Anna welcome to bloomberg daybreak europe. Where in the city of london. Manus its super thursday for the bank of england. Frances number three bank with every other bank in france which is delivering its numbers. Credit agricole worst numbers, the market predicted 700 702 million euros. Delivering stable revenues in 2017. Its the mortgage fees that are helping the banks. Credit agricole saying net income quadrupled in the First Quarter. They have the italian business trying to expand. It looks like the cfo expects stability. Trading revenue rose by 17 on fixed income money. That joins the overall theme that we had. Thats the story in parts of the banking sector. Also getting numbers from union credit. Firstquarter net income 907 million euros, a above the estimate of 586. 7 million. Interesting reading from my builterg colleagues, they it as the quarter where the ceo might need to prove profitability. According to the estimates, he seems to done just that. , italystalys bank biggest bank and the into it there was a real focus of bringing the bad loan situation under control a little bit, but what can you do in terms of that profitability in the business . It seems that the profits are really head of estimates. Versus the estimate of 703 million. Manus another headline on deutsche telekom. Billion. 5. 5 confirming the fullyear forecast as well. There more discussion in the United States overnight about the possibility of consolidation with tmobile usa. Anna interesting to see what theyre saying about the United States business. Strong numbers coming through from door to telecom over the last month, increasing their estimated subscriber gains for the full year. The strategy back here in europe wirelessabout winning business clients in germany as a face competition from the lights others. One and a tough competitive environment but they are confirming that fullyear forecast. If you ordered anything online or drop the letter in the box, the click of the button, its all online. Deutsche post delivers firstquarter earnings under 5 they said 2017 is going to be a more normal year. The Fourth Quarter was their best quarter in history. Its about the electronic delivery. Firstquarter net income, 600 33 million. We will have a conversation , frankn with the ceo appel, at 8 45. Anna that show investors where we are overnight. Were focused on the bank of england. We put in the kiwi and the Canadian Dollar, not just because Erik Schatzker is in town. He kiwi down this morning central bank really confusing economists, it seems, saying they will keep rates at a record low for an extended time, downplaying the inflation picture. Moodys downgrading six of their banks. ,anus a shot out on daybreak , today raises the flag its canada. Lets talk about commodities. This is on the inventory story dropping yesterday in the United States. Stockpiles dropped to 5. 5 million. Sachs says it was an opportunity for you to get long. Anna were not expecting to go anywhere very fast at the start of u. S. Trade. Another record high on the s p yesterday. For anyone whos overly concerned about what the confrontation between trump and the director would do to pass his agenda, the markets have not gotten to that story yet. Senior Senate Republicans have closed ranks behind President Trump after his dismissal of fbi director james rejecting calls for a special prosecutor to investigate russias meddling in the election. Meanwhile Jeff Sessions spent most of the day interviewing candidates to hold a job on an interim basis. Another 18 months before the bank can generate returns for investors. Speaking with Erik Schatzker, saying they want to raise the return from 9 to 11 . But warned that barclays ability to cut cost further is limited by the need to upgrade its aging technology. Topf you look at desk computing at barclays, our systems are windows xp. I dont think anyone knows about windows xp anymore. They stop programming that years ago. By the ended this year we will upgraded. 0 employees thats a sort of investment we have to make to get barclays on its right foot. Anna bank of england looking to revise its higher inflation outlook for the year when it delivers its Monetary Policy review later today. The market will watch for more than one Voting Member to vote for a rate increase. Thats at 12 00 p. M. London time. Chinas foreign acquisition frenzy is ending almost as to manically as it began after record 246 billion of outbound takeovers in 2016. Chinese steel makers are now controls. Hter capital crossborder purchases plunged 67 in the first four months of the year. 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. Loomberg at top talking about that rally in new zealand. Lets look at some of the other market players. The nikkei holding on to go 17 month highs. Australian share market in late trade is pretty flat and the cosby once again at a record on a recordkospi high. Looking at stocks were watching a 14 year low after flagging a potential 130 million loss in the First Quarter. Announcing it could have backtoback profit losses coming through in terms of decline in profit for the First Time Since 1994. Fallen to atals has sixmonth low due to weak demand. Weve been talking about china shares in particular, Mainland China shares being underwater. The msci china index has overtaken the csi 300 for the First Time Since the Global Financial crisis in 2008. The of that to thanks to likes of alibaba lifting the index. Weve seen an offshore premium coming through in nos chinese stocks listed in the u. S. Much, thank you very juliette. Optimistic about the impact of brexit on londons financial sector. He spoke to Erik Schatzker and inventiveity is enough to work around britains exit from the eu. We have bankers and salespeople all across europe continuing to engage with europe. Upt like having to set Holding Companies in the United European Union doesnt require us to set up structures across europe to make it more robust and more within the fold of europe. You know what im getting at. Does the hardness of brexit determine how great the impact is on a bank like barclays . Thatuld be decisions taken might not be in the best interest of the free flow of capital. Of the tenets, if there were couple things that came out of the financial crisis as positive, i think the coordination of the g20. As we reregulate the financial industry, lets not inhibit it barriers, the free flow of capital. So long as those barriers are not put up, there will be workarounds around brexit so london will remain a very important source of capital for europe. X relative to your peers on the subject, you are an optimist, at least you are constructive. What is the upside being optimistic . What gives you that degree of confidence that they dont have . Am just expressing what im think thats what i think. I dont know if its optimism or pessimism, it is what i think. We have a Bank Subsidiary in ireland that is part of the european union. Have 1200 employees today in continental europe, from milan to paris to frankfurt to madrid. Uncertainty, but having been in the Financial Services industry, its amazing how creative the financial industry can be. Anna the ceo of berkeley speaking to Erik Schatzker. The bank of england released its minutes of its most recent meeting in his new economic forecast. According to Bloomberg Intelligence analysis, we can , there arete of 71 one fewer voters this time around. A downgrade on gdp growth and forecast for inflation to be nudged up this year. Manus so he brought in a specialist on risk who got up extra early. Brownie points for the day. You say though rates are entrenched. I think its interesting, you do worry about the buildup of dissent. , the minimum number of people there could be one or possibly even to more. Its not as if with that close to a hike, but still, if it turns out that there were three hikes, three votes for a hike, that would be quite a big deal. I guess the governor gets a little bit extra if needed. When do we expect any movement from the bank of england . Rateslleagues are saying wont start to go up until 2019 and looking at the probability of a hike by december 2017, its lower than it was three months ago. Expectations are falling. I think thats true. Obviously the bank is got to come up with its you of how the economy is going to develop. I suppose since the brexit vote last summer, the bank has been surprised by how resilient the economy has been, but nonetheless, wage growth remains sluggish and inflation is going up. Consumption is falling. U. K. Is not a hurry in the any more than there is anywhere else. Manus from the market perspective, and you look at this is u. K. Ay, real rates, and they have started to move higher. Define inflation indexed isso the real rates that meant to continue in this environment . I think it does. If you look at the scale on this thing, theyre edging higher. Manus coming up to the 200 day moving average. 2. 5 percent real rates, there Something Different the market expects for the u. K. Outlook Going Forward. The bank ofthat england is going to keep real 2 forates negative at another five years. If you looked at the 10 year rate, you would not see rate very different. It is an extraordinarily low rate. Anna and a lack of reaction from the bank of england. You could argue that it is saying that the bank of england free for to keep money a 10 year or longer horizon, certainly a five year horizon, to keep the economy going. Anna so inflation is on the rise. Its going to be hard for the bond market to stay like that. It will go up and am pleased that gone up 40 basis points from the lows. Lawrence will stay with us. Anna and more on the banks policy decision, followed by governor mark carneys press conference 30 minutes later. You can follow all the action on the bloomberg. Up, fbi fallout, republicans told the line as the latest on the contentious firing of james comey. This is bloomberg. Anna welcome back to bloomberg daybreak europe. The Trump Administration started looking for a new fbi director after firing james comey on tuesday. Democrats protest the president s move. Kevin has more from the white house. Kevin President Donald Trump fighting back against criticism that he mishandled the firing of at the eye director james comey. Spokesperson telling reporters it was a surest form of hypocrisy for democrats to be outraged after specifically calling for his own ousting during the president ial campaign. Members of the Senate Intelligence committee had invited the director to testify privately in a meeting next week in the senate. Elsewhere, mixed reaction on capitol hill. Absolutely laughable. Both parties at different times for dismissal of mr. Comey. This is not watergate. The clinton investigation by any measure was very much a little size. Its time to take a new direction at the fbi and i think the president has made a wise decision here. The president is said to be considering several employees already at the fbi. The u. S. ,cking with calling for three more rate hikes this year. In order to avoid an overheated economy. Saying the bank should gradually reduce the Balance Sheet. After years of forcefully advocating low rates. Our guest is still with us. ,ets talk about these comments as someone who is in favor of the low rate environment, and he seems to be more hawkish of late. In 2017. Es, three more how do you view his comments . He certainly an activist. In a way, is doing the same sort of thing we heard the fed say. Saying the data is Strong Enough , in a way, if you compare where he is and where the fed is now to where they were at the back end of last year, what happened to the dependency . Anna is this official fed messaging thats designed to push up the chance of a hike in june . View, is not necessarily coordinated, but the fed the issue remains the level of the twoyear yield. Although the twoyear yield is that recent highs, were still 65 basis points below what the fed with supply. Manus the market has gotten quite aggressive in terms of pricing. September has gone from just under 5 last week to 40 on tuesday. It has almost doubled what it was a week ago. So youre saying that is eerie would be more aggressive on paper. The fact that is at the more doesnt the repricing of the Broader Market is something the fed would like to see, the fed is not want to shop the market. Anna they been talking about the Balance Sheet. We dont have the details yet on what they plan to do around that , but how will that you worked into your thinking . The fed has a problem with the front end of the yield curve and at the back end of the yield is that the term premium in the bond market remains surprisingly low, even now, a little bit below what we saw at the end of the paper. You can see its trying to get steepened again but it really is struggling. Sheou think of the commerce conversation accelerates, is talking about getting ready to do Balance Sheet reduction after the next hike. We expected him to Start Talking about it toward the september meeting and to enact Balance Sheet reductions next year. So this is a little bit ahead of what we were thinking. But this is another big ministry for the fed, why is the term premium so low . You can push the 10 year yield , thats what a reduction in Balance Sheet would be four. Anna stay with us on bloomberg daybreak europe. Manus ill have a conversation with Charles Evans from the chicago fed tomorrow. Its 2 30 in back, the afternoon over in tokyo. The dollar against the japanese. En trades a little bit weaker 6 30 here in london, 7 30 if youre over in italy. Insurer, waiting for those numbers. Mv. M waiting for o when we get those, we can always come back. Lets focus on the bank of england for the moment. The bank of england is expected to leave its benchmark rate unchanged at 12 noon london time today. Followed by governor mark carneys News Conference 30 minutes later. Good to see you this morning. Forecast, and the theres only two forecasters who nk he may dont expect a change of heart and policymakers today. Expecting from the economic upgrades and predictions is an upgrade to the inflation forecast for 2017 but a lowering of the growth projections. According to economists, this is not likely to translate into more votes for a rate hike. In fact, just one policymaker is expected to break ranks and it will most likely be Christian Forbes who did vote against her colleagues in march, citing the outlook for inflation. Cap and questions over whether others much all assumed and thats likely what will capture the markets imagination today. Other signals voting with Kristin Forbes in the future. Sterling has rally this year, the best g10 performer, in fact. Year and theree are the political hurdles to get over with the election and the twist in terms of brexit. Anna mark carney can be outspoken on some super thursdays. Of course we had the election on the horizon. Yes, we do. If ever there was a time for mark carney not to rock the market, this could be it. As theonths ago even bank of england raised its inflation and growth forecasts, he managed to maintain a dovish tone. Now there are more concrete reason for him to do that as well. These are the first comments that the boe went into preelection fervor. Analysts are saying is likely to talk down the rate hike expectations and if you look at the markets, those expectations for a rate hike have been pushed further out. In march there were Something Like up 50 chance of a rate hike by the 2018. By now the market has pretty much priced out the probability of a rate hike before november. Thank you very much. Lets talk about that breaking news crossing now. The Insurance Business out of italy, the largest insurer, net , also missing estimates falling versus the year earlier. Q1 results concern confirm the strategic profitability objective has been reached again, the company said. They talking about increases in net acceptable to lower nonoperating investment, mainly due to continued policy to gainate hike game and stronger impact of taxation. At combined ratio coming in 93. 1 . In terms of the breadandbutter on the combined ratio and proportion of nonlife premium, that looking a little bit sluggish. Have omv, whaty they referred to as a clean that above one or two the estimates that i have. They talk about it unprecedented move in the First Quarter results. They say production costs fell to around nine dollars a barrel and they see the cost of production dropping to around nine dollars per barrel in the overall scheme of production costs. This is what was seen across all the various oil industry participants that weve spoken to. Have a conversation with their ceo. He will join us at 7 15 this morning. Reiterating the current 2017 outlook, sales ahead of estimates and ultimate operating profit coming in ahead , confirming their forecast. Numbers coming out of telefonica right now but we wont dwell on those too much. Headline, if you think the markets are hot, the up for thedex closed First Time Since 2000. A nice headline on that sweep of earnings. Lets get back to the broader picture. Knowledge the economy is getting stronger. Was presseddraghi by lawmakers met when he will start winding down euro area my terry stimulus. Earlyrtheless, its too to kanaan success. Underlying inflation pressures continue to remain subdued and have yet to show a convincing upward trend. The domestic drivers of inflation are wages, and their not responding to the recovery. This, before we get into lets give you the slide anna was mitch was mentioning. Oibda has a slight miss their. ,n terms of quarterly revenues pretty much in line with what the market expected. That level of 48. 8 billion euros. I guess to still here with us in studio. Defending himself and what the ecb has been doing there in the hague. Mario draghi is acknowledging there has been progress that hes trying to explain clearly that the ecb wants to wait before beginning to talk about taking their foot off the pedal. Manus his rhetoric was very clear. Is it the time to exit or think about exiting . Being youre euro revocable. You have mario draghi so emphatic, now is not the time. There is less of a coalescing of mines than one would hope from the ecb. Wingsre are certainly two on the ecb. What we have to remember is that the ecb is really where the fed theyre conscious that inflation, although apparently the risk is declining toward deflation, inflation is still very low and they dont have many tools at their disposal since getting turned down. Everything argues for moving very, very slowly. Thinking yes, the have to of knowledge that the economy again, until we see the inflation risk of all that is well, we really need to see that. Startnk core cbi will picking up this month and keep rising. Manus if you strip out the oil in it, whats going to drive court cpi . Theres a whole variety of that if health core inflation down for a while. We think there gradually eroding. It has a lot to do with inflation expectations. The think that helps drive inflation upward. In unemployment. The Spare Capacity as much lower than it used to be. I say rather glibly that the u. S. Economy the european economy always looks like the u. S. Economy with a 2. 5 year lag. Place to see in this revival in inflation where away from getting the actual information. Anna where does it leave us in june . Do you expect mario draghi just reiterates everything he said at the hague . Other guests have talked about a change in language around the risk and the way its balanced in the eurozone economy. We think the june meeting is the right meeting. So should we not expect too much from june . I think theres still a chance they will signal when they get ready to remove negative Interest Rates. You have to remember how hostile many people in europe are to the negative Interest Rate policy. People thinksure it is successfully stimulating the economy. Marioere is that draghi never embrace that concept for the u. K. Thank you very much for joining us this morning. Anna snap plunged in afterhours trading yesterday. They reported firstquarter revenue of about 150 million and send it is adding fewer users than expected. Manus sarah has been tracking this. In snapes first earnings as public company, they disappointed on several fronts. First there was user growth, which was much slower than expected, showing the company may have some pretty heated competition in space. Then Revenue Growth was much less than expected. Snapes need to prove that it can hold its own and increasing competition from facebook, a much larger competitor thats of best apps. Ome bringing it close to 17 ipo price. Hiscompanys ceo made public debut to explain away the companys issues and he actually seemed pretty confident. He said that while user growth is not trying to get you to be friends with all your friends on snap. There not using some of gross hacking tactics that other competitors use. He said that maybe facebook has to copy snap because it is not quite as creative and he takes it as a compliment that the Larger Companies need to resort to using some of snaps most popular features. The company has a lot to prove, but the management seems confident that they will get there. We will see if they are able to get there by the end of this year. Remember if youre a customer, you can watch everything were doing on daybreak and all of our Programming Using the tv function. You get all the charts and functions we are using through the program and you get to join the conversation as well. Up next, we hear from the berkeley ceo about the banks turnaround and the whistleblower scandal. A banking feast for you. This is bloomberg. Anna welcome back. Lets get of Bloomberg Business flash. Income onagricole net the recovering european economy. Sawces thirdlargest trading revenue jumped 17 with creditrating and foreign exchange. Unicredit has reported First Quarter profits exceeding analyst estimates following the companys Balance Sheet cleanup and a record share sale. Italys largest bank said net income more than doubled, lifted by revenue and lower costs provisions. The takeover bid following the refusal by the dutch chemical and clothing maker discussed another offer. Rick it remains convinced its proposal is vastly superior to an alternative plan. Thats your Bloomberg Business flash. Family issaros royal said to lets get to Tracy Alloway in abu dhabi. The timingugh this, someone say is confusing. Importantright, the thing to remember about the timing is that this request happen several months ago, including the news they were looking to raise a brilliant dollars worth of capital. Stake justraised its under 10 . That means a lot couldve changed since the request was supposedly made, but the reason were all interested is because it speaks to control of Deutsche Bank and if the request was granted by the german regulator, it would mean we basically have unprecedented concentration of Voting Rights in china and the i royal family. That could mean potential Management Changes at a time when the ceo has been under pressure to prove that Deutsche Bank can withstand legal cost and adapt to a vastly changed banking environment since the financial crisis. Much, tracyyou very alloway with the Deutsche Bank story as it relates to investors from the middle east. Staley has apologized for trying to unmask a whistleblower. As he told Erik Schatzker, becoming involved was a mistake. Its important that people feel comfortable to contact the bank or the regulators with full protection to talk about conduct issues at barclays. Erik schatzker joins us now on set. Good morning to you. This raises questions about the , witheblowing scandal limits around what he can say, but he came out white strongly to defend himself yesterday. As you would expect because he still the ceo in he has the support of the board. Howissue Going Forward is long is this going to drag on . He was clear that he and barclays are at the beginning of the senior managers regime theess being run jointly by Prudential Regulation Authority under the aegis of the bank of england. I did not get the sense that the interviews had taken place thus far, so it could be months. He was unwilling to attach himself to a date, but this issue will hang like a dark cloud over staley and barclays until it is resolved, and beyond that, and even bigger question is how the regulators will act. This is the first test of the senior managers regime. While we got extensions from some of the shareholders yesterday . That is a reasonable assumption. Has donecounts staley a pretty good job putting barclays back together up to this point. But there are some questions as to what will happen in the future. Thee are some doubts as to quality of judgment he exercised in the whistleblower case, and there were some people who wonder what is the climate inside the bank like right now . Put to him,estion i why would anyone blow the whistle at barclays if the ceo might be willing to go after you . Here is what he said in response. Whistleblower rules are incredibly important for maintaining and regulating control of banks. It is very important that people feel comfortable to contact the bank or the regulators with full protection to talk about conduct issues at barclays. We will do everything we can to robustre we have a whistleblowing program. Us its clear he wants to he is personally paying for it financially. The issue for shareholders is very clear, its about return on and he cost of equity, staked his reputation on it. What is the promise to shareholders . Thats one of the questions, how much can barclays grow . Staley is staking his reputational as a leader on the consumer barclays is a and corporate, an investment bank. What exactly does that mean . Existential point of view, any shareholder who is in the stock right now cannot afford to think about whether he survives the senior managers regime investigation, because if he doesnt survive, the alternative presumably is a berkeley share price somewhere below two pounds 10 which is where it is now. If you believe he survives, what is the growth plan . How much can barclays grow, what d of return on equity can can it earn its cost of capital . Quarter, thest groups statutory return was 9 . Thats where you want to be. We have a good chance of within the next 618 months. So optimistically, six months from now. They are nolly, longer destroying shareholder value until 2019. The man still has his work cut out for him. Anna he has stood out perhaps from some Business Leaders and being fairly lacks about the impact that brexit is going to have. He said provided politicians shut outct walls to the u. K. And furthermore provided financiers were creative at getting around roadblocks that regulators set up. This should bring some alarm bells, but what he meant to say was, banking and finance in general can be creative. If the politicians want to find ways of enforcing a heart it. Anna im sure creativity can be a good thing. We just had maersk numbers below estimates. Manus super thursday. The bank of england delivers inflation reports. Anna oh, snap. Shares plunge in late trading after an earnings report. Manus bloomberg sits down with jes staley after shareholders give him a vote of confidence. It is very important that people feel comfortable to contact the bank or the regulators for full protection to talk about conduct issues. Barclays. Manus youre welcome. It is bloomberg daybreak europe. Our flagship show. Anna it has gone 7 00 a. M. In london. It 00 a. M. If you are watching at paris or berlin are many places besides. Lets get some breaking news. Manus it was a miss. Da, the underlying profitability 201 million. First quarter revenues command, it is a company in transition moving away of the well business can focusing on containers. They set the container business to 2 ow to percent 24 in 2017. The estimate was for 74. 6. They are sticking to their fullyear outlook. That is maersk. We will have a conversation with the cfo in 45 minutes time. We have bt. Anna we have a few numbers 54ing across the bloomberg, 50. 4 pence. Ahead of estimates. Proposing a final dividend of 10. 5. A lot of questions around the companys performance given the challenges it has faced recently, the italian accounting scandal in all of that very topical. The ftp spending plans, what will we learn today about that . In terms of executive pay, some headlines coming through, the chief executive will not get a bonus in 2015, 2017, and the structure will not get a bonus this year. The performance of the business coming through. Manus one of the areas the market will be interested in is the Strategic Review of Global Services, they are revising their outlook in january of this year. It has been a tough couple of andhs for bt between italy the business. Lets bring in the ceo for a first interview of the day. Welcome to daybreak. Good to see you. Lets deal with the businesses. We are going into a Strategic Review of Global Services. Mean, howthat really long will that take, when can we expect your version, the new version of Global Services to be delivered . Guest we have undertaken the review and come to a number of conclusions. Global services is an important business for bt. We recognize that the market is changing, technology is changing and we need to change the business so we are announcing today a transformation of the real focus ond a our Global Customers which may mean we will not focus as much on the domestic is this outside of the u. K. Anna what does that mean for bits of the business you will hang in onto and bits of the business you will sell . What is clear is our Global Customers at around 200, we have a good business, a good relationship, that will be our focus. We increasingly invest in platforms that use the cloud and the global network. Over time we will do prioritize some of the local businesses and that may in time made that we dispose of one or two. That is not part of it. Not makingng youre an announcement about selling italy. People said given what happened with that be the first . Guest we can transform italy, we can fix it. We have new management in place and that is what we focused on today. Manus lets get to one of the issues here. You have had a review of your own remuneration in terms of your annual bonus. The message to you from the shareholders to the ambassadors and your business . I am thinking about where it hits your own pocket. What is the message . The boardignaled to in january when we announced the problems in italy that i felt it would be an appropriate to take up bonus if one was due and that what you can see in todays announcement. Need to be setting an example for everybody across the business. I completely support this decision. Manus have you got. Or from your shareholders, how wrinkled are they, give us a sense of the conversations you have had. Gavin shareholders are disappointed in terms of what is happening in italy in particular but they support the strategy. There are a number of things that have gone very well this year. We have now resolved the future in terms of regulation. We have an enduring settlement which is a with the platform to grow the business. We are announcing a consultation around the potential to invest even more beyond our existing plan which we will be doing through open reach. Investors seem to be supportive of that. It has been a challenging year, no doubt about it. The underlying business is strong, performing well, and we can put our italian issue behind us which we think we can, we can go and set the business of for future growth. Anna tell us more about the consultation that you are running here. Is it Something Like 2 of u. K. Buildings have access to fiber connections and bt has talked about getting more out of the copper infrastructure. Is this a change in direction, what do you expect to learn through this . Gavin we have always said we one should not be fixated one technology, we should let the market figure out with the best technology is so we are ruling out [inaudible] which we will get to 10 million premises by 2020 which with speeds of half a gigabit per second which is pretty significant. We want to understand whether the market wants to go beyond that and to go beyond that speed we would need to take what is nor known as fiber. We have to million premises within our existing plans. We will be consulting the markets are open reach to understand whether or not the cps would support that and 10 million premises by 2020. Anna is there political pressure, other companies that tot you do not want this happen, wheres the impetus coming from . Gavin there was a lot of commentary during the strategic or Strategic Review. We felt the right thing to do was to consult the market and see whether or not there is real under becan underpinned by our customers. Through the new government structure that we have, we see it as an opportunity to see whether or not that is the case. Manus you talked about making this additional investment, Additional Capital expenditure. Would you concur that there are crocs in the u. K. Telecom market the u. K. Telecom market. They are beginning to look like chasms. Talk to me about pricing. Gavin what i am saying is consumers expect better value and they are becoming much more canny about shopping around to get that value. It is not all about the the cheapest price in the market. It is about often being more for more. You can see in our consumer businesses that is the strategy that is working on the eve brand and bt brand. I think cutting through just straight price rises without increasing the value of the service you offer customers, those days of have long since gone. The you mentioned one of achievements of 2017, you used a word earlier to describe it. How longlasting is this going to be, is this completely put to bed . How long before some of the companies that use open reach say we need even more separation from bt . Gavin what we have proposed and what was agreed that the [inaudible] which is at arm length. The requirements are in place to meet our judiciary responsibilities but apart from that open reach reports to an independent board that reports to the group or debt they have a high degree of independence framework,hin the the budget we set for them. They were able to consult on a andate basis with cps develop Business Models and that is what the market wants. We will continue to invest. Investment and open reach has gone up 30 over two years, we want to go further. We are prepared to step up. The proof will be in the , if weif we deliver deliver on investment and service. This will be a model for us. Manus this is, take us forward. Thereve done interviews, is going to be demand for more money, more cash infusions to break down the deficit. Balanceways a hard between the dividend and the cash you may have to put into the pension. Have any sense of the figures we can deal with and is the dividend under threat . Doing annual overview. It is too early. Cans you are the man who tell us the size of the speculation. Gavin it is too early to draw conclusions. We will look at the amount of cash we put in the bonus and look at the benefits that the the pension and we will look at the benefits that we provide for pensioners. We are a strong company. We can afford to support the pension. We see that is a very important response ability as a board. , wean pay dividends increased by 10 which is slightly ahead of consensus. We can invest in the business of the future. Year,and has been a tough it has been a tough year. Will you get better for you from here . Challengings been a year. There have been things like italy that have been setbacks. But also, the underlying business is strong and we have a good market position. We are investing in the network is a say. I am confident about the future of the business. Manus many people in the market will ask this, are you susceptible, are you, you have got to tough couple of months, . S bt susceptible to a bid can never say that you are completely immune from a takeover. When i am confident of is that we have a Clear Strategy that shareholders support, a good market position, we are clear where we can invest to grow for the future. Im focused on that and looking forward to delivering on it. Anna thank you for spending time with us on bloomberg daybreak. The bt group ceo, gavin patterson. Manus lets get a bloomberg first word news. Senior Senate Republicans have closed ranks behind President Trump after his is missile off fbi director james comey. There are calls to investigate russias meddling and the election. Day enteringt the candidates. Has admitted [inaudible] that the was a mistake. Staley spoke exclusively to Erik Schatzker. The chief executive officer of a bank with the complexity of barclays, i thought it was trying to protect the colleague who was vulnerable from a malicious attack, but i should not have gotten involved as i did and that was a mistake. Juliette the preelection pledges have been linked, leaked. They include plans to renationalize railways, the proposal for the Energy Companies and scrap tuition fees. A labour spokesperson said they do not comment on lakes. The manifesto will be finalized at a meeting of Party Officials thursday. The bank of england is likely to revise higher its inflation outlook for the year when it delivers its Monetary Policy review later today. Analysts say the market will be watching for whether one or more voter members will call for an increase. That will be followed by governor mark carneys is conference. Press conference. Newly south asked foron has pressure and engagement over the situation with the north. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories at the on the bloomberg at top. Anna were back to the earnings story. Why does it see lower refining margins ahead question mark we will put that for the companys ceo next. This is bloomberg. Manus it has gone 7 18 a. M. In london. Lets talk about the firstquarter numbers for omv. Joining us now. Line have to the top gone with. Your refining margins are expected to trend downward. Give me the parameters him a percentage drop in refining margins translated into dollars. What can we expect for the squeeze on margins . Guest good morning. I appreciate your question. I think refining margins in the First Quarter benefited from maintenance activities as well as reduced arbitrage opportunities. See that goingot into the next quarters. The refining margins was pretty high with 5. 4 per barrel in the First Quarter. We expect to see for seven dollars per barrel refining margins which is the level we have seen last year. We have adjusted. The situation has not changed in europe. We still have low capacities in the market and we are going to of some volume pressures Refined Products being delivered from russia and the middle east. Anna can i ask you, good morning, can i ask you about the oil price and what your expectations are, i assume were talking about 55 a barrel for bread. But for brent. Do you see opec action being effective, is that the driver . Guest we have seen in the First Quarter 54 a barrel. I would like to stay with my 55 for the entire year of 17. Opec is going to make the decision here on the 25th of that they will continue with the production cut. If not then we will see huge pressure on the oil price and the main question is, what kind of [inaudible] are going to agree . It will stabilize the price in the low 50s. Sticking my 55. I am sticking to my 55. Anna what is your fear for how long it could go . Guest oh, come on. It would be below 50. No one knows. We were member what happened with the oil supply, it went down to the 30s. The signals are pretty clear from opec as well as from some nonopec members members that they are ready to continue the cuts. My scenario is they will continue with their production cuts. Anna well ask you if it happens but i see your point. Ofus lets talk about some the areas of business, i wanted to talk to you about. About iran. Can you from that up for us . Guest i cannot give you any details because we are at the end of negotiations. Contractor not signed but we are in the end phases of negotiations. Manus do have a time frame, will we hear from you in terms of concluding those negotiations . Guest i would like to close that deal yesterday. Manus memories. Anna talk to me about risk in the iranian markets at the moment with sanctions lifted but everything we heard from the u. S. Administration, how risky do you see investing in iran at the moment . Thet i think first of all queue of interested parties sign deals has been diminished. We are still very much interested. The main challenge right now is still the financial transactions, so this is limiting us. This is more my concern. In parallel, we are going to negotiate the terms of especially the economic terms amount we can get if we are going to invest into some oil fields. Manus you switched countries for a moment, lets talk about libya. Can they get back above one Million Barrels a day . I would love your opinion on that create also in terms of your expansion, you just thently acquired stake in field. What can it deliver . Offwould say it is paying because the production is back. We have seen some interruptions and i think my outlook for 2017 is libya will have a production, you have to deal with some interruptions because one or the other wells is going to be shut down. Of theore a limitation availability of the infrastructure and not our production facilities. Barrels aen 16,000 day production in the First Quarter. We think that we are going to produce something between 10 and 15 and the rest of the year. The be a has done well. They are now back to 800,000 barrels a day. Libya has done well. Mustafa would like to see the one one Million Barrels at the end of the year. Anna they have done well you say but give us some insight as to what it is like operating there. Are you able to, have you been able to bring Foreign Staff back in, do you have plans to, and are you fearful the vertical activity on the ground could could on libyan exports, result in that being halted, for example . Anyt we cannot send expats into libya right now. The security situation does not allow it. We can operate our facilities with the local staff and we can go up to 50 of our capacities which is pretty good in these times. If we would like to increase to the max capacity we need to have the security situation to bring back our expats. The political situation in the country, i think there is still a conflict between the libyan militias, and the especially with the general. If they come to an agreement we will see further improvement in libya especially as we are speaking about oil action. Manus hopefully we will get rainer seele, iran. Webout libya and have oil with a little bit of a [inaudible] flat in, they are london. 73. 38. Up in paris, the dax fairly holds theas draghi line. That is what is pervasive across the market. We will have to digest a lot of these numbers. Omb had a nice beat, defining margins coming down. They missed 245, the market was looking for 275. Anna a host of earnings out this morning. Of themree. 3 percent. Anotherve been negative, more concerns about the clampdown we are seeing on excessive borrowing in the chinese market. That had been a concern that we talked about last week. The shanghai composite market was under pressure when it came back toward the end of the session. U. S. Futures, pretty flat. Manus they are. Lets have a look at the risk radar. The kiwi dollar at an 11 month low. And the Canadian Dollar you had that move from the Ratings Agency suggesting that they are concerned about the banks, the big banks. Anna downgrading some of the big banks. High house prices also. Manus that is it from the daybreak team. You get a little more with the daybreak open. I am with matt miller and we are talking with the ceo of maersk. Manus you are welcome. It is bloomberg markets, the european open. We bring you the first trade of the day. I am manus cranny a longside matt miller. The bank of england delivered its Rate Decision with an inflation report. Will the election and brexit keep the Central Bank Governors hands tied . Staleydown with jes after shareholders give him a vote of confidence. His whistleblowing scaaln