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Relationships between the nations. Take a look at what equities are trading at right now. Its 30 minutes until the end of the monday session. The stock markets are rallying today across europe. We are gaining for the fifth consecutive day. Its the best since december. All of these other currencies are falling against the u. S. Currency ahead of the fed chairs testimony on tuesday. On wednesday, on commodities will see the final three columns. Swedishart with the maker of the fighter jet. It says fourthquarter sales and operating profits missed estimates, sending shares down 4. 5 . Thats the biggest decline since june. This is since june 27. Its looking somewhat lower than anticipated as a major order in Airborne Surveillance systems was delayed until january. Estimates of the growth will be higher than longterm financial gain. Shares did rise to a record on thursday after the gaining of 39 in the previous 12 months. Midsize companies are regaining some of their luster. Dax midcaphing the index to a record high on friday. The shares have underperformed the benchmark index since middle 2016. That may rise further. , near aon is still low threeyear low relative to the dax, which is what this shows going back to 2013. This is a chart i wanted to show you. This is the benchmark stock index in turkey. Goaloard in the distant 100, we see the relative strength index and its one of the best forming stock markets in the world this year. Below 70, is falling that is a move with shortterm declines in recent years. Overbought i should say for one of the best equity performers of the year in 2017. We are 90 minutes into the trading day in the u. S. How does it look . Julie we will see if we are getting to oversold levels. All three averages arent record labels. The s p rises for the fifth straight session. If you take a look at the bloomberg, you will see we have a long drought in between simultaneous records for the three major averages. Into 2016. O 2000 if you zoom in on this chart, you can see we really have seen an increase in the number of records in the past couple of months coming fast and furious as we have this uptrend at that has been continuing for the three major averages. There isnt even a line for today yet. It does seem to be based on optimism about growth. When you look at the groups in the s p 500 that are leading, its cyclical. There are groups that benefit when the economy is doing well. Financials and bond yields are rising. Bond yields tech is higher. Telecom, real estate, energy is lower along with oil prices. It helps a rally when the company that is the largest is doing well. Apple shares are up 15 year to date. They are at a record today. Ubs had a positive note saying the stock should be higher. Service liketheir you do paypal, you would have 10 upside for the stock area stock. Today,s of commodities we are watching oil prices. They have been falling on the outlook or supply here in the u. S. Iron ore is on the rise. They say they dont think iron ore is going to fall off a cliff. The china demand should be relatively robust. Mark thank you. Janet yellen will deliver her testimony before congress tomorrow. There is loads of anticipation about if they hike rates when they meet next month. Our next guest says its close to 50 probability that march will. 30 t guest says probability of a hike. We assume that we stay in the same part of the range. There is a hike in probability closer to 20. Its very hard to see how the probability will fall from here. The last time yelena spoke in california a few weeks back, the market sold off 20 basis points in the front and of the curve. She is not going to say anything different than she did ask them. Mark 3 end of year . Is that your call . Its perfectly achievable. If you go back to june last year, the market was looking at a divided congress, a Clinton Presidency and yellen forever. What we have now is significant for a push. We have an equity market that is 15 higher. We have basis points higher. The market is pricing in the same for the fed. We should be putting in a bigger risk premium in the front end of the curve than we have. That would have repercussions on the tenure as well. Vonnie at what point does the market start to rice the fed in your view . Price the fed in your view . We could get a repricing this week. We do have precedence for the last two hikes about how we can get to a hike. 2015, itok at december was the fed that actively tried to get the market to price in a bigger probability through the october meeting. In the december 2016 hike, it happened through positive data organically. I would argue that we will get to the next hike in june rather than march. It will be through a combination of the two. The data continues to be decent. Own reports on retail sales out this morning which says we will see a rebound on the consumer. If this data holds up, i dont see any reason why they cant hike at least twice. Vonnie we had some fun managers on last week talking about in short and getting into slowing rates. Is that a good strategy here . To wait out the pricing . Positioning is an interesting thing to talk about in this context. One of the things we are highlighting this year is Foreign Investors to the domestic base. Wellpublicized reduced sponsorship from the japanese Investor Base and the decline of the chinese reserve. Thats what they are doing. On that front, the only thing i would really say is if you look again at relative to where we were the last time yellen spoke, the positioning has become cleaner. The price action speaks to a bit of a short squeeze with positioning cleaned up and we are repeating that message. I dont see why the market cant be priced higher. Mark this is one of the more interesting charts of recent weeks. Hadtenure spread, how do we for gains . Outcome inential april and may . I think there are interesting trends to look at. We put out a big report on friday. One of the things we would argue is the periphery on a surprise in france would be the bigger underperformers and future assets. Being short spain versus france might be a better hedge than being short france. Germany is that stretched levels. I buying cdf from the netherlands is one of the biggest financial exposures to france and euro area countries. It seems like a way of hedging at this point. There are a variety of ways of looking at it. The big question we have to ask ourselves is whether or not the probability that is implied in the bond spread is on the annual view. I would say it seems fair. Reached of what we during the crisis in europe in 2011 seems roughly in line with us withst markets put le pen actually winning. Vonnie just returned to the u. S. For one more moment. Likes ofu price in the regulation here in the u. S. . Does that get a big consideration from you . There is up changing of the guard the sec. Do you have to price that in . You do. I think one of the interesting things to look forward to is a normalization of what we call intensive trades. As we had to stop relying on Foreign Investors and domestic treasuries, one of the things that has suffered is evaluation of any Balance Sheet intensive trade. That may be the basis of treasuries swaps. One of the ways in which we would express our views that ultimately regulation is going to be becoming less onerous and put less pressure on domestic Balance Sheets in the u. S. , we are very constructive on the evaluation of treasuries relative to performance. We expect to see a rich inning of the cash on relative to the synthetic. Mark its great to see you. Please come back. Its great to hear your view. He is it bank of America Merrill lynch. Do not miss our coverage of chair yellens coverage of her testimony to congress. Vonnie it should be interesting. Lets get to first word news. Orkney President Trump meets with Justin Trudeau put a. Northl renegotiate the American Free trade agreement and it could disrupt half a trillion dollars in trade between the countries. The two leaders will hold a News Conference at 2 00 eastern. You can watch it right here on bloomberg television. Thezo abe says he thinks u. S. Approach to north korea will be stricter under President Trump. He spoke in an interview after returning to japan. Over the weekend, north korea testfired another ballistic missile. Trump will consider all options in dealing with the matter. In south korea, a prosecutor questioned the billionaire executive over corruption allegations. He is the de facto head of samsung. He is accused of taking part in payments that samsung made to a close friend of the south korean president. In romania, there is a demonstration. Tens of thousands of protesters again demanded that the government step down. Its the 13th straight they are protests. The romanian Prime Minister has tried to stem the anger. He has reversed controversy legal matters. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. I am Courtney Donohoe. Mark thank you very much indeed. They are preparing massive expense reductions. We will talk about how the lender will meet profit targets after the stock dropped 26 last year. This is bloomberg. Vonnie its always sunny in new york. From bloomberg World Headquarters, i am vonnie quinn. Mark we are counting down to the european close. In roughly 14 minutes. They are considering cutting more than a billion dollars in operating cost to meet at the targets. The lender will unveil a fresh plan a couple of weeks. People say they may include eliminating jobs and closing branches. Joining us is our banking reporter. Do we have any numbers or jobs they could cut . Its a billion pounds in costs did richard the sunday times reports about 15,000 jobs could be cut and they had an analyst cited as a person who said that. About a billion pounds of cost cuts equates to that number of jobs. They bank pushed back a little bit on that. They said they dont recognize that number. We gather there will be job cuts as part of the new plan that was announced by rbs on the coming weeks. They are not going to tell us headline figures. They are not going to say 10,000 jobs. They will tell the staff. To reach one billion pounds of cost cuts, thats going to be a significant number of employees that must go. Up. shares are some might say that if you spend money on this, you might not be spending money on buybacks and dividends. Shares are up today. That the royalea bank of scotland will take further action to loyal its cost. They have been running several years with the cost base of a global bank or it they have already done most of the legwork and shrinking banks to focus on the u. K. In ireland and commercial banking. They are not the powerhouse they once were in Investment Banking. They have a lot of the technology and infrastructure. Required to run a global institution. They are burning off that baggage. Approaching a ninth year of losses . Has been held back by things are out of his control. Are we any closer to the government for instance selling at stake . Richard i dont think thats going to happen for several years. The chancellor here in the u. K. That has written back royal bank of scotland contriving to the treasury for the next five years. He said the bank needs to get through its legacy issues such as a fine in the United States for the misselling of Mortgage Backed securities and the department of justice is investigating the 3 billion pound provision for the fourth quarter. The results came out earlier and they said they would post that in the annual results which will drive a bigger loss for the bank yet again. Losses, it will be some years before we see this institution making money and getting the taxpayer out of it shareholder register. Mark its not the only bank streamlining. How is it faring relative to its competitors . Richard rbs would say they took the pain early end to the restructuring that rivals are now going through. For example, Lloyds Banking group is going to the process of losing 12,000 jobs. They are three quarters of the way through that. Whether that includes more job cuts is a question to look at get him to than most are doing banking online these days. Consumer banks dont need as many people at call centers and branches. On the Investment Banking side it, we see barclays. They have made heavy job cuts in asia as they focus on the u. K. We have our european rivals. Credit suisse and Deutsche Bank are cutting jobs here in london. The outlook for Investment Bankers in the city is still very much uncertainty. Usk thank you for bringing the story. Its a great story. Vonnie . Vonnie great stuff there mark and richard. Thanks for that. Marine le pen says branch france should leave the eu. That would be suicide. We will hear more of his thoughts next. This is bloomberg. Mark live from london, this is the european close on bloomberg markets. We have just under seven minutes until the end of the monday session. Vonnie it is time now for our latest is this flash. To buy out aagreed billionaires stake in copper and cobalt mines in congo. 960deal is valued at million u. S. Dollars. It will allow them to take full possession of the mine. That is due in part to the demand from tesla, which uses cobalt in lithium ion batteries. Buying a company for 2. 5 billion. Its a 14 premium. They sell the cool sculpting system. It chills fat dont that cells in the body that cause them to die. Doingn will start unlimited data. They refuse to offer unlimited data plans. They will charge 80 a month for a single user and 180 for a plan with four phones. Bloomberg business flash for this hour. Mark Pierre Moscovici released the winter Economic Forecast today. They expect growth in the eurozone of point 1. 8 next year. Its up from the autumn forecast as for the u. K. , he says the commission will have milder growth the cousin of the brexit forecast. This year, 1. 2 and next year he expects his reasoning. Pierre investment will slow down and that will impact growth. Again, we wouldnt say here that its good that growth is slowing down. We believe it will be. We will be satisfied to see it slowing down less than expected. That is good news for all of us. Outcome of the french elections the spring, he said it speculation that france would leave the euro if Marine Le Pen wins doesnt make sense economically. Year pierre it is not strengthening for the economy. The people in france are attached to the euro. They know that getting out would be a tragedy and suicide. Mark global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. Earlier today. This is from brussels. Lets take a look at where markets are trading. We are heading towards the close on this monday. The stoxx 600 is up for a six consecutive day. Sensehe best run december. I believe you with the closers. This is bloomberg. Mark live from london and new york, this is bloomberg markets. I am mark barton. A gain of the highest level since 2015. Almost 11 below the april 2015 record. The battle of the charts today, i will say it are bs prepared to cut more than one billion pounds of operating costs by eliminating jobs, closing branches, as it proceeds to hold to profitability. This is according to people familiar. Ratio, a keyncome measure of profitability, below 50 by 2020, and blown a bit off course by last year when the bank of england cut rates. Needs to remove about 1 billion of annual expenses to reach his target. Shares have been valued at 54 since falling to a 7. 5. A big gainer in europe. Shares were up as much as 15 . The biggest gain since 2005. Shares have risen to a record after the german drugmaker seized to office. 3. 5 billion euros per 56 euros per share, a 13 premium to friday passes close. The other interested parties, advent international, what would it give you . Access to the german, russian markets. The over the counter and copycat drugs. The company had two divisions. Branded products and generics, with the latter making up roughly 58 of revenue. The company is known for medicines to treat the common cold. Lets finish up with u. K. House prices. The average price of a u. K. Home hits a record in january. Continuing an upper upward trend. The. 3 increase in value lifted the average to 300,000, 169 300,169 pounds. Prices now double the level they were back in 2002. In 2016, london was one of the worst performers among 10 regions analyzed partly due to weakness in prime locations because of brexit and tax changes. What a wonderful chart showing you how prices have doubled in 2002. Vonnie it is amazing. It got us in trouble in the first place. Lets look across assets. Look at this. Again. Lar index plus 101 it is pretty significant because in 2017, youe year have seen the dollar index we can. The Canadian Dollar we will look at, unchanged in the session. The change is obviously very weak. Iswill be interesting what said about currency when it comes to trade. 58. Ruble, below the ruble is strengthening. Fx interventions wont affect fx interventions wont affect liquidity there. Closer to about. 25 and more than. 25 and more than that once it gets lets get to Abigail Doolittle who has been looking at those records in stocks. Abigail pretty amazing. Records for stocks. This is a big reason apple is up nicely today. This is a twoday chart. We can see it higher up nearly 1 . This puts apple on pace for a record high. The stock could be undervalued by 15 in terms of the way the business is valued. But the bigger story here is the turnaround come back for apple. We look at a two year for apple and those with a record highs. It is on pace for the record closing high. The big drop was on disappointment from the iphone success. 6s. The iphone 7 is really kicking in. Plus, talk about the iphone super cycle. There may be more upside. Btv353. Look at g 2013, that wasd in disappointment around the iphone 5. The next is a big upside we look at a very similar tech side here. The big iphone eight super cycle is leading to upside. Tying it into the reflation trade, tech was pretty poor out of the election, but this is a different story. Technology is the top sector for about 200 basis points above materials and Consumer Discretionary, making a. Omeback s p 500 Technology Sector is trading at levels last seen in 2000 and Consumer Discretionary at highs. Vonnie i want to add something. Tether is weighing options for units including branded drugs. Va is interested in looking at options units. Up 1. 36. Is Courtney Donohoe has more from the newsroom. Courtney in the wake of the latest missile china says all should avoid us good intentions are japan has called on china to take action against north korea. The United Nations Security Council holds an emergency session on the issue tonight. To senate is expected confirm President Trumps choice to be treasury secretary. Steve mnuchin is a former Goldman Sachs banker. To protect thousands of homeowners from unnecessary foreclosures. Steve mnuchin says he helped home owners with refinancing so they could keep their houses. Most 200,000m people urged to evacuate because of fears that an emergency spill could fail. That has reduced concern is that it could break and send a 30 foot wall of water into nearby town. The European Commission says President Trump and brexit are heightening economic risk in the euro area. Of themission first said Economic Forecast of the election. Bracing for potentially tough times. President trump has taken a more protectionist trade stamp and the next two years may be dominated by brexit negotiations. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Im Courtney Donohoe. May be betting on an emerging victory on the french election. More than two months to go on the first round of elections, attended to take france out of the euro. Investors, the most bearish on the euro. Joining us now is Simon Ballard from london. Charts. Wonderful the best way of doing it, this is a great chart. The blue line is the german 10 year yield. 2016, an important time to we were nowhere near those levels. Simon what it reflects, and this chart was put together by my colleague, it shows the rally defensive nature. On the back of uncertainty around possibly first round second round. In terms of implied volatility, we are at 5 . Tradingfrom from 4 last year. It shows there is a degree of nervousness. We could to verge in opera sit directions in opposite directions. Mark this is another wonderful chart paired bearish bets on the your are increasing. Chart. Bearish bets on the euro are increasing. Euro area sovereign crisis levels, but we are at a noticeable level. Simon this is basically euro conversion risk being priced into the market as we have with the sovereign crisis. All of this is based on surprise. Because of the structure of the electoral system in france, is unlikely she will get through the second round. Mr. Trump was unlikely in his day. People are pricing in that tail risk ahead of the first round at least. A corporate perspective, what are spreads theyre telling us . On you look at what its what has happened, the cds look at thecan individual on the Corporate Bond side, fairly well held to mystically. Is a better help shortterm risk. Germany, dramatic widening. That chart could be updated slightly. About 32 basis points, back at 2014 levels. Back in june around the brexit vote. Kinde when do we get some of resolution to that . Simon the spreads will either blowout further, getting through if shest round, possibly does not make it through the second round, then you start to see the spread collapsing again. The risk at the moment is it continues to widen, the more popular she looks going into that first and second round. Mark the 10 year french german spread last week widened to levels we have not seen since 2012. Outstripped. Evels, the easiest way is the short side of the market. Said,how do we hedge, he spain versus france. Simon on the cds spaces. Yes. The relative performance sustain in the recent quarter. That is probably a way to hedge it unless you think any further than the first round. Protection of these levels mark how are we relative to preach up expectations . Do you think investors have learned from there, not mistakes, but from the prices of those the surprises of those outcomes. . Simon possibly, we will go a little bit further than we need to or we should be at this stage because once bitten, twice shy third time. Vonnie are there any things out there that are not pricing in Political Risk or are not racing it in enough . Simon i think the easiest way to look at it is cds. In the options market, slowly rakish slowly waking up to the Political Risk. You could expect to see higher call options on bonds, outstripping in terms of demands. That is calling for higher yield. You would expect to see demand picking up for call options out there in the market. For the time being, the lag art of the trade. Mark you also said the derivatives contracts, the here, it is onks investmentgrade companies. It does not show elevated levels of risk either. Bond calls skew credit volatility. As soon as i read it this morning, i said, get that man in and here you are. Well done, all of you. Good stuff. Simon ballard. Ie canada and one of the worldss most integrated economies since free trade agreements 30 years ago. Now are those agreements at risk . This is bloomberg. Theie welcome back to european close on bloomberg markets. Mark time now for a look at some of the biggest business stories in the news right now. Has redoubled its efforts to reach a broad agreement with the music industry. Note give she nations with labels and trade associations. The deal would cover user generated videos including songs and could pave the way for facebook to create National Videos from the label themselves. Holding back more than 200 million in billings. The makes to internal business systems. Last month, shares fell one the company warned of the Material Weakness in accounting at sikorsky. Falling prices, product is growing again. The luxury goods maker in january showed positive is positive results thanks to a revival in europe and asia and sales fell 90 . Theyre hoping to double their sales in each of the next three years. That is the latest Bloomberg Business flash. Theie trade will top agenda as canadian Prime Minister justin to know meets with donald trump for the first time. My . 1 billion in trade between the two countries. Joining us now with more is michael mckee. A there were to be renegotiation, it would include mexico. The can rest side is arguably more important for what we trade with canada, drugs, everything. Michael it is seamless integration between the three countries. And mexico are separated by the United States and have different issues. The canadian economy is more similar to the u. S. He company economy. Hurt theirtest would products coming into the United States. Also, if you reopen nafta, the rules for labor standards and minimum wages that are covered inside agreements in the current nafta trading be put into the treaty, made more strict, raise costs for mexico and make some of canadas products more competitive with mexicos products in the United States. Vonnie we know a lot of these parts travel across the border back and forth numerous times. And ordinarily complicated thing to negotiate. Likely impact on the canadian economy . Be a hugehere would impact in the short run on the canadian economy. Perhaps fortunately more to canada. So naturally resources dependent. Supplyd have these chains interrupted and no one would know immediately what to do in terms of tariffs and nontariff agreements. You would have a shortterm interruption. A better place to renegotiate with the uniteds dates. The Trump Administrations themes to be more friendly to canada than it has been to mexico. Also, canadians would like to have an agreement with the United States, more energy down here, the Trump Administration has suggested, we think of canadas as our own and it is all one. There are reasonsthere are reas0 u. S. It be a quick negotiation of a Bilateral Agreement if they came to that. This is something i asked earlier in the Canadian Dollar has outperformed all of its other peers since the election. The stock market is at a record. Potential trade between canada and the u. S. Or we may not be heading in that direction anyway . I think jennifer is probably right. It is hard to say now because so much is uncertain. You do not know where you are going here with trump and with the trade negotiations. He does not have his u. S. Trade representative in place. He does not have the commerce secretary designate in place yet who is supposed to lead negotiations. How it will be handled is very much in the air. The interesting thing that has happened is the canadian stronger is getting a little stronger Canadian Dollar is getting a little stronger. A trade advantage, and even if you put in attacks, it would bring back up to where they were. They will be interested in where the administration wants to go from here. Conclusion foregone that they will end up paying for whatever is put on prices because of all of these renegotiation deals . Michael if there is any kind of tax or import duty placed back on goods, it would probably be endorsed by citizens of the country because countries do not generally want to observe it. Absorb it. Companies without a lot of competition or who cannot make enough of their goods, they will pass on those prices. ,ot as bad as a 20 increase you go to nordstroms just to pick a random department store, to buy, because the duties is are placed on the wholesale cost. Still a little more money that you would have repeated have to pay. Vonnie thank you, michael mckee. Bringing you the joint News Conference today at 2 00 p. M. Time and it mark sphinx says the 10 year drop below 2 or above 4 . Stay tuned. This is bloomberg. Vonnie it is time now for global battles of the charts and what they might mean for investors. Dont forget you can always see these treads on the bloomberg. Kicking things off today in new york city. Hi. You know what, we will get this fixed. Mark, why dont you take things away . Mark the resurrection of the European Industry continues. Today, the 20 member stoxx 600 deathindex has risens risen to the highest level since 2014. That brings it from a rebound , 132 . St january lets put hard numbers on this. In january 2016, the yellow line, a yellow circle, 131 billion euros. Today, it is 315 billion euros. That is 185 billion euros of value added in the space of 13 months. There is still quite a distance to climb to this level, the highs of may 2008 when it was worth 500 and 9 billion 509 billion. The index is 46 below that. Top to bottom, by the way. , the valueion disappear over the space of 7. 5 years. That is bigger than the size of one exxon mobil. Last january, 131 billion. Since then, angloamerican has risen by 521 . Below the may 2008 record. Minors,rrection of 5868. Vonnie you get to have a second go. We are being reminded. We can still see the charts. The twoalking about different forecasts. It has been a topic youre talking about all dan i want to bring it to your attention because we have larry fink who has arranged from percent to 2 and yields are advancing, 2. 4 . Of thenlap says the end bond rally will be at 3 . We have a ways to go until that point and a lot of indicators this week. We willoming out and see it continue to fluctuate. Vonnie that is amazing and i love it. 5911. Do not forget we are monitoring the conference taking place live at 2 00 the emmys turn. Just 2 00 p. M. Eastern. Taking place live at 2 00 p. M. Eastern. It is noon in new york. I am vonnie quinn. Welcome to bloomberg markets. Vonnie from bloomberg World Headquarters in new york, we will take you from washington, d. C. , to San Francisco in the next hour. Here are the top stories that we are watching. In markets, fresh records for u. S. Stocks. The dow s p 500 and nasdaq off hitting alltime highs. Industrials on materials leading gains. Meanwhile, apple is also closing in on a high. In politics, the canadian Prime Minister meets President Donald Trump today. Trade, immigration, and womens issues. We are also expecting a news comfort that 2 00 p. M. Eastern. We will bring you that life as it begins. Fed chair Janet Yellens committee of lawmakers begins tomorrow. The first such performance since donald trump became u. S. President to we are watching for any hints about the fed march meeting

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