Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20170405

Dont want a brexit deal with the european union. A warm welcome to bloomberg daybreak europe im anna edwards im joined today by Matt Matt Miller here in berlin. Lets talk about what market expectation looks like heading into that meeting xi later thisand week. Recovering the missile test and that gets people nervous politically that where the meeting goes and what the outcome could be. How nervous are markets . Some of the reactions weve seen are the latest moves in the taiwanese Tech Companies. You might think that if we see a fallout in relations, the trading relationship between the United States and china, if that comes to blows in any way, we might see nervousness about holding Tech Companies based over in someone. But the Market Pricing seems to be having minimal impact. You can see they did fall off in the immediate aftermath of the vote to put donald trump in the white house, but since then they have either gained ground or not lost an enormous amount of ground. A word of caution as we head toward what is no doubt a big where the tray conversation goes. How nervous are the markets is a different question. Matt i just want to flag something, in one sense yesterday, the takeover by chemchina, the 43 billion byeover has been approved the u. S. Regulators. Just to keep an i on some of the mergers that are going through, this is one of the biggest ones , a 43 billionry dollars merger is always something you want to keep an eye on. Chemchina did buyout syngenta by u. S. As approved regulators. Lets look at the risk radar this morning, i wanted to kick it off with oil because its it interesting to see brent crude bollingerthrough the bands. Just a sign of strength for grant, and we almost see wti going up through that as well. So brent crude of right now. We will get some data out right now, u. S. Inventory data that will be very important to keep wille on and certainly help to steer it in one direction or the other regardless of the technical indicators. Gold coming down just a little bit, but the key to keep an eye on gold as south africa goes through the turmoil, not only a safe haven in some senses for investors but huge commodity for that country. Speaking of south africa, we do anna winning the u. S. Approval, still waiting for eu approval and chinese approval, so all these Global Regulators wanting to have their say and the u. S. Telling the companies they were divest three types of pesticides in the u. S. , so there are some Strings Attached to this approval. Lets get to the first word news. In france, rain Marine Le Pen was labeled soft on euro exit plans during it Television Debate performance at failed to win over viewers. With all 11 candidates granted a hearing in a for our discussion last night, she repeatedly lost her cool. She was rated only the fourth most convincing candidate with y half the and endorsements up the front runner emmanuel macron. Two big ceo made pronouncements in his annual letter to shareholders as the Trump Administration starts to reshape the government. The u. S. Is truly an exceptional country, and its clear that something is wrong. Jamie dimon, who sits on Donald Trumps business board, is andwned for his optimism has voiced his support for parts of the president s agenda. The Un Security Council will hold an session today after an apparent chemical weapons attack in syria that killed at least 58 people. Western leaders have condemned the reported use of asp on a town, claiming blaming forces loyal to damascus. Trump called it reprehensible and said it cannot be ignored by the civilized world. 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. Marketsts check on the in asia. Juliette it has been an interesting day. The hang seng coming up as it resumed after yesterdays holiday. 300, part of csi the reason for the highs if we check out the stocks moving in the region is the ongoing talk of building in one province that will provide a new economic start. Lets look at some of the stocks in the region. Bbfg of after the h shares rose by 35 on monday. They are quite strong in hong kong today as well. Han high is a record iphone supporter. After Credit Suisse downgraded the stock, saying China Airlines have a low year. China is generally of play for yield or dividends but were starting to see payouts from some of the shanghai listed Companies Outperform those were seeing in europe and the u. S. , so the white line is the dividend index and the yellow line is the shanghai composite. A bit of divergence in terms of yield payout. One analyst saying investors could search for that yield even more in the shanghai composite as it goes on. Matt stay thanks very much, juliette. Staying in asia, north korea has conducted yet another Ballistic Missile test. It comes days after President Trump bow to act unilaterally to address the threat from the kim regime if china wont. A day before trump and his chinese counterpart me facetoface tomorrow. Our china correspondent joins us from beijing. How does this action from north xitrump talks. This is straight out of the north korea playbook, firing a missile off during a meeting of World Leaders were north korea is not invited. The second point to make on this is that it does underline now that north korea is the number one geoPolitical Risk as far as the u. S. Is concerned, and it is a risk that is growing. As you say, the u. S. And trump have been trying to put pressure on china to take a tougher stance on its neighbor. Heard from President Trump Rex Tillerson saying that 20 years of diplomacy have failed and the u. S. Is not ruled out the them to strike on north korea. From the chinese perspective, they want to see washington and pyongyang sit down for talks. China is concerned, of course it does have is concerned that if it was to take steps to fundamentally undermine north koreas economy, it could create a failed state on the border and that something the chinese want to avoid. Out. Ly the time is running many watchers of this situation see a possible intercontinental Ballistic Missile produced by north korea as fairly imminent. Anna this is clearly a big issue when we see xi and trump meeting. How are the chinese preparing for this meeting in florida . Tom weve been speaking to government advisers here to get their take on this. They say the chinese delegation will be going into this thoroughly prepared. One advisor told me they are going in expecting the unexpected. The formerke to chairman of the oil and energy giant sinopec. He said the chinese learned lessons in dealing with previous president s in the u. S. Take a listen. We looked into the u. S. In part, in the first one or two years, and relations between the u. S. And china, but after two years, it wasour different. But Everybody Needs to understand others. Everybody needs others. Theres a sense here in beijing that the likes of Rex Tillerson, the u. S. Secretary of if theyan we work with win the argument over the china that is awashington, constructive potential relationship that the chinese can have with the u. S. They want to have their imprint his chinaools off policy and this is part of that meeting with the chinese. Anna thank you very Tom Mackenzie in beijing for bloomberg. Its great to have you here with us today. The north Korean Missile test adding to the mix overnight. How nervous are markets . We started with the story around the tech sector in taiwan, recovering since the election of donald trump. Marketument goes, if investors were that nervous about china and u. S. Trade, the stocks would be weaker than they are. What does your universe tell you about how nervous markets are . There is definitely an element of risk, but its very, very mild. To a certain extent being driven by the market reassessing in general was been happening with the pledges that trump has made on several fronts and specifically with china. I dont think the market is really pricing any Significant Developments or even a fallout as was mentioned before. I think largely its going to be an exploratory meeting on both sides. Obviously some risk on currencies are relatively down on a month to date basis. Think that largely has to do with some correction that weve seen in commodity prices. Matt what do you think about trumps chances of getting anything past . After the dramatic failure of the healthcare legislation, and of course the going to try again, but does that take away a lot of the markets confidence in his stimulus measures . Think thats a very interesting question, but i think it makes an assumption that what has actually driven markets to a large extent has come on the back of trump expectations, and this is where i beg to differ relative to consensus. I really think there is a larger element of Global Growth upswing that has been driving the markets for quite some time now. Election, his pledges for the fiscal stimulus and potentially what the market was short, it, was probably but if you start drilling down and looking to individual Asset Classes and start seeing how they behave relative to each other, you will see that u. S. Equities have underperformed significantly european equities since the trump election. That tells me there is another element that has been driving markets. The paring back of these expectations as to what trump is going to do is probably going to have an effect at the margin, but i dont think it will be the main driver of markets. Ofa from the u. S. Secretary commerce, wilbur ross, we have a quote from him. The department of commerce report that mr. Will help him fulfill his commitment against unfair trade practice, and he referred to whats being called includesafta which free and fair trade. Thatught this editorial wilbur ross has written, it said Peter Navarro contributed to the article. A lot of people have been saying, who is really guiding trade policy . And to see the two of them collaborate at least on this article, how does this all play into whats been called a dollar negative view . To the first part of the it isnt clear who is actually in charge or whether were basically getting accommodation of different views that somehow blend together. As far as the currency market is concerned, a think we have to take a step back. First of all, a number of large inconsistencies in what trump actually wanted for the u. S. Economy and what that meant for the dollar. On one hand were talking about bringing back jobs in the manufacturing sector, and a lot of people at the same time thought that he was going to pursue a strong dollar policy, but at the same time, bringing jobs back into the u. S. Manufacturing sector is not entirely consistent with a stronger dollar. I think on the whole, there will be a small bias towards a or accelerate buteciation in the dollar, again, the dollar is in the hands of the market, and i really think from here on going to see an ongoing depreciation in the doctor. In the dollar. Extent, the dollar is in the hands of the fed. The richmond fed director has resigned over his role in a 2012 leak of confidential information. He admitted he shouldve ended a call with an analyst brought up an important nonpublic detail and he failed to inform the fomc that the analyst has a confidential information. He was already due to retire in october. How important is this resignation beyond the trauma of the story . It, think you just said there is definitely a large element of drama in this. Far as the policy Going Forward is concerned, i dont think it has any meaningful implications. If i take at face value what ive heard from fed officials since the previous meeting, all fed speakers seem to be communicating that they are looking for a couple of Interest Rate hikes by the end of this year. And unless we get a major surprise either way, i think we will probably stick to that script. Youre going to stay with us, a lot more to cover. Were going to bring you all the breaking news and analysis of the first facetoface meeting andien President Trump x as well President Trump and xi as well. Front runners macron and le pen exchanged words at the debate. Outsider, the communist backed candidate who came out on top . We will discuss. This is bloomberg. Anna a warm welcome back. This is bloomberg daybreak europe. If youre in france. 11 french president ial hopefuls clashed in the first ever Election Debate to include all 11 candidates. The focus fell on the front runners, Marine Le Pen and emmanuelle macron. We need patriotism, we need for our businesses to have an advantage in the opening of our public contracts. Fors true for businesses, our industries, and for our agriculture. We need our production putting competition with products that dont respect the same laws. Proposing ise nationalism. I come from a region where conflicts between european reminded, as we were rightly, you have to know where you come from and where the separation would take us. Nationalism is war. I come from a region filled with cemeteries and i dont want to go back to that side of the black line. Anna some of the highlights from that debate. According to a poll after the debate, it was a third candidate who emerged triumphant. That melelchon was most convincing. Lets get your thoughts on the French Election. The latest holing around the French Election, weve got le pen and macron losing ground and melelchon really gaining. The more votes he attracts, what do they do in the second round if he is not . There that can be something investors are having to watch p are correct and not entirely convinced that it plays an Important Role as far as the final outcome is concerned, as far as market indications are concerned. It, we either see again in ground in populism, which i think is unlikely, or we go ahead with the mainstream government. In which case there might be some implications for domestic policy, but for the market perspective, i think it will hardly make a big difference. The question one has to ask is where is the euro trading relative to these outcomes . There is a consensus and we been highlighting this for quite some time that the eurodollar is undervalued by approximately 10 . There are reasons why its undervalued. I think Political Risk is improving. The outlook for Political Risk is improving and once the clear the French Election, a thinker going to see some upside in europe. , justi have a chart here one of the ways you can look at this repricing of risk. Betweenws the spread fritsche law and british french law and british law. More room to maneuver as far as restructuring debt. The point is, the spread has widened out. You can see this with any number of credit instruments, any number of Asset Classes. The repricing of risk has happened recently. Markets are getting prepared because they been so wrong in the past. Does this offer opportunity, if you really want to take the view that le pen is not going to win or be a to change anything, does it offer the opportunity to take it back in the other direction . A veryink it is difficult call. As you mentioned, we have two precedents from last year. We have brexit and we have the trump election. In both cases, the markets seem to be pricing in a different outcome, and we ended up going the other direction. Having said that, the fact that we got expectations wrong last year does not imply that we will keep on getting expectations wrong each and every time. Not surentioned, im some factors of liquidity played a role or an Important Role in that respect. When i look at the fx market, as i said, i see not a lot priced in terms of Political Risk. I think risk is that we move further to the outside in the eurodollar. Anna how high will it go if macron wins . 10. It could go to 1 anna coming up will talk about u. K. Chancellor Philip Hammond. This is bloomberg. [ engine revs ] [ screams ] [ shouting ] brace yourself this is crazy [ tires screeching ] whoo boom baby rated pg13. [ screams ] [ [ screams ] ] [ shouting ] brace yourself this is crazy [ tires screeching ] whoo boom baby rated pg13. [ screams ] anna a warm welcome back. This is bloomberg daybreak europe. This is tokyo at 2 30 in the afternoon. A new edition of daybreak is now available on your bloomberg and your mobile. Lets look at some of the stories that have made it into todays edition. We start with a cover story today around the French Election and last nights president ial debate. Night for Marine Le Pen according to two polls that rated her the fourth most convincing candidate out of the 11 who took to the stage. She repeatedly lost her cool during heated exchanges. Matt the next story is the fate of britains expat bankers. Tired of wondering about their back, they phase have volunteered to return to their native eu countries if the lenders need to relocate workers after brexit, according to people familiar with that story. Anna we will continue to watch that number station. And we focus on the richmond fed president who resigned after disclosing his role in the leak of secret information related to centralbank policy in 2012. The leak involving global departmentstice investigations. Lots of questions still remain around where the original leak came from but this is the fallout as we know it so far. The u. K. Chancellor Philip Hammond said there are some within his countries Ruling Conservative Party who dont want a brexit deal with the eu. I reported joins us on the phone from india. What is the hardest battle for hammond right now, winning over the eu, or winning over the backbenchers at home . Hes pointing to wellknown divisions within the Ruling Conservative Party. Very interesting, in the interview he said he acknowledges that there will be plenty of tensions once negotiations start. Meant tensions with the tory backbenchers who take a very hard line on brexit. I wonder what kind of deal people are all expecting. Everyone i speak to in brussels from the european side said they need to get brexit done first before they even begin to discuss trade. What is this deal that hammond is hoping for . Mean, not sure what you what hammond is hoping for is the free us trade deal possible. He very much sees himself as a peacemaker between the europeans and the brits, whos trying to push a more reasonable view. There are number of people within the conservative party to think that a hard brexit would mean a return to debbie geo rules because britain would take that full control of the situation as they see it. This scenario has been described as ridiculous given the economy. Anna you could bring the argument that perhaps making this statement that the party is divided, there are those who would walk away with absolutely no deal, that may play into the u. K. Go shading strategy ahead of any talks, making the rest of the eu think that the u. K. Doesnt necessarily want to say to hammer out a deal and could opt to leave. According to theresa may, its an idea she floated very early on. She is now in favor of trying to a better way. ,ammond made that very clear but its been described as. Nfeasible but with none of the obligations of membership. Not the position that the going to try and push the rules , andmething they favor they would be prepared to do that if push came to shove. Anyproblem here is that compromise deal that theresa may comes back with is going to face the hardline from those who say it doesnt give britain enough control and theyre likely to very difficulton indeed. Thanks very much, our u. K. Political correspondent. You can read that interview in full on the bloomberg top. Here inalk to people and at the commission, to the parliament on the european side, they all say we want to get a brexit deal, it get that done first, get the divorce over with, and then we will talk about trade. Do you think the u. K. Negotiators are being a little bit too optimistic if they think they can get some kind of trade agreement folded into this brexit negotiation . I think thats about right. I dont know exactly what they think, but what they could actually communicate is pretty much what you describe. , think its quite clear strictly speaking from a , theiate perspective leverage in this negotiation process is very much with the european union. That view, its the u. K. Is vulnerable here. I think eventually we will get into a position where will have a lot of compromises being made by the u. K. Down the road, but it will be a very much longer process, i think. And what does the fx market tell you about the pound . I pulled up this chart, everyone was talking about how short the market was, but when you look at sterling shorts as a percentage of all the data, actually the market has been more extreme in their sterling positioning. What does this look like to you . We can say with a fair degree of certainty, that the market is short. As to whether its extremely short are not, its a very good question. What we try to do in dealing with such a liquid and huge market, we try to use a number of indicators. When they all point to the same direction, we say theres a great likelihood of these of this actually being true. Something to be saying recently that positioning in selling is quite short. If you look at other gauges like risk reversal, for example, i think there is a high possibility that the data captures only a certain segment of the market and may exaggerate what happening on a global scale. I think the market is short, but im not entirely convinced it is at the shortest. Is a very tricky question. I personally think weve seen at least on a oneyear basis, weve seen the biggest adjustment in sterling. I still think the bias is to the downside, but im not entirely convinced that will reach levels of 115 or 110. I think a lot is already in the price. Matt we talk about the cable rate and the euro dollar rate, but its interesting to look at the euro pound here getting maybe closer to parity. Where do you see this headed, considering that you think the e. U. Has leverage in these negotiations . I think this is going to be the result of a number of factors. First of all, let me be clear that we are relatively bullish on eurodollar, so even if you have a relatively neutral view on cable, you still see euro back of higher on the this. I think there is an additional reason, and the reason has to do with portfolio flows. Crisis,he eurozone debt weve seen a large number of inflows coming to the u. K. From the eurozone, largely because it was a crisis in the eurozone and haven statuse safe of the u. K. That is gradually being taken out of place right now and i think flows are in the process of regarding. Coupled with at the fact that eurozone growth is doing quite well and Political Risk is diminishing, i think were going to see further euro sterling upside. Anna so where are we now . Forecasts over the next couple of quarters suggest were going to see euro settling above nine. I think the risk is for further upside, actually. It could go to parity. I think the term that has been , it could go to parity. I think the bias is that were going to be trading between 49 and one. Anna what about friction round any kind of transitional deal, some call it a bridge, others call it an adjustment or implementation phase. Is this where we will see a great deal of volatility even in the euro against the pound, for example . The city of london and Financial Markets has been cited by mark carney, for example. See ftly think we will is the most likely scenario. If we look at history, all the trade discussions take an awful lot of time. Its not being sorted out and a couple of years, especially when you have all these things already put in place in the european union. I think were going to go into a phase of prolonged discussion and negotiation. Higher uncertainty about the u. K. , and all this is going to contribute to high volatility for cable and a higher euro sterling. Anna thank you very much for your time, we appreciate it. Lets talk about the oil market now. Oil extending gains today. U. S. Crude stockpiles declined. Tracy alloway whos watching the oil market. The mood has really changed compared to just a week or two ago. People talking about the demand story in the u. S. A lot more than they were just a few weeks ago. Right. s exactly weve had a Pretty Amazing turnaround in oil prices over the course of two weeks. Think back 14 days ago, wti was it Something Like 47 a barrel. Its now above 51 a barrel. Foray get a catalyst another move upwards later today. The data is expected to show that finally, u. S. Inventories recordsed down from comes the plaintiff people will be closely watching that as an indication that maybe the world itnot as awash with oil as once was. The broader background for the new optimism has to be the noises coming out of opec members. Weve had a steady stream of opec member countries saying they would support an extension of the Production Cut agreement beyond june and that has spurred a bunch of bullish commentary of bullish commentary across the oil market complex. For instance susquehanna saying its time to get back to e p stocks in the u. S. , saying they are undervalued based on the value of 45 a barrel. That gives you some indication of the optimism currently out there in the market. Matt and technical optimism as well. We broke through an upper Bollinger Band on brent. Is the price just headed up . Talk Bollinger Bands. Thes not all good news in oil market. Weve seen some bearish signals. We saw olivia lifting crude yesterday. It will in the moratorium on the north oil field, an indication that we could get some supply back into the market. Beyond that, if you look at something more sophisticated than the oil price alone, take a look at cftc positioning data. We still have hedge funds cutting back their bullish positions in crude. That suggests there is still a little bit of doubt, a little bit of nervousness about the timing and the pace of rebalancing in the oil markets. Tracy, thanks very much, Tracy Alloway there in abu dhabi. If your bloomberg cussed me, you tv watch the show watching go if you are a bloomberg customer. Reach out to the shows directly by sin to show producers at the bottom of the screen. Coming up, lambasting le pen. She felt the heat from both sides in last nights debate. Snap poll see her pop her popularity waning. Will she make it to round two of the race . This is bloomberg. Matt welcome back to bloomberg daybreak europe. Lets get the Bloomberg Business flash. Chemchina has one antitrust approval for its takeover of syngenta. The two companies have been told to divest three pesticides in the u. S. As a condition for completing the deal. Chinese union and leaders are also reviewing the tie up. Paying out deferred compensation from previous years. At least three executives have left the trading unit in asia. In january, you europes largest investment banks got bonuses of top executives and other senior executive. A spokesman for the bank declined to comment. The ceo of lloyds of london has weloomberg how global were told about the growing area of the market. Weve seen an increase in demand for all types of Political Risk insurance, particularly if businesses are doing trade with businesses and other countries. They want to protect the fact that they might not get paid if the government puts on a ban of transferring money out of the country and things like that. We are seeing a great demand for that. And with the uncertainty around the world, were seeing a demand for that. That is your Bloomberg Business flash. Much,thank you very deborah. Lets turn back to the French Elections and head out to paris where caroline joins us. Shes joined by the chairman of gravitation. , ithese debates last night was a historical debate. 11 candidates. Francois fillon managed to come back. Im joined by an entrepreneur and security advisor. What is your take on his performance last night . That he is ashowed statement statesman with strong experience. He said francis seeing difficulties that need profound change and that he is the only one able to restore economic order and it was pretty convincing to me. Of january we started to hear about all these allegations against his wife and children. Last night, only 15 of the french watched the debate thought he was the most convincing. How do you think this could be a game changer . Im surprised about that figure, to be honest. There were 60,000 people voting after the debate and he was at 54 confidence. I think there was a clear storm he was already elected in some circles after the primary election. One cannot exclude the head of after instruction is given to some judge to make his candidacy more difficult. Hes been accusing the judges, but were also seeing that emmanuelle macron is now the favorite to face Marine Le Pen in the runoff of these elections. A lot of the central rights people who may have it endorsed fillon may now be for macron. Giving fillon 20 and macron 24 . So its just a 2 margin of error. A lot of french people are not yet ready to make that choice. Time there still a lot of uncertainties. That macron make it to the second round with Marine Le Pen. We have a graphic showing that even if the abstentions show up at a record level of say 50 , still very hard for Marine Le Pen to win in the runoff. She still needs at least 5 million extra votes. There is a Glass Ceiling due of the party that Marine Le Pen is heading. Its a complex story, lets say. And also due to the fact that those wanting all an exit from europe and from the Euro Currency and the vast majority of french people do not want that. Andes a monetary storm its not a priority. We have so much other stuff to it could prevent Marine Le Pen from winning. They are not happy about the way andeuropean union is going the Euro Currency might have been a mistake, but now that its their, they all understand ,hat if we get out of that there will be severe consequences. And a credit we get from the banks would be very high and this would be bad. As an entrepreneur, you invested many startups. We have a poll showing 65 of startups prefer macron. 45 of big businesses prefer francois fillon. Is fillon the candidate for big business . Not at all. Understand his program with 40 billion euros in decrease in taxes is good for them. The vast majority of entrepreneurs who are involved in Economic Life in europe are supporting fillon. Matt thanks very much, caroline in paris for us on that election news. Here are some highlights for your day ahead. A debate today on the e. U. Brexit negotiating priority, ahead of the summit with donald trump tomorrow. Meets theesident xi and we getf finland the minutes of last months fed policy meeting at 7 00 p. M. U. K. Time. With yetnorth korea another missile. We assessed the International Response and the risk. This is bloomberg. Matt another Missile Launched. North korea conducts listed missiles test drawing condemnation from neighboring countries ahead of the facetoface meeting between president s trump and xi. The richmond fed resident resigned over his role in the 2012 leak of confidential information. And wrench hopeful faceoff. Candidates covered everything from the nations debt to ethics. Marine le pen defends her euro n comes oute melencho on top. The exchequer said some conservative Party Members do not want to deal with the european union. Hammond speaks to bloomberg as he travels in india. Good morning, welcome to bloom bloomberg a break europe. I am matt miller in berlin. Anna i am anna edwards in london. Lets have a look at where the futures open up on European Equity markets. It looks as if we will be positive at the start of the european trading day. Around. 1 of 1 . We have a lot of focus on the geopolitics along around this Missile Launch from north korea. What does it do to the scene the President Trump and president she xi meeting. But have a look at some of the other assets. I have my risk radar up right now and oil is at the top upside forsk to the brant as it passes through the top level of the belligerent and. We will get department of numbers out of the u. S. Today. That could be more important than any technical indicators that you can throughout this. Watch brent crude, watched of uti as well wti as well. Gold coming off a little bit but it has been doing fairly well at 1255 a troy ounce. Im concerned about what is going on globally especially in south africa. Speaking of south africa, take a look at the rand. It has leveled off, it has been in a bit of a freefall. The worst week since 2015. It is losing ground here today. 13. 54 is better than what we were looking at earlier. Not too close to the 17 level low that we saw last year. The yen gaining some ground for the fourth day in a row, this is how many and you can buy for a 110. 72, aht now, only real move we have watched it continues. Anna that is one of the things that is weighing on japanese shares during the session. Recovering toward the end of the session, these are the closest for the japanese market and the asx 200. Broadly positive in australia market. Shares advancing and australias stock falling. Story critical. But get the bloomberg first word news. Here is juliette saly. Juliette in france Marine Le Pen was labeled soft on her euro exit plans during a television and failed to win over viewers. 11 candidates had a full hour discussion. She repeatedly lost her cool. O snap polls labeled her the fourth convincing candidate. Joh too bigng pronouncements as the Trump Administration starts reshaping the government. Truly an exceptional country and it is clear that something is wrong. Jamie dimon who sits on Donald Trumps Business Forum aimed at boosting job growth is renowned for his optimism at has been voicing support this year for part of the president s agenda. The Un Security Council will hold an emergency session today after an apparent chemical weapons attack in syria killed 58 people. Western leaders have condemned the use of gas on a town blaming forces loyal to damascus. President trump it reprehensible and city cannot be ignored by the civilized world. Serious is the guest came from a weapons factory. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. We are rounding out some of these asian markets. We have seen of rebound coming through in the nikkei closing high by. 3 of 1 , shares closing by. 3 of 1 . You want to watch the action on the csi 300. And 20 17 high of 1. 4 ahead of the meeting between president xi and trump. This new Economic Zone that will be built in china which is getting a good boost of building stock. The a shares listed and shanghai hitting the daily limit of 10 after rallying strongly in hong kong and also monday. Elsewhere we have seen a decade high antione. Sales,n record, iphone it is a iphone supplier. Suisse issueddit a downgrade to the stock saying the airline is likely to post a loss of in 2017. He do not often think of shanghai as a market to search for yields are dividends. This is the dividend payoff from the shanghai composite. This is in the yellow line and you are seeing the Stock Exchange growth index in the blue line. Even though some of these dividend payouts are small they are outperforming the overall market. And outperforming payments from europe and the u. S. Some analysts saying watch this space. Matt differently when people should check out. North korea has conducted yet another Ballistic Missile test. That comes days after president unilaterallyo address the threat if china will not and he comes a day before President Trump and the chinese president are getting their first meeting on thursday. Ourbring lets bring in news editor. How does this action from north korea impact the talks that we are expecting to watch today . North korea was already expected to feature high on the agenda and this focuses the attention on that. Trump has vowed to act if china does not do anything as he said. Some sortooking for of deal. How that fits into the broader talks remains an open question. What trump and the administration appeared to be looking for is for china which is the top ally of north korea and accounts for most of its trade to do more to enforce u. N. Sanctions on north korea and to pressure them economically. Anna this is going to be one of the big issues that will be talked about between President Trump and xi. What are the other things the chinese are preparing for my as the chinese had to this meeting . They are optimistic that they can strike a deal. They see trump as a businessman, as a dealmaker. Yet he is unpredictable. Trump regularly bashes china on twitter. There is a risk that these could go awry, that xi could be embarrassed drastically. They see economic gains is one of the big things on his agenda. Something promised and they invest more in the states, promise more jobs, focus on creating jobs and trying to get trump to back off on his threats of a trade war and labeling them a currency manipulator and things of that nature. Anna thank you for your time. Capital. Ow from we see from the north koreans, one of our correspondent said this is a typical label. For this this do conversation that we are seeing what doesump and xi, that mean for investors . 7498 if you are on the bloomberg. It shows limited pricing and of concerns around tech stocks in taiwan. This is the stock you might expect to see some weakness in. People are worried about what was going to happen between the u. S. And chinese trade relationships. Guest i think it is it helps the discussion in a way what north korea has done. Has got thing is trump some popularity at home. If he can prove he is doing something on the diplomatic front, that is a plus for him and should improve his approval ratings. You have the discussion with him and president xi, saying that china will go further. Started to move to put some pressure on it and they can move further not before u. N. Sanctions but they will be further and that gives President Trump something to say, this is what i have achieved. It is a distraction that helps them. As far as the markets are concerned, we have seen trump sort of fail in many of his policy agendas. This could give him a little bit of credibility. It could be a bit of a boost to the trump reflation trade of people think he has more power than he had a few weeks ago. With will trump walk away a better deal, do you think, a better trade deal with china eventually then people think he has now . Guest that is a big question. That manages to put that on the what we aret is concerned about. I suspect what could happen is pretty little out of this discussion. Maybe there will be a bit more commitment from Chinese Companies to invest in the u. S. In order to employ more people in the u. S. I suspect we will not see very much. What we may see is him stepping back from his rhetoric against china. In terms of global trade, that should be a good thing. Anna the conversation around u. S. Reliance on china trade shows that going over the years ended is clear that makes some in washington very nervous. Donald trump how wants free and fair trade, not just a Free Trade Agreement and nafta. He is raising questions about where trade relations are going, 10 questions that the administration wants to address. What could trade deficit mean for the u. S. . It is something that administration is wrestling with. If the the focus consistently lies, that needs to be closer. That is the discussion we have in europe about germany having this huge trade surplus where countries like the u. K. Have a big trade deficit. Matt do you expect to see more legislation from trump that actually passes . Stimulust to see infrastructure spending, deregulation, a tax agreement, or are you less confident about that now . That is quite an issue and we have got an issue at the moment in terms of whether we can get the budget through, whether they can achieve anything at the moment. I think there has to be some sort of accord now between republicans in congress and trump to try and get this presidency and Republican Congress back on track. There is a better hope then people are looking at at the moment. Thank you very much. Jonathan bell stays with us and we will talk more about europe when we return. Marine le pen feels the heat as french president ial candidates square off. The big winners and losers coming up next. This is bloomberg. 8 17 a. M. Herene in berlin. 7 17 a. M. Back at our european Head Quarters in london. Here you see a shot of the Brandenburg Gate on what is it a and foggy morning. We have some italian bank news crossing that make clear the fog little bit at least as far as that sector is concerned. Anna yesterday we brought you the story about how much recapitalization, bloomberg. Nderstood the ecb would need we are getting confirmation from the two banks, that is the update. Manitoba veneto banca. Was pointing to 3. 3 billion. That adds up to a pork a total of 6. 4 billion. These businesses looking to merge, part of that merger plan and the ecb reporting yesterday these business are businesses are softened. Lets get the Bloomberg Business flash. Juliette the Trump Administration is so alarmed that chinese investors may try nuclearestinghouses business that officials are trying to find an american or allied buyer for the company. Cabinet members including Energy Secretary rick perry and Steven Mnuchin are said to have discussed preventing the purchase by a chinese link company. The takeover of switzerland that companies are being told to do best three pesticides. European union and chinese regulators are also reviewing the tie up. Deutsche bank has seen several senior employees leave after paying compensation for previous years. Three have left the trading unit in asia. They have cut variable pay for other senior employees. A spokesperson for the bank declined to comment. Of lloyds of london has told bloomberg how global uncertainties are driving demand for insurance against political and terrorism risks. He told us about the growing areas. We have seen an increase in demand for all types of Political Risk insurers particularly in business is doing trade with other countries. They want to protect the fact that they might not get paid if the government puts on a ban and his transferring money. We have seen great demand for that and it seems like the game of uncertainty, we are seeing a demand for that. Thank you. The 11 president ial hopefuls clashed in the first Election Debate. Amongst the throngs the focus was on the two front runners, Marine Le Pen and emmanuel macron. Our business is to happen advantage in the opening of our public contrast. That is true for businesses and industry. It is true for agriculture. Productionccept our be put in competition with products that do not respect the same norms. That is true for environmental dumping. What youre proposing isnt nationalism. A come from a region where conflict between european Jean Lassalle reminded us you have to member were you come from and where nationalism would take us. I come from a region filled with cemeteries and i do not want to go back to that side of the black line. No, madam le pen. Said the of viewers far left contender jeanluc the populars candidate. Melenchon ist gaining ground although he is in fourth place with francois fillon. Either le pen wins and certain outcomes happen or she does not. This kind of situation continues as normal. This candidate is not anywhere near winning. Concerns seem to be overdone about a le pen victory . Guest yes. I agree with that broadly. Are likely to get beyond against le pen. I think there is very little chance of le pen winning a victory in the second vote. If she does the euro would fall as a shock throughout europe. Anna the more fragmented this field is the more unpredictable how the voters behave in the second round becomes. Guest i disagree with that. People do not want to leave the euro. That is pretty strong. Marine le pen has that as a central tenet. I do not think and see her having the popularity in the second vote particularly against macron. To my mind, the vote in may will get rid of a lot of the Political Risk in europe. Macronhen you look at a victory, is there anything that changes under macron that would affect your Investment Strategy . Guest the issue under macron is he has not got a party kind him. What happens in the june i suspect that is something he will be able to achieve. To my mind this is about the things we have been worrying Political Risk, the collapse of the european union, i do not think that is going to happen. We saw that in the dutch election, we will see that in the French Election. They give us gives us more confidence. We have reasonable growth and it is beginning to pick up and unemployment is falling. Earnings growth is picking up in european countries. For the last four years we have seen companies not able to generate any Revenue Growth and this year is the first year we have seen some Revenue Growth. I am fairly optimistic that a lot of the downside of europe is slowly ebbing away. That makes me positive on european equities. Anna i pulled up the chart for the euro. It could go 108 if we see a win. N when interesting to see what that could do to european corporates. See the equities . Guest guest it would fall to radically if macron won. The upside is more likely. It was around european equities. Pricedthere reasonably at the moment. We have the beginnings of earnings coming through. That is not cheap but if you look at the yields that you are comparing equities with with the alternatives, particularly if you look at the premium over bonds, we are in a low return environment. You sustain higher fees and then you have done otherwise. Im reasonably optimistic. Matt we have forgotten about the german election. In lace. Firmly back how important is the german election . Guest i do not see it as anything that derailed the general clinical improvement. Ofould say that in terms economic terms is not that important. The more important one will be the next italian election. When we see that in there is a to bring italy boats in a party that has a referendum on the eu and that is my big concern. That is a concern for next year rather than this year. Anna thank you for your time. I thought 2017 was they year of Political Risk. Will have to keep it on the agenda. Johnson, the u. K. Foreign secretary is speaking in brussels right now. This pictures coming to us from brussels as he arrives there for meetings. European openets is up next. This is bloomberg. [ engine revs ] [ screams ] [ shouting ] brace yourself this is crazy [ tires screeching ] whoo boom baby rated pg13. [ screams ] [ [ screams ] ] [ shouting ] brace yourself this is crazy [ tires screeching ] whoo boom baby rated pg13. [ screams ] watching bloomberg markets, this is the european open. The cash trade session opening shortly. Im in berlin. What a we watching this wednesday morning . Le pen loses her cool. Emmanuel macron emerges unscathed. Should markets ignore last nights french president ial debate . North korea fired a missile a day before the xitrump meeting. If there