing these capital controls, will ease pressure on the currency to appreciate. One thing that has been driving it so much stronger. It has been astronomical in iceland. We have gone from 500,000 to a projection of 2. 3 million this year. There are only 340,000 People Living here. Strap aroundhuge services, and obviously in return the currency as well. Manus omar, lets see what happens with the currency throughout the next couple days. Our man on the ground. Breaking news from mitsubishi. Anna mitsubishi chemicals is selling ¥150 billion of convertible bonds. A busy morning for news flow from the japanese after toshiba earlier today. Lets talk about the fed, widely expected to raise Interest Rates tomorrow amid buoyancy in the stock market and indications the u. S. Economy continues to grow. Manus the markets attention will turn to Janet Yellens press conference, 30 minutes after the decision, for any clues on the outlook for rates. Ke is rosenstri with us now. The consensus is three hikes this year. There was a lovely line this morning, a binary outcome a dovish hike, gradual, data dependent, thre e hikes, or there is a skew. She could open pandoras box in regards to a more hawkish fed then we anticipated. How will she tried the line . In that definition, we would go more for a dovish outlook. We think if you look at the economic data, we have very good sentiment indicators on the consumer and business level, but are seeing little acceleration in the u. S. Economy. If you look at inflation, it has moved higher on the headlines. More importantly, if you look at wage growth manus that is what weve got for you there. Tell us what this is. This is real wages. Wage adjusted for inflation. For the first time in three or four years, we have gone excuse me, yes, four years, we have no negative which means we have gone negative. Which means that mid income drops are not keeping up mid income jobs are not keeping up. Thats a good indicator for what the fed could do. They need to get that inflation higher, they need to allow people to get good jobs that will push inflation for a sustainable amount of time higher. We dont have real wage growth improving, and its difficult for us to see an acceleration in the feds monetary policy. Anna where does that leave you on the rest of the year . Do you think three years is the max . We were talking yesterday about whether there could be three they could remove therebybsolute rates, signal to the market right. Yeah. I think theres going to be a difference between what yellen the perception yellen pushes adnd what the actuality is. Two, as theloser to market is disappointed by the rate of improvement. Manus, i can see what you are going to give me [laughter] we still have an indoor miss number of uncertainty an enormous number of uncertainties, trump being one. Lets not confuse the animal spirit in the equity market with the improvement of the economy. Just because we are the absolute number the absolute number of jobs is increasing, the quality of jobs is not there, and we will continue to see this Participation Rate increase. We think stamping on the brakes at this point, given the way the inflation outlook looks anna i think what youre saying about real wage increases, but others the other data on Janet Yellens dashboard, even without trump and his stimulus, is enough to justify those three rate hikes. Thats what makes horse races, right . Differences of opinion. Andation is so critical, allowing everybody to participate in the recovery in the u. S. Is a part of the new, kinder, more gentler fed, and that is not coming around at the speed we expect. Manus one thing we have had since the start of the show is that fiveyear paper. It looks as if it is oversold. Three. Ket is priced for do you think there is more Movement Everybody is talking about potentially moving higher agreed. Manus so is there room for more maneuver on the upside . Again, withthink our expectations, we dont see an aggressive said. W aggressive fed. Therefore the dollar is also going to be one of those currencies that will weaken throughout the year. 2017 was supposed to be the year of the dollar. From our vantage point, that is not going to be the case. Anna thank you for joining us. Hes getting back to his desk to check out where the pound is. [laughter] i can see it from here. Manus the man who wants to save the pound from itself. Everything you see here, you can have a look at it. Tvgo, a video stream, and you can follow all of the charts and functions and reach out directly to the show producer. Bottom of the screen, sebastian is poised like a panther ready for your questions. Anna 121. 59. Coming up, the dutch decide on the eve of another key european election. We will focus on populism in Political Risk. Nd anna and as Britains Parliament passes brexit legislation, we will focus on plans. T this is bloomberg. Manus a live shot of washington, d. C. , where snow was falling across the eastern seaboard. The dollar is rising against sterling, 121. 63. Its almost as if europe woke up from the end of asia and started to sell the pound. Snow in the United States, not going to stop the fed. Anna we heard that announcement this morning, all things go in terms of the first day of the fed meeting. Lets get to the Bloomberg Business flash with juliette saly. Juliette thank you. Is weighing an offer for rwas german renewal. The French Company is speaking to advisers and hasnt made a final decision about whether to proceed. It has a market value of about 18. 6 billion euros. Representatives declined to comment. Rwe says it expects this years profit to rise, with positive contributions from its supply and trading units, and energy. Toshiba is considering the sale of a majority stake in its electric Nuclear Operations. As the company grapples with writedowns, the conglomerate made the announcement, gaining approval to delay the release of thirdquarter earnings until april 11. Westinghouse, which could be written down by 6 billion, has been at the center of toshibas most recent problems amid cost overruns on Nuclear Programs and related litigation. Concededthat has defeat on Valeant Pharmaceuticals after waging an outspoken Public Defense of the controversial drug maker. He sold his entire steak at a loss and says he will leave the board. Public filings suggest he may have lost 2. 8 billion just on those valeant shares at the end of last year, with overall losses likely to be much higher. And that is your Bloomberg Business flash. Manus thank you very much. To europe. The dutch Prime Minister and the Freedom Party went headtohead in a live, televised debate 36 hours before the netherlands election. They were questioned on the antie. U. Stance. A question for you. You want the netherlands out of the europe. You know this will cost 1. 5 million jobs. That would mean chaos for the netherlands. In england, there is chaos now because of brexit. You want to push the netherlands into chaos as well . Dont do it. I sincerely hope you are not going to be the biggest party, that you wont form a cabinet. I will put up a tough fight, dont do it. It is the worst news the netherlands can have now. Accusedanwhile, wilders of the liberal premier on breaking promises, arguing it is wrong to exclude the Freedom Party from the party making process. Then you exclude the pvv, who will join you in lowering taxes . With whom will you introduce a strong, law and order policy . With whom will you close the borders . If you exclude by party now, the voter at home knows you will join up with the left in the middle, and that jesse klaver becomes the new minister for education, and no one here wants that. Then nexit. Manus three opinion polls showed rutte in front by a margin of three to four seats. The other saw them tied. Guest this morning, thank you for joining us. The final 48 hours of canvassing. You heard that from rutte, challenging wilder. My question is broader. Do we need rutte to be the winner, to draw a line on the populism in europe . I think thats an interesting point, and certainly over the last few weeks we have seen the polls move, it seems that that it was could be the first election to buck the trend following brexit into trump. We could see a halt to the rising populism. However, as you just pointed out, the pulls are very close at this stage. Its still possible that mr. Wilders could become the largest party, the one of the things we know now is that he is not going to form the next government. Anna its interesting that rutte has jumped on that significance of the dutch election. We were talking about how this is like the quarterfinals in terms of populism, saying i am not playing this is clearly a part of the story playing out in the dutch legislature. Talk about putting the coalition together. How difficult will it be to form a coalition . How much more difficult will it be this time, or not so . Given the broad spread of votes that we are seeing, according to the opinion polls, it looks like a coalition would have to be formed between three, maybe even five parties. U you are awareill o but a coalition between two is difficult. Depending on how the vote turns out, it could add delay. That said, markets are braced for that. We expect to see a quick resolution to the situation in the veterans. That has its positives and negatives, but it does make things difficult for the netherlands at a time when european governments need to be working together. Manus the other piece that Bloomberg Intelligence has done is brexit. The u. K. Leaves europe. The netherlands is a weakened form of coalition, a weakened voice within europe. To that end, the challenge, the back push within europe is it reallyakened begins to get quashed in europe and the francogerman allianz extends as a triumphant voice. You will have harder and more aggressive legislation in europe. We have to be mindful that the elections take place in france and germany this year. One thing we know is mr. Hollande will not be around. Even in germany. Were to take on mrs. Merkel, that could lead to a change. I think it is too early at this stage to be drawing conclusions. Anna looking at the european, Turkish Alliance over the weekend its fighting its own electoral calls, erdogan is fighting his own electoral agenda, this fragile euturkey deal on refugees, erdogan knows the power he has. Yes, and i think thats a very important point over the next month or so ahead of the french elections. If we want to see any breakdown in that deal and start seeing low, that is a fact that could influence voters in france. Its clearly something that markets need to be sensitive on. Manus nexit. You just heard rutte having a go at wilder. He says dont threaten the country he sees that as a low probability, because there are many substantial legal obstacles to that even be remotely on the table. Quantify fothat for us. In terms of the legal process, although there have been some legislative changes, it would be very hard to get a binding referendum on such a question, especially as mr. Wilder is not going to be leaving the next government. We put a 10 probability on the chance of nexit anytime soon. Anna thank you very much. Dean turner from ubs wealth management. Tomorrow, the dutch go to the polls. Manus we will be looking at them after the radio show. Lets talk about toshiba you are considering selling a anna they made the announcement as they gained approval to delay the release of thirdquarter earnings for a second time. Our aged technology managing editor joins us. Great to have you. Another delay from toshiba. Remind us again of what is causing this delay. Thats right. Today was supposed to be the day that the Company Finally reported its earnings for the quarter, ending in december. Instead, it said it cant produce those final results and soft an 6 and sought an extension. Instead it is saying it will sell a majority stake in westinghouse. The problem is that is trying to get its hands around the problems in the nuclear unit. It has been struggling to complete a few construction problems in the united dates. They are years beyond schedule. The company has said it will probably need to take a right down of 6 billion, but it could be bigger, and auditors wont sign off on the books. The company is also investigating whether management at westinghouse exerted undue pressure as they tried to buy nuclear concessions. They are trying to get their hands around a lot of different things. They are talking about selling assets. Why is it so hard to estimate the losses that toshiba has . Why is it so hard to get a final number . Well, it is working on the construction of Nuclear Plants in the United States, where there havent been new Nuclear Plants since two mile island. Toshiba but the westinghouse business many years ago. It was working with regulators, trying to figure out how long it would take to construct these plans, and cost of estimates keep going up. It came out with a Nuclear Design it thought would be more easy to execute, modular designs that would snap together. In fact it has been very complicated. After the fukushima troubles in japan, the Safety Standards for Nuclear Plants went up quite a bit so regulators want more safety provisions. It has been difficult to get their hands around exactly whats going on with the Nuclear Construction projects. Anna peter, thank you for your insight. Our Asian Technology managing editor. Manus next, breaking news. A quick check on sterling as we go to this break, down. 5 . Well also have more data as well. Anna inflation data due out at the top of the hour. Thats coming up next. This is bloomberg. Manus may on the march. Lawmakers back the governments brexit bill. The Prime Minister is considering triggering article 50 in the last week of the month. Anna late again. Toshiba weighs a sale of its Westinghouse Nuclear unit after missing a second deadline. We are live in tokyo. Manus and long green. Bidi is setting to eye a for renewables company. Welcome to bloomberg daybreak europe, our flagship morning show in london. Anna a very warm welcome to the program. 7 00 in london, 8 00 in germany. We are getting some Inflation Numbers coming through from part of the eurozone that has more than some others. Manus absolutely. This is germanys harmonized year on year, the month on month . 7 , in line with what the market had estimated. This iss is the debate, what the germans are going to be saying in terms of their news flow to the bund, to the European Central bank in terms of their objection to potentially continuing on with their qe program. Anna german voices objecting to the qe program. This is the Copper Mining business, giving fair numbers. Earned appreciation of 1. 6 3 billion, just above the estimate. Revenue coming in at 3. 6 billion. Thats broadly in line give us an update on the capital expenditure. Lets have a look at where the markets are going to open up, because it was in wait and see mode in the asian session. Global equities not far from alltime highs, european stocks a little stronger at the start of the day. We are waiting for the fed. Manus we are. That two day meeting will go ahead, federal agencies are open for business. The snow might have stopped Angela Merkel, but nothing is going to stop the Federal Reserve from having this meeting. The market says it is issue when, a shoein. The pound is lower and that is reflected clearly on this risk radar. Anna bring up the risk radar. Dollaryen trying to catch a break. It has made some progress. Up by. 8 . Well, thatacific as weight in c chinese stocks in hong kong on the back of the chinese data. The pound, this has been our preoccupation in the first hour, and it remains so. 151 against the dollar. Weakness in the pound against the dollar in the euro this morning. People a day after many spent the day scratching their heads and justifying why the pound is so resilient when it looked as though article 50 was going to be or rather, the legislation that allowed her to trigger article 50, would be approved, and it was. Manus its the timing of the independence referendum in scotland, that some are saying give some succor to the pound. It wont come until the backend. 121. 40 is where we are trading. That is your support level in cable. We have had this with peter rosenstreich, he was more moderate in his view in terms of pricing the downside for the pound. Oil is just dipping into th e red. We are waiting for inventories to come in, expected at 3 million barrels, even though kuwaitis want to expand the deal to cut output beyond june. Anna day one of the twoday fed meeting. Lets get the bloomberg first word news with juliette saly. Juliette anna, thank you. The uks Prime Minister is preparing to trigger brexit in the last week of march, according to two officials familiar with her plans. Last Night Parliament passed legislation allowing the government to invoke article 50. At the same time, the house of commons overturned amendments from the house of lords, thought to restrict theresa mays room to a neo maneuver. Closely will be watched for signals on the timing of the brexit trigger. Chinas economy started on a firm footing as old growth engines gathered pay. It climbed 6. 3 from a year earlier, ahead of expectations. However retail sales missed economist estimates by 9. 5 . At the same time, fixed Asset Investment increased 8. 9 . The u. S. Estimates show 14 million americans could Lose Health Coverage by next year under the new gop obamacare proposal. President Donald Trumps administration has been quick to challenge the cbo report, but several Senate Republicans have said the new analysis suggested that the party may need to rethink its plan. U. S. Isheast of the being hit by a late winter storm, grounding flights, pushing up power prices, an closing schools as much as 19 inches of snow and closing schools. Meanwhile, the extreme weather has forced to germanys Angela Merkel to postpone her visit to the white house until friday. Global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. A wait and see mode is the theme of the day across the asian markets. We are waiting for the fed and the boj, the nikkei down. 1 as the yen gained, the topics having its first session in four. Hong kong a little weaker, hang seng down by about. 1 , china retail sales missing the mark. The asx 200 impacted by a drop in business confidence, but the cost on this massive care is up, rallying since we had the president s impeachment last week. Looking at stocks in particular, toshiba was in focus, ending in the black despite being in the red to the tune of around 7 before it came out and said it is considering selling its Nuclear Business, westinghouse. Samsung propping up the costs, reporting that it could be considering the move into a holding company. Alibaba held one of the front runners in the hong kong session, up by 13 on a report that they have a hong kong buyout bid. I want to show you this chart. The fed in focus, but so was the boj. This shows you that the volatility index on the nikkei 225 versus the vix in the u. S. Climbed 16 last week, and is at its lowest level in four months. Traders showing calm the head of the boj meeting and the fed, where we are expected to see the rate hike. Manus juliette, thank you. Juliette saly with the latest. We have deals aplenty in the bidding firm mobileye. 15 billion for the Car Technology company. The question is what kind of premium is being paid. We have a 34 premium on friday. Lets talk about m a. We have the cio for Global Equities at allianz. Good morning. A big blockbuster deal, looking large. My question to you is very simple. This is the drive of m a that we have at the moment. Are we at frothy levels . When you look at the premium of 34 , are Companies Paying up and looking large inexpensively . Well, we are quite late in the cycle of m a. We have hadtwo years we have had two years of strong m a, but it could go higher. When you look at the reasons for why it is happening, there is certainly a motivation, and that is that we still have low financing costs. When the is a time costs may be more expensive, so theres an incentive to get on with it now. Corporate confidence, particularly since the u. S. Election, has risen. Then there is valuation being thrown up by currency. All of those things suggest we will get more. Anna the individual sectors have their own drivers, as well, whether you look at energy are financials. Where do you expect to see this in the european fear . It continues in those areas we have seen, and others as well . We have seen something that has, the attempt been quite a steady dealmaking. I imagine we will see more as well. It is pretty broad, not just focusing manus we mentioned currency. The one thing we havent been tracking is cable, lurching down by another. 5 . It has its own idiosyncratic reasons, but again, we have seen aberdeen do its standard, that is coming tge together. But this currency leg lower is definitely opening us up in the u. K. Or is that just too pl ain a statement . Vanilla it may be, but that was one of the reasons the currency offered the opportunity. It is certainly one of the drivers. That the only one, but one of the drivers. Is i cant see any reason that will stop, except of politics gets in the way. Anna are there any u. K. Holdings you have at the moment, where you think, there is all this holding, but we also think its the takeout target and are willing to bet someone will come in with the pound . 121. 37. Down. 7 this morning. There may be one or two were its an option. Manus when we see these kind of moves in sterling, you go back to the office and, presumably, it will be a topical conversation. We are getting ready for article 50 now, two years i will say hubris. Anna was saying i was too aggressive. But there are risks, and the biggest is currency, whether it is cable or eurosterling. Did you see another momentum move . There will be many bumps and homes between now and whatever the outcome is. Is this where the manifestation of risk is, is that inequities . Equities . N the two real areas what is currency, clearly one is currency, clearly. In currency, we are seeing the companies which have to import, trying to pass on those prices. So far, most of them seem to have done a certain amount, but there is a potential margin squeeze. Hand, youhe other have impact on demand, and so far that has been limited because Nothing Happened yet. But we are beginning to see some signs of slowdown in government demand, and i think that is maybe because of the focus elsewhere. Some contracts being pushed out a little bit. Those are the areas where we are seeing potential wouldnt be surprising if we saw more. Anna the u. K. Consumer, is that factoring in your thinking . Areain the u. K. , not the being picked because of exposure. Its around that expected weakness due to reported inflation. Exactly. It doesnt look as if the u. K. Consumer, who also still has an overhang, is going to be a real driver of strong growth. I would look at consumers elsewhere. Manus a couple lines coming through to sheila. Toshiba has delayed and delayed their thirdquarter numbers. The ceo says he will announce the earnings as soon as the the companyrove, trying to decide what they will do in regards to westinghouse, their Nuclear Business in the United States. They are trying to think about the sale. The ceo speaking now, the president , excuse me, at the News Conference in tokyo. An announcement as soon as it is possible. This is one of those great debate about what happened next. Can it survive in its current form . Anna lets check on sterling. Trade,is where we substantially lower for the pound against the dollar, weaker against the euro as well, 1. 1410 , around. 5 . Some pretty broad selling of the pound this morning. Yesterday was quite resilient in the face of the pledge to seek permission for the independence referendum from scotland and nicola sturgeon. It was quite resilient yesterday, but not the story today. Overnight the change has been that the house of commons and house of lords fell in line and have given theresa may the legislative blac back drop she needs. Not expecting it will happen this week. People familiar are telling bloomberg it will likely happen in the last week of the month. Manus you can see what the editors are saying. They are suspicious of the volumes that went through in a. M. , 00 a. M. To 7 00 that we are resetting for potentially more risk a conversation you dont want to miss, the first minister of scotland joins the team at 7 30 a. M. On bloomberg radio, and bloomberg television. About half an hour later. Next, renting off the valley and taking a multibillion dollar hit. More on that coming up. Manus its snowing on the eastern seaboard, quite heavily. 17 inches in new york. This is a live shot of washington, where it is indeed hitting hard. Havenot the snow might stopped Angela Merkel from getting to the United States to meet donald trump, at the Federal Reserve are not missing their opportunity. They have already announced that washington is open for business, and we will see a Federal Reserve meeting taking place. Lets talk about the market. I will kick it off with the pound, nearly. 7 on the pound. Yesterday we had a banner saying earlier that it did moderately well. We havent seen a move like this on the pound we havent touched these lows since the 16th of january of this year. We are pretty much retesting the lows, 1. 21. Sensex, thedia victory for narendra modi, certainly something markets are reacting to. Lots in the mix. Lets get the Bloomberg Business flash juliette saly. Juliette thank you. Engie si said to be weighing an offer of four French Company is speaking to advisers and hasnt made a final decision about whether to proceed. It has a market value of about 18. 6 billion euros. Representatives declined to comment. Meanwhile, rwe says this morning it expects profits to rise with positive contributions. Considering the sale of a majority stake in its Westinghouse Electricnuclear operation as the company grapples with the crisis. They made the announcement as they gained approval to delay the release of thirdquarter earnings until april 11. Westinghouse could be written down by 6. 2 billion and has been at the center of its most recent problems. Ackman has finally conceded defeat on Valeant Pharmaceuticals international after waging an outspoken Public Defense of the controversial drug maker. Champion hasest sold his entire stake at a lost and says he will leave the board. He mayfilings suggest have lost 2. 8 billion just on the valeant shares earned at the end of 2016, with overall losses likely to be much higher. Citrix systems is said to be working to seek potential suitors for the businesses according to people familiar with the matter, it found buyers including private equity firms. Shares have risen more than 30 in the last year, valuing the company at 13. 3 billion. A spokeswoman declined to comment. Representatives didnt immediately respond to requests. That is your Bloomberg Business flash. Anna thank you. Juliette with the business flash. Our guest is still with us. We talked a little bit about m a and where it intersects with the portfolio. Debt overhang remains a structural thing on growth, so where are you going for topline growth, and is that the big driver you are looking for . The first thing you try to find is where they will get topline growth what is the key at the moment . We are always looking for structurally, so that is what we are really and that has driven us toward technology we can still see doubledigit topline growth, but you can find it in other areas. Theres not too much in , butties and the longterm where you can find it is technology, health care, and consumers, and areas of financial. Manus you talk about health care and say the greatest risk is that Hillary Clinton has been removed and the aca successor is becoming clear. How do you want to play that in terms of health care . The drug company the main threat has been written. Even when we see what President Trump does on twitter . [laughter] but the tweets to one side. That was the greatest threat, some gross in price regulation. However there is still downward pressure and there will remain. That means you need to be in those companies that have really got something innovative. Luckily, there are plenty of companies which are producing in many areas. Some really interesting things are happening, so you want to be at the center, in which case there will be discussions about pricing, not anywhere near so much. You need to get innovation in that area. Anna the tweets will be followed up on [laughter] for now, specifically on companies, need to be careful. But there is soft regulation going on, so you can see that pricing overall has slowed down. His tweets are having some impact and the threat of more regulations can have some it isurther down structurally growing, and the need to Keep Health Care costs down is going to mean you will see growth. Medical devices those are demographics. There is plenty of opportunity, and also risk. Us its fascinating companies have begun to self regulate, change their pricing, quietly i have shown the yield in treasuries of where that might go, but my question the debate between offered, it. 6 , 3 raises the debate between my equities exposure in my bond exposure. What does it do to the Global Equities . Bonds,proequity versus it is not clearly in favor of equities as it was because you have seen bonds performing. There is still a buffer there, because he started with equities. There is still some buffer there, and growth is the reason why the yields are rising, because of that more nominal growth, when equities can still do relatively well. Very strongad a rise in markets in we cant expect it to go on forever. Thatuldnt be surprising we could see the shortterm consolidations. Anna weaker by the end of the year . There will be better buying opportunities. Anna lizzie, thank you so much. Lucy macdonald, at allianz. Dont miss the conversation coming up on the program. This is bloomberg. Guy tuesday morning, welcome. This is the european open. Your first trade of the cash equity session coming up. Half an hour to go. Im guy johnson. Hiking in harmony. The fed in the markets seem an agreement on raising rates in march, but will it be a dovish hike or a hawkish hike . We will find out. As nicolaum rerun, sturgeon sets out plans for another Scottish Independence vote. We speak to her predecessor. T