Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20170426

Anna a warm welcome to Bloomberg Markets europe. Im anna edwards. Of in we will get a chart a moment but were waiting to bring some earnings for you. Anna weve got numbers from santander coming for you. Ahead of the forecast of 1. 73. In terms of the full in loaded ratios, the aim is to list the ratio above 11 by 2018. Ad loans ratio at 3. 74 a host of updates coming through come most of which are doing better than expected. Political stability in brazil was one of the expectations going into this. It got a boost from the strengthening reality in the of the strengthening rial, talking about improving performance in the banks 10 main markets. They plan to raise the dividend. We will speak to santander later this morning, the cfo will join at 7 20 u. K. Time. Manus big news from Credit Suisse, the decision was whether to go for more capital. A 4 billion swiss franc rights issue, the proposition was around 3 billion after the market but they might get swiss business. They decide to raise capital, go to the market in raise 4 billion swiss franc. , and i havepretax an estimate of 437 million. To retain full ownership of the swiss bank. The decision has been made. This, theyturing of raised 6 billion swiss francs and the stock is down 30 , one of the worst performers in the stoxx 600 bank index but it looks safe the decision has finally been made at a profit number that beats the market estimate. We will have an interview with on the consider continued ownership of the swiss bank. Lets talk about what happened in the u. S. Yesterday. Soars past 6000. Party like its 1999. Why are they saying that . Because on the blue line is the earnings ratio. This is what people are fixated with. Facebook, amazon, netflix all flying higher on the repatriation story. Relative to 2000, relatively speaking, were still not technically overvalued. David einhorn says valuations are divorced from reality. Anna he said there was is akin 2000 to the bursting of the. Com bubble. , five stocksne responsible for half of the rally weve seen in the nasdaq since january 26. Asian equities in fine form as you saw from the united states. Tax reform story, the reduction in eu Political Risk as well adding into the mix. We see money coming out of begin once again, little more that risk on trade this morning. Manus a twoweek high for the dollar against the yen to increase that move, to bolster that momentum, the market needs to see the details from Donald Trumps tax plan today. The aussie dollar, we were looking at some of the anomalies of the market. Firstquarterr inflation data, cpi rising. 5 . Word lets get to first news with david inglis. Lets get started with u. S. President donald trump, he 10 tax on earnings that American Companies have stockpiled outside the u. S. , according to a white house official familiar with the president s tax plan. Treasury secretary Steve Mnuchin met with congressional leaders to preview the tax proposal that President Trump plans to reveal today. Goldman sachs chief economist has said he sees these tax reforms by donald trump increase in u. S. Budget deficit and he told bloomberg he doesnt see it is being to enough. It does increase the deficit relative to what would have been the increase to disposable income in taxes come down and deliver modest growth. Has San Francisco judge barred enforcement withholding funds from socalled sanctuary comply withiled to federal immigration demands by shielding undocumented immigrants. The ruling could reinforce and more policy this, the nations largest cities like new york, l. A. , and chicago. Calling for crackdowns on those living in the u. S. Illegally. Stock market valuations have become divorced from reality to a cautionary note came as the nasdaq closed above 6000 for the first time ever. Previouslyo warned of equity prices caused by central bank easing, but saying theould favorably affect more cyclical outlook. Candidate Marine Le Pen speaking on the countrys most watched television station, she refused to be pinned down whether she wanted to be the hero of the mission she championed during her campaign. Is the appearance to a tax interest rival iman will macron. Are you going to vote for someone who has the globalization of society as a whole . Is project of mr. Macron actress idol. I said it, because it is aiming is patrick seidl. Especially with the direct it is patricidal. 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. Have a look at markets across the asiapacific. Its green and its looking good. The benchmark, where actually above the height we had late in march and were on track for the highest close going back to the summer of 2015. Look at some of the major benchmarks right here. When you look at dollaryen, 111. 50. Ow closer to once and the rest of asia, the asx 200, inflation numbers, manus touched on it briefly. Accelerated to just below the central bank targets. Hittingsically multiyear highs. Some of the movers were following across the region, when macau stop topping roughly in line with the pressure were seen on gold prices. Chinas largest property kong,per here in hong , now looking at the company as spending. Look at this chart right here, lets take a step back. As far as the value of Global Equities are concerned, msci all country index for the first time is now about 50 trillion u. S. Certainly it speaks to the fact to 1996, roughly few hundred a billion. A basic question, where is all this money coming from . Bond markets have held up as well. You can run this on your bloomberg. David, thank you very much for that breaking news coming in this morning. A South African miner, the ceo is telling us to expect largescale job losses at their marula mine. Platinum is not one of the most roaring commodities in the world. They tell us the unit cost will be around 22,600 rand. Anna lets talk about the auto sector, numbers coming out from european carmakers later today. Hyundai stock is on the move over in the south korean session. Chinese retail sales falling by 14. 4 , talking about the turnaround and recovery. Saying new brands are helping their recovery and they expect the uncertainty continue for the time being. Lets turn our attention to the burning story, Credit Suisse delivered numbers, firstquarter incomes and beating estimates. Saying it will retain full ownership of the swiss bank. Anna our guest as many european banks are in good shape. To talk about the specifics, he joins us here. Great to see you early this morning. Lets start with the big news out of Credit Suisse, the fact theyve decided theyre not going to ipo the part of the business they were planning to. Its been talked about for a little while. With this be a welcome surprise for the market . I think a welcome clarification. Theres a debate whether they should go for the Capital Raise like theyre doing now. Shiftings have been toward straight capital rates. There at the high end of expectations, so its a big step forward for Credit Suisse, clarifying the issue thats been overhanging the bank. Theyre going to move to an all cash dividend. They said they had to move way off script so this was a way of conserving cash. Its a double punch going above what they thought, theyre going of billion above what we thought they would get for that and we turn into it all caps dividend. That income, 5. 96. These are good numbers, arent they . , it looks like the headlines revenue numbers are beating expectations. There are many parts of the Credit Suisse route that have been performing reasonably well. Overhang from the run off assets which still are producing 500 million of loss in the quarter. Dragon has been preventing them from organically and therehe capital at the low end of where they should be and where they need to be to pay dividends. A caps goal Capital Increase list into a level where the and if is sorted out they have enough time in earnings to sort out the rest of the run off of banks. Anna lets talk about santander, a bit more detail on where the profit is coming from. They Beat Estimates on the net income line, so better than expected. Brazil profits rose by 77 . U. K. Profits fell by 8 and spanish profit growing 18 . The strength is coming from brazil because of what we saw in the currency market in the wake of political change their. Incertainly its a big part listing results, so a good story for them. One good thing about the group is that theyre very diversified. They are not a one trick pony. Franchises inng various developed markets. Finance is a big part of their business. It will be interesting to drill down a little bit more into that , how u. S. Consumer finance went and how Consumer Finance in europe is performing. If think about Deutsche Bank and Credit Suisse restructuring, if you look across europe, who is further ahead in that restructuring story . I would say Credit Suisse is further ahead and in a better position, really. Quite suisse is straightforward, once you take away the remaining run out and they already have some parts their franchise that are delivering very strongly. Deutsche bank is more of a mixed pick. The question, how is Deutsche Bank going to generate earnings and profit going forward. Thank you for putting all those backing stories in context for us this morning. Grounde lacqua is on the and she will speak to the credit time. Ceo at 6 50 u. K. Were getting some comments from del rio with regard to alitalia. They are saying alitalia could be sold to the highest bidder. It may come through from the tonsillar from lufthansa. They will give alitalia 300 Million Euros as a sixmonth to reports this morning. Alitalia is starting bankruptcy procedures and its all tied to a 2. 2 billion refinancing effort. Anna they wanted to do the recapitalization of 2 billion doos but now they cannot that. This is what we heard from the who said theyer will get a short time a special administration and then there could be a total sale or some kind of liquidation. Manus we were talking about this morning. It depends whether they want to actually make an approach. You can follow all the results on top. Find out about President Trumps plan for repatriation for tax breaksy inside america. This is bloomberg. Manus its daybreak europe. Today were going to get details of what has been one of the great driving forces of the truck rally. It said it will include a 10 tax on more than two point 6 trillion in earnings of u. S. Come preset are stockpiled offshore. Down from about 40 . The plan is expected to include a 15 tax rate for corp. Rations. Joining us is a cheap economist at g plus economics. Is there a risk that if the tax reforms dont deliver similar to what we describe, markets will be disappointed, or have they been quite happy going with other factors . I think has april comes to a close, theres been a distinct team for the markets this month which is been a remarkable really that coexistence of Political Uncertainty and resilience. The various setbacks in the that president a trump has been promising, or not really causing distress to businesses. Season has been supportive for valuation. Although i think theres a tale theisk to be had, uncertainty is going to remain. Valuations,ention and this is what we started with today. Facebook, netflix, amazon, google, they are rolling ahead. When you look at the valuations here, heres the nasdaq, David Einhorn this morning saying there is a divorced from reality in terms of markets. You dont sound as if you agree with that. You sound quite bullish. Next the Global Economy has been on a tear since the middle of 2015. When you look at the confidence in leading Business Cycle surveys of the two largest economist in the world, a u. S. And china, the indication is recovery is mature, when you look at unemployment rates in the u. S. , there is little potential for a more cyclical upturn yet theres no sign of a physical slowdown. Sheet,elp of balance its difficult to see a major slowdown on the horizon. In thehe devil will be details when it comes to tax plans from the united states. To get a 15 corporation tax, reduced tax on pastor businesses, could this be a stimulative package for the u. S. . Expectations a very important. All of what you just mentioned will help momentum in the shortterm. Its coming from the tailwind of risk, but in terms of sustainability, theres a big question here as to how much of congressional deadlock will surround health care. The person First Political hurdle crossed in france, well talk about that next. This is bloomberg. Its 2 30 in the afternoon in tokyo. Dollaryen moving quite risk leave this morning, up. 25 . London, 7 30 a. M. In paris. A little bit of breaking news from peugeot. Revenue, 13. 63 euros, up 4. 9 . Market, the auto best on record just a couple of weeks ago, up 11 for your. 2 . N america will grow by 50 quarters of declining unemployment here. A nice lead on the revenue side. They got hold of General Motors and the opel brand just in the middle of last month. Anna daimler car and truck as this, revenue coming in at 38. 8 billion euros. We had heard some headline results about the First Quarter earlier on this month, reporting profit that almost doubled because of search in were sadie spence cars. This is a business that switching like the regular sector, the company says its electric is have driving cars as well as investing in the current lineup. Saying it would speed up its 2022, 3 yearso earlier in the ceo presented in september at the paris auto show. They see Significant Growth in revenues in 2017. Manus that validates everything weve been saying. It just confirms the great reflation and growth story. We have interviews of plenty for you. Stay team for that. Anna the global rally in equities continues. The bulls are roaring when it comes to the equity markets. Global stocks at an alltime high. Hong kong stocks at a 20 month high, the japan topics on its longest winning streak this year. The broad risk rally resulting in some gains. The indian rupee push to his highest since 2016. Aussie and new zealand bond yields moving higher. Whats driving the risk rally . Part of it is down to corporate results. Not to mention european ,olitical risk abating a little taking a backseat for now at least. The Dollar Strength in the against the yen to a twoweek high versus the again. This is it over three days, up about. 25 . The u. S. Tenyear treasury yield also holding a five day gain. The reflation trade so far has been pretty much gone off course when it comes to treasuries. The 10 year yield forecast all the most in september. Franklin templeton calling u. S. Treasury one of the worlds biggest financial bubbles. The past five days have shown a little bit different picture but we will see if that continues. Guess where else people are talking about bubbles . The u. S. Stock market, of course. , the s pq hit a record 500 and the dow not far off their alltime high. The s p 500 and shanghai composite and not been is split since 2008. That was just before the collapse of lehman brothers. Manus its a new edition of daybreak, its not just us. This is this mornings top story. They taken this to a whole new level. The president wants to introduce a 10 tax on 2. 6 trillion of u. S. Earnings according to a white house official. Is calling for a cut in the past through business to 39. 6 . Will have more details on the tax plan later today. Weve heard from Credit Suisse already this morning which is holding on to its with brain banking unit and planning a rights issue instead. Confirmation of something thats been talked about for a long time. The income beat analysts estimates. The ceo is sitting down with francine and we will bring you that interview in about 15 minutes time. Rose, butrican crude the more it official official report may show stockpiles dropped by 1. 70 5 million barrels. 7 36 if you are in italy. Alitalia is set to start bankruptcy proceedings. The development pushes the carrier toward its Second Administration in a decade. Manus the decision to appoint an administrator is the first step in the legal reorganization process. In tracy alloway. Good to see you. We have room boards coming in that government is thinking about a lifeline, a temporary loan. What has been the reaction . Im trying to think of a suitable adjective to describe tihad. Otion from e they came in three years ago and began building its big state in alitalia, injecting a lot of money into the company. A lot of that was used to modernize and get the flight attendants new uniforms. There was a lot of fanfare that had injury into the carrier. Fast forward a few years. The decision by the employees union means that all parties move out, and it is important to you note the words being used by the transport union. We had the official who made the the sont saying certainly emotion is running high right now. Not saying italy will oppose any bid from of concept for alitalia. Thatere any chance alitalia will avoid bankruptcy right now . A lot of people are saying this is just another instance of rigs been shipped between the unions and the government. It seems like its a little bit more heated that it was. The italian Prime Minister has said very clearly that he does a bailout more on nationalization of alitalia at this point in time. The most likely scenario is that it goes into a time of administration. Given the outspokenness of the union, there are a lot of factors involved in Something Like that. Think shareholders are going to have to start preparing the procedures provided by law. That certainly suggest some sort of administration process. Thanks for the roundup there, tracy alloway. Lets turn our attention back here to europe. Delivering the assessment of the european economy, officials have indicated little change. Investors will be focused on any signal from president mario draghi that the central bank is starting to discuss an exit. Weigh in on what will hear from mario draghi this time. Will we get any hints of a change in guidance to come further down the line . That is the hope, i think. Its not going to be quite a cowboy ride. Asset purchases down by 20 billion, so they are going to be taking stock of the changes in financial conditions. Of theon the heels result, theyed need to constantly look at fundamentals. Its quite assured that the inflation risk has been contained. Interesting when you see the u. S. Inflation story. The euroyen up nearly 4 and the euro dolling eurodollar, take a look at the one at the top. Where does the euro outperform the most . From the euroank buck . There are two competing themes. Political upset causes systemic shock. Reinforces the behavior weve seen in recent years. Hand, it would appear to the Political Uncertainty in the u. S. , middle east, and asia. At this point, but weve seen in recent years is that growth has led to expectations of a stronger u. S. Dollar and a weaker yen. On the other hand, as you whenoned in the beginning, we see the inflation thenrential come through, were going to see a sustained new thing emerging in currencies. Were not at the end of the electoral season yet. And events are unfolding geopolitically in terms of north korea. Anna unemployment here in focus overbeen a big recent years and the inability to bring down some of those stubborn unemployment rates. They been coming down, but not as fast as many would like. Its nice to make the argument that if employment does come maybe will see the reduced appeal of the populist argument. Thoughts together for us later as we look ahead to the european electoral calendar. The conditions we saw playing out in the u k and the u. S. During President Trumps election are very much visible in the polls in france. There is a divide between the center and the far right, between nationalism and globalism. Eu Economic Policy can work for citizens in the shape of asadening across sectors well as signs that the recovery is reaching bringing down the employment rate. That is a good ring. However, its too early to sound the all clear on populism. Especially with the french parliamentary election still ahead. The future still hangs in the balance. The fact that Political Risk is feeding and resulting in easing of financial risk conditions supporting a strong recovery ld suggest moving tour its too early to sound the all clear. Manus just pull that graphic up again in terms of support for the euro. The stimulus has saved europe, so to speak, but support for the euro, the most regressive group against the euro are the and that is substance for five stars would go toward the end of the year. Still suffering from an employment deficit and at productivity gap. There is clearly room for improvement. Anna thank you for joining us this morning, we appreciate it. Manus coming up, will bring you that interview with Francine Lacqua and the ceo of Credit Suisse. Key. Ship is this is bloomberg. Anna welcome back, everybody, to bloomberg daybreak europe. Weve had news out of switzerland in the shape of numbers and a 4 billion rights issue from Credit Suisse. Manus theyre not going to give up ownership of the swiss unit. That seems to be the key message on the ceo, and thats what the market was not expecting, but they got the details on it. The headline numbers were better as well in terms of cost cutting and cutting of cost. Worththe Rights Offering 4 billion swiss francs. This as the linda reported better than expected thirdquarter net income. Francine lacqua talk to the ceo about it. , ifts been a good quarter you think about the kind of work we have been engaged in. Earnings are up 18 and costs are down 11 . We are profitable from reporting. This is what the bank is able to produce today. [indiscernible] you can see that across the board. More than 5 billion in asia, 2 billion in switzerland, which is significant. The Global Market is up 29 in capital down 12 . All the units seem very strong. International Wealth Management could have been stronger. 45 million profit distorts the numbers. [indiscernible] i could not wish for a better quarter. We had a number of tailwinds. Increase. 33 quarter. A good the numbers speak for themselves. It means the end of restructuring. Billion, enough to wind it down and close it down. Talk to me about the Capital Raising. Lets talk about capital for a minute. We think that something we got right. It was a bit of a shock to some people. Say many times that we needed to billion4 billion. We had the option to do that. It was entirely under our control. We feel that we raise 27 billion last year, so we believe weve power ofnstrating the this platform in terms of Wealth Management. We made it much more palatable. When we were thinking in an october 2015, we had a right down ahead of us. As we discussed many time, it couldve have had a broad range of outcomes. Removing that in january it completely reset the dials. When you look at it in that context, there are no downsides. That is at the core of our strategy. Would it have been more complicated . [indiscernible] its a huge improvement in the swiss business. We didnt lose anything by preparing that move. We keep 100 of a very good cash flow side of the business. Manus the ceo of Credit Suisse speaking to Francine Lacqua in zurich. You can follow everything on top. You heard him justifying the decision amid speculation, woody ipo the swiss business . He didnt want to lose the revenue that comes from the swiss is this. He said the numbers speak for themselves. That was something we heard from our guest in the first hours program. If theyve gone with the other plan that would of been more dilated for shareholders. Enthusiasm more for Capital Raise. Also justifying the strategic choices theyve made, saying that they still seek strong growth and Wealth Management but its been more toward the Wealth Management side. Manus more job cuts at credit squeeze throughout the First Quarter, 1400 jobs in the First Quarter. Inre will be up to 5500 more 2017. Credit divisions all revenue double in the First Quarter versus a year ago. They say this should be it at Credit Suisse. 6 56 in london. We will speak with another big banking executive joining us here on daybreak. This is bloomberg. Manus credit swiss goes for a 5 billion writedown offering. We hear from the cfo in a few minutes as well. Anna asian stocks extended a theal rally after and nasdaqs past 6000 for the first time. Manus President Trump will propose a repatriation tax. The white house unveils its hardline for the overhaul today. You are welcome, it is bloomberg daybreak europe, our flagship morning show here in the city of london. I am manus cranny. Anna. I am lets take a look at the futures. Corporate earnings story in the u. S. To much tax reform story in the u. S. , all of that pretty a bit putting a bit of a fire under the asian equity session. A 20 monthpe is on high. Throughhe nasdaq trade 20,000. It is up 12 . Is europes rally sustainable as the politics fade . Just called back a little bit in terms of your overall enthusiasm. There is still an entire election in june to come and france. Anna it is quite possible the rally is not to do with taxes in the u. S. But that could be the icing on the cake. Late january, since january 26, half of the gains on the nasdaq have come through five names. Also more broadly, not reflected in the asian equity session. Manus you have the dollaryen and the yen moves lower. What does it take to propel the dollar even more aggressively higher. The big banner high lines at 10 tax, repatriation being the key issue. But further lakes higher than the dollar. It is going to take real detail from donald trump to come through. If you think of the swathe of information we have had this morning. Anna daimler, strong outlook. For some good news in terms of the earnings story this morning, coming through from europe. Lets get a bloomberg first word update. Credit suisse has announced plans to raise 4 billion abandoning its attention to hold a initial Public Office it offering. They ran to opposition from analysts and investors. At the same time Credit Suisse announced firstquarter net income beating analyst estimates. Anko santander is benefiting. And comers to a. 7 billion euros beating estimates. Profit from brazil and its biggest market jumped 77 from a year earlier after president the president boosted the economy following the encouragement of dilma rousseff. U. S. President donald trump sense to propose a 10 tax on more than 2. 6 trillion in earnings. That American Companies have stockpiled o offshore. Gary cohn and treasury secretary Steven Mnuchin met congressional leaders last night to preview the tax proposal. Chief economist had said he sees trumps tax reforms increasing the u. S. Budget deficit. He told bloomberg that he does not think it is enough to boost gdp to the 3 target. It does increase the deficit relative to what it would have. Een that increases disposable income if taxes come down and delivers a modest boost to growth. A San Francisco judge has barred the executive order withholding funds from socalled sanctuary cities. They shield undocumented immigrants. The ruling could reinforce similar largest cities including new york, los angeles, and chicago. It is another blow to tighten u. S. Quarters and crackdown on those living in the u. S. Illegally. Stock market valuations have become divorced from reality. [inaudible] changes says David Einhorn. The nasdaq closed above 6000 for the first time yesterday. Warned previously of inflated equity prices called by central bank easing. By donalds pushed could be a boon for Economic Growth and favorite favorably affect some positions. Letter reflects a more cynical outlook. Banet at downing street. It comes to six weeks before the snap general election. This afternoon they faced Jeremy Corbyn for the final Prime Ministers questions before the june 8 vote. Candidatesidential Marine Le Pen has softened her position on europe. Bp and down on whether she wanted to leave the euro, a position she has championed in her campaign. She used the appearance to attack emmanuel macron. Either going to vote for someone who has the global [inaudible] of society as a whole . Macronject that mr. Emojis fratricidal. Employees is fratricidal. 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. Lets check in on the market in asia. The faithare keeping as the stock rally continued. We saw Equities Trading at highest since the summer of 2015 with several benchmarks trading at key psychological levels. The yen dropped along with other havens, the hang seng climbing to a 20 month high. Shares in china stabilized. Aussie stocks rising even as the aussie dollar slipped following the latest cpi data and the kospi trading at 20 to 10. 22. 10. Hyundai motor rising as much as 2. 4 after its First Quarter earnings did eat estimates. Denteddid fall nearly 7 by heavy u. S. Discounts as well as Chinese Consumer backlash. The korean carmaker is cutting on its suv and genesis brands to recover earnings. We did have wynn macau rising. A six week low in hong kong. Authorities hope that some of the home sale profits on suspicions of illegal transactions. Cheneys stocks had a pretty good street. They are tracking that surge in cheneys yields. We did have banks and lenders checking the most in five weeks given the rising rate. The topets get back to story. Offering 4 billion swiss francs and decided to retain full ownership of the swiss bank. Net income numbers. Francine lacqua and spoke to the companys ceo. Under normal circumstances that should be it. Said a complete restructuring we would need to refuel in 2017 which we are now doing. We have 11 million of restructuring costs to go through. Francine is in zurich. He is living up to his reputation. Swissholding onto the chapels. Francine i was getting an idea of why the chose to raise capital. He said this was always in the works. Februaryoke to him in or january he was turning back ipohat he said saying the was only an option. Today he said this was a Capital Raising, when he took over. That is the time and he kept himself [inaudible] he was either raising capital that he could use now because the markets have turned around or if the markets had continued being bad, it would have been putting off that swiss franc. Anna away from the Capital Raising story, the underlying performance of the business tells a good tale for shareholders. Feel like i ask him every quarter, is this the turnaround . He has been under pressure because of the bonuses that they paid, they had to he said cutting voluntary, the of the bonuses. He has been under immense pressure to turn around the bank area the ship price was at a record low. The bank. The share price was at a record low. He said i could have not hoped for a better quarter. A greatlear this was quarter and hopes this means they are on track in the trend will continue. Manus great job, good to see you having that conversation. Francine lacqua in your and zero. In zurich. Our finance team head. Are you surprised they have gone for Capital Raising rather than selling the swiss business . That was always on the cards. It was to boost capital and he could not do that in october 2015, he could not raise as much money by selling stock. He left his option on the table the stockt has has rebounded from july. Not far from what it was in 2015. Manus this is one of the worst performers. The investors have been seeing this was the crown jewel, it is the unit that is the single largest profit generator at Credit Suisse, do you want to get rid of it, do you want to dilute that core shareholding and there has been a lot of pressure on management to think hard about doing that. Anna underlying all of this away from the capital ratings story there is the underlying performance of the business and in the meanwhile, things have improved. Had a lot of fun for seem unforeseen writedowns. They are beating estimates. He is at a juncture where he could show the delivery is bearing fruit, is bringing forward the closing down of the strategic revolution unit. This is showing that delivery is yielding for the company. Manus more good news in the former santander. Recovery inovely terms of the brazilian business. There is a it of a renaissance all around. They have always pointed to the fact that they are very diverse. It has always helped them. Youre seeing all the 10 markets being strong for them. And yes, the model is proving to be more resilient. Anna that is something the chair has talked about, she has seen growth in all those markets coming through. Thank you for joining us. Bits we will dig a little deeper into the santander numbers. All 10 divisions. Diversity is key. We will have a chat about the First Quarter earnings, we have the cfo with us. This is bloomberg. Anna welcome back. 717 and london. In london. A. M. Sophie alitalia has said it has exhausted all options after workers voted against job cuts in salvaging the cashstrapped toward pushing it administration for the second time in a decade. Its 2 billion euro recapitalization is effectively dead and it will start appropriate eagle procedures as funds run out. China Merchants Bank said it wants to capitalize on the growing flow of chinese money into International Markets and become the Largest Private Bank in asia. Speaking exclusively to bloomberg, the Vice President said the Bank Overseas it should through its assets under management. Leapfrogging current leader cbs. Banks happen find 2. 3 Million Euros over compliance issues related to antimoney laundering and terrorist finance laws. It was also recommended for six breaches of the law between july 2010 and july. 14 which the lender has admitted to. The bank is preparing to what could be one of the biggest share sales in london this year. And First Quarter revenue has far exceeded analyst asked minutes estimates. We above expectations of a 13. 2 right. That is your Bloomberg Business flash. Manus thank you. You want to check into your futures board. London is down and europe was on a 20 month high. If you take the news that we have broken, santander was significant. Suisse raising capital. Pew zhou was good for and we have this slightly undecided look about the market. The European Market taking out some time to work out where they will head. It is more positive, lifted by the asian equity story, corporate profit and tax reform. ,he big theme of this week maybe we are just pausing. The European Markets are taking some time to work out which way to head. You mentioned the corporate or earnings the story which had been strong and guidance by the likes of guy there. Likes of dime ller. Daimler saying that it had significant ebit growth. Manus they have lost a little of market share but they upgraded in terms of latin america and they have gone for an upgrade in terms of how they see europe. This is the one chart that we started to show. To what extent, you have the ones with the driver, the bulwark behind it. This is the nasdaq, this is the to 1999. Elative do you actually go with that as being the markets are overstretched, the markets are two highly valued, that is the question. Anna an interesting line from David Einhorn. He is concerned about where we have got to with markets and he makes of high that there was no catalyst that we know of that burst the. Com bubble in march 2000 and we do not have a particular catalyst in mind. This leads to the conversation we had, how far the rally goes. March 2009 was the start of the market rally. He was making the point that in the last year or two years you can make significant returns. Manus if nothing untoward a headline is coming in. Bitda delivering earnings a shade before below with the market had expected. The market had penciled in 1. 9. Anna lets talk about santander. Lets get to the cfo of this business, joining us on the line. Great to have you on the program this morning. Lets talk a little bit about the brazilian side of the business. That seems to be where you have a big uplift in profits versus this time last year. How strong can brazil get from here . Guest good morning. Clearly in recent months, we economic much better conditions in brazil. The riel has strengthened. Recent Economic Data point toward an economic recovery that probably would result in positive gdp growth this year and in the years to come. And that environment, clearly, the economy and particularly Financial Sector should do very financial that the penetration in brazil is still very low compared with more developed economies. Manus good morning to you. Lets talk about your home market in spain. The challenge is, every time we aboutbout spain, we talk the renaissance, growth, restructuring. It is one of the good stories of europe. Talk to me about the spanish is this. Where are you seeing a shift here . Guest we have seen for a couple of years, we have had very good mediumsize sme and companies and consumer loans. Recently the most important change has been the recovery in the Real Estate Market. After the crisis we had in 2008, 2012, the Real Estate Market starting to recover. We have seen house prices going up. We have seen demand going up. For the first time in hourly almost a decade, we are starting to see new production of thegages being greater than amortization of existing ones. That is a very important change relative to what we have seen in the last couple of years in spain. Anna i know that is the spanish story but with that in mind, what do you expect from the ecb into the next few months . Clearly, the markets are expecting a gradual production reduction in the monetary relative strength or hardening in monetary conditions. Stick with the deeper rate over the next few months. We are still quite far away from a natural lean in and stressed in interest rates. The purchasing of government and corporate bonds. We are still quite far away from interestrate. The trend is toward tapering, exerting liquidity measures that the ecb has in place. Manus we have to get to the u. K. , a big portion of your problem profitability. Are you seeing any slowdown in terms of lending and are you prepared to chase the market . There was a record low Mortgage Rate last week. Are there any fissures in the market and will you change market share . Guest that you is doing better than we thought after brexit. Around 2 ,mates are that is pretty sound. And slightly better than we thought it would be right after brexit. The economy is doing better. We are seeing relatively low demand and mortgages. Previous Strong Demand in consumer loans loans and smes, we are not going to go after market share. Loan portfoliour is mortgages. We have been comfortable with what we have. Price, theat at some conditions to not pay for the risk. After not going to go market share at any price in the u. K. Nna thank you for joining us talking about brazil, the u. K. Economy, and the ecb. Mass london is lower and the rest of europe is bid. Matt miller and guy johnson next. Guy good morning and welcome. This is the european open. First trade of the cash session coming up shortly. It could be a positive one for most markets in europe. I am in london. Matt miller in berlin. What are we watching this wednesday morning . President trump said the planning a 10 acculturation tax. Let us keep the equity rally rolling . Credit suisse is abandoning plans to spend off its swiss business