Transcripts For BLOOMBERG Bloomberg Markets Americas 20170220

Happy president s day if you are joining us from the United States. Good afternoon. Anna edwards, good afternoon. There you go. Stoxx 600 up for a second consecutive day, the highest level since december. It will be a quieter day today because of the president s day holiday. No chart shows a better story, no two day chart shows a better. Tory 143 billion, that was the bid put on the table for unilver from kraft heinz. The shares surged 13 on friday. The biggest gain ever, a record. Or unilver today, shares fell 9 . Kraft heinz walking away. Sixceo of unilver had months to put his ship in order because takeovers to debate that kraft cannot come back for six months. s defenses were not formidable, such as low Stock Ownership by management. Credibility may take a hit Going Forward. That is an interesting angle. Rbs shares up to a oneyear high after it said it would scrap its planned sale of its Consumer Banking division. Investors are optimistic today. The rbs is closer to resolving these issues that have overshadowed the company, overshadowed the stock. The 750 Million Pound provision is part of the plan to address its eu rules to division during the financial crisis. The commission is now considering allowing it to keep asideit and in said set money to enhance competition in business banking. Now erase their postbrexit bosses, something significant. Banks today, big week for u. K. Vendors, the big five on ftse release earnings. Hsbc tomorrow. It has then the best performer among lenders. Investors will want to know about potential buybacks Going Forward. Anna thank you very much. We will get more on the Banking Sector and emma throughout the next few hours of programming. U. S. Vice president mike pence is the United States will remain a full partner of the eu. He is in brussels meeting with European Union officials. We are also in brussels traveling with the Vice President. Great to have you on the program. We heard a lot from donald trump himself about his attitude to europe. From mikeeekend pence, james mattis, and mike kelly. What are the top lines for you . We are looking at the differences and what we have heard from President Trump and his deputies about the u. S. Commitment to nato and the European Union. A lot of the leaders here in europe and brussels are waiting he followsher through on what his Vice President said, that u. S. Committed to these partnerships, because a lot of people here in europe are concerned. They have heard President Trump talk about problems in europe, the global movement, the brexit vote, saying other countries would leave the eu as well, so there is concern and europe that the u. S. Is not committed to the alliance that it has been committed to over the last 70 years, but from listening to the Vice President , there is some assurance there. They are waiting to see if its followed up by the actions of the president. There is a question of russia and attitudes to russia. Mike pence said the u. S. Will hold the russians to the minsk accord. We have heard to paying different messages here it they would hold russia accountable and a mandate not invite the territorial integrity of its neighbors. That was appreciated here in he also brought forth the president s message which is the u. S. Will try to work with russia. President trump he says he believes the u. S. Can make a deal with russia and does not want to oppose or slander the president of russia. He said a lot of positive things about vladimir putin, which has caused more concern in europe, so there are those two messages the Vice President tried to balance while in europe, saying the u. S. Will be strong in defending its alliances, but also reach out and olive branch to russia to see if a deal can be worked out. Anna thank you for your contribution. Touluse olorunnipa joining us from brussels. Politicaln the backdrop, david is with us from jeffries, chief european economist there. And enduring commitment to the eu, so says Vice President mike pence. Had you take these latest assurances . We have had assurances from various visiting americans, but they do contrast with the commander in chief. Thats right. At the end of the day, the u. S. Will want to have a close relationship with the eu common and the eu remains concerned that it remains high up in the countries it speaks to come a particular with brexit. If the u. K. Will leave the eu, it is important the rest of the eu form solid relationships Going Forward. More aboutll talk the u. K. And a moment. One of the stumbling blocks seems to be contributions to nato. Tothe u. S. Is committed nato, and we are hearing those messages, if they are committed, there does seem an expectation that europe will have to pay more. Which economies can afford to pay more for defense . Everyone will have to pay a little bit more. It will be done by gdp and populationweighted numbers. I imagine thats how it will fall. There is a point here. There is a price for everything, and europe will have to pay more Going Forward. Anna europe trying to get a handle on what the u. S. Administration makes of it, to work with europe on . With those to deal old challenges like the greek crisis. Roll your eyes, david. We are at their again. More conversations around greece taking place today in brussels. The second round of the third bailout, that kind of magnitude of things. Do we risk this becoming another standoff . Aware ofleaders are the populist thread and not wanting to give ground to the greeks. The imf has been clear and consistent. They were not get involved unless there is some debt relief , whether an actual acceptance of the debt sustainability numbers in greece. To be somee compromise on the part of other eu leaders. That is pretty obvious. At the end of the day, im sure we will be talking about this in a years time. That will have to cross that bridge. They will have to get the financing through in some way so onece remains and played by o e july. Anna before then, you think its possible we get some Debt Reduction being given, some sort of haircut . That page, been on but european governments dont want to do that. The imf cannot be seen as helping finance what is an insolvent country. The number something dont add up. The imf are trying to cut greece some slack. 1 of gdp is sufficient for the imf to get involved again, but they have to have that numbers on top of that which i had up. Anna our Athens Bureau chief said actually the ecb stance on greek debt, the lines of support , the ecb has suggested they want by greek bonds unless various criteria are met. Problem goes back to 20092010. Angela merkel and sarkozy came clean about by greece was so important to them. At that point, a lot of banks, including u. K. Banks, had major exposure. That is why they could not afford greece to theyll and fall out of the eurozone. Now we are in a situation where no one has admitted to this really, so it remains in play, but it will have to be some form of Debt Forgiveness. Years,his year of all they dont want to offer any way out. David, thank you very much. He stays with us. Lets check in on bloomberg first word news. Thee are sticking with europe story. Ministers meeting on the greek bailout. Once again, they will tell greek officials they need to do more to get a new round of eight. Germany wants to make sure the cooperation with the u. K. On military matters survives brexit. Bloomberg spoke to germanys defense minister at the Munich Security Conference. We want to have very close ties with our nato member and friend, the united kingdom. To work onty started the bilateral roadmap. We want to pursue it because we know we need each other. We are both members of nato, and we have common interests to increase our cooperation. Germany has pledged to raise its defense spending to 2 are the middle of the next decade. John mccain is criticizing President Trump for calling the news media the enemy of the american people. Getold nbc that dictators started by suppressing the free press, but said he was not saying President Trump aims to become a dictator. Malaysia seeking four north korean suspects who led the country the day the halfbrother of kim jongun was murdered. Authorities believe he was poisoned. Malaysia is holding for other subjects. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. I am taylor riggs. Anna thank you very much could still to come on bloomberg markets, the u. K. House of lords begins its debate on brexit and whether Prime Minister may can begin the process of leaving the eu. That conversation is coming up next. This is bloomberg. Anna a warm welcome to bloomberg markets. I am anna edwards. 12 15 in london, 7 15 in your. Lets look at the biggest business stories in the news right now. Taylor shares of unilver falling. Kraft heinz offered 143 billion for unilever and what would have been the biggest takeover in the Food Beverage industry, but the company walked away after unilevers negative response to it saudi arabia broke records for oil output. The saudis tom to 10. 5 Million Barrels per day on average and exported to three fourths of that. Production has been cut back this year. The saudi led the push to end an oil glut by reducing output as agenda way first. 9. 4 billion to build plants incal louisiana. The Taiwanese Company wants to expand production lines in texas. U. S. Shale gas provides a cheaper source of Raw Materials for petrochemical production. That is your Bloomberg Business flash. You. Thank the u. K. House of lords holds its first debate on the government bill authorizing theresa may to begin the process of withdrawing from the European Union. Jeffreys chief european economist is with me now. Richard jones joins us on set. Great to see you. Lets look at what is happening with u. K. Assets, the pound making substantial moves, up. 5 or so. 124. 68, pounddollar. It is a bit of an abridged day because of the u. S. Holiday, but one of the things i think investors are looking towards is we have mark carneys testimony to the treasury select committee. Given the moves in sterling and the volatility we have seen, perhaps we should not be too surprised to get a bounce back today. For me, the key is looking at eurosterling. We are still not able to get above that 86 level, an important technical level. 50, the debate beginning in lords is a big thing, but there is news low driving pound and u. K. Assets. Anna article 50, this has been through the commons, now the house of lords with the threat of substantial changes to their role, should they decide to block it, seems to be the message from government. Is this going to be headline risk around u. K. Assets, not material . The timeline on this is interesting. We have two bys and the u. K. This week. We have the u. K. Budget on march 8, then we have this meeting of European Finance ministers in brussels on march 9 and 10, then in rome, the 60th anniversary of the signing on the 25th of march. March 25 it is important for the rest of europe. So they probably dont want the u. K. Triggering article 50 then. As wella dutch election in the mix. Ideally, they would like to have everything done and dusted by the 10th of march meetings in brussels, so maybe on the day of the budget they announce it. Anna may be. Number oft a amendments of posed by the house of lords, so there is a risk that timetable slips into april. Absolutely. The assumption is it will be done and dusted in two weeks, but there is the possibility it will get delayed here it the its justto be clear, the amendments around article 50 and what parliament finally says on what ever deal will be done. Not so i dont know how this will work at all. Anna one of the big stories is unilver today. This would have become a political story and the u. K. Aft asa may referenced kr one of the reason she saw more role in government takeovers. For a if we are going mild brexit, they have to make up their minds which sectors are important and which are not. Certain sectors the u. K. Government probably wont be as that important Going Forward. Not the fx market does have to deal with this megamerger because it has been withdrawn, but sometimes it does move fx markets . Close canome of the be high, and as result, you can in the fx markets, and some of them can be quite significance. In the swiss market, we saw some big moves based on m a. The u. K. Is susceptible to that as well. Anna thank you very much. Still ahead on the program, deal. Rs failed we will look at why that fell apart. That is coming up next. This is bloomberg. They warm welcome back. This is bloomberg markets. I am anna edwards live from london. Shares of unilver tumbling after the collapse of that 143 billion dollar bid from fellow food giant kraft heinz. Now has to prove to investors why the company is better off on its own. Joining us for more, deborah aiken. Great to have your insight on the program. Why did this fall apart . It came and went as quickly as it arrived. Since the weekend, we have been hearing the proposal was put forward up to two weeks ago. Anna early in the discussions really, wasnt it . The company probably needed more time behind the scenes without this breaking into the marketplace. It actually caused the refusal statement to come through from unilver on friday. Why is it not working . , ok we have at heard this morning about the u. K. Government, how theyve the protectionism in place, but also thinking about both sides of this company. It is not only a to do shery case, it is about creditors, monopoly, not having a on the situation, taking care of employment numbers. Chart that shows the ramp up in shares on friday as this news broke, then the big moves the stock made this morning. You mentioned the fact there is a Dutch Holding here. Some could have been protection for unilateral management because they have dutch shareholders as well. The roles theyre a little different on takeovers. Its looking at the overall sustainability come all those different areas, and we do know that the ceo absolutely flies the flag. It is not just lip service, but. He sustainability side he is very much involved in that. Anna a lot of people have been. Uite vocal, shareholders we spoke to some on Bloomberg Television who are in favor of staying independent. I spoke to one commentator who shareholderslever have bought into the longterm goals against shorttermis m. It when werightly so look at this company, we could say 70 of investors are there over seven years. Getting 8 eps growth. We were talking about the deals they are doing, about how their Home Personal Care focus on higher growth and higher margin. When you look behind the business of unilever, 38 40 of the group margin, so taken in the right direction, but there are areas where it is in transition. Anna its less and less about the foods business. Deborah, thank you so much. So, shares in unit lever trading down today in london to it we will talk about Global Market risks when we come back to in with j. P. Morgan asset management, who says it is better than you think in europe. This is bloomberg. Welcome back, live from Bloomberg European headquarters edwards, ai am anna special president s day issue for you. Lets check in on first word news. Associates of President Trump are pushing a plan for russia and ukraine. The diplomats include the president s personal lawyer, ukrainian lawmaker and i man who helped the president make business deals in russia. Its two left sections against russia. A ceasefire between ukraine and russian backed separatists again today. There is a report that European Union citizens living in the u. K. Will face a legal no mans land after brexit. Document drafted by european lawmakers that says the u. K. Lacks information on which eu nationals are in the country and that will make it difficult to choose who will remain after the u. K. Leave the eu. Than 127,000ore Civil Servants were filed or suspended after last summers failed coup. Movement linked to the that was blamed for masterminding the takeover attempt. Is near the goal of launching 20 rockets this year. The rocket was launched from the Kennedy Space center. It is the same one used for the apollo moon mission. Launch this year and the rocket was carrying cargo for the International Space station. According to a fiveyear plan, more than 50 airports will be added by 2020 which is almost a 25 increase in china. The Largest Airlines have ordered hundreds of lines in the last two years. News, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Thank you very much. In Global Equity markets, european stocks are rising. There seeing gains in Banking Sector and phone companies which is outweighing the signs we see at the Company Unilever. Lets focus on the risk factors. Joining us now from jp morgan is the Global Market strategist asset. P. Morgan management. Great to see you again. Lets talk about the Global Equity picture. We saw a records being reached by u. S. Equities last week. When we get back to it tomorrow, what do we expect . Do we go higher from here . We have been seeing record levels for equity markets across the world last week and into this morning on the markets that are open. The first thing driving this data is that macro data. That has been surprisingly good since the beginning of the year. Looking goodare and Consumer Confidence is looking strong in europe and the u. S. Investors are looking to find gains and equity markets and when you have that with Earnings Releases and the earnings season in the u. S. Is him is done on the european season is halfway through, you have a strong sense that some sectors are outperforming expectations. With that we see support of equity markets and we dont expect that to stop of these earnings keep coming through. Broadening Market Participation in the u. S. , it does that give guidance as to where stocks go from here . Inflows into mutual funds last week. I can America Merrill lynch says this is pushing equities higher. Is this broadening participation in u. S. Stocks . When you start having more retail coming into asset classes, one can argue there are slightly higher valuations. Run ins still room to certain parts of the equity market and depending on which sectors those funds play into, there can be room to run. The two big themes for u. S. Equities are value over growth and financials outperforming the more defensive bond proxies. If you look at the return expectations for those sectors, we see them being strong and no alarm bells in the selective plays for u. S. Equities. What kind of rotation do you see taking place as we go through 2017 . Its a big week for the Banking Sector in europe and there is news flow around the unilever. Which are the sectors that moved to the top for you . For the u. S. , it is the energy or anything that has been counted in the past year like energy. Any kind of value stocks that can provide returns in the near term and rising inflation environment, we do financials in , a higher yield curve and steeper yield curve helps banks in the u. S. The spread will improve as the fed starts hiking rates this year. In europe, its more of a selective picture. We like financials in europe but its staying away from some of the bad banks that may have nonperforming loans on their sheets. We are looking at ones with solid Balance Sheet and perhaps more of the asset accumulators rather than the Large Investment Banks that face a more challenging environment in europe. Also being selective about the companies that show high roe. Its figuring out which companies have the best Balance Sheet returning more in the politically challenging landscape in europe. Chart but wet a are talking about the gold price and the appetite for gold. You seem to be quite bullish on the u. S. Equity market but not so much on gold and safe haven plays. This is a chart that shows hedge funds wrapping up through january and february, their net longs around gold prices. Even when we saw more appetite for equity markets, does that make sense to you . Do you see gold is a good place to go during a time when equity markets have been making gains in the United States . Equity market question is a good way to look at it in terms of multiasset environment. The real indicator for gold prices is real yield. Real treasury yields in the u. S. And the higher those get, the lower the gold price tends to go because you can get a safe haven assets that gives you income rather than just holding gold that does not provide any carry. We expect a gold to be a bit challenged this year but fixed income is no longer going to be that safe haven as yields rise. The gold plays more a part of it. Your today to date, gold returns look good but i caution that with the rising inflation and yield environment dampening those possible returns. Anna thank you very much. Coming up, u. K. Banking giant from barclays to lloyds report the results this week and well focus on the potential headwinds on those reports coming up next. This is bloomberg. Lets look at the stocks and assets on the move during the monday trading day. European stocks are trading higher. Its president s day in the u. S. Which means there is no stock market trading. Its down by 6. 6 . Andforeign Exchange Market where we are trading. The fed voice in the mix today is the dollar against the yen. The house of lords will vote on the brexit bill. The oil prices gaining ground this morning. This is bloomberg. Anaa its time for Bloomberg Business flash. Lets get to taylor riggs. The head of psa looking for support for the proposed purchase of General Motors. The ceo will meet with government leaders and france. Psa makes peugeot. The Company Reportedly will honor its existing labor contract and keep investing in his german factories for at least another three years. Boeing says it hopes to finalize fighter jets with qatar and kuwait. Boeing says the sales are an important part of being able to tape its production lines in operation. In london have posted their largest annual drop in almost six years. The average asking price this month is down 4 10 of 1 . There are a combination of reasons including inflation, tighter lending standards and concerns over brexit. Thats your Bloomberg Business flash. Anna thank you. Big week ahead for the Banking Sector, a lloyds, barclays, hsbc are reporting earnings this week. One thing we are watching is rbs was shares at a one time at a one year high after the bank said it will scrap the planned sale of its consumer ranking banking unit. Lets bring in the Senior Analyst for bloomberg intelligence. We look at rbs and we have to look at the announcement around williams and glyn. Its good news because it removes a fairly large uncertainty. They have been trying to sell this and the deadline was extended and they spent 1. 5 billion dollars already. We have no idea if they were forced to sell it. If there is a way out, we can start thinking more about what we see normalizing that and we start thinking postrbs settlement as to when they can talk dividends again. Livestock well cap that was going to be a capital return story. Maybe we reset there and change the dialogue. The rbs release talks about , u. K. Challenged banks. What is the latest fair . Its government owns so the government is using this to cultivate more completion in the sector. Over the last year or two, they having been growing loans 50 per year. From 2416 int the list of mortgage lenders. They want to boost on this will help by giving them referrals. Its going to help with investments in technology. Its a way of the sense of the past being used to fund and make the Banking Sector for retail a more competitive place for the customer. Meanwhile, its a big week for the Banking Sector with lots of banks reporting. U. S. Banks have rising Interest Rates. How does that translate to the European Banks . What are your expectations . There are quite a few challenges that European Banks have faced in prices the biggest one but up the other three is regulation. A lot of regulation to increase capital on the Balance Sheet versus risk on the Balance Sheet all stop we got negative Interest Rates or low Interest Rates in europe and the u. K. And over banking, a lot of banks that exist relative to gdp compared to the u. S. That exist in europe. With those three challenges, it has been tough for the past few years for European Banks to surprise analyst expectations or provide strong positive eps growth. Last year, we have seen a lot of adjustment and we know were not getting Interest Rates that are going to much lower. We have a lot of regulatory adjustment being paid off in restructuring and increase profitability in the big names in europe so we expect more positivity in European Bank stocks this year compared to last year. Being are still talking about fines being paid off. What do you expect from this earnings season . Will be interesting because last quarter, they said they are beginning to reach it retake market share. The u. S. Banks a pretty strong results and Deutsche Bank restructuring. Rbs has a Large Investment Bank franchise but it a bubbly needs to be peered back further. Hsbc is the big one. Its the most geared in europe to rising rates. Gettingthe market is that may be the capsule is being put behind us but maybe we will get another by back. That was a catalyst last year. We are seeing real divergence between banks in the theor that are dominated by return of capital to shareholders and other banks that are dominated by costcutting. Its difficult to put them all in one basket. Indeed, thats our biggest comment and the sector in general and specifically financials. Insurers are on one side and Large Investment Banks are on the other and some challenge banks. Bad loansealing with like in italy so its a diverse pot of financial stocks within the sector. Its exercising that selectivity to access Earnings Growth and the price returns that could be possible this year. At the bigi look five u. K. Banks, their worst score since 2009. We have seen these stocks rally quite a lot given the turnaround in the u. S. Interest rate story . Youve got hsbc and standard chartered. Those of the biggest restructuring stories and menu got lloyds which has repaired itself in the margin story is still coming through and rbs which is a work in progress and youve got barclays. Its to mastech versus international. And standard has performed very well. Can it continue . Youve got rbs and barclays were you still got restructuring. When do they turn the corner . Barclays is here to instill restructuring. There is also the litigation question which is a good barometer of u. K. Banking. Anna one of the factors we will be looking for in the European Banks is in relation to brexit and access to european markets. That is the big question just before u. K. Banks and Financial Services and the lot of u. K. Financial outlook depends on what the brexit negotiations entail for Financial Services to the eu and the rest of the world. Its something to watch but theresa may enter team have emphasized the importance of the brexit negotiations. It seems like it is at the top priority to protect and make sure this industry has its access to the Global Market. Like anything related to the brexit negotiations, its a wait and see to see what sanctions, what trade agreements, what passporting rights may exist throughout the course of this year. Meanwhile we watch the vote this week in the house of lords. Thank you very much. Thank you both. Still ahead, oil is gaining this morning amid rising optimism on opec cuts and we will look at the latest moves and preview the National Petroleum conference this week in london. This is lot this is bloomberg. To bloomberg back markets. Lets talk about whats happening in the commodity markets. The largest Oil Gathering in london is about to kick off. Lets get a preview. Great to have you on the program. What do we expect from petroleum and week . What does this week normally involved . Its a chance to get together with discussions about contracts between leaders in the industry. The hotel is in the mayfair district in london and you have andbig reducers from kuwait saudi arabia and some of the trading houses. They are all gathering and hosting big parties. I expect a better mood than last year. Him tional proposal he interNational Petroleum week last week have falling prices but this week its better because we are still at 50 but the industry sees the light at the end of the tunnel. Anna i think you will be going to these parties . Chiefs week, i am the cocktail correspondent. Anna you will bring us everything we need to know with a lot of big names in the oil industry. How will they feel about the oil price around 53 being captain check by opec and the u. S. Shale . You think about the opec secretary who is speaking tomorrow on the official program. The opec agreement between november and december is so far working. Opec has been able to stabilize the price and i hope it will increase by the end of the year. You asked about the big producers like the epa and chevron. They are still suffering a little bit but they have seen the costcutting measures over the last two years have been working. The traders that think about the traffic coming in 2015 and 2016 were having one of the best periods ever because there was so much oil. They were making lots of money. Market is the way it is, they are making less money. Is increasing and the traders are not making the money. Anna so you have to pick your cocktail partners carefully. This chart talks about how brent prices have not responded to net longs in relation to hedge funds boosting their bullish bets on the oil price. The oil priceink and will go higher but it has not responded. You have two forces bumping up against each other. Hedge funds are bulletin are taking the view that by the end of the year or by june or july, the market will have a shortfall of barrels and that will drive up the price of oil. Others have taken a different view and they say thats all very good but thats something that may happen in the future but what we have seen today is that inventories continue to increase particularly in the United States and that is putting a cap on the oil price. Have emergedducers from the crisis a leaner and faster and are boosting production even at 50 per barrel. That was unthinkable in the past. We saw we needed 80 for these producers and today 50 is enough. Anna thank you so much and enjoy the week. Hour, thein the next bank of america chief u. S. To economist joins us to talk about where the u. K. Goes. It is 1 00 p. M. London. I am anna edwards. Welcome to bloomberg markets. It is monday, february 20. Here are the top stories we are watching. Unilever plunges as kraft heinzs 143 billion bid collapses. Euro area finance ministers meet in brussels to discuss the greek bailout. They are racing to complete the review before the start of National Elections in several countries. Rbs rises to a oneyear high after the bank scrapped plans to sell its Consumer Banking unit. Welcome to bloomberg markets. A quick look at how equity markets are trading. Mark barton here. We are up for a second day. The stoxx 600 gaining for a second day. Little change, but still up 1 10 of 1 . Difference inthe yield between france and germany in the 10 year, it is widening. Second roundt in a runup between le pen and le le pen has 44 of the vote. The underlying here, the loot line, is the blue line is le victory chances. Was if thefriday other parties could unite with one candidate, perhaps opening ,he door to a le pen victory leading to the widening of the yield, which is closing in on the 2012 high we saw a week or so ago. Gold is rising. It is going against theory in a rising rate environment. You would expect it to decline. But since the fed raised rates, 13 , 6 over the previous time. London postingin the largest annual drop in all most years. High values deterring buyers. The average asking price following 0. 4 percent from a year earlier. The first annual decline since april, 2011, when asking prices gained 2. 6 from january. Londons Housing Market underperforming during 2016. The rest of the market across , stretchry affordability with brexit demand. On anna i am still linking about le spread. I thought you were talking about unilever. That is a different story. Lets focus on what is happening in the u. K. The house of lords holds its first debate on a governor bill authorizing Prime Minister theresa may to begin the twoyear withdrawal process from the European Union. Joining us is rob wood, bank of America Merrill lynch u. K. Chief economist. And then get krumbmuller famke krumbmuller. We do not know if this is something that could delay the Prime Ministers timetable. It is just her and her governments timetable. Famke it is a selfimposed deadline, but it would be bad if she missed that. , and weld have been will not find this out for a couple of weeks until the lords vote on any proposed amendments. It could make for some awkward and local the lords headlines. But so far, so good. They are on schedule. We still expect article 50 to be triggered by the end of march. Anna you look at the timetable, when you look at the u. K. Economy, youre thinking would be dependent on when we actually see that triggering of article 50 and what happens thereafter. Are you also waiting to see what the house of lords decides to do . I am assuming it is triggered by the end of march. The talk now is around the ninth or 10th of march. It makes sense given this past with no amendments, but we have to watch what the lord have done. It makes sense as a base case. This is a really important moment. Not the actual triggering of article 50, because we expect that to happen, but what happens after that. If she got the deal outlined in her speech, it would be a good deal. The u. K. Would get most of what it once and ditch what it does not want. Leaders response will be important. Anna we continue to get the response that you cannot cherry pick. Inre has been little change the message coming through from the other 27 during this period of limbo, because they are waiting for negotiations to be triggered. Svenja absolutely. The danger is how literal is the message . Ents position has been that this is the opening gambit. But what we have been hearing from officials in germany, merkel generally means what she says. It will be interesting to see how that translates onto the negotiating table and how far they will have to compromise on the ideal outline. Anna are they both playing poker here. Meanwhile, certainly the weeks box around week spots around the u. K. Has been retail sales. Any weakness we have seen recently seems to be on the retail sales side. What does that mean . Rob the squeeze on peoples spending power is starting. It was always likely after sterling fell, because it would push up inflation. Pay growth will not go anywhere. This means we are already seeing real wage growth slowing. I think inflation will head up to about 3 . Falling average earnings. What we have seen is consumer strength. That is why the u. K. Economy held up. It is all to do with the consumer spending. We had very strong spending growth in october, but it has fallen off sharply. Anna are people getting ahead of perceived changes or is there a change of perception over the Christmas Period . Rob people anticipate price suggest and ivey do not think history suggests they do that outside of a vta increase. What happened is remember, 52 percent of people voted to leave the e. U. Older age groups saw their confidence go up, so they could be spending after they got the result they wanted. For other people, there was a period of low inflation, of steady wage growth higher than inflation. That also helps. And Interest Rates were caught. Cut. What a lot of these things that help the consumer are falling. Anna and we will see when we see the budget for the u. K. If the chancellor ones to take things easier wants to make things easier. Another story that links in with is u. K. Industrial strategy the unilever story. Why did that deal fall apart, from a u. K. Clinical perspective . Political perspective . Svenja we know there were talks over the weekend. Conversations about how theresa may would have dealt with this. So far, she has had a narrow escape. She has spoken out against this type of deal in the past. Anna specifically kraft. Svenja indeed. She specifically says she wants to protect communities. In this kind of takeover, jobs are likely to be lost. So we do not know what was said, we do not know how much government noise or how the government raised eyebrows contributed to the takeover being dropped. But i suspect this is not the last we have heard of it. Anna perhaps the negative advice from the government, from the management of unilever. Fork you Svenja Odonnell joining us. And rob wood, chief u. K. Economist stays with me here. Lets check in on the first word news. Taylor riggs joins us. Mike pence is trying to reassure europeans concerned about the Trump Administration. He met with donald tusk in brussels. You, the United States is committed to continuing and expanding our collaboration on the collective security of all of our peoples. The safety and security of your union and our people depends on that increase, collaboration in the global fight against terrorism, and the United States will remain a full partner with e. U. Took off was that. Taylor he expressed strong support for the Nato Alliance people in sweden were troubled by trumps adjusting there was an immigrationrelated purity issue there security issue there. The president clarified in a tweet, saying he was referring to a fox news report friday on random violence in sweden allegedly committed by refugees. The euro area finance ministers meet in brussels on the greek bailout. Greekgain, they will tell officials that they need to do more to get a new round of aid. Is seeking four north korean suspects who fled the country the day kim jonguns half brother was murdered. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am taylor riggs. Thank you. Coming up, u. K. Banking giants from barclays to lloyds report today. This is bloomberg. Anna welcome back. I am at your edwards anna edwards. Time for a Bloomberg Business flash. A look at the biggest business stories in the news now. Taylor shares of unilever are falling. The proposed deal between unilever and kraft heinz collapsed. Kraft heinz offered 143 billion in what would have been the biggest takeover in the food and beverage industry, but the company walked away after you know levers unilevers negative response. Will meet with government leaders in the u. K. And france psa will meet with government leaders in the u. K. And france to try to take over the opel and vauxhall line. Losses grew bigger at hong kong disneyland. It lost 22 million dollars. Attendance fell in part because of fewer tourists from mainland china. The government and disney announced a 1. 4 billion dollars expansion. Hong kong disneyland has been criticized or being too small. That is your Bloomberg Business flash. Anna taylor, thank you. A big week for the Banking Sector. Hsbc allrclays, and out with reports the next few days. One mover we are watching is rbs. Shares at a oneyear high after the bank said it would scrap the plant sale of its Consumer Banking units. Jonathan tyce and rob wood are here. We have is rbs story. How significant is this agreement they have seem to have reached with regulators . Thosean this was one of painful moments that dragged on and on. The big worry was if they did not hit the deadline, what with the losses be . Point 5ady paid one billion 1. 5 billion. At that point, rbs was a dividendtalized special Share Buyback story two years ago. Hopefully, we begin to draw a line under that and talk about normalization of his this and potentially dividend special share dividends for 201. By more thanock up 7 . The sentiment story there. If we broaden the conversation, the u. K. Banking sector, as any other bank, low Interest Rates is something global banks have been struggling with. In the u. S. Conversation, we talk about how u. S. Banks get a lift. What are your expectations around Interest Rates . I do not think u. K. Interest rates are going anywhere for quite some time. We were talking about how the consumer seems to be slowing. You could have i do not told a t year that may be the bank of england would have needed to hike rates in the summer or autumn of this year, because the economy picks up, inflation picks up, it needs to do something. Is the latest consumer data plans are for the rest of the year, growth slows. If the latest consumer data pans out for the rest of the year, growth slows. And it is crucial how much that matters. If you look at the u. K. , look at lloyds, its recovery has been predicated on interest margins expanding. The last two or three quarters, they have been shrinking to maintain markets. So i think they will be interesting, what they have to say. Obviously, the rbs challenger. We will get more competition, not less. Ratesnot just interest that drive profitability, it is competition. Anna explain why a bank like rbs, when it rates puts out a re talking about new entrants coming into the market, almost making it easy for them . Jonathan there would be a financial implication, whatever it would be. Some of the book of business in williams glyn, they want to go into these challenges. A slow taking to pieces of williams glyn, rather than the huge problem that made it impossible to sell the coming the centerpiece. Anna a u. K. Focused bank looking at the strength of the u. K. Consumer. You do not have good news there, do you . Rob i would not. I will not exaggerate what is likely to happen. Slow more. Ail sales we see the consumer under pressure this year. I would be surprised if they increased consumption much. It will not collapse, but i of weaker growth. The u. K. Is overstretched at the moment. Savings rates are close to historic lows. Consumer credit is rising at doubledigit rates already. That does not normally happen until the end of the cycle. So even the consumer is in a stretched position already. The Housing Market starting to turn down a little. Prices in london falling down. I think the environment is not stacking up well for the consumer or their borrowing habits. Anna thank you. Rob wood joining us, from bank of america, and Jonathan Tyce keeping an i on the Banking Sector. Still ahead, oil gains on the Banking Sector. Still ahead, oil gains. This is bloomberg. Anna this is bloomberg markets. I am anna edwards in london. The largest Oil Gathering in london is about to kick off this week. To give us a preview is will kennedy. Great to have you on the program. Blas was painting a picture of a party town, though divided emotions about the oil prices, depending who you ask. Tells about petroleum week. Will it is the biggest , to getg of oil traders together and socialize, talk deals, sign contracts. It is a good time for us to gauge where sentiment is. , to get together and socialize,though pr than they were, so they all look happy, what is low is volatility. Oil has become rangebound. Anna so that explains why some of the trading houses may not be as happy as the producers. I have this chart shale revival. G btv 6100. It shows oil rigs going up in the United States and be price of wti moving, suggesting rangedown to trading in december and january. I was reading a hedge funds are increasing their bullish bets on wti. Will i think we are seeing a tugofwar between optimism that opec is acting, yet signals from the u. S. That shale is coming back. We have seen an increase of production in the u. S. It is the same story as a few years ago, this tugofwar between opec and shale. Some investors are confident, but there are clearly people on the other side of the trade who do not think the market is as healthy as it looks. Meanwhile, opec could cut production somewhere around 90 . Is it a surprise . Impressive. I think a lot of that burden has fallen to saudi arabia, which has exceeded its targets. The market will have to see if that is maintained. This agreement opec has is only for six months. So people will have to start focusing in may. Much. Will, thank you so bloombergs will kennedy with what is happening. Still ahead, a standoff over greek debt again. We will have plenty more on this. This is bloomberg. With x1 you get the best of the oscars. Youre a funny guy. Funny how . How am i funny . Scorsese finally wins. Could you double check the envelope . Show me best picture. Whats the difference . Show me best actor. I do not take tonight for granted. Thank you so very much. Get all the greatest scripted and unscripted oscar moments on xfinity x1. The oscars, live sunday, february 26th 7ea4p on abc. Anna i live shot of london for you. The ftse trading under that 8000 mark right now. Live from bloomberg headquarters in london, i am anna edwards with this special president s day edition of bloomberg markets. Lets check in with first word news. Taylor raikes has more from the newsroom. Taylor pushing them peace plan for russia and ukraine. Amateur diplomats include the presence personal lawyer, a ukrainian lawmaker, and a man who helped scout business deals in russia. Ceasefire between the ukraine and russian backed separatist began today. Germany wants to make sure cooperation with the u. K. On military matters survives brexit. Bloomberg spoke to germanys defense minister at the munich defense conference. We want to have very close and with our nato member friend, the united kingdom. Worke already started to on a bilateral wall map that we want to pursue because we know we need each other. We are both members of nato and we have a common interest to increase our cooperation. Taylor germany has pledged to raise defense spending to 2 of economic output by the middle of next decade. Turkey says Civil Servants were fired were suspended after last summers failed coup. According to the turkish labor minister, they were linked to the movement blamed for masterminding the takeover attacks. He is in exile in the u. S. China appears to be sending a message to the u. S. And its allies about north korea and kim jong uns regime, hinting it is time to make a deal. China will halt all coal imports from north korea. This is in compliance with sanctions over north Koreas Nuclear program. China says it is time to restart talks on the north korea issue. By 2600ews powered journalists and analysts in more than 120 countries, im taylor riggs. This is bloomberg. Anna euro area finance ministers meet today in brussels to tell greece it needs to do more to get new a. Id. This as continue reports of financial instability has shaken Consumer Confidence. We asked about this. We risk the economy not being able to move into positive territory. Remember 2016 . Very small but still turning the corner. We risk another risk of failing if this goes on for too long. Unreasonable as some of the demands are at the moment, the better road for greece is to actually sign onto the agreement now. Anna for more on what happens next with greece, lets bring in the head of political intelligence at open cities. She joins us now from paris. Ive learned to limit expectations of the very short term, but what happens when it is crunch time when we get to july and greece really needs the money . Famke this is going the way it has been working for the past few years, which is that different members of the program ,n greece are the institutions like germany for example, cannot agree ahead of time and will wait until the last minute to seal the deal. Whats important to keep in mind is that this has worked in the past and will work this time around again. We do have a series of elections in europe and nobody at this stage once the greek story to mess with their domestic elections. Anna with that in mind, what is the timing of any concession on the parts of european creditors going to look like . Its easy to find a window after the dutch elections and the French Elections before july, but we still have the german electoral calendar to think about. The germans dont want to be seen to be giving more ground to greece. Ands with the domestic clinical challenges domestically. Political challenges domestically. Famke theres differently a short opportunity to deal with greece and it will get increasingly more difficult to make concessions on everybodys front. The dutch elections are less than a month and the french and german elections they will all need to take into account what is going on in their home country, especially under Angela Merkel in germany. And aw faces a contender role that is much more difficult for her to deal with and she has to take into account what is going on in her election campaign. It will be difficult for her to strike a deal for greece and at germane time make sure Public Opinion stays on board with her. But it will be difficult, do you see an end that the germans will have to come around to the imf way of thinking that some kind of Debt Forgiveness will be required here . Famke at the end of the day, the germans need to reconcile their contradictory position. On the one hand, they are against mediumterm debt relief that they insist the imf financial and technical participation in this program. This is a reconcilable at this stage, so they will definitely have to find a way to make this work. I think what is important is that merkel is meeting with the imf director, on wednesday to discuss exactly can find sure that she a way to compromise this and sell to her voters at home. Anna that seems to be on the agenda at wednesday. And sense of the greek situation, one thing that creditors do seem to agree on is the extent or the ongoing need for greece to do more cutting to cut back further. This is where greece is saying there is a redline. Who do you think wins out on that particular debate . Also aagain, this is replay of what has happened the past two years. At the end of the day, alexis inpras has understood that order for his creditors to agree on the next loan to be released that he will probably have to agree to some form of more austerity. I think especially the imf has heo understood that maybe needs to find a way to prelegislate on a certain amount of measures that wally take place after 2018. Politically for him this is difficult and thiere some pressure to win the election, but given that syriza so far back in the poll, it does not look like a likely solution for him. Anna one thing to keep in mind was another member leaving the euro, an option for an exit route to get there. Is that the only car that greece has to play with your . Here . Famke that is definitely something that they can play. The germans finance minister has actually tried to make it clear that he personally thinks that that would be the solution if greece doesnt do anything else. I think it is correct and fair to say especially in the context of brexit clearly germany has less than they have ever had any incentive to let greece go out of the eurozone or force them out. That would be political suicide actually. On that front, the greeks have an argument and thats why the germans have to reconcile their position here. Im sure we will get more details on this this week. Merkels best interest to get this out of the way as soon as possible. She has the elections to deal with an as soon as possible to get this out of the way for her. Anna thank you for your time, head of political intelligence at open cities. Apples goodyear is the best performing stock on the dow this year, but pressure is mounting to find new markets as its iphone matures. Where else could it find growth . That next on bloomberg. Anna welcome back. Bloomberg markets. Thi this is bloomberg markets. We going to breaking news out of brussels. He expects the imf to join the greek bailout program. They seem divided on the sustainability. This is the back story around greek debt and not so much on what the greeks need to do to try and address their current spending. A Greece Bailout is very theoretical according to shove chaeuble. Lets look at the biggest business stories right now with taylor riggs. Taylor saudi arabia broke records as they pumped out 7. 5 Million Barrels a day and exported three force of that. Production has been cut back this year. Saudis have let the push to end the oil glut by reducing output as of january 1. There is a gasoline glut in the biggest market in the u. S. And so traders are lining up to export gasoline diesel from new york harbor. That is an area that normally relies on steel imports from europe and eastern canada. Gasoline stockpiles on east coast have set records for three straight weeks. And sticking with more commodities, citigroup critics a comeback is only the beginning. Copper will probably rally to several thousand dollars per metric time a year and go past 8,000 by the end of the decade. Copper is often seen as a Global Barometer of economic health. It has seen a rise because of rising demand. That is your latest business flash. Anna thank you very much, taylor. Lets talk about the Technology Industry and shares of apple are the top performer of the dow, recording seven straight weeks of gains. We spoke with david westin to discuss apples potential and how its taking a bite out of the cup edition. The competition. The stock is on a climb. Why . You have seen steady improvement since the last quarter, but this is speaking to a product cycle and you have seen that in terms of results. This is really across the the overallwhat adoption is going into the impending 10 Year Anniversary of the new iphone eight or iphone 10 Year Anniversary, but its also showing the shift that is happening. You have google coming with pixel, which so far has had positive reviews. Samsung, their headwinds have given tailwinds to apple. David do people know they are switching over to apple given samsungs problems . Dan if you look at the overall numbers, you saw apple takeover samsung in terms of overall market share and to speak to some sentiment. Every time you get on an airplane that you hear the announcement that thats not necessarily a positive. The big question for samsung is as they start to gain their sea legs and some of the momentum where apple,ly especially with the success, that is where their back was against the law. Battleinues to be a between apple and samsung, but its also the software piece versus the hardware piece. Innovation needs to happen whether its augmented reality or software services, like the cloud which we see a lot. Next week, we will see what this means for the industry. David take us into apple spanking. The ipod,e mac, iphone. Did people think new thinking has to reside in the iphone itself . Dan its about the innovation within the software or potential hardware. Thats why theres a lot of anticipation for the 10 Year Anniversary release that looks to be anticipated. When you look at apple, its still around the iphone. That is the meet at the restaurant in terms for them. Its now about innovation and further monetizing that. You have seen the software and services. Its not just the high margin peace, but overall in terms of industry, where hard work, you can only innovate so much. Its about the software and services and that is where there has been a shift, not just that apple but across the industry. David they talk about their growing services and the want to grow that dramatically, but when they step into the Services Area come of the have a much bigger set of competitors than just smartphones. Dan is a doubleedged sword. Its more competition, but on the other hand, they have a neck a system that is unique to any copy in the world. They have an at go system that is unique to any company in the world. Over the next 35 years, if you compare apple to amazon or aws 57 years ago, look at google and microsoft switching to cloud. This is big tech trying to shift. If you stay flat and where you are and dont innovate, that is where there is danger and they have not done that. David theres a lot of talk about apple and tax reform, physically with repatriation. If they were free to bring that back onshore, what are they free to do with it . Dan this is what you see across overall technology. Its not just from an investment perspective about buybacks and dividends, but its really about m a. If you look across technology, the consolidation space continues to take hold. Not just investors that the industry is really focused on what is happening inside the beltway because that could have major impacts when you talk about potentially a trillion dollars that could come in between all the largecap tech companies. David dan, thank you so much. Anna that was david westin talking to dan ives. It is 8 47 a. M. In new york. Trump toad, President Campaign mode in florida over the weekend as his Vice President seeks to calm Foreign Policy fears here in europe. More on the white house agenda coming up next. This is bloomberg. Anna welcome back. This is bloomberg markets. For anna edwards in london you for this special president day edition president s day edition. Late last week, his Luxury Hotel Brand opened his third location and brooklyn, new york. While he does see opportunities, his closely watching developments in washington. Oliver renick asked him what donald trump should be concerned about when it comes to the economy. The pace of his multiple stimuli. Its a dangerous game could the. The first thing you learn in business is dont take your banker in the face. The banker in this case is china, who bought our debt. You want increased defense spending, so you need revenues and we might go down before we go up in terms of tax receipts. If he cuts Corporate Taxes and individual taxes, i guess the hope is the economy accelerates enough to replace those tax cuts and will grow. Its a leap of faith. I think deregulation or reregulation. Its just too much. If like taking too many steroids at once. Maybe its 5. 5 because we screw around with the employment rates and we count under employed people as unemployed. We dont have 14 unemployment anymore. Certain industries are in somendous holes, privatepublic mentor programs and training them for the jobs available, i am all for Infrastructure Spending. Time for deregulation to some extent. We have overregulated certain banks. Ies, like the i think Corporate Tax cuts are useful and a simple if occasion of the tax would be great. Oliver in moderation . Barry i think you may have to step it a little bit and be careful not overheating the economy. If rates rise to fast and you put trade barriers on china, so you put a straight on our buyer debt, that would be hard for the equity markets. If rates are going up because there is great economic growth, then we are all pretty happy as long as they dont go hogwild. We do have 20 trillion in debt. That is 400 billion of interest expense we didnt have. Debt is whatf that we own, so we are paying ourselves, but there are third parties. We have to be careful. What im seeing right now is i actually like what im seeing. Theres some discussion and thoughtful giveandtake, so thats a good thing. Oliver one area that trump has not given a ton of details is he has talked about tax and rolling back doddfrank. He says he wants to spend a lot, but the details have not become quite clear yet. What would you like to see that could spur infrastructure and companies to really get on board . Barry i think Infrastructure Spending is too bad. We need a line of products. Somebody has to come through them and decide there is high return on investment on these projects. We dont need bridges to nowhere or paving the road to my summer place in nantucket several times. We dont need a wall. I would rather see that go to schools and building a Better School system. I really dont believe thats an issue, but im in the minority there, i suppose. Overall, i think Infrastructure Spending would be great. Some of our airports are a mess and other airports are fine. Orlandos airport is great. New york citys airports are not so great. I just took a 10 day trip around the world. I was in the middle east, soul, taipei, and every airport is nicer than jfk. Issue, butnteresting also logistics, transportation, ports, the canals, our ports system, our railways, bridges, tunnels. They have to align them all up. It will take time to be done and has the longest life but hardest to put in place. Once you identify the project, you have to design it, bit it, and build it. And youre talking year three or four before you start to see that probably. Anna that was very starlit Barry Sternlicht speaking with oliver renick. Over the weekend, trump spoke in florida defending his policies. Margaret joins us now on the phone. Great to give us your insights today could this president s day, what does that hold in store . How much has he managed to get his campaign back on track after his comments on sweden over the weekend . Margaret it has been a fascinating stretch the past few days. He kicked off the long weekend with a trip to a blowing plant boeing plant. Flew into the orlando area for this fairly extraordinary rally. It was several thousands of his supporters less than a month after his inauguration. The theme was im doing great, Everybody Loves me, and dont trust the media. He did talk about some other things and then hunkered down with his staff for a long weekend, which was mostly about the search for the next National Security adviser. That as a decision we expect here in the next few days. Anna we will look for that update on Michael Flynns replacement. Thank you very much. Coming up in the next hour of the program, the credit of global fx strategy joins us to talk about the dollar and other currencies. This is bloomberg. Anna from london, i am anna edwards good welcome to. Loomberg markets welcome to the program, everybody. It is monday, february 20, and here are stories we are following up this hour to usually are. Unilever plunges. Finance minister has progress on greeces rescue program. The european commissioner, eu, and the imf are racing to complete the review before the start of a busy National Election season in several european countries. Rbs rises to a oneyear high after the bank scraps plans to sell its Consumer Banking unit. Welcome to the program, everybody. 2 00 here in london, 9 00 if youre watching on this president s day in new york. That explains a special edition of bloomberg markets. In theet uptodate equity market in particular. Mark barton has the details. Without the u. S. , europe is up and running. K that is why, which is that is right, which is why volume is up, 28 below their 100day average. This is the story of the day, the story of the last couple of trading days. Day share price, as you can see, it is up by 5 , a record high, a record move, shares earlier falling as much as 9 , the biggest decline since 2003 after kraftheinz walked away from us 143 billion dollar takeover, 3g capital, and warren roughly owns half of kraft heinz, did not want to go hostile, so the ball is in the court of unilever. Another bench, which means paul polman has six months to get his house in order. Consumerand glenn inking division, the reason why shares are rising, the reason why shares have now raised their postbrexit losses, and investors are optimistic that rbs is getting their house in order. The bank will take the 750 Million Pound provision as part of this plan to a dress the to address the issue eu place on rbs, and of course the u. K. Government because the government owns 70 of rbs. Rbs has struggled to sell off williams and glenn, which is hard to do in the wake of the 445 billion pounds of state aid during the financial crisis. Shares are rising today, and lets finish up with banks. Fiveyear on the ftse 100 released earnings this week. Hsbc kicks things off tomorrow. This is a chart that shows the sensehsbc is the best brexit. A lot of the earnings come from outside the u. K. , which is why analysts say any recovery in sterling against the dollar will stockly weigh on hsbcs performance. The blue line a sterling against the dollar. Keep an eye on buybacks. That is what investors want to know when it comes to hsbc, when it releases earnings tomorrow your debate by releasing earnings this week, hsbc has been the best performer since brexit, anna. Nna mark, thank you so much. Duere seeing Light Trading to the bank holiday in the United States. Joining us on the currency you, thegreat to see silly us cannot guess vasi leios. Are you looking at what donald trump is looking to do yo, or is moment . Unknown at the vasileios uncertainty is the big factor that everyone should be looking at right now. The market has a possibility, which is quite likely, that the Trump Presidency brings with it a number of uncertainties and a number of negatives with it, and itt is why we started the in being priced into the euro. First of all, the dollar is down , and it is definitely off its highs by middecember. Time, initially, the aftermath of the Trump Presidency come of the election, we had a big rally relative to major markets. I think overall, the u. S. Stocks have started pricing in the premium. Anna and that equates to what kind of risk premium, the risk premium you normally associate with other countries . Vasileios i think that risk premium is quite meaningful because, for one thing, we do nature of know the the fiscal policies that will be announced, and from the time that they will be announced as planned, what will filter through the real economy and congress, and at the same time, we have a big unknown about transporters, which we have seen some backpedaling, some uturns, that will beless, damaging for the u. S. Economy and the global trade, although implemented taxes in the way that has been suggested by some on capitol hill, is that a dollar positive for you, something that has a nuanced effects depending on how long it takes the country to respond to figure . Vasileios right. Strictly speaking, whether they would like to admit it or not, a tax forg to be input, so on the back of it, we are to see a shortterm reaction higher. Dollar ishink the because react largely the market is going to be very that thee of the fact wto is monitoring, and there is a potential collapse with wto compliance. It really depends how it has been anna how it has been drawn up. Vasileios then you have the potential of retaliation. Anna from other countries. Reading a story on the bloomberg this morning, i wonder if this has crossed your mind. There was an interview with a employee, someone who used to work at the department of labor statistics, raising concerns about how trump has been very critical, as mentioned, about the real unemployment being much bigger than the official rate, and then started to raise the question of whether we were going to start moving to change, a world where the administration is changing the stats on which the u. S. Economy is measured. Is this something that is being flagged by economists . Vasileios i have seen in terms of the news flow that this is something relatively new. I dont like it, personally, willly because it says i mess with the data to fit the story. I think we go down this route, it will increase the uncertainty that will imply a high Political Risk premium because at the end of the day, you are talking the data inlating the way that you would like them to corroborate information, advising the policies that you will go through. So i dont think that this would be supportive for the dollar. Anna you raise the idea of the government tried to manipulate the currency. We have some coverage of the Munich Security Conference where both democrats and republicans were there. Perhaps this is something that can actually galvanize congress, they could unite around this idea, despite the fact that actually what china has been doing most recently in the currency market has not been manipulating the currency low. Vasileios right. At some point, we have to face the facts. China has been doing for the past several quarters is actually supporting the change, not weakening, or prevent a very sharp rate of depreciation, right . So at the end of the day, for the u. S. I administration to gon right now, and it may be china, it wont fly, you know. Anna should they have the case in france . Vasileios yeah. It is going to be a neverending story. We have the possibility of accusing Different Countries for various different things. If the go back 10, 20 years. I think he and administration well avoided. Anna ok, vasileios gkionakis, head of global ethic strategies, fx strategies, here on bloomberg markets. Lets go to taylor riggs. U. S. Vice president mike pence is trying to reassure european concern over the Trump Administration. Defense let me assure you vp pence let me assure you the United States is looking to continue and expand the collective security of all of our people. The safety and security of your depends onur people that increased collaboration in the global fight against statessm, and the united will remain a full partner with the eu and all of our european allies to a college that. Taylor over the weekend, hence pence showed strong support for the Nato Alliance. Will tell greek officials they need to do more to get a new round of eight. The imf halted pension and tax. Russia is bracing for more bad news about the economy this week. A report is expected to show that retail sales strength lowered for the 15th month in a row. Some help is on the way, though. Inflation in russia is expected to decelerate to a historical low this year. And malaysia is seeking four flee korean suspects who the country the baby halfbrother of kim jongun was murder. Was killed. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Anna still to come, we will talk about greece and we will talk a little bit about emerging markets. Anna welcome back. 2 30 p. M. In the city of london. 1 ,100 is down, nearly keeping it below the 8000 level in todays trade. Unit level or unilever a big one. Finance ministers are meeting in brussels pierced it with us, more with vasileios gkionakis, unicredits head of global fx strategy. Commissioner talking about how he wants to have a mission returned to athens as soon as possible. Greece has already made a lot of progress. The imf must be on board with the greek program. Crucial stuff, but the real conference comes in july. Vasileios sure. We will slightly gravitate toward that period because that is the norm with greece. Told uswhat history has so far are it far as the currency market is concerned, right now, greece basically sits on top of all of the other Political Risks out there by and large, the French Election. Anit were just greece as ongoing isolated events, i doubt it would have a meaningful event in the currency market. Anna but the fact that you have this followup, this lack of Common Ground, i guess, between the european creditors within the eurozone and greece, that is at the time when french political contenders such as Marine Le Pen are talking about leaving the euro. That adds an extra dynamic, doesnt it . Vasileios sure. That is absolutely true. That is why i said it sits on top of everything else. Having said all that, and i dont want to dismiss, obviously, the rise of populism, lets not forget that despite all the talk about the growing populism, nationalism in the eurozone, it was the u. K. That brought in brexit, and it was trump that was elected president in the u. S. The last time i checked in the eurozone, it still remains democratic and deeply committed to the globalization. This is still an issue, i have little doubt about it. At the same time, i think the market is pricing in. That is why you are seeing the euro. We may be under some pressure. That is why you are seeing european spreads rising. It is really difficult to assign certain probabilities, and i would like to avoid that, but i think our viewers in the second round things are now are by far the most important political event. That is not yourto have lethin expectation. You mentioned the brexit vote, and that is of course what we are seeing, the brexit vote coming through in june. 124. 67 is where we trade on the pound against the u. S. Dollar. That is after some weakness earlier on this month, really, and the pound. Why are markets more positive this morning . Vasileios i think it is really hard in general to make a lot of sense out of the space, daily, small moves. I think from a big picture perspective, the big move, the big adjustment downward has already been seen in sterling. Doubt we are going to have a lot of political influence. I think it will actually be economics that will drive trade. We know article 50 will be triggered. Phase. Enter the next it will take a lot of time. From now on, i think the market will just try and see whether the data is going to start rolling over because we have seen some weakness in the u. K. Data. Anna retail sales is that were you see the weakness coming . Vasileios largely the problem is falling depreciation in sterling and the eventual rise in inflation. That means a problem, and i expect that soon, things are going to go on getting worse Going Forward. I think we will be trading with a downside bias. Feeling about Political Risk with regards to emerging market, we talk about it more and more about the pound in u. S. Dollars. When you look at emerging markets, where do you see the best or the worst levels of volatility around politics at the moment . , forn, the korean won example, we have a chart showing how that has been reacting to the politics out of the u. S. Vasileios sure. The korean won has been one of the traditional bellwethers if you want to measure indications of u. S. Policies and what happens in general in the emerging markets. We need to realize that emerging markets are not a homogeneous group. There are those with growing full abilities and those that are still having issues. We have seen a good rally in the turkish lira recently, but it is coming from a very low level. I think Political Risk is still an issue in turkey. But other markets out there, depends a lothich on Commodity Prices, Commodity Prices are holding up quite well. Anna ok. Vasileios, thank you this morning, vasileios gkionakis, senior credit head at global asset strategy. Lets look at corporate stories making news right now. Here is taylor riggs in the newsroom. Taylor the head of tsa is looking for support for the posed general motive General Motors brands. Vinyl willwere bar suarezthe promise existing labor contracts and keep them in the factories years. Ther three 24. 9 billion for petrochemical plants in the state of louisiana. The Taiwanese Company wants to spend 5 billion for a production line in texas. U. S. Shale gas provides a cheaper alternative source of Raw Materials for petrochemical production. And that is the Bloomberg Business flash. Anna . Anna thanks, taylor. Still to come on the program, more on the deal and never was. Unilever,o sales on which would have created the second largest packaged food giant in the world. This is bloomberg. Anna welcome back. This is bloomberg markets. I am anna edwards in london. London, 9 22 if you are in new york. 423 billion bid from kraft heinz fell apart for unilever. Unilever is under pressure to prove to investors that the company is better off on its own. For more, lets bring in ruth david. Very good to see you on the program. Why did this fall apart yo . From everything i have read, there are various theories. We at bloomberg certainly seem to be talking about that Warren Buffett was met with hostile reception. Ruth you had all these stories telling the government officials ebitda,into this, and eve they need to step in. Unilever is headquartered in the in theets netherlands, where they have stringent control in place of a company in over. In 2016 ery clear we will go where we are welcome. Why probably decided waste all this time going back and forth and getting to an ugly war of words when we do not have a friendly takeover target . Anna this could have become very political, as you say. The u. K. Government said lets have a look at this, but theresa may you pointed out rightly during the break, it is a ft now but she has mentioned kraft as one of the reasons the government needs to be more active in takeovers. Ruth yes. And unilever, there are all these really flagship british companies, so the moment you talk about somebody acquiring them, you can imagine all over, right . Both companies had conversations with the government on friday, which is pretty unusual with a deal that they have not agreed with the deal together. They probably decided why waste time and go back and forth . Lets just back away. Who knows for now, the next six months, if they are going to do anything. Anna but this could come back, you know. There have been suggestions that more could have been that deeper pockets could have been found at kraftheinz, and more money put into this. A lot was made over the weekend of the different cultures over these two businesses. At unit labor likes of talk about longterm stability, and that is the way the company has been unilever likes to talk about longterm stability, and that is the way the company has been run. Ruth yes, the company margins. Sometimes, there is the impression that it is about margins and not as into brands. That he is under a lot of pressure. You spoke to him last month where he was saying that this is a challenging market, this is a challenging environment, and now he needs to prove that unilever is better as a standalone partner. Anna and the government minister, a business secretary, points out that a number of u. K. Companies may feel like their targets now. Thank you so much for joining us, ruth, from bloomberg news. Still had, navigating Political Risk. This is bloomberg. Anna welcome back. This is bloomberg markets. In ftse 100 treads water this really like day because it is president s day over at the United States. Ominous skies, you could say, over the city of london right now. 1. 2467 against the dollar. Here is taylor riggs. U. S. Vice president mike pence says the European Union has nothing to worry about and its commitment to the eu is steadfast and enduring. Eut is what you officials officials were hoping to hear. We are counting, as always in the past, on the United States wholehearted and unequivocal support to the idea of a united europe. The housence told u. S. Will hold russia accountable but will also seek to find Common Ground. China appears to be sending a message to the u. S. And its allies about north korea and kim jonguns regime, hinting it is time to make a deal. China will halt all imports from north korea. That is over sanctions regarding north Koreas Nuclear programs your taunus as it is time to restart talks on the north korean issue. A korean corporate Corruption Scandal at other South Koreans who have been convicted have had sentences reduced or suspended, but one Observer Says public unhappiness with the big conglomerate will make leniency politically difficult in this case. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Anna . Anna thank you very much, taylor. Lets take a look at the Political Risk stories run europe. With us from our bureau in berlin, he just returned from the Munich Security Conference where heads of state and other highranking officials gathered to feature security challenges. As we saw in the news bulletin, alan, since then, we have seen mike pence moving on to brussels, so the presence of the u. S. Top Government Team in europe continues. What have we learned from all of these visits mike pence, james mattis, john kelly many voices in munich and before that, even, now in brussels. What have we learned about the relationship between the u. S. And the eu . Alan well, we have had some unequivocal messages from the usa, for most among them the Vice President , saying to a clearlys effective audience clearly susceptible audience, that they will hold russia accountable for its actions. They had support for ukraine and the continuing minsk process of peace. Heard innow, we brussels, reaffirming commitment to the eu. That is all very welcome, of course, and it was by no means clear before hand. But the remaining very large question marks over who is actually speaking for the u. S. Administration when you happy Vice President in brussels saying one thing and donald trump waking up and sending tweets, again, critical of sweden and the immigration policy. So there is still a lack of clarity. Anna yeah, there does seem to be a lack of clarity. I suppose the commitment to the minsk, something Angela Merkel and her crew will be have to see, alan. Where is this in terms of what it takes from these conversations . Does this stress from what it has heard about double trump, from donald trump, or does it remain reassured from be nuanced, calle collaborative, positive messages . Alan what is clear is the substantial body of opinions from senior u. S. Officials in the administration, who are maintaining the u. S. s Foreign Policy toured europe, potentially, and so obviously that is welcome. Unclearame time, it is whether they will be any longerterm move toward dividing europe. That is still unclear in terms of trump and what he actually stands for. But europe is being confronted with the reality that they really will have to step up, and to a larger instinct, look after its own affairs, both in bench terms, as we have heard, but also in Foreign Policy and security. Anna the european leaders increasingly asking themselves what they need to do for themselves for defense, and maybe those issues around nato spending could be something we talk about in the future. Alan, thank you so much for joining us, Alan Crawford joining us from berlin. Elga bartsch, chief european economist or morgan stanley, joins us on the phone from london. Great to have you on the program. We talk about geopolitical backdrop, about reassuring messages we have heard from the u. S. Administration, if not the u. S. President himself. To theh does that matter European Economic story at the moment, because the economics seem to be getting more positive around europe . Elga yes, indeed. We have strongerthanexpected data coming in. We probably get a further rise in the pmi composite indicator tomorrow, and also inflation is very quickly making its way back to the ecbs target range. Obviously, that is just a headline. So far, i think the Geopolitical Uncertainty or the Economic Policy uncertainty does not seem to be waiting much on demand dynamics in europe. Anna elga, we see countries in europe increasingly asking themselves, despite reassurance from the u. S. Delegation, whether they need to do more to provide their own defense operators, they need to spend more on defense. The germans are spending more than they were on defense. Members are asking themselves what they need to do. How much does that become an economic story . Are we going to see that level of spending . Will it make an Economic Impact on these countries . Elga if they were all going natoto the 2 of gdp commitment, obviously, that could translate into a substantial fiscal stimulus. Thatis probably not all likely to happen. Unfortunately, the fiscal policy market fire on defense spending are much lower than, say, on Infrastructure Spending or educational spending, so i would not get too excited about the macroeconomic story. From a macroeconomic standpoint, it might be a little more meaningful, but i think we are still quite far away from a situation where this is a major macro story. Anna one thing we do see on the macro front, elga, is inflation picking up on the eurozone, perhaps inflation rising a lot, core inflation not so much. What are your expectations around inflation . How does the ecb response to that inflation, because talking about policy divergence is very topical right now . Elga yeah, so we would not be surprised at all is headline inflation in the euro area would break through the 2 level. That could happen, potentially, as early as the february date to release. Definitely going to happen, at least based on current futures later in the year. I think the ecb will react to that by stressing that this is in amounting to a pickup underlying inflation, and what is your interesting that what we saw one of the hawks on the ecb governing counselors, the german member, actually moderate expectations for a quick shift in the ecbs policy outlook or risk assessment. That is interesting and important because she is one of the hawks on the governing council, and most likely will have voted against the december extension of qe. Anna elga, thank you very much. Elga bartsch, chief you are panic economist at morgan stanley, joining us. Coming up on the program, a former greek finance minister tells bloomberg tv a bailout could be needed. More on what needs to be done next. This is bloomberg. Anna welcome back. This is this is bloomberg. This is bloomberg markets. Finance ministers are meeting in brussels. With georgespoke papaconstantinou. Here is what papaconstantinou had to say about the Current Situation in greece. George it is sustainable over the next five years because exemptions are very low, very small. Interest rates are very low on the central loan. Beyond that, even if you do not buy the full analysis, because i do not think Everybody Knows where you will be in 2016, even then, it is clear that greece needs Additional Debt. That is something the germans are not willing to accept in principle. The eurogroup has said they will do more on greek debt relief. With german elections coming up, the germans are not willing to actions toinal identify what measures short of a haircut everybody understands it will not be a normal haircut so taking the rate at todays low levels, and a bigger grace period. But the germans want to see more. They want to see more austerity. Really putsipras more austerity in the greek system without it being i minister of the irish says it will be the straw that breaks the camels back. Germans and the eurogroup are talking about a Prime Minister target over the next 10 years is that realistic. . George germans and the eurogroup are talking about a Prime Minister i do not think. It is doable but at a huge cost to the economy. It needs to get out of its slump, which it has been there years now, oright years does it in this on a higher target, which simply makes it slightly more sustainable over the mediumterm . Lower one will be much better for the economy. However, the eurogroup has signed an agreement, and they dont want to change it, especially with all the elections coming up, the dutch election and the general election. Course, thetime, of germans would like it to be in the program. You cant have it both ways. You cant have both having the imf in the program without accepting what the ims is posing. Me bring the populist view, if you want to put it like that, that the greeks cannot pay, wont pay, that is huge amount of taxes is still not being paid, and this, sir, is the crawl in the german throa. Cant pay, wont pay, just wont pay. George this is correct. We are now at a point remember, the crisis started in 2009. We have over taxation of the moment, so it is impossible to go on. This is why you do not need additional right now. That is why a lower surplus makes more sense. If the creditors are pushing, as you say they are, what is the tsipras . Getting hold . George he is agreeing to do most of what the creditors are proposing. He is agreeing to prelegislative measures for additional taxes. His part of the bargain, pretty much, he needs to be able to sell it to his constituency and parliamentary group, but we are almost there. I do not think he wants to go through polls. There is a fundamental difference that people are missing out on. Has bought into a narrative of a turnaround. Europeo longer trash in are in for an international audience, it is clear that he wants greece to get out of the crisis. In that sense, i think he wants to stay on as much as he can, i believe that he will sign on to these measures, he will pass into this parliament, and im not sure if this will happen now, over the summer, in other words, we go over to the brink is a ratherhat plausible scenario because i do not think we can close it now, but in any case, i do not think we will see a repeat of 2016 with a referendum and everything. He is 15 points behind in the polls. I do not think he is into a respectable defeat. He wants to stay on as much as he can. Anna that was the former greek finance minister george papaconstantinou. It is time for the Bloomberg Business flash. Here is taylor riggs. Taylor anna, boeing is finding deals with qatar and kuwait. Kuwait wants to buy the 18 super hornet. Boeing says the sales are an important part of getting the production line in operation. Saudi arabia broke records for oil output and exports last year. Day andlion barrels a exported about 3 4 of that. The saudis lead the push by producers to end the oil glut as of january 1. And that is your Bloomberg Business flash. Anna thank you. Coming up, life lessons from Warren Buffett. Melinda gates talks about taking risks and failures. That is next. This is bloomberg. Anna welcome back. I met edwards here in london, and this is bloomberg markets. Were going to talk more about the bill and Melinda Gates foundation. They outlined their foundations ambitious goal for the coming year. Special marks a very line, 10 years ago when Warren Buffett pledged 30 billion to their foundation. In a conversation with linda gates,megan melinda megan finds out more. Arenda the most important life lessons, even separate from money or the return on the securitys life lessons, how you live your life is really important, and warren has a set of values that he lives to an is true to. He loves to laugh and make everybody feel good. We feel like as long as we have known him, we have been lucky because we learn by his example. And then his tremendous gift that he gave to the foundation that we were not expecting to receive, he was not expecting to give. His money was going to go to the foundation that has his wifes name on it. She unfortunately passed away. When this gift came, we were so stunned by it. One of the things that we realize is you have a response validity your own wealth thoughtfully, but when it is somebody elses wealth, you had better do it in a careful and thoughtful way. We do think about what is the return on the . And how many lives have been saved . Have we done it in the best possible way, the most efficient way, used to the best partners, found the best partners . I think warren has really inspired us in that way. The other thing i will say is he does say, i do not want you to be riskfree. I want you to swing for the fences. You are taking a societys hardest problems, so take risks, fences. The we have had some failures along the way, and warren has been ok with that because he knows were trying to move there he difficult problems forward. You talk about swing for the forces, 122 million childrens lives have been saved. When that kind of gift came in, how much did you plan out, how much did it change the scale, impact what you could do . Melinda it had a substantial impact on the scale and what we could do, but the way we thought about it when we came in when it came in, we were already working in global health. We had much more to go. Believe me, we have so much to learn, and i hope we are learning throughout our lifetime. We had already gotten going on things like vaccines, malaria drugs, working on tuberculosis, but when warrens gift came in, we had another series of projects, learning grants we were doing because we were already seeing ourselves it is phenomenal. People have to start with a healthy life, but it is not enough. You have to make sure they have a healthy start in life, basic health, but then they have got ft themselves li out of poverty, so we started a series of grants in things like agriculture. We were able to take more an gift and scale poverty programs like outlook culture substantially. Like agriculture substantially. The future will surprise the pessimist. When you look at the world we are in now, some of the challenges that we face, some of the political challenges that we face, what gives you pause that that kind of optimism runs throughout in terms of where you see a better future, and a better global future, perhaps most importantly . Melinda you have to turn to the facts about what is happening, despite the things that people read in the headlines about all the negative news and there is negative news every day but the world is Getting Better. Poverty has been cut in half in half in 25 years we talk about the fact that 122 million children are alive because of the vaccine work that has happened in the malaria drug that is getting out there. I have been lucky enough i traveled to the developing world three times a year. Ram out in remote, ural, dusty villages, and life is Getting Better for people. It is not Getting Better fasten appeared i am not a patient optimist. We wanted to get better faster. People will take them up and use them if they are provided. Gone over andave over again, a remote part of tanzania, life is Getting Better, farmers are hooked up to markets, theyre selling more eggs, they are having more income, they are putting kids in school, so it is not just how people from the numbers. You have to look at the numbers you and i know that but it is palpable when you are on the ground. I think sometimes we forget that in the marriott of issues we face in our own lives in our country. Of issues we face in our own lives in our country. Anna that was Melinda Gates speaking with our megan murphy. Flat. G is pretty we have a mixed picture. The london market being held back a little bit, as is the dutch market. Unilever, you see at the bottom of your screen, down by 6. 5 after the bid by kraft heinz and three capital could not be done. S p futures is important for the trading day, it is tuesday, a slight move to the upside after the start of u. S. Equity trading. Of course none of that happening today because of president s day. No u. S. On market trading, either. Here is a quick look at the fx market. Currency,for the u. K. And the british currency, against the u. S. Dollar. And the euro is pretty flat, 1. 0619. Oil prices on the move despite the price being kept down by what is happening on recount and the opec. 53. 65 on w t i. Mark barton is coming up next to it i am anna edwards. 11 00 p. M. In hong kong. Live in london, im mark barton. Welcome to bloomberg markets. Mark covering stories out of london and munich. Unilever after a potential bid by kraft heinz fell apart. This may not be the end of the road for a potential takeover. U. S. Vice president speaking to european part is about a Trump Presidency using his speech and munich to reaffirm the u. S. Commitment to nato in the european projects. Later, i will be speaking to Allen Higgins with his views on the unilever deal and why he likes cocoa bonds and the likely of a rate hike in march. 90 minutes until the close of trading here in europe. No trading in the u. S. Today because of president s day. All of the attention is on your. Highest day since december 17. The usuale below levels at this time of trade. Avat function with Telecom Stocks leading. Lets get to the today chart of unilever. You know what happened friday after kraft heinz table this 240 billion offer. A record move. Sunks rose to a record and by as much as 9 . Biggest decline since 2003. Now they are down 7 . Over the two days, they were up 5 . Kraft heinz is walking away. On friday, unilever undervalues the Company Unilever says the company is undervaluing it. Heinz come back to the table . That is something i will be asking Allen Higgins shortly. They are going to scrap the plans of its banking division. The rbs is closer to resolving some of its biggest issues that have weighed on the stock. On that matter, the bank is going to take a 750 Million Pound provision a part of the plan to address its issues with e. U. To set offuggled this division in the wake of the financial crisis. The u. K. Put lots of money into rbs 45. 5 billion pounds. European commission is now considering allowing rbs to keep the units and set aside money to enhance competition. Rbs shares, a oneyear high. They are raising those postbrexit losses. That is significant. Let us move on to hsbc. It kicks off the big five on the ftse. They reported earnings next week this week. Analysts will be i more buybacks when it reports earnings. Lender has been the best you got the brexit result, the buyback starting. Investors are keen to know the details on other buybacks. It still lacks american businesses like bank of america and goldman sachs. The blue line a sterling against the dollar. Riggscheck in with taylor with bloomberg first word news in new york. Taylor the latest bailout deal looks like it could be delayed several months. In brussels, the finance minister downplay chances of an agreement tall unlock more loans. European creditors say they will not keep funding greece without the participation of the imf and the greek government refuses demands for more austerity measures. Vice president mike pence assuring europeans about the Trump Administration. Let me assure you that the United States is committed to continuing and expanding our collaboration on the collective security of oliver peoples. It the safety the safety and security depends on the collaboration in the global fight against terrorism and the United States will remain a full partner. With the e. U. And all of our european allies to a cop as that. Taylor over the weekend, pence expressed administrations strong support for the Nato Alliance. In france, a poll shows Marine Le Pen gaining on her rivals in the president ial election. Penopinion poll shows le picking up a percentage point in the first round to 27 . The others are both at 20 . No polls show le pen winning inmates runoff, but she has cut her deficit in half. China appears to be sending the message to the u. S. About north korea and kim jong uns regime. They say it is time to make a deal. China will hold called all all importsill halt to north korea. Global news 24 hours a day powered by more than 2600 journalists and analysts and more than 120 countries. Im taylor riggs. This is bloomberg. Mark thank you. The collapse of kraft heinz could prove to be the first step in a Long Campaign for unilever. Approach. Ed off the to proveas six months to investors that unilever is better off on its own. Shares are down by 7 . Andrea is here. Hi, andrea. Andrea it may not be long it could cute costs, but they have to do with the underperforming food business. They may not want to do that. It is a catch22. It takes a big chunk of the business away. They probably want to do more in that area before they spend off food. Mark on cost savings, he sent out his plan, but it is nothing when you look at kraft heinzs cost savings plan. How do you compare them . He has doubled his thein expansion target, but margin for unilever is half. Craftpped has heinz has already raised the bar. Pullman on borrowed time . Andrea the idea that he would go in the next couple of years could be brought forward now. You have the chair who is very highly regarded. That is the scenario that could happen. Mark the idea is that the reason why the shares have not given back all of their games, investors believe that kraft heinz will come back . Andrea the two are linked. Unilever has got to effectively do what kraft heinz wouldve done. If it does that, shares go up and everything is fine, but if it does not get its act together, they littleas it just a carriage, but wasnt more to come . Maybe it was not ideal. If they had not withdrawn over the weekend, it wouldve expected that it wouldve been opening shot setting the bar at a certain level and come back with more cash. Kraft heinzs share rose on friday. If it had not played out the way it did, we wouldve expected it a line mark could kraft heinz look elsewhere . Andrea it could look to food, but it has shown that it is willing to try other markets, not just foods. That brings up a whole spectrum. It is very interesting. Mark is the industry alive now because of this . We have nestle. Nestle and athat unilever mark really . Then you got the competition authority. Andrea the funny thing about unilevernestle, in the food business, there is not much overlap, so you could put them together. It could possibly do that. Pullman has a big job, doesnt he . Andrea exactly. Mark goodness me. We will have you back regulate, and reappeared we will have you back, regularly. Up next, european leaders have been forced to navigate the mixed messages from President Trump and his top officials regarding Foreign Policy. This is bloomberg. Live from london, i mark barton. Its bloomberg markets. Its president s day in the u. S. , so no trading today. Lets get over to taylor riggs in new york. Taylor cheers of unilever are following. The deal between unilever and kraft heinz collapsed two days after it became public knowledge. Kraft heinz offered one hundred 43 billion for unilever which wouldve been the biggest takeover in the food and beverage industry. But the company walked away after unilevers negative response. They had a psa is looking for support for the purchase proposed purchase of General Motors. The ceo war meet the ceo will meet with officials. Citigroup predicts that coppers come back is only beginning according to a new report, copper will rally toward 7,000 per metric ton this year and go past 8,000 before the end of the decade. Copper is often seen as a barometer of Global Economic health and its price increased 18 last year because of rising demand. That is your Bloomberg Business flash. Mark taylor, thank you. It u. S. President u. S. Vice president mike pence relieved europeans fear somewhat about European American policy. United states is committed to and expanding our collective security of all of our peoples. The safety and security of your union and our people depends on that increase collaboration in the global fight against terrorism and United States will remain in full partner with e. U. And all of our european allies to compass that. Allies to accomplish that. Mark an equally unsettled question was raised how much should europe start doing on its own . Alan crawford joins us. Let set with the first edition. Have concerns been allayed about the trumps ministries ands stance the trumps administrations stance when it comes to nato . Alan some concerns have been delayed allayed. They all came with the united one of, which was unwavering support for our nato, the Transatlantic Alliance. Theyst heard today would hold russia accountable for their actions for ukraine. All of that is welcome. At the same time, there remains a large . Mark to what extent do they speak to the medication . Do they speak for the administration . Donald trump could contradict some of these messages. That means uncertainty. Mark we had pictures of mike pence, the Vice President and the secretarygeneral. When it comes to military integration, german chancellor Angela Merkel has called for more of that between germany and france. Is this possible that Many American president s are caught in the past of other members to spend more on defense in the past . Will Angela Merkel call for increased integration . Ears . It fall on deaf war alan there is a clear recognition that there will that they will have to step up delayy are seeing and a America First agenda, europe will have to do more on multiple fronts, and then close Cooperation Among the line drive talking about specifically on defense spending. There was a little bit of an ease at the munich conference when Vice President mike pence started a hectoring tone instructing the european allies when they were already committed to doing so. Is they are a long way short of the target. It is something they have committed to. It raises all sorts of questions if europe will manage to get together and step up. Mark that is the question. Is there a sign among you governments that they are deemed,to take what is unpopular measures, toward further enlargement . Alan further enlargement of the e. U. . No. Very much off the agenda. It is unacceptable to the electorates and most e. U. Countries to have more people present. At the same time, there is a recognition in germany, which is the biggest economy in the largest g7 leader. Certainly germany will have to step up. France . It is too early to see because of the elections. Britain is on its way out of the e. U. Interestingly, we heard the defense secretary wanted to continue Defense Security cooperation with brexit. It is still too early to answer that question. Mark on the russia subject, mike pence touched on finding Common Ground. The Common Ground is that . That well, i am not sure that was clear, but certainly, if anyone came away from the Munich Security Conference unhappy or dissatisfied, it looked like the Russian Foreign minister he gave a short speech and answer questions, which was more than the u. S. Delegation did. They did not answer any questions, most of them, at least. Because the u. S. Was relatively robust towards russia and committed to the Peace Process what kind ofe, but Common Ground can be found with russia . To look at isswer over sanctions. Certainly, there is no indication that the u. S. And certain parts of the e. U. Will that is more of the unknowns. Mark why didnt the u. S. Delegation not answer questions . Did that highlight the dysfunction of the Trump Administration . Alan i am not sure. Certainly, it did look to most aservers that they came with very deliberate message, which was assumedly agreed green with the president and they did not want to depart from that at all. Certainly, the secretary of , who emma Rex Tillerson was at the g20, he in the state department were very clear and in listening mode. Certainly, you could not certainly, you could interpret it that way. It was a talking point in munich. Mark allen, thank you for joining us. In the next hour, we will speak to ian bremmer and, founder of the eurasia group. 4 10 in london. Rbs may have reached a turning point after the bank scrapped its plan to sell the williams banking division. We will discuss next. This is bloomberg. Mark this is bloomberg markets. Im mark barton. Rbs said it will scrap the plans glyn bankliams and division, even if it means shortterm losses. Is that the feeling . A relief . Right. Rbs is throwing a lot until the Fourth Quarter and a party announced they will take a 3 billion pound charge for the doj probe going on. Now they are taking 50 million insteador this new plan of williams and glyn. Those with a two big things. It is more bad news on one hand, but on the other hand, you are losing to resolving. They offloadldnt williams and glyn. These were rbs branch and said they had to separate out and put them on their own Technology Platform and find a buyer. The almost got a buyer a few years ago. Since then, they have struggled with the separation on getting everything on the same class warm and finding a buyer. It is than one misstep after the other, and perhaps having his other route where they fund some of their competitors basically. That is perhaps more doable for them. Mark something significant happened today. Shares postbrexit have been lowered and negative. What are we looking out for hsbc tomorrow . Everyone is saying by back. What is the big look ahead . Michael they are all different with hsbc. Lot from benefited a the buyback they did last year. Can they continue that momentum . What are they see going or it on china . What do they see Going Forward with china . They are very exposed to global trade and what does trump need for that . Which is thes, as investorsde keep a close eye as we fizzled out towards the end of the investment season. Michael the question is did they perform like the u. S. Banks or the europeans . The u. S. Banks did much better on fixed income trading. To takeays starting share from the european competitors, or are they in the same boat . Mark great to see you, michael. Live from london, im mark barton. This is bloomberg markets. No trading in the u. S. Because of the president s day holiday. Taylor . Taylor in london, house of lords is taking up theresa mays proposal to trigger brexit. Some lords are hoping to make changes in the loss that the house of Commons Delta secure and they want to vote on the deal to negotiate changes with e. U. If parliament does not like it. 127 civils more than servants were fired or suspended after last summers ailed coup failed coup. Collen is a next file in the u. S. Associates of President Trump are pushing their plan for russia and the ukraine. According to the new york times, it includes the president s personal lawyer. The plan is scheduled to outline away for President Trump to lift sanctions against russia. Meanwhile, a ceasefire between ukraine and separatists began today. China plans to build dozens more airports because of a boom in travel. According to a fiveyear plan from the countrys aviation authority, more than 50 airports will be added by 2020, almost a 25 increase. Airliner hasst ordered more airplanes. Global news 24 hours a day powered by more than 160 journalists and analysts. This is bloomberg. Mark thank you. Ands go back to unilever their shares tumbling after that failed 143 billion bid from food giant, kraft heinz. Prove whyan has to the company can make it on its own. Alan is a financing man. Apart,he deal that fell but maybe it will be back in six months. What interested you most about bid . 143 billion alan firstly, sterling euro. The fact that buying to keep currencies aligned with us. We like sterling as you know. Number two, actually, yes, you can see they did not want to pay up anyone it to be a friendly deal. When you look at, for example, the difference between the bond the bonds werenk a little under 3 . You take out the company and you dont have to pay the dividends anymore. The dividends on unilever circled three. I could see how they financed themselves. They have done this before. They have to be careful because of trump really does bring Corporation Tax down as he promises, then surely they will do something in terms of getting the offset on the debt interest. Mark will it be that in six months, the deal . Alan i am not so sure i think. Maybe they will look elsewhere. U. S. Hen with the closed, it is hard to see. There are a range of companies. It seems pretty clear that we dont know if off it is driving it. Atk sterling you mentioned 124. We have been going sideways. What is going to budge sterling from it sideways moves, alan. . Sure there are lots of positions around of the u. K. Economy is holding up well. There is a Global Economic boom in the u. K. Sterling is and mean for reverting currency works well for the mean reverting strategies. Mark what is the mean . Mac if younk the big are looking at purchasing power. Up 160. It is a one offbeat indicator. It is mean reverting. Markets have been very counterintuitive over the last few months. Mark are you buying sterling against . Alan we are not trying to be too clever. A basket. Mark that is the safest way. Something we have talked about that i know you love talking about is financial cocoas. To thatshat defend how does that dip into alan individual cocoas are not allowed to be sold to investors. , we you become a client will not be able to sell you a unique credit of cocoa. Very strange when you think about it. We can talk about the equity but not the cocoa. , the right issues are coming to an end. , fantastic news making the company supersafe. But as an equity holder, they have bottomed out. Maybe need to miss out on the middleman and give money to investors. Equity holder straight to bondholders. Cocoas is a great risk adjusted investment. Unicredit can refinance. The huge rights issue is virtually gone. Mark italys banking woes over are not . Monte is such a small market cap company. It is hard to say that is a National Champion. It is a very old, vulnerable black vulnerable bank. That looks like it is getting sorted out. But for us, we invest in funds that can to buy the National Champion banks. Mark and hsbc is among them . Alan yes. Mark tomorrow kicks off the spring buying season buybacks, buybacks, buybacks. Alan if he were to pay another 5 and dividends, which is very attractive, why dont we buy those shares back . Rather than paying out five cents, which is a lot in terms of the current income structure worldwide. It makes perfect sense for them to follow through with the buyback. Isk which National Champion a champion of all champions when it comes to banks question mark of all champions when it comes to banks . What would you say . Alan it is hard to look beyond u. S. Banks and jpmorgan. Cap, equitymarket performance, credit spread. It is hard to look beyond jpmorgan in the states. Mark is it hard to look beyond Roger Federer . Alan yeah. Is it at 18 . Alan yes, i think it is, right up there to. Right up there. Mark he has one through it once, hasnt he . Allen higgins is staying with us. The pima kansas speaking to the nato secretarygeneral. They are holding a joint news conference. Mike pence has said a lot of things, but has committed to nato and is committed to the Transatlantic Alliance as well. We will be speaking about that more with ian bremmer. President with the secretarygeneral. This is bloomberg. Mark by from london, im mark barton. This is bloomberg markets. Allen higgins is still here. Post yellen, post inflation data went above 40 and we drifted down to 234. Why are investors less bullish on the fed hiking rates in march and they were post yellen, post inflation . Alan just looking at your favorite words for action function, a bit of the short end and a lot of money chasing the short end can bring that down, but the big picture is it seems a little low, and i would have thought, with my interpretation of yellen if that she would like to tighten if she can. What does that mean . Area. Two year a two or three Rick Heitzmann . Year rate hike man . Alan two or three. Mark we are at record in the u. S. What will stop it . Alan fundamental, makro, or sentiment. That makes me look like i favor bmp too much. Are twoy be investors bullish when it is strong. Relatively bottomed out. Even of the market continued to rally, really sentiment was negative, for this is taking indicators such as the American Association of individual investors, what do they think . Now we are mark the blue line. Sorry, the white line. Alan with all of these indicators, they are much better buy indicators and selling. , they do the math on it give you the quantitative work. You get quite poor sales signals. It is a reason to be more cautious and not be fully exposed to risk assets, but you should not use them to sell them off offering. Mark the white line is the market risk index, that is low, the blue is the Economic Uncertainty index, which is that records. Alan implied volatility is everywhere. A good piece of research came out the week before saying when volume is low volatility is low and the vix was a component of that, keep on buying. It is just a poor indicator for selling. The global Economic Policy attorney index policy index is intuitively, that is to indicate all that macro of fort surprises. Of surprises. Of withere is all sorts the elections. Alan the French Election is huge because we have got someone saying i am going to come out and reintroduce the french franc. Mark are you betting on that . Alan the market could be counterintuitive. How would you bet on that . Maybe one way to do it is too short french bonds. I may wealth manager, not a hedge fund manager. Equities could be counterintuitive. Lets say le pen gets in . What does that mean . It could mean a weaker french franc. Equity markets love weaker currencies. Very dangerous. Could be very counterintuitive. Youou look at the u. K. , will probably come me ftse 100, which is obvious. Short, we i were would have to buy that pretty quickly could mark why is the ftse 250 a record when thertainty is there about postbrexit process . Maybe this is a year when yields alan macros the politics. Beat politics. Tremendous had earnings deliveries. I might the ftse 100, it has been much more spotty. Yields andeight high long financials, health care, tech, equities. Everything. Give me something quirky, something different. Mark,i can only tell you, what is inside the portfolio, and i cannot keep talking about russian equities. We cannot come up with something new every time. Mexican one year bonds. Mark what you think about mexico postelection . Alan number one, this trump the currency down . Clearly, he does not theyre starting to rally. A lot is priced in. They will have tough times ahead. It will not be easy. But it reminds me of brazil this time last year with a lot priced in. We like idea getting involved in the currency and the local debt probably in a diversified way. Local em fundamental event is by mexico. There is a lot priced in. But if we look at where we have 100 your debt in dollars and sterling, it is uncorrelated in investments. Mark alan, always good to see you. Time for the Bloomberg Business flash. If a look at some of the biggest stories. Taylor riggs is in new york. Classics want to spend 94 billion dollars to build petrochemical plants in the state of louisiana. Taiwanese Company Wants to spend 5 billion expanding production lines in texas. U. S. Shale gas provides a cheaper alternative for Raw Materials. There is a gasoline glut in the biggest market in the u. S. Traders are lining up to export gasoline and diesel from new york harbor that is an area that normally relies on field imports from your pennies in canada. Gasoline stockpiles on the east coast set records for three straight weeks. That is your Bloomberg Business flash. Mark still ahead, former greek george minister constantino tells bloomberg tv of a forced they allow maybe needed. This is bloomberg. Mark this is bloomberg markets. Im mark barton. Finance ministers meet in brussels. Yanis varoufakis caught up with George Constantino saying about the current financial situation. The imf is fundamentally right that it is unsustainable. Next sustainable over the five years because redemptions are very low and small and Interest Rates are very low on loans. Beyond that, if you move into the future, even if you dont buy the full debt, i dont think anyone knows. Clear that greece needs Additional Debt relief. And that is something the germans are not willing to accept it in principle, they have because the euro group has said they will do more on greek debt relief, but with german elections coming up, the germans are simply not willing to do additional steps necessary to specify what kind of measures, short of a cut. Extension of the maturities pegging the rates at todays low levels. But the germans want to see more austerity. Can they put more austerity into the greek system. One of the irish ministers say it will be the straw to break the camels back. Would greece prepare to take more austerity questio . They are taking a target of 3. 5 . Is that realistic . It is doable, but at the cost of the economy. Do you get the economy something to get out of the slump, or do you insist on a higher target that simply makes that slightly more sustainable over the mediumterm . A lower one would be much better. The euro group has signed an 3. 5 and they dont want to change it with all the elections coming up. Hat is why we are stuck at the same time, the germans would like the imf to stay in the program. You cannot have it both ways. Having the imf in the program without accepting what the imf is proposing. Viewdont know, populist from the press is that the greece cannot pay, or will not pay and that a huge amount of taxes still not been paid, and claw in the germans throat. Viewis is not the populist. We are at a point remember the crisis started in 2009 and we lost a certain amount of gdp. We have over taxation at the moment. It is impossible to go on. This is why you dont need additional a lower so plus makes a lot of sense surplus makes a lot of sense. If the creditors are pushing, what is the risk of cyprus going to the polls . Is stuck at the moment because he is agreeing to do most of what the creditors are proposing, even if it does not make much sense. He is a great to prelegislate measures for additional taxes and exemptions. Bargain, he of the needs some wrapping to be able to sell it to his constituency. I dont think he wants to go to the polls. There is a fundamental difference from 2015 people are missing out. People have bought into the narrative of a turnaround. He does no longer that she no longer clashes with europe. It is clear he wants greece to get out of the crisis. I dont think he can take them out of the crisis himself. Us tot sense, he wants stay on as much as we can. I do believe he will sign on to these measures. I am not sure if this will happen now or over the summer. Close ithink we will now, but in any case, i do not think you are going to see a repeat of 2016 but the referendum. Himnt think it will cost the election. He is in ank respectable defeat. Mark that was the greek finance minister. The best that has coming out of the meeting for greeces bailout orders will return to athens and greece has agreed to legislate reforms from 2019 onwards according to greek officials. This is bloomberg. Mark it is 11 a. M. In london and midnight and hong kong. Im mark barton and this is the european close on bloomberg markets. We are going to take you from london to mexico city and berlin here on Bloomberg Television. Here are the top stories were following on the bloomberg and from around the world shares of unilever leading declines on the stoxx 600 today after a potential did by craft heinz fell apart over the weekend. This may not be the end of the road for a potential takeover. I will speak to the Eurasian Group president , ian bremmer, about nato and the transatlantic relationship. Also this hour, an interview governor of and go to mexico and a leading candidate to take over later this year