Europe. Manus we are back together again. How anxious are you, you have read about syria, you have read about china, you have read about north korea. You have tried to observe the risk, do not reach for this annex just yet. This is the bank of america mobile inch stress index. Were picking at to the highest levels, we have gone from the lowest levels to the highest levels. We put on a quarter of 1 muster but we are nowhere near we were at the brexit moment in the middle of last year. Somersaulted peak that you saw when china and the equity markets collapsed last year. Anxiety is rising but it is nowhere new the brexit deke, nowhere near this time when your ago when china was the core focus, we are more anxious, yes, but these markets did not fall over. Losing 1. 1 the s p last week and gaining zero point 9 in yesterdays session. Lets show investors were we have been. Mnuchin talking about the timetable around tax reform. We heard Something Different from the president of the united states. We saw some strengthening and turkish assets. Since then a little bit of change weakening now for the lira and the base case is that we get limited structural reform. Iron lets have a look at ore and the s p 500. There is the iron ore. Iron ore has been falling for four weeks in a row. The last time it was this oversold was in december 2014. If you read some of the reports they say that this is further to run. You will went out the 2016 gain and they are saying that the gains we saw our unsustainable. That is a big feature in the mliv chat. Anna breaking trend that first day and what falls, and that iron ore story is dividing the asian equity section because you have the markets that reopen like australia playing catchup and weakening on the back of this iron ore story. Elsewhere you have the and Holding Things and check a little bit. Lets get the bloomberg first word news. President mikee pence has arrived in japan as he completes his asian tours. Koreas amid north tension about north koreas weapons program. They will increase talk about increased access to the japanese market for american products. Donald trump will take aim at i. T. Outsourcing companies when he orders a review of h1b said programs to favor highly skilled applicants. He c some companies asited that will not get visas approved. Racee plus president ial enters the final stretch with no main winner insight as the contenders scrap for votes in a flurry of campaign rallies. With almost one third of the electorate still undecided and the front runners clustered around 20 in the polls, the race is the most unpredictable the country has seen in recent history. Hasurkey, president erdogan declared his victory and the excellent of seeing the election culminated in us the majority of voters approving the cost to shun that gave him more power. The countrys deputy Prime Minister has talked it down the prospect of an early election. President everyone made it clear that the next elections will be held in november 2019. And there will be some turbulence. Some it is clear that elections are not on the agenda. 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. Manus thank you. Rounding up the stories of the day. We have a trifecta of issues to do with. We have the dollaryen, we have got iron or something, these asian markets have a little bit of this, you have your asian indices, the nikkei holding onto more of gain, that is the dollaryen story and the a quarter ofs down 1 but the dollaryen where we want to keep an eye on. A lets stick with the talk about geopolitics. U. S. President Vice President mike pence visited japan as hes congenital his trip to the asiapacific region. They are seeking to do with caps on economic issues, keeping commerce secretary wilbur ross out of the dialogue. Is valve reynolds joins us from tokyo. What is expected out of the meeting, some headlines cresting the bloomberg this morning. Twohere are basically themes, one is north korea, that tensions are worse than the have been for a while. And mike pence has come out and said he is deeply committed to this relationship with japan and called the alliance the cornerstone of security, sticking to the status quo and all about working together on the north korean issue. , talking about the u. S. Japan economic relationship. Japan wants to avoid being pushed into a corner on trade issues. At the same time, he wants to make offers in terms of investing in the u. S. To improve the u. S. Economy and more jobs. Manus what are the prospects of a free trade deal between the u. S. And japan question mark we know that trump is not a globalist and he seems to be much more a bilateral us, it is cut almostand divide and conquer, is that . He stays prefers to stay in a bilateral format whenever he can. Onhave had wilbur ross in 10 the same day. He is not being allowed into the economic dialogue. We have heard the report that he met with Prime Minister of a abe to talk about trade. He said it is not clear what kind of format this will take. He does want to progress japanu. S. Relations. We do not know exactly what the agreement is but it looks as though is moving in that direction. Anna thank you. Studio,us now in the good to see you. A lot of jill geopolitical threats to do with. Yesterday we saw Something Different. Geopolitics causing you to rethink your strategy . Not much. We believe economics and earnings beats the political fears and we have seen a lot of this before whether it is north korea with saber rattling but it is encouraging to see the u. S. Line up with china on north korea. So many concerns about north korea and south korea, either equities are bond selloff but it tends to go away. It is a concern when you see these missiles ruled out and these big parades. Is us, the main news notwithstanding the debate between hard and soft data, we go away from the u. S. , you see strong economic activity. The saberhave seen thising by north korea and is the chart that we looked at the start of the show. There is this is nothing in the scheme of things, there is exit and the china debacle. Mind, drawdowns and markets, do you see them as opportunities . General yes. We have had a 2. 5 . Anna ali overdue for one . You see a 10 correction in Global Equities nearly every year. Theres not much euphoria in the market. We have had the debate about the vix many times. It does notow but mean there is euphoria. There is a production buying out there, you see the skewed numbers on equities or you see it in the euro. Buyinga lot of people protection. You can see it in the data. You can look at the price of puts and another way of looking at the price of fear, the vix is the purest one. There is still an awful lot of fear in their. Excessive buying of put options. Anna russian assets is something you talked about before. You have some russian equity and some exposure. As in that wrongfooted given the way that the end of last year, people were talking about a rapprochement, things look different now. You can see a trump endorsement in late 2016. It should be great for russian assets. We have been in russian assets for quite some time, late 2014, early way 15 based on the contrary and value style of investing. We did not go there, we had been already. The soft money has chased in thinking that sanctions will come to an end. Things they to warm up between the u. S. And russia. Theeed to warm up between u. S. And russia. Manus the one market that has struggled with all of these issues is the treasury market. It was risk off last week. And it was way enjoying herself and on was away enjoying herself. Bond market, it did not roll over. This is the point that fascinates me the most. We growth scenario, do really test 2. 6, do we travel toward 2. 6 in the absence of a great political shock . There is two messages there. The first message is that the end result of the fed funds will be in the fed area. The market knows, big picture. Were looking at 4 , 5 rates. Message number two is the hard global the u. S. , the economy is in good shape. The data is incredibly weak in the u. S. Rushed back into the Office Yesterday to have a quick look. The hard data remains extremely weak and the effect of fred the letter fed is down. Atlanta fed is down. Many global boom. Anna hard data is not cooperating. Our i and or is down, we talked about the weakness in the session is this an incredibly volatile asset, the many booms aside from that . Is cracking after a great rally from last year. It could be our view that this Global Economic boomlet were seeing will continue. ,uestioning that right now commodities like iron ore, we will be openminded. We will stick with it, when you look at global pmi almost as you have been here, they beat expectations, theyre both 50 nearly everywhere in the world. I want to get a quick opinion on china. We had some china data to absorb but the shanghai composite is struggling. Any top lines on china . We do own china stocks, mainly in the age share markets. Hshare markets. Iron ore has a good run. But a correction. We do not see anything fundamentally wrong with china. For a long time, we have been saying what is hard to pretend is not going on is value in the market and people who are close to china, who work in asia seem to be a bit more bullish than people out here. So we side with them. We will talk about emerging markets as we go through the program. Manus it will bring you an exclusive interview with the ceo hitting the tapes at 9 15 a. M. London time. Anna the fight of france is less than a week away. The election remains up for grabs. What does it mean for markets . That is next. This is bloomberg. Manus it has gone 6 19 a. M. In london. Welcome back. Iron ore, we were talking about it. This is gmm, iron ore down another four point 36 . The question you need to ask yourself according to our guest this canary is, is in the proverbial coal mine question mark we are about to undo our gains for 2016. This is a really important story in terms of rio tinto. When they open in the london market. The leveluch is at that Goldman Sachs suggested. Anna taking the edge of some of the australian miners in the trading data. Its get the bloomberg is this flash. Lets get the Bloomberg Business flash. The ceo has assured wall street they will rebound from the current storm. The issue will be a watershed moment for the carrier and it is the practice to put customers first. There Financial Performance beat expectations with shares eating in afterhours trade. In alaskas north slope is no longer leaking oil or gas. Say the wellists is out of control and want the authorities to investigate. To 650,000 barrels in march, the highest in four years. That is below its 1980s peak of about 2 Million Barrels a day. Cereal maker posts holdings have closed to a deal. Weetabix atld value 4 million pounds. Representatives did not immediately respond to a request for comment. Netflix has reported gains that fell short of estimates due to a lack of hit shows to draw new viewers and routine others. The lack of bigbudget production posted income. They said next quarter with the return of house of cards and three major movies on the relief release schedule, profit will miss estimates while customer gains will improve. The ceo of china as it management which manages almost 150 billion in capital has said some investors hold her dangerous assumptions. He was speaking exclusively to bloomberg. That is one of the very dangerous assumptions and the Investment Community that the government will provide. [inaudible] especially in the couple of initiatives. Reducing the leverage at the same time could reduce the core capital concept for asset managers. They have to go back to the basics. Your Bloomberg Business flash. Anna thank you. One of the most highly anticipated clinical events is less than a week away. The first round of voting in the French Elections take place on sunday. Manus in the polls, macron is still ahead followed by le pen. The two front runners held events in paris yesterday. I will restore our national borders. No other candidate is proposing this, none of them. We opened the door of france to terrorists and quickly understood the advantages that they could get from our incredible powerlessness and send their soldiers of hate and among the flow of migrants to hit our country in the heart. Out of 11 candidates, 10 want to bring us back to the fantasy of the past. Them, combat their ideas. With one candidate it will be cuba without the sun. Venezuela without the oil. Alan figgins is still with us. I was impressed when i looked at the [inaudible] in seven cities. We are a week away, less than a week away from the first round. How riskaverse are you feeling with in regard to french related assets . You want to look at the widenut you have to they have the power to threaten to leave the euro . The greek people wanted to stay in the euro and it is similar in france. She has to get parliament behind it. Then she has to go referendum and get the french people to vote to come out of the euro, that would be catastrophic. The fact is that the euro is popular in france, for us it is more of an opportunity. The country where it is 5050 whether the euro is popular. The italian elections when they happen, that is the one that is the break up of the euro type scenario. We would not be surprised, we think macron is going to win. Isre is that line about he the next socialist himself, he said france will be like cuba without the sun, he is repeating that, it is a great line. Like brexit. L be a oneday wonder where potential buying opportunities. Manus the market does not want to be caught twice. That is what the euro is, i have been seen people write down the question, can we deal with a third black swan . Becoming very itchy about this risk. You think it is a little bit more laissezfaire for you. It shows gains like we were talking about on equities. How expensive it is to buy put options, you have to pay a premium to be bearish on the euro. The market is skewing that relationship. It would argue that would be hard. On the day le pen wins, shock. Be le the shock could pen. We will talk a lot more about risk very shortly. Stable a stays with us. Anna turkey is torn after a divisive defeat by president erdogan. Stay tuned 48 interview with the deputy Prime Minister why he is ruling out other elections. This is bloomberg. It too 30 it is 2 30. Japan alliance is a cornerstone of peace in the pence, according to mike and he said that strategic patients with north korea is over and all options are on the table. Markets on the move. Stocksre seeing asian lower and Australian Shares with producersnd commodity were weakerr market than expected and you are seeing and comingsing keeping a close eye on the dollar index, it shows the dollar stronger and we saw it close below the moving average. Market was closed Steve Mnuchin said the strong currency is good overtime. Yield thatcus of the weeks. En down for the sandwich between these resistance zones. The 10 year yield has to fall and that is according to the go all the wayld back. The turkish president told a crowd of supporters that they dont care about the european critics and took aim at the critics of the voting process after a slim majority concentrated more power into his hand. A deputy minister says the turkey will not call early they are looking. Turkey has gone to quite a few dramatic experiences. There is a Terror Threat and a geopolitical drag. T will proved and him hi create structural reforms. Agenda witha reform elections and referendums and the president promised a possible referendum on whether or not they should introduce the death penalty. They get it opportunistic and it has been in power for 40 years. There has been talk for early elections and we have never had early elections. The president made it very clear that the next elections will be held and there will be a time of adjustment and transition. It is very clear that elections are not on the agenda. Capital punishment is a separate issue and it would not be as timeconsuming as it has been in the past. Good morning to you. We are getting more reaction to the referendum results and there is the budget that the sit and unemployment with the is the economy and that longterm view of investors. A firm has been keeping a long view on turkey is joining us now. Thank you for joining us this morning. Lets start out with this Political Risk and you are saying that it does not. What does it mean for turkey . We are in the investment of the long terms and turkey has been important for us. I expect the referendum and stability and i expect improvements in the economy. Top in theone of the is betters and this than most European Countries and if you look at this, it is lower than the european average and i expect all of this to come into play Going Forward. It has been rough for turkey. And webers may be better have had this out late last night and the presidency can focus on economic reforms. What will this look like and what will it do to the economy . Beene account deficit has going down and i expect improvements to continue. We are investing in the areterm and there businesses and you are not exposed to economic volatility. 2008, we were investing in a hospital chain and it has grown from one we exited the business. Improvements. Ar does this mean you are willing to expand . If you are as excited as you tell me you are, you should be able to put that to work. Turkeyill continue in and i expect that to go forward. Reaction withxed referendumtes and results. Investors stay away from . There is china and energy driven markets with consumer driven markets. With thea country average age of 29 and it has grown 5 and we expect this to continue. There are industries we like and consumer driven businesses. We own one of the largest businesses in the country and people consume yogurt and cheese no matter what. Ecommercelargest business and would have grown. There is this at 65 and the european average is where the opportunity is. The government focuses on economic priorities. Is that a better opportunity to look at exit in that scenario . Improvepect things to Going Forward and we are lucky. This in theve investing time. A priority. Are we see it will be for their a to the dollar. An on credibility to the currency and i would for that it would stabilize towards the end of the year. Investors will be looking at this and the combative rhetoric. Is this just rhetoric . Should we be taking a closer look to what is being said . All of these impact growth markets. All right. We will leave it there. We will hand it back to you. Alan into the conversation. And you noted that things will get a little better you think they will look and willictatorship that embolden turkey as an asset flow . Are funds and there are times with currency depreciation and you have attractive yield in their. People have a bit of a dampening there is the underlying basis with turkish assets. Struck by this cycle in the u. S. . Think that it has held up ok and history is on our side. If you talk about the global look at trump and if you reallyand want that, you want the weaker dollar. You want a stronger mexican peso chinese yuan and it is hard to find. The hedge funds have the net you say that that raises a flight for you. Sinceis the best quarter 1993. Lira have a turkish really oversold before and just after the u. S. Election. It is in the pesos. Start to worry about the market. There is a standalone piece of information from extreme bearishness to extreme bullishness. You mentioned what we heard from donald trump and you dont he saysve speaking and the Dollar Strength is seeking to depreciate the currency. Yes. Definitely. Is a weakert dollar. I think trump will succeed. I appreciate it. Remember, if you are a bloomberg customer come you can get all of the video. You can best do on you can even were just days away from the vote for president and we will get expert analysis from paris. En the futures are just the there is thisd andedown with futures standing by in hong kong. The ceo of United Airlines has assured wall street that the carriers will rebound, following the forceful ejection of a passenger. They are determined to put passengers first. The cereal maker could have a deal at 1. 4 billion pounds and repentance to request for comments. Saidstreaming video giant that house of cards and three major moves are on the release schedule. Thank you very much. The first round of the French Election approaches and the race remains tight. Tank that you value ists the economic programs on now. You have been doing it analysis of the economic programs. What is the plan coming . Proposed candidate and fillon wooden cross the economy. He favorable . There is a favor for fillon. S with there are different options in the program and our calculation withat he is the only one a positive plan for the economy. But we have to make many projections. The French Economy would be cost 193 billion euros and he is accelerating in the polls. How much did the french electorate really care about these numbers when you see that . There is a big risk. I am afraid that they do not really care and we have programs are really were ainess and they fact that the state must be everywhere and there is a strong defiance against the free market and it is important to increase and we thinkrance that the state must be there is thed it isic reflection and not a philosophical way of seeing things. You can see the problem. To what degree do you understand what he stands for and what he plans to deliver during this Election Campaign . There is a banker and public servant. At the same time, we can expect reasonable constraints in the why we ared that is not very far from him. Only diversions in very andle or symbolic options it keeps the fortune. Seeing the shift of 30 . Iq so much for joining us this morning. Asnd out what to expect mike pence visits japan and find that the bout finds out about the visit to japan. This is bloomberg. Prepare for volatility. The than a week before third of open and a per grabs. Warnings,ing stern mike pence said they were committed to security. A strong greenback is a good thing, just days after trump talked it down. And it isgship show 7 00 in london and were getting the first look at futures. It was editor and you saw london take that a little bit lower and you will get a little with the risklead and that is where we are taking it to now. Some see the Dollar Strength it contrastsng and a little bit with what we heard from the own trump. It was the immediate aftermath and many are questioning the longterm with the limited structural reform. This with gone from the volatility. Futures and we have been following this with oversold. T be it may break. We have the u. S. Futures and we saw a big change in the direction for equities yesterday. And lets go to the japanese markets with the yen on the move. We have the topics up. The Vice President , mike pence arrived in japan. Was over tensions in the region over the north korean program. Pence will also discuss increasing access. Trump will take aim at outsourcing companies today and 1b3ered a review on the h on rogram with Emphasis Program channels the u. S. Industry. Racerench president ial enters the final stretch, with no clear winner insight. Almost one third of the electorate is undecided. Race is the most unpredictable in recent history. It was democratic beyond that and it proves changes to the constitution. Meanwhile, the have toned down the aspect. You can find more stories on the bloomberg terminal. We see the weakness on hang seng it is the last stretch of there is aand bullish demand on china and there is supply in malaysia and you are seeing tech stocks at a 10 year high. And they home prices are at 70 over the course of this year. Asking a lot with the pushesy market and that the aggregate higher this year. Thank you for joining us here. In japan, they continue the first trip to the asiapacific region. Seeking toinister is this, a going a japanese official. What to expect from todays meeting. Mike pence has finished his to thend they stuck the Prime Minister put wostrandon tour. It is an economic and trade issue and mike pence will go. Nto this with his counterpart yes. We are waiting for that to take place. This is set up on the is aese behest and with therelationship theent and they will set up timeframe. What is mysterious about this visit is that we believe there abe andort meeting with some kind ofhave agreement. A lot to digest. Do the trade and defense issues. Global reflation. Focused onto be and we have always geopolitical flareups. Argued that seen as investors are focused on economic fundamentals rather than just the noise. Thee should thank of fundamentals. Or see iron ore tes could rise faster than expected. You have accommodative Monetary Policy and the trajectory is for rates to increase. With is the assets equities. The Dollar Strength is good flipflopped. This is the average and you would maintain it is getting too strong. Is it so strong that it could knock the recovery . You have considerable dollar they raise rates. At think the boss can changes minds frequently. I dont think we should focus too much on that. I see this two years ago and i have traded a little bit down and sideways. It works is in the context of the overall portfolio. This is a flareup, people run to the dollar as a safe haven. I dont think you should expect money from the long dollar position in this environment. This . You see is some benefits from what trump is doing. It is something short of labeling. There is a positive view on equities and debts. Is a position maintained they are done particularly well. There is the emergingmarket seeing poorare is theance and this asset class and you could see a further correction in emergingmarket assets. My view of markets did not fall over and it did not quite breakdown completely. Now if we aren is in an overbought scenario. I have seen these moments before and i am not panicked now. Timeframe is very difficult and we would say that the value in the u. S. Government for a 10 year view with inflation trending upwards and real mates are negative. We think there are attractive assets. We invest that and you get the and it issouth africa 20 basis points. We will have more on the crucial last days before the french head to the polls for the first round of voting. Welcome back. Against theeuro dollar was less than a week until the first round of the president ial election. Lets get to the business flash. The ceo of United Airline says that the carrier will be pr storm and said that this will be a watershed moment for the carrier. Financiale time, the performance beat expectations and shares gained in the afterhours trade. No longer leaking oil or gas after the leak was discovered. The environmentalists say that it is out of control and they want an investigation. Oil rose to the highest in years. Oft is still below the peak 2 billion barrels a day. Weetabix. Nt on acquisition makes it the second largest chinese food company as they expand the global footprint. Netflix has reported user gains that fell short of estimates and, on the other hand, the lack production boosted net income. Next quarter is the return of house of cards and major movies. Customer gains will improve. There are like two drops of water in the ocean and amazon can do great work and it would be hard to affect us. It is not a zero sum game. That gives you the bloomberg flash. Less than a week away and the firstround in the french with macron still ahead. Scrapping it out for third place and the front runners in paris yesterday. Our restoration of national no other candidate proposing this. None of them. We open up the door of france to those who understood the advantage of our powerlessness and sent soldiers of hate among our migrants to hit the country in the heart. 10 wantf 11 candidates, to bring us back to the fantasies of the past. Combat the ideas. With one candidate, it would be n and venezuela without the oil. Giving campaigns a little bit of a boost. Twophase process. ,espite all the conversation you would remind everybody that this is a twostage vote and that is crucial and sets it apart. What has happened, because of the recent experience of the election, is that they have been wrong twice and you book at the perspective of what was done before the event and we may stay or leave. That most people went to bed and did not know what was going to go. Positions andized electionsked at the in the weeks prior and there was a range of portfolios. There was a 70 probability the clinton would win and there was andance of high probability it is an uncomfortable position to go into and you take that out of your portfolio. Are not making any changes to the portfolio. Do you think it ratchets high . With the alltime do you think it accelerates in the intervening time between the first and second round . Accelerates before the that round and we expect therend down because of level suggesting that le pen would be unlikely to win. Beginning ande some candidates have been pretty negative on these institutions. She was against the euro, but turned down the rhetoric and knows that 70 of the french electorate wants to keep the euro. Debatee is going to be a about the euro staying in this is more about the tone for the european project. Bigger risk is what is happening in italy this year and the year and you could see some volatility and increases. Thinking about the manufacturing index, take politics out of the side and and there isops too much and it is not that bad. It is not just a sugar rush. The point i made earlier with the negative you look ates and what is happening in japan and highly supportive measures for assets that are starting to recover. Thank you very much. Later, well have a conversation and you will get a lot more of me and double. That is it here. Manus is not going anywhere. Is 7 26 here. 24 minutes until the european equities. Manus will be back. Stay with us. This is bloomberg. 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Here is what we are watching for you. The fight for france. Less thana year of a week to run until the polls are open. It is still a macron, Marine Le Pen race. A strong greenback is a good thing