Have a look at where european equities are trading right now. Just under 30 minutes until the end of the monday session. Ninth daying for the in 10, the highest level in the stoxx 600 since december. All these currencies rising against the dollar. No trading in the u. S. Because of the president s day holiday. Mixed performance look at the innch twoyear yield france, commodities and credit isault swaps the spread the yield difference between the friends french tenure and german 10 year. Risk. A measure of a lot of goings in france over the weekend. We have had polls that show the National Front leader has improved her chances of winning the election. She still below 15 below 50 but her chances have risen versus the last month or so. Potential we had the for unification of the left candidates, but it did seem as that theye weekend were exchanging barbs, so a unified candidate less likely. The concerns would be if they unified, they would reach the second round and if marine le of her, the probability 2 in this34 point wonderful bloomberg function. Its up 7 since the fed raised rates. It jumped 30 in the two months following last increase. 6 of the previous time. Gold usually falls in a rising rate environment. This chart has shown the opposite. Concerns and European Election concerns as well as gold has risen seven and eight weeks after the the worst quarter in 2013 when it fell by 12 . A big piece of data out of london today property prices posting the first annual drop in almost six years. Theaverage asking price in capital following this month from a year early. Thats the first decline since april 2011. Sinceakest monthly gain february 2009 during the debts of the recession. The country battles low growth and high inflation uncertainty surrounding President Trumps policy. Michael mckee is standing by the special guest who may be the next chief of mexicos centralbank. Michael he is the Deputy Governor of bank go to mexico. Thank you for joining us. We can talk about your future but first, central banking. Jump inseen a big mexicos inflation rate. It is projected to rise. A lot of that may be the government removing fuel subsidies in january and the peso which we can substantially after the u. S. Election, but gasoline prices wont keep rising and the peso wont necessarily keep falling. Is further action by the central bank needed at this point . Guest good to be with you. Highlighted, mexico has been experiencing two types of stock two types of shocks. One is the Exchange Rate not only after the election but in the last years. I will also say changes in relative prices coming from gasoline, as you have highlighted, created shortterm pressure on inflation. Here, our main job is to make sure Inflation Expectations remain well anchored and prices in the economy remain in place. Is thiswant to avoid change in relative prices are an increase or acceleration. That is why the Monetary Policy in the last month has been tighter. In the most recent Monetary Policy meeting, the rates were increased. We believe this is creating a more orderly outlook for inflation going forward. Banko has raised the rate by more than double. Have those rate increases been justified and do you need to do more . I think thats always the question on the market side. Is thet i can tell you increasing rate that has been put in place for today, it has created significantly, orderly adjustment to significant shocks the economy has seen and we it willgoing forward, be contingent on several items. How this could potentially affect the next Inflation Numbers and i think we need to be mindful that the u. S. Economy is going to accelerate its gdp the contrary is expected for the mexican economy. Judged by the board going forward. Michael some were you have used up most of your ammunition and with trump in office threatening things that would effect the mexican economy, do you have many tools left to fight that . I think the central bank always has tools of their disposal and i think we have been using those tools. Therderly adjustment in follow tilde t that we face in the market has been substantial. It is going to be very important for the real Exchange Rate and for the peso to have less uncertainty in terms of our trade outlook going forward. Precisely what is going to be taking place in the next month and we want to ensure that until that information is fully determined that the price formation in the economy gets done in an orderly way. Moves inthe dramatic the Trump Administration are affected reflected in the value of the peso. Whats your view of currency market intervention . I would say making a guess about the over valuation or undervaluation, it is always hard. I think the market has been to a large extent a liquid market. We believe in terms of intervention the Exchange Rate commission is chaired by the minister of finance and central bank is the authority and terms of Exchange Rate decisions. The goal has been to foster liquidity in the market and only where thenstances market is in a significant way prone to rapid and sudden movements in the Exchange Rate without almost any meaningful volume, it has been instances where there have been intervention. In tryingon is only to promote adequate liquidity and adequate price formation on the Exchange Rate. As you highlighted, theres a lot of uncertainty out there and there is still to be known in what is the future of the u. S. And mexico relation what are u. S. And mexico relations going to look like and what is nafta going to look like. Im sure the Exchange Rate would reach a level according with that outcome. Michael there is concern of a Credit Rating downgrade. . S that out of mexicos hands is most of whats happening in the mexican economy being driven by external factors . Guest as of today, the single most important factor of uncertainty is precisely that. Our trade relation with the u. S. And the future of nafta, i am they are is something gauging themselves. Michael is it your understanding of governor carson still plans to leave in july . There is some talk of him staying on through the rest of the year. As you can imagine, it is not my decision to make a concrete comment about that. I can tell you that it has been an enormous honor and privilege to be nominated by the president to be a member of the board. Im happy to be in the central bank. Michael would you like to had the central bank . If so, what direction would you take it . I dont want to go around that issue and highlighted. I am probably the least suitable to answer that directly. What i can tell you is that i am happy to be part of the board in theseere and try difficult and volatile times to make sure we have an orderly adjustment. Michael thank you for joining us today. Guest happy to be with you. Thank you. A great interview there. Michael mckee our International Foreign policy correspondent. Lets check in with the bloomberg first word news with taylor riggs in new york. Taylor latest greek bailout deal looks like it will be delayed for several months. In brussels, euro area finance ministers downplayed chances of a quick agreement that would unlock more loans. European creditors say they will not keep funding greece without the participation of the imf and the greek government refused more demand for austerity measures. In london, the house of lords are taking up theresa mays proposed law to trigger the brexit. Some are hoping to make changes that the opposition in the house of commons failed to secure. They want to vote on the deal that forced may to negotiate a deal with the eu if parliament doesnt like it. Vice president mike and says the European Union has nothing to worry about. Its commitment to the European Union is steadfast and enduring. The eu was hoping to hear after meetings. , on the United States unequivocally, let me repeat, unequivocal support for the idea of a united europe. Taylor in malaysia, north koreas ambassador is to announced the investigation into the killing of the north korean leader, calling the killing clinically motivated and demanded a joint investigation. He died after apparently being poisoned at the airport in kuala lumpur. Global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. Im taylor riggs. This is bloomberg. Mark coming up, navigating Political Risk ian bremmer, founder and president of Eurasia Group joins us live from berlin, next. This is bloomberg. Mark live from london, im mark artan, counting you down to the european close. U. S. Vice president mike pence gave his first speech on the world stage since taking office. He made a pledge speaking at the munich 30 conference. Mr. Pence on behalf of President Trump, i bring you this assurance the united its in america strongly supports nato and will be unwavering in our commitment to this transatlantic alliance. Joining us now is ian bremmer, founder and president of Eurasia Group. Can europe sleep better after the visit from the triumvirate of tillerson, pence and matus . They were the speeches the europeans wanted to hear, but as im sure you know, they are completely inconsistent with the things the actual president of the United States have been saying about Foreign Policy over the course of the past 30 days. Comforted some were but most, i think they understand they are in a wait and see mode and they dont like that one bit. They would love it if Tillerson Mattis and pence were the ones running the government. Mark what was your big takeaway . Ian that was one, in the sense that just like when you are at davos, you saw she jinping and it was a speech that sounded like it could have been given by an american president and then you realize its the chinese and theres they are still a state capitalist authoritarian regime. Same thing with mike pence. I was at the conference last year as well and it was similar from what i heard from john kerry and you could have heard it from obama. But you realize thats not what we are hearing from washington. There is that disconnect, but it is good the americans thought it was good to send a highlevel delegation, lots of members of congress were there. They were loud and they were trying to reassure the europeans that nato still matters. The russians, you can see the Foreign Policy literally changing over the course of the meeting as lots of people advising putin who had promised them when trump comes in that life is going to get better. Suddenly not so sure thats the case. Is last thing you want to be one of putin positive advisers having poorly advised putin that if you dont go ahead on sanctions against obama that everything is going to be fine when trump comes in. I saw a very skittish russian delegation and finally, the chinese are much more committed to the existing world order and europeans are being stuck in the middle. For the First Time Since 2008, was notary problem another country, it was back in washington. Mark it is president s day. I want you to grade trump on the bremmer success scale. Incomplete, not applicable, no comment. Clear the u. S. Markets youre focusing on 24 7 continue to respond very well to a Republican House and senate trump made possible and he is clearly pushing things like a clearly focusing on infrastructure, talking about getting taxes on corporations down. , on every other issue, if you are talking about Foreign Policy and the rest of the world, American Allies all over the world are not happy. Look at the australian call is that a country we want to be . Aking on are we just randomly picking a country out of a hat . There is clearly no plan behind it. Other nations around the world are unnerved by the fact you have an american president that is not only unpredictable but debt they dont think they can actually rely on. Netanyahu infrom israel. The mexicansom because no matter how upset they are, they have no choice. You go to europe and sitting here in berlin, the germans are completely unnerved by this new Trump Administration. I dont know how you can grade m when americas top ally allies feel that way. France, as the odds increase that Marine Le Pen will fearsan you give us your when it comes to a le pen presidency . Havebecause they wont control of parliament, you are certainly not going to get a french referendum. But it would be incredibly damaging in terms of leadership in europe. Almost overnight, it would make an eventual unwind of europe much more likely. Theirne in europe after concerns about trump, their number to concern for the foreseeable month will be the outcome of that french election. We will speak to you soon. Founder and president of the Eurasia Group. Front hearing that the National Headquarters have been rated. That is the french far right candidate party. The Party Spokesman has confirmed there has been a headquarters. The will bring you details as soon as we get them. This is bloomberg. Mark live from london, this is the european close. Six minutes until the end of the monday session. Time for the Bloomberg Business flash a look at some of the biggest business stories in the news right now. Lets get over to taylor riggs. Taylor ther saudis have pumped about 10 Million Barrels a day and production has been cut back. To reduce clutter by january 1. The head of the tsa is looking for the vauxhall brands. Psa makes peugeot. Promised to honor the existing labor contract and keep investing in its german factories for another three years. That is your Bloomberg Business flash. At wheree a look european equities are headed to day in 10 the ninth thats the run up by a quarter of 1 . Small gains for the ftse Given Unilever is such a decline are. 40 dax is higher, the cac barely changed. Have a look at the currency board as we approach the close. Stirling is up against the dollar, the euro, the pound in a sentence today and the close is four minutes away. This is bloomberg. Live from london, this is the european close. Stocks finishing up today, highest level earlier since december 20th, 2015. This theres only one big , 140 3 unilever billion was the price, sending shares up 13 , record move to a record high. To go hostile, wanted things to go smoothly, but that did not seem to be the case. Foods and less some wealth comes in. As of now, the today performance is 5 . Rbs, the big mover today. They say they will scrap the plans for its Consumer Banking division. Resolving some of the big issues that have weighed on the stock, rbs has reversed all those losses and is now higher than it was on the 23rd of june. Members big five player of the ftse have not risen. Lloyd banking group, the European Commission considering allowing rbs to keep them and set aside more money to enhance competition. This is a wonderful chart, brexit. At hbc since analysts will be buying more buybacks. Particularly in emerging markets like china, we are from Allen Higgins earlier and we heard from michael moore, our finance editor, telling us when it comes to hsbc buybacks and the outlook on china, it does feel like it has been competitive in the u. S. Bank of america. Sterling would probably be a where on hsbc stock. Lets check in on the bloomberg first word news with taylor riggs in new york. In france, authorities have rated the headquarters of Marine Le Pen as part of an investigation into whether she fake jobsge aids with the european parliament. She has denied the allegation. Some associates of President Trump are pushing their own peace plan for russia and the ukraine. That includes the president s personal lawyer to ukrainian lawmaker and someone who helped the president scout business deals in russia. Some say it is a outline for a plan to lift sanctions against russia. Is bracing for more bad news about the economy this week. A report is expected to show retail sales stress shrank for a record month in january. Way but itson the been expected to decelerate to a historical low this year. China is expected to build dozens more airports because of a boom in travel. More than 50 airports will be added, almost a 25 increase. Chinas state owned airlines have bought hundreds of planes in the last two years. Global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. Riggs. Lor this is bloomberg. Mark the house of lords has session torst discuss brexit. We are joined by stephen isaacs. You have a joke for us . Guest whats the connection between john mccain and miranda car . John mccain warned us about dictatorships arising and miranda kerr possibly friend is creating one. No Voting Rights at all. We have seen all sorts of weird and wonderful share structures, but to go whole hog on an ipo is aay nothing at all, it dictatorship. That is a poor advent for shareholder capitalism and is something investors should inc. About. You own a passive fun, you will own snapchat, it will go into the index, the major indexes, we will leave that one to my 40yearold daughter. Maybe the evaluation works. I dont know. I think this is a poor advert for the whole concept of passive investing. You have to buy whatever is served up and i would ask investors to think carefully. The argument has been about passive, the fees are so low and you have to own the index. Couple of things there is decompression everywhere, so most actively managed funds now, even the good performing once mark may the performances are not so good. Guest past performance is no guarantee. Past performance, we all know owning a passive index has been the best performing strategy forever. Where s a point mark do you feel we are at a Tipping Point . Guest one has to argue the market as well priced. But theres more egregious behavior coming in and taking the mickey. What does it mean when you have no shareholder control . You can do what google has done which is essentially run a hedge fund of audits with no oversight. It means with things like expenses and compensation for the executives, theres no control at all. Ask yourself is since this just fundamentally a big problem for the market . It is time to say active investors and managers can deliver good performance and i think they will deliver better performance in the future. He fees are competitive you can pick different strategies, you can pick value, energy, whatever you like. Its time that they step up to the plate. Mark lets talk politics. The french election, last year, you called brexit, you called trump. Its inevitable, were going to ask you to call the french election. Marine le pen is pulling, which we dont necessarily listen to because polling has always proved accurate, but it is improving. She is closing in on 50 . Victory a third leg of the stool . Guest i think we are some way from that, but we are getting closer and there are a couple of things driving that one. Hadt, external events, we watched in paris i think selectively throughout the country, it was not particularly well reported that was quite widespread. Now, we have the French Police turning up at the headquarters, which is fascinating. These sorts of things are narrowing the polls. Narrowing, i think le pen would find it very difficult to beat the genuine conservative who seemed to represent some actual change, more of a traditional conservative, churchbased agenda. It would have found difficult to position herself outside him. Then ishe does fade, think she has a bit more of a chance. Party. Oung and has a new its going to be two new parties fighting out. I dont think one can rule it events with two months to go will dictate it. If we get a major terrorist outrage, if we get more french writing or some other external factor, then she can win. Mark how do you think Financial Markets would react . They got through brexit, they got through trump, whos to say we would not see a similar reaction . Guest populism at the moment, you are assuming it is good news and the assumption is it leads to fiscal listening and that has and seemsn the u. K. To be happening in the u. S. But a national fun presidency would be a different animal. It would just break up the eu. Theres no two ways about it. Theres no compromise but the National Front is a former fascist local party and she is quite clear. Her gender is very radical indeed and the destruction of the euro, probably the ending of the eu the eu will end up as the holy roman empire, some sort of figurehead with rotating presidencies and ministers meeting. It will completely lose its anse and that would lead to huge amount of disruption and would be negative for markets. Mark still ahead, President Trump returns to Campaign Mode in florida over the weekend as his Vice President seeks to calm a Foreign Policy fears. How investors should react, that is next. This is bloomberg. Mark live from london, im mark barton and this is the european close. Lets look at the Bloomberg Business flash. Taylor boeing says it hopes to finalize deals in the coming months. Ar will buy the strike eagle. Spend tolastics was to build a plan in the state of louisiana and expand production lines in texas. U. S. Shale gas provides a cheaper alternative of Raw Materials for petrochemical production. Citigroup predicts that coppers comeback is only beginning. According to a new report, copper will probably rally toward 7,000 permit fun and go past eight thousand dollars before the end of the decade. Copper is often seen as a barometer of Global Economic growth. That is your Bloomberg Business flash. Over the weekend, President Trump held rallies in the state of florida and defended his controversial first month in office. Big issue for you is the fomc. The fomc, hes got quite a few positions to fill and maybe more to come. About the Supreme Court, forget about sanctions, forget about travel bands. Policy. Ters is monetary dan tarullo resigned last week. If you take the assumption of and accordinglen to for previous chairs that stood down from committee, then trump has five out of seven. He can completely recast this committee anyway he wants. The Worlds Largest central bank is in Donald Trumps hands. We need to make a production what does it mean . That one is difficult. Goingas an allegedly man to be wanting some yesmen who will keep Monetary Policy nice and soft and absorb this tsunami of federal deficit coming down the line . That is one possibility. Or is he going to take a Republican Party line that we need some sort of hard money to get the discount rate up, we need some creative destruction, which of those Donald Trumps are going to show up . I think it is more likely to be the latter. If you look at donald trump, forget about the twitter feed and look at the look at the appointments has made. Jeff sessions,e right across the board, they have been pretty mainstream or hardcore republicans. The Supreme Court nomination as well. This is a big problem for the market, that if you really do see a big change in Monetary Policy coming and its entirely in the president s hand, theres no way a Republican Congress would turn down those kinds of appointments, then we may have a very different world to come and mark how do we as investors prepare ourselves . The short term, we dont know when these announcements are going to be made, so we have a timing issue. And thatlly in place the market being 10 up from the election, i would be taking some profits but when the actual announcements come out, im leaning one way but im pointing out that its difficult to predict donald trump. If we get a very different fomc appointment, i think you will get a little time to react, but watch this space closely. Mark takes a money off the table, you are saying . Guest yes, a. M. Mark whats the market looking like to you . Frothy . Guest when you are in an incredible bull market, its difficult to say this is the top drawer line, pick a number because you just cant do that one. By virtually every valuation are very close to alltime highs p e ratios, the ratio between Treasury Bonds and dividend yields, everything is looking very stretched. It can go further, reflation trades, i would just caution the putsthat if donald trump dbase errs in charge of the fomc, all bets are off. Mark where would you put your cash . Guest i am Holding Short term dollar bonds. Again, what is going to happen to the dollar forget hard money coming to the fomc, and the dollar, which has been be quiet and has withstood the twitter feed and withstood the possible talking down by the big president ial and Political Risks in europe still to come. Im still pretty bullish. Dollar, shortterm cash, get some assurance in right now and be very nimble when we work out who is going to be on the fomc. Mark how does the dollar work with the trade deficit . Theres a lot of contradictory wants within trump economic policy. Deficitsago, trade were the biggest influence on currency movements. In the modern era, they have become almost irrelevant. The assumption is theres enough freeflowing capital around that foreignexchange float is so enormous that the yield difference is what drives markets. What does trump want to achieve on trade is your question. To see betterts trade terms with china or mexico and paradoxically, hes looking to reach out to some countries he sees could give the appearance he is not antifree trade, like the u. K. He wants to do a deal at the u. K. Because it takes away the assumption hes a blanket protectionist, but secretly, he is a protectionist and wants to hurt mexico and china. Coming up, john wick chapter two starring kiana criticals released to acclaim and Box Office Success. Were going to talk about the film and the actor what lessons can hollywood learn . This is bloomberg. You have no idea whats coming. Mark kyunghee reeves has a lesson for hollywood. He has a great movie and he is fantastic in it. Hits in the sweet spot of hollywood right now. The industry is split between blockbusters and art house films. With the blockbusters come the strategy has always been spend big, risk equals reward and you will get big returns. An that is no longer infallible strategy. Weve seen some huge flops, so the risk is huge. Fores a real sweet spot film its not super expensive but is still well done and distributed widely and makes good returns. Of necessarily billions dollars, but for the money its paid for, it is a good return on investment and thats what we see here with john wick chapter two. Its not an expensive product, but its beautiful, fans limit, critics love it and its doing well at the box office. Is it down to keanu reeves or has he just landed on the perfect vehicle . A little of both. Hes great in this film and hes an aging action hero in real life and in this film, hes an aging assassin, and it works. He is really good, but he probably would not have been cast in this film if he was making the kinds of money he was making in the 90s and early 2000. Its an actor ready for this role, its really working well. Interesting case study because some of his films have made a lot of money. The matrix sequels, but they were critically panned. Hes sort of made money from good and bad films, but these two films, they are both acclaimed, so it takes you back to the 90s when he was making good movies and was making a lot of money as well. Iran a correlation on his Box Office Success in the critical reviews of his films. Its tough for most actors but with these films, hes hitting on all cylinders and the critics love them and they are making good money. They are not going to be the top of the box office, but they dont have to be. Is this the new franchise . Whether it is hunger games or wickence has john got legs . Guest we will see more of them for sure. I dont know if it would work for disney, but this is distributive by lions gate. They are smaller, more nimble and they can take a movie like this, put their marketing behind it and make it a hit. Theyve talked about it on their earnings calls and they have said we had hunger games and divergent and we have been looking for other properties that have this franchise potential and this is it, so we have seen the Second Chapter and im sure we will see three were for at least. Mark they picked it up quite late. Its on an obvious pick. Saw the first version 11 weeks before was supposed to go to theaters and they bought it at a good price. Theyve put some Marketing Muscle behind it and made it work and it was a smash hit not a smash hit, but it made a nice payday and then this one, and its first weekend has matched the box office of the seminal version, so they are off to the races and its a great win for them. Megan bill and Melinda Gates are tackling the Worlds Toughest issues. From poverty to world health and education, they are dedicated to improving the lives of those in who need it most. Mrs. Gates wed listen to those people, and empathize and put ourselves in their shoes. Megan in a conversation with Melinda Gates, we discussed the challenges facing the Gates Foundation when it comes to ending polio. Mrs. Gates we are trying to do very ambitious things. We are trying to eradicate this disease off the face of the planet. Megan and improving education globally. Mrs. Gates education is the key. That is what we know lifts families up. Megan she highlights the progress so far. Mrs. Gates the world is getting better
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