Received attention. Manus welcome to bloomberg show. Ak, our flagship i am manus cranny. Anna a bigger mandate in the house behind me. She needs to third of the mps in two thirds of the mps in the house. We will consider what that means for the assets. The huge chemical maker any takeover, theyve delivered their numbers. Good news for the ceo in this defensive moment. Revenue, 316 6 billion. Passing for. 6 billion. The net income they had put in is 240 million in the First Quarter. The First Quarter, a comfortable fullyear earnings. It will be about 100 million higher than they were in 2016. Ceo plans to fight defensively. Missate the chemicals as qamar work up to 90 billion euros to break that away, to come up with perhaps a defensive place. Those are the top line numbers. , auick line on asml significant beat. 402. 8 million billion for asml. Keep an eye on both of those stocks. The euro down outside with minister. The british pound broke the 200 day moving average. That is a critical point. The First Time Since brexit we are up. We gained against the aussie 78. 65. Canadian dollar, almost six. , a cry for god, england, harriet, and george. Almost shakespearean, a cry for god, england, harriet, and george. They capitulated. They say this is a game changer. It will dilute the effect for the influence of the hard right. The risk radar, equities are under pressure. Adv is back on the nato. Not so much in yield. Tickle of this. The shanghai composite down touching february lows. Down a 3. 4 in the past four days. Trading lower. 0 . Back almost at the global reflation trade is under measure in terms of u. S. To your paper. Under pressure in terms of u. S. Two years. The aussie dollar as down 20 . 8 . Surplus willre pick 70 tons per year. That could rise to 90 million. Deborah u. S. Vice president mike pence has called north korea the most dangerous and urgent threat to these insecurity in the asiapacific region. He spoke of overwhelming responsibility to addressing military personnel on the uss ronald reagan. the full range of the United States military capability is dedicated to the protection of japan. Japan, you are our friends. You are our allies. On that foundation, we will face the future together. Deborah polling remains tight before the first round of voting in the first residential elections. One candidate has come up with a novel way to be in more than one place at once. A hologramlenchon six locations. N reunion island in the pacific ocean. Bill gates is pleased u. K. Has but signs and job creation at the top of the agenda postbrexit. The explicitly for bloomberg and london, britain and the world would be worse off without that focus. Ive been very pleased that both the chancellor and the Prime Minister have said scientific leadership, creating good jobs, having the strength that they are going to work to maintain that. A huge loss for the world and the u. K. If that was not done. Deborah 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 as top. I am deborah mao, this is bloomberg. Manus the markets now, a little feeler for them. The asian markets, ive seen a little bit. Juliet, good morning. we have seen of the zynga for iron ore contracts come 5 . The iron ore route waiting into movement in the Asian Session and particularly in australia. The asx 200 off by. 6 . Risk off across the asian equity markets following what we saw in your part of the world and wall street following theresa may calling a tax snap election. China heading for its lowest close since september 2015. Csi 300 off by. 9 . Countries we have been looking at in focus, coming through with earnings and india. Down in the red, down. 5 . Earnings of. 4 . Morgan stanley has cut the cop the stock. Airtran h shares have had the biggest fall in the month. It does not see upsides for a lot of the airlines in china due to fuel line pressures and tariff hikes. , sydney, up 6 . 24 over the last three months. It has won a crucial new contracts in the north american pellet business which has been under pressure. Also want to show you one of the stocks of course that has been hit hard by iron ore. The fourthlargest exports. It has shown it has skewed very much in oversold territory. You have seen that come back a little today. This is a stock that has fallen below the 30 level. Generally seek a recount rebound. Manus thank you very much. Is unexpected snap election for the eighth of june. Set to get the green light from Parliament Later today. Jeremy corbyn has already expressed his support at the shop announcement marks a sharp you can you turn who previously sit opposed and only that. And early vote. This is a woman who is essentially pragmatic. Indeed. Anna indeed. 17 and 21. Behind me talk 21. That is the percentage point lead that the conservative points the conservatives have over the tories. That poll. What did the newspapers make of it . Why do they think she is going ahead with this . She needs to get the backing of parliament to do so. The summit newspaper, the poll will kill off labor, kill tories to in a bid for brexit made it. Blue murder. He never of the reasons why she might be going through with this. Who exactly is she looking to crush and her own party question mark that is one of the big question for many. The solo crushing the senators the daily mail thinks she is going after those who want to remain in the brexit vote and failed in their mind to move on from that. Others suggesting Deutsche Bank referencing a big move in the pound suggesting it makes it easier for her to take on the hardline brexiteers in her own party. Divided on who in her own party she is going after in this post. The guardian saying give me my mandate. In reference to what yesterday. ,wo thirds of mps on her side the labour party has said they will left her plan. The Deutsche Bank will dilute the influence of the mp pushing for a hard brexit and that only the deadline to deliver a clean up brexit without transitional arrangement. When it comes to the economic side of this discussion, she is playing for the sweet spot. How does this play in the calculus . We are not battered and bruised by brexit just yet. Anna not to the extent that forecasters have expected. The u. K. Company has held up well. One of those talking about a sweet spot. The pound falls, exporters still have access to those eu markets that they previously did. The imf had to come out and forecast improve forecast for the u. K. Much more than they had u. K. Economyonomy has held up much better than had been expected by the majority of economists at the time before the brexit vote. How long will that last is the key question. The details and the nittygritty. Pushing the next election five years out in two 2022. Into 2022. Manus julian howard, head of multiasset solutions. Welcome. Smart move by theresa may . Julian we were quite surprised by the calling this election after the promise that we were not get one until 2020. There is a bit of risk involved. The market seems complacent but sterling will rise because you brexiteers. D court we cant pursue Single Market membership and keep up the soft brexit angle. I think that is 90 i dont see how theresa may can suddenly just turn the situation around by an election. If anything you have to wonder where the tory mps are going to come from. If you look at the labour party it is already much reduced. Majority additional will emanate from, that is a bit of a risk. We have seen a number of analysts pointing to the fact that some of those labor seats are very well held and well entrenched. Who do you think she is trying to take on within her party . Is it the ramonas or the hard court hard court brexiteers . Hardcore brexiteers . If her ultimate conviction was to stay in the European Union you have to assume she wants a softer line on brexit. Within the recent months where she has been very hard on brexit it is to stay ahead of the curve boris johnsonke and david davis. She wants to get a bigger majority and 10 face these hardcore brexiteers. I dont know where she will get the larger majority from. Theres a possibility of a grand coalition among the other parties who do not really want brexit northern ireland. And, much of the labour party. Not many really wanted brexit. Lets be frank. It is not the mps, it is the british people. The mps are there to execute the will of the people. That is sometimes what needs to be reminded of everybody. Britain voted for brexit. That is the mp responsibility. We can conjecture about as much as what will happen around the country. I wonder how many mps would go against the will of the people. Julian weve seen how ugly the negotiation is going to be. We have seen rhetoric from europe. When he buys a house, he wants to do research into houses before deciding to purchase. There is an argument to say lets see what a deal looks like before recharge head on. We have seen this is not going to be plain sailing. There may be a case for the mps to turn around for the constituents at the say this is not as easy as you thought. Maybe we need to rethink this. Deutsche bank is throwing in the towel on the pound. 200 day moving average. Would you capitulate, would you throw in the towel, would you say this had the ability to write further . We could see bumpy Movement Toward 1. 35. I do not think this is a big assessment because of the risk i described. In the shortterm, the market feels we will have a softer brexit. Manus the head of multiasset solutions. Bill gates says the u. K. Must insightsit leadership and technology. I sat down with the microsoft cofounder for a conversation. Gates the u. K. , whether it is microsoft, they have a huge lab there that does Amazing Things next to cambridge, or for the foundation where we have 1 billion of exit active grants to build more tools for us. The United States is by far the number two place with a huge difference to number 30. Maintaining that scientific sxcellence would sometime involves scientists having the right part of collaboration. The eu the u. K. Has been a huge recipient of r d dollars. Ive been very pleased that both the chancellor and the Prime Minister have said scientific leadership, creating good jobs, having the strength that is really fantastic and the u. K. They will work to maintain that. It would be a huge loss to the world and the u. K. If that was not done. It can be done. They have made it a bit more complicated by not being a bit a part of the eu. What will the rules be about people . Are foundation will be here 10 years from now, 20 years from now. , i am sure weme will get asked as the questions the choices are being made. Strongu keep the very momentum, whether it is stock scotland where livestock is unbelievable. Imperial oxford, anyway. U. K. Strength is there. I think theyre are being careful to make sure they are not dropping off on that. Anna more from bill gates through the program. Will coversident, we all of that. Coming up in the program, inflation seems very much in doubt. Expectation from a summer height hike from the fed fadeaway. This is bloomberg. Anna welcome back. This is bloomberg daybreak europe. Has your business flash. Deborah verizon is considering a merger possibilities to set the course of the Company Given the fastchanging structure of the industry. The ceo says he would be open to talks with comcast. New forces ofking growth as the mobile phone business matures. As the new Media Ventures take time to gain traction. Ibms Quarterly Sales fell short of estimates for the first time in a gear. Struggles in some overseas markets and delays and service contracts, reminding investors that they should remain on the path back to growth. The 20th decline, margins contracted from last year, sending shares to an extended trading. Strong demand for product such for ae it compensated weak performance in other areas. The maker of maybelline said it revenue advanced 4. 2 . Work in the Luxury Division was double was predicted. Lower a real making a decision on the future of its shop. That was your Bloomberg Business flash. Manus bloomberg caught up with the esther george. One of the big concerns for investors. The timeline of the Balance Sheet striking shrinking. We have not made a decision about when but i think if we continue this discussion you will see the minutes reflect coming up. Rate on the key issue of increases, expectation for a hike this summer. Depending on futures, the odds remaining below 50 until we get to september. Julian howard is with us today. The junee got here, probability. Extrapolated into a chart, below 50 . Were not see that for a while. We got a bit frothy, and at times skimmed the punt. Julian softer in the u. S. , inflation has probably gone a little bit too far. The labor market is adding jobs. 19,000 was a little bit softer. Overall, a job additions in the u. S. Since the end of the crisis from a big proportion of this has been in social care, hospitality, lower paid jobs. Crisis,prices income people playing video games. University of chicago study on this. Not as tight as people think. Labornnot look to the market as what will happen to inflation. Thats why the Inflation Expectations falling a little bit. What about the tax reform story . Assess his ability to get through the text changes. Julian that will be tougher. It is a bit of a consensus but the Obamacare Repeal failure, care made everyone r rethink what this administration ryancare made everyone rethink what this administration can do. 2. 2 percent before the failure of the Obamacare Repeal it was 2. 3 . Very small revision downwards. The u. S. Economy is very solid pens solidly pinned. We will take the 2 because thats pretty good. Manus the twoyear is the most announced. Extrapolate that for me. Do you shave a bit off u. S. Equities . How do you look at that . With u. S. Equities if you are investing now, given where the cape is, you have got to be anticipating lower returns. Constant,k at the 6. 5 the longterm, lower than that right now. Froth, time and to skim that off. Manus a little bit to get from julianna this morning. The final countdown to the french election. This is bloomberg. Tually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. Back. This is bloomberg daybreak in europe. We are live in westminster. In the asians session coming under pressure in part because of the u. S. Earnings story. We need to get to some breaking news. Indeed. E do a little glass of cognac to warm you up, warm the cockles of your heart down there. Total sales plus. 9 . They confirmed 2016, 2017 target. There is no sign of a my. Lationary threat for re organica Fourth Quarter growth, 6. 2 , busting through the estimate of 5. 5 . This is a pretty good set of numbers, jeffries had written up their note that those Fourth Quarter organic sale busting at 6. 2 . Numbers atre the. Emy lets tell you what is happening with the ftse 100. You could see some volatility. That is where fair value is pointing down another 1. 2 . Lets talk about levels, lets talk about the fibonacci levels, you could see some support on this fibonacci line, the 23. 6 line that comes in north of the 7000 level. So whats that is a key line in 23. 6. Nd for the markets, lets start about what moved the market yesterday and that was the pound. The concerns surrounding the election, that is not a line you can draw. What you can draw is line tween what is happening with the pound, the market was sure the pound, we knew that and we were looking for something to keep is higher. We saw this move here yesterday. Lets talk about levels. Action a while along the 127 levels. A traitor said you have to respect the recent ranges. While we had a little push higher we did see the levels being respected. Level at the 128 moment. Are we going to come back down, is this where the support is, the midone 27th. 127s. Sterling, lets talk about the real yield on what happens with sterling. The u. K. Has an incredibly negative real view. Here is the gilt down at 1. 0. Big gap iny very terms of the negative yield and that will push money away from the british pound. That should act as a big break on any move to the upside. Because of the positioning story, the market is incredibly short. We will look through this and say were going to take sterling higher from here. Back to you. Thank you. Lets talk about daybreak, available on your bloomberg. Edition, its cover is the reflation, the global bonds have rallied as reflation, the global gauge of investment grades to the highest since Donald Trumps victory. 10 year yields from the u. S. To japan are at levels last seen in november amid the geopolitical tensions and the dates on the u. S. Growth. We are of reviewing strategy. Anna reviewing strategy, lets talk about the french election. We were talking about the u. K. Election yesterday, later on yesterday. We were focused on this forthcoming french election, it is days away. The latest polling, lets get to that. Leadingmmanuel macron thethe republican and communist are you can. Melenchon held a rally and how the virtual rally in six other locations by projecting a hologram. For the first round of this french president election, lets go to caroline. Tell us a little bit about the latest on the campaign trail and the use of holograms, this is new. Caroline of course, we are yes we have four days to go, the candidates are using different candidates. The technique is to reproduce himself in several seven different places. Night he was in burgundy but also all across the country and six other cities including the remote reunion island. Supporters campaigned in the u. S. For bernie sanders. It is a technique that is less tiring. Cheaper according to the organizers. It cost around 300,000 euros to produce him in the seven places last night. To appeal toying young voters, to appear modern. Some of his supporters created a videogame where there is an is taking and taking money out of politicians including Emmanuel Macron but also Nicolas Sarkozy and christine lagarde. Manus we will want to see what that is about. The fight against terrorism, where does that rank in the priority on this campaign, where does it rank on the news belts every evening when youre watching from home. Buthis might surprise you at the end of last year tourism and security were the two Top Priorities of the french. Beenwo subjects have topped by the economy and unemployment. This might change with the terror threats we had yesterday, two men were arrested in marseille suspected of an attack on the president ial race. The target was not exactly identified by the authorities but the police found a newspaper in the flat showing their public and candidate on the front page. Surely this will be a subject that will be mentioned tonight in marseille for marine le pens big last rally in marseille tonight. Last night she reacted saying that this was the result of islamic fundamentalism. You. thank our guest is here with us. First round,o the are you reducing risk into this election because if you look at the ftse and the drop in the pound he would not have 1 you would not have wanted to take that off. We are running a slight overweight and it is difficult not to sound complacent in the light of what happened in 2016. Even if you applied a big margin of error to marine le pens polling that she will not be able to get past that constitutional block which even if she does well in the first round in the second round, you have so many antile pen forces going up on her, very difficult to see her get through. I think europe is that play here. If you look at the fundamentals in europe there strong, the economy is improving, Company Earnings are doing better. If we get this Political Uncertainty out of the way around the french election, you can see equities really flying. Anna would it be possible for the pen to do so well in the first round to force you to rethink that expectation, is there a number in mind that would cause you to revisit that . Guest yeah. If we get into the mid 40s than we may well need to rethink that. You have to see a surgeon support which is possible, some people do not tell the truth when they speak to pollsters, there may be an element of shame talkingrassment about about voting for the pen. Looking at the analysis i have seen, you have to add a big chunk of Additional Support to make that dangerous. We are running a small overweight to europe. It is something we would add to as we get more confidence around this result. Manus you will see shifts in the bond market as well. We have tracked the french government bonds, you talked about the potential for an explosion on the upside and equities. Does that hold true in terms of the spread over germany and france, and the euro, what does it do to the euro . On the bond side the french spread is pretty wide and the reason is french bonds are held in big proportion by overseas investors, particularly japanese investors who have fled the market and the recent weeks. That is a big reason why this spread is so wide. When we get through this election season assuming the outcome is benign you could see a quick tightening. On the euro, the euro has been basically suppressed why the ecb, the ecb not political over the but the reason they have not given much credence to improving inflation and fundamentals is because of this election season. We get through the season, the and wel take a step back could see the euro start to appreciate. Manus the bill and Melinda Gates has committed an additional 5 million to eliminate tropical diseases. He gave us an update on the organization. Been five great years of progress but we have a lot of allies in this war, the Drug Companies actually donate over one billion doses he year that are taken out and given to people in poor, rural villages of these is number neglected diseases, country by country, we are eliminating the disease and so we have to give to less and less people. We have some like guinea worm or sleeping sickness, where close to getting to zero. Like with still two with big numbers. We have to get out there and get those drugs distributed but we are happy where we are in five years. Were thinking that Drug Companies, the government donors, u. K. And the u. S. Are the biggest and the countries where these Health Workers go out and do this great work. The ambition was to eradicate guinea worm, you mentioned some of the other nine. The biggest challenge of i said, was it pulling what was the biggest challenge . We have always got to work in some pretty tough for all areas, these are the poorest of the poor and so the quality of execution there has to be a constant effort. We do have much better ability to go out and survey where the disease is, get reports back from locals who have made it quite a bit more coordinated and efficient. In the case of guinea worm we had 35 cases that we have run into challenges. Although we do not think there are many cases we have not been in to certify and because of the unrest. That will slow us down by maybe two or three years. Manus we often give a dollar or many dollars to charity. Give me a sense of what a dollar means in terms of economic spending. What is the social leverage of the dollar . It i prettys overwhelming. Because we get the drugs free it only costs . 63 to run the Delivery Campaign that gets out to dilute individual people. They are getting some drugs once a year that they take and that protects them against five of these diseases. If we go out there and cover numbersthose disease are down and down and if you do it long enough, you get that to zero. Some of these adult norms live for a long time so we are trying to also invent a new drug so we would not have to go the full 15 years. The cost for patient treated is small enough and what you are avoiding is so horrific, some of these kill, a lot of them cause immense pain, some people are withiar with the fact that you could have a lymph node or a scrotum that is gigantic and you get rejected, you cannot do work. Just driving the number of people suffering from this down to small numbers would help. We have philanthropists who created a fund called the end fund that pulls together a lot of good donations for this work. Manus bill gates speaking to me on the neglected tropical diseases. And what the bill and Melinda Gates are up to. Much more to come from a whole host of subjects. Trumps tax and health care debate. Bloomberg customer you can watch the show on tv and the video stream and you can follow the charts and functions and reach out to the poised producer, he is like a panther this morning. For anna and myself. Coming up on daybreak. Has the pound gone parabolic . That is a question for the markets. Theresa may calls an early election in june. We will get a breakdown what this could mean prebrexit negotiations. This is bloomberg. Manus it is running 9 a. M. In london, a little bit Early Morning in new york, 1 49 a. M. And s p futures recovering after at eighth of 1 . A little bit of doom and gloom in the United States yesterday. Optimism,pating the the s p 500 is on the up. Mao is standing by. Debra First Quarter profit beat analysts estimates. Jumping up to 376 million euros. The ceo prepares to go before investors with a breakup plan to the business in a bid [inaudible] verizon is considering merger possibilities to reset the course of the Company Given the fastchanging structure of the industry. Forill be open to talks disney or cbs. It is seeking new sources of growth as the mobile phone business matures and its new Media Ventures take time to gain traction. Ibm sales fell short of estimates. That theirnvestors main on the path back to growth. The results mark the 27th quarterly decline. They reported Gross Margins that contracted from last year sending shares down in extended trading. Showing signs it can move toward growth. The Company Posted adjusted revenue and profit that top post estimates. It was the last report before its sale of its main internet operation operations to verizon. That narrows the timeframe to close in june. Loreals luxury unit made a they compensated for a weak performance in some areas. The maker of maybelline said revenue advanced 1. 4 , beating estimates. It was the double of what had been predicted. Loreal said it had yet to make a decision on the future of its body shop chain. That is your bloomberg is the . And i and manus. Manus thank you. The u. K. s snap election is likely to get the green light from parliament. Jeremy corbyn has expressed his support. The surprise announcement marks a sharp uturn for theresa may who previously opposed an early vote. She is hoping that the general election will broaden her majority in parliament. The pound jumped to a sixmonth high. Anna is standing by to decide all of the news of the past 24 hours. Anna i am pleased to say i am can help our guest who us decide what is happening. Which rebels is she going after . Guest she is going after all rebels. What she wants is to not have any difficulty from infections and her party. She is divided over the issue of europe and she realizes it will be complicated negotiations around brexit. She has a small majority at the moment. It an extreme group of people who wish to remain or leave. She does not want any of those groups to have undue influence over her to hold her to ransom. Of importante numbers here, 17 is the majority she has. 20 or 21 lead she hasnt called. Intooes she turn that lead a bigger majority, what kind of numbers can she go for . Guess it is difficult to know where the majority will fall if these figures were to be played out. When you look at 1983, conservatives got 40 . Labor got 27 and they are at 23. I think theresa may aims for some sort of three figure majority at the moment, it is quite realistic but where will things go from here . Give you a know snapshot of Public Opinion at the moment. We have seven weeks remaining in the lot could change. It could be a complete realignment of politics along the lines of the brexit referendum. An entire electorate going one side or another. That is not likely but not out of the question. We have lots of things this time around that we have not had in previous elections which makes it interesting. Of england or wales constituencies voted for brexit which is one of the more persuasive arguments that has brought me of the very much brexitmps around to the way of thinking. Does it mean that no parties will stay on a stay in the eu platform . It is unlikely that they will do anything other than support the results of the referendum. Brexit black platform. The lib dems lost a lot of their votes down to nine seats. I expect them to position themselves as the proremain party, that realignment that i talked about. At a National Level that may not or 50em the 30 or 40 seats they were used to. What it might allow them to do in theg back southwest of england. And it does it make the live dame dash lib dems proremain . Legal there will be mechanisms that will allow britain to withdraw from withdrawing, exit brexit as they are characterizing it. Anna how do you see the labour party . Itst if labor were to use, is most likely that he will leave but by no means guaranteed. 0 and it is disastrous. Anna thank you. Manus thank you. More bigot plenty interviews through the day. Larry fink joins us at midday. Next, we are moments away from a raft of earnings. Ab foods and burberry, and we look at the impact of with sterling on consumers. And have you bought a trenchcoat . This is bloomberg. Anna may mandate. The Prime Minister looking to get backing for a may election. Deflation trade. Hike dropped. Er once again. At zero i sit down with the worlds richest man to talk tech, tax, and trump. Have seen his pragmatism on a number of things and i am hoping that these healthrelated thatts receive some of attention. Manus you are welcome to bloomberg daybreak, the flagship warning show. I am manus cranny. Anna i am anna edwards in westminster. We need to keep an i on the u. K. Political story. Persuadeay will try to two thirds of the mps in the house of commons to back her with plans for a general election on june 8. Elements she needs parliaments action to do that. We need to get to some breaking news. Manus we absolutely do. This is about the state of the consumer in europe and they are buying and buying cars at a record level. Levelrose 11 to a record for march. We are looking at this, a rise of 11 . Sales were at a nineyear high and lower unemployment is boring confidence. Buoying confidence. 8. 4 gain in the u. K. And car sales, registration, 1. 9 4 million vehicles. We have a shift in april, renault is gaining. France and 7 , italy up 18 . Vw losing market share, 1. 4. Pew show and their market share drops of brown. And chrysler. 6. 8 from 6. 2 . Anna lets go to a bee foods, this is also a retail story with a different flavor. Not just all about primark but also about the sugar sector. We have numbers coming through and they expect good growth in fullyear adjusted operating profit and epa. That is one of the forwardlooking headlines coming through. Numbers, given their 7. 3 billion pounds adjusted pretax profit, 624 Million Pounds. Heading into the numbers they raise the stock a be foods to buy. We are talking about strengthened sugar and primark margins. At primarke their but what happened here, this brings in the broader u. K. Consumer story around brexit. To what extent will the weakness thehe pound the limiting consumer in terms of what they can import, that is one of the Big Questions and the inflation story, how does that squeeze operate on the high street . More breaking news. Name, think of the brand the chemical maker. We have the ceo defending himself against a 24 billion bid from ppg. To spin offprocess the chemicals business. That is worth 12 million euros. This is a defensive play by zo. Nal bill ak will increase financial guidance. This is part of the strategy to accelerate growth and deliver value. This is defensive play within the m a space. Is from axa novell axonobel. Let take you tome let me take you to beer. Comingre the notes through from heineken. European solid reading for heineken. When you look at the auto sales, things are cranky in europe. In burberry since we are in the pound territory. We are seeing the pound, it has not gone tolerable. At one point two 7 billion, one. 2 8 billion was the expectation. Profit of 130 Million Pounds. They have completed 100 Million Pounds of their 150 Million PoundShare Buyback revenue, 1. 6, a snip below with the market expected. Lets welcome in our guest and break down this data. Investment. Of if you have cut your breath, we will reflect. Said, weg i just had are buying more cars, things are pretty good in europe for the moment. Guest that is a good recovery taking place. Sentiment has improved quite dramatically and scott is being always do to the fact that the been successful with bringing the cost of capital down. Everything is becoming a lot more affordable. Consumereases the spending power. I think we are in almost selfsustaining growth phase where the ecb can look forward to whether it tapers toward the end of the year or not. And then how fast and so on. In the meantime i think the economy that will be evident not only in Consumer Spending but manufacturing and export. There is some very good things happening in europe. The European Equity market has been responding but there has been a little bit of a discount because of the politics of uncertainty. There is a lot more left in the corporate earnings momentum in europe is stronger than the s p 500 so a lot of people are iserway in europe and that what we expect of the next quarter. Morning to you. That is the eurozone story. Where does that leave you on the u. K. Assets, ladies on them given what we know about this general election coming on june think this is you the right sweet spot in terms of where the economy is to hold this election . Guest the economy has been stronger than most expectations because the momentum had been so strong that has allowed us to continue and the downturn that a lot of people had forecast did not occur. We are on a steady track, everything is fine. I think that given the short inflation e of calm. This will a steady as we go for now. There is going to be delay in Capital Spending cycles. That is going to keep the growth rate so 1. 5 rather than 2 . Considering all the uncertainties and anything else, this is a very good outcome. It is there is no need to be frightened of the u. K. Assets. In terms of the relative performance, the ftse 100, the big beneficiary of the sterling, more than 75 of the earnings are nonsterling. The pendulum will swing toward the more mastic related corporations rather than international companies. We are busting through the 208 moving average. Is it parabolic, what is the target . I think what we had was everybody was negative on sterling, we have the most extended negative short positions on sterling and we messy squeeze up front. I would expect the rally to continue. There is going to be a lot more for closing and more margin cost coming in and so on. For ae momentum is on little while longer and things will calm down waiting for more certainty and clarity to come through. The long haul of negotiations has not changed, it will take some time to get the final interim deal. This is how long the timelines are. Manus we have a little bit more to get through. On gates has commented donald trump pragmatism when it comes to health and spending and foreign a. I sat down with a billionaire for an exclusive conversation. We understand, we will have a flu epidemic, and epidemic of path and military activity will be very expensive. , theve had some leaders secretary of defense United States talking about how if you do not have that the budget for forces the military to have to buy more weapons. Power ande of soft hard power particularly being ready for Health Crises that if there is anything that could perfectly kill millions of people, it would be an epidemic. You do not want to get out of balance. Manus you have been vocal in the foundation is troubled about potential cuts in health funding. When i see an aboutface from donald trump on china and north korea, what is the possibility that the threatened cuts to health may be scaled back . Mr. Gates there is a possibility that the proposal will not end up being the exact budget. There are things like the hiv lifesaving work that gets done that has a very strong backing in the congress. And budgets go through congress and they require enough votes in the senate that they cannot just be completely onesided on an issue like this. I do not think large cuts will take place, although that was put forward that we had to speak the defenseven with community to say they care about these things. Manus you had a couple of there is the him, is he a president and you have met many of them that you can do business with . Mr. Gates certainly he is the current president. He is pragmatic on a lot of things. It means talking to him and giving him some backgrounds that he might not have had through his past work. Important with him as with anyone, he wants to be a leader, he wants to have things that he has accomplished, i talked to him about hiv and how we should be proud of our work and there is more we need to do. So yes, this dialogue is important, you have seen his pragmatism on a number of things , i am certainly hoping that the receiveelated budgets some of that attention. Gates covering a broad lot of subjects with me. Guess is still with us. Listening to bill gates and he is talking about a pragmatic trump, cuts that will be less than we pursued the moment. When i hear that and that was when he was engaged with trump, what hope do you hold for the great reflation trade . The market does not believe this is a president that is able to deliver. Yes it will be difficult for trump to deliver on his promises simply because he has underestimated how much opposition there will be. Also said democrats and how hard both theget through houses. He will see a dilution of his plans. The market is too impatient and what we saw was things got out of kilter. Looking at the infrastructure trade, it was high. The best a lot of good news coming in in terms of legislation and the profitability. Half of the gains have been given up. Isch means the market becoming a lot more realistic in terms of the earnings were bullish they upfront and started to tone down. We have seen in the First Quarter the expectations for the to 9 0, about 12 down already. This is a repeat of what we have seen in the last four or five calendar years and i expect the downturn to be a bit further. Nonetheless, some of the deeply areas, will get slightly better but nothing as good as the market has been expecting. Do you see yourself stocking up on u. S. Financials during this earnings season, do you buy them because of those expectations order you stay away because of the difficulty of passing new rules . I think the outlook for the Financial Sector is still very good. The profitability we have seen from the numbers that are being reported has improved quite dramatically. That is a lot more continuation to come. There aree slightly better growth prospects. It is still not too bad right now. The growth rate is going to be toned down a little bit but still very positive. We do not have a inklings of a nonperforming loan cycle in any of the major sectors even though there is they are slightly higher car sector. The possibility of the Financial Sector is ondemand and if we get some dilution of the legislation, cost of doing business will come down, the profitability improves. There is still a lot to be said about having exposure to the Financial Sector and this selloff is a good entry point to think about tapping up some of the core holdings. Manus we will head to asia for the largest auto show in asia. We will speak to the lincoln ceo. This is bloomberg. It is daybreak europe. It is a Beautiful Day in the city of berlin. Down 1 8 of 1 . European car sales surging to the highest level on record. The biggest auto show in asia is kicking off this week. You have manufacturers displaying the latest amid a backdrop of potential trade disputes. Lets get to shanghai. We have Tom Mackenzie on the ground for us along with the lincoln ceo. Take it away. Tom thank you. Ofm joined by the ceo lincoln. You will the starting production in china in 2019 of the lincoln model. It is interesting timing given the discussion that is being held around whether or not china will change its joint venture strategy. What it have made more sense to wait it out . Inss we entered this market 2014 and we have grown very rapidly. Where youan industry have to spend a lot of money to produce locally. As we have been building momentum, volume has been growing areas it is time for us to start considering local production and that is the plan we had in place and the time youre talking about, a little bit of a coincidence. Offers something of a hedge if tensions between the u. S. And china exacerbate. Building believe in where we sell. Were just getting in the market. And growing the volume. In a sense, that is a hedge. It is building where you sell is a hedge against kersey and policy. You need a certain level of scale and that is the scale that was missing. We will start with that one. Tom i wanted to ask about pricing. The price is relatively low. If that part of a strategy to undercut some of the competition . And pricing is determined by the marketplace and the strength of the brand. Greatand in china is in regard. Most of our products that are here now are selling in the heart of their sector. The heart selling in of the sector and the continental is selling in the heart of its sector in large sedans. It is dependent on what the market will bear. We are pleased with where our pricing is right now. Are you seeing from the competition domestically, from the domestic carmakers that are looking to move into the premium sector and also the foreign automakers here as well . Guest very competitive market, very large market especially for luxury, very vibrant. It will be the largest market. Everyone is present here and you mentioned the local manufacturers, they have raised their game substantially. We take all competition very seriously. We have a very unique proposition. Where offering the industrys best dealership experience, best ownership experience and when you combine that with great product like the portfolio we have, it helps us grow at the pace we are growing. Tom you will be looking at optimization presumably. Your arrival, cadillac has done a good job. The stepsstate will you take growing the brand . Guest the first up is the suv. We will produce it in our chinese plant around 2019. As we grow volume of our products in other segments, we want it to make sense when we have the critical scale. We will consider it consider expanding more products. Dealership expansion has been fantastic. We opened our first store in 2014 and ended with over 73 stores so very rapid growth. There is a lot of room to grow. 100 stores this year and continue to grow next year. Tom there is a slowdown, some say it he did 2016. Test the luxury market in the u. S. Has been very stable. Lincoln has been outpacing the luxury growth. This year we are about 9 in the luxury market was down. We grew in double digits when the luxury market was flat. The combination of the product and our comp customers have f fueled the growth. Starting toentories stack up in the u. S. Question mark in general in the luxury industry youre seeing some pressure and growing inventories, yes. Tom thank you, giving us insights into their strategy. Lincoln will be building their car, their brand here in 2019. Hoping to take advantage of that. Manus great interview, enjoy the week, Tom Mackenzie on the ground with the ceo of lincoln. Life go, you can pick up all the big events from the trade day. This is the mr. Pence manying in asia, repeating things he said overnight, which was much earlier and there has been an overwhelming response to the u. S. In terms of their actions in north korea. As if sterling is off a little bit from its parabolic move. You are at westminster. Move we saw a strong yesterday, a lot of expectation coming through in terms of how hard or soft the brexit is going to be from here. As we see, theresa may trying to go for another election on june 8. She needs to get two thirds of the members of parliament and house of commons to go with her if she sticks with that plan. We will be here through the day to track the u. K. Policy story. This is bloomberg. Guy good morning and welcome. You are watching bloomberg markets. This is the european markets. I am in london. Matt miller is in berlin. This is what we are watching this wednesday morning. Sterling is softening up but the Pound Holding near its highest level since october. Mps plan to vote for a early election. Does this currency have more room to rise . Reflation bets fade. Global