Describing the dollar as strong. And Easyjet Brexit turbulence. The Budget Airline says sterling will impact earnings by over 100 Million Pounds. It rose 20 since october in the shares keep climbing . Matt well, we are looking at futures that indicate we could see gains across europe this morning as the ftse futures are at about. 3 , cac futures up about. 2 , dax futures very little change after drops across the board yesterday. We see further pound weakness today, or should i say we see dollar strength. The dollar, after coming off a little bit off Steve Mnuchins comments, starting to gain back the strength that have lost. Guy absolutely, let the show you on the gmm. The british pound is the big loser. This is advance of the Supreme Court ruling, which comes through at 9 30. As matt says, more to do with whats happening with the dollar. They got hit a bit yesterday, and now beginning to come back. This morning it is down but it is starting to rise. The yen is down as well. The aussie dollar, frenc danish krone, all being driven by what happens in the Foreign Exchange market and the treasury market. That it is definitely a dollar story. That is the key theme at the moment. Lets get the first word news update with juliette saly. Juliette guy, thank you. Donald has pulled the u. S. From the Transpacific Partnership i executive order. By executive order. Contact with canada and mexico, but action is still in the works. The president also about a major border tax on companies that move jobs outside the u. S. , and said he would cut regulations by 75 . Treasury secretary nominee steve and excessively strong dollar could have a negative shortterm effect on the economy. The comments were obtained by Bloomberg News from answers he gave two u. S. Senators. Mnuchin is awaiting confirmation of the senate, which has yet to schedule a vote. The Senate Foreign Relations Committee approved Rex Tillersons nomination as secretary of state, clearing the way for the full senate to approve his most critical choice. They approved mike pompeo of kansas as cia director yesterday. Global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. This is bloomberg. Guy and matt. Matt all right, thanks very much. A major hurdle in theresa mays path to brexit comes up today in the form of the Supreme Court ruling on whether she has the authority to trigger article 50 by herself. The judgment could require the u. K. Prime minister to put the decision before parliament first. Anna edwards is outside the court right now. Anna, what will she do if she loses today . Anna good morning, matt. Im outside the Supreme Court. If she loses today, she will try and bring a short as possible, simple as possible piece of legislation to the houses of parliament to get its approval, the idea being keep it short, and that gives those who object to it and object to brexit less chance to attach amendments. That is where the power of Parliament Comes in, not necessarily to block or stop brexit, but to soften it or to slow it down. What kind of amendments are various parties in the house of commons might try to attached to this piece of legislation, that will be crucial in determining just how hard or soft a brexit the u. K. Ends up embarking on. Guy one of the critical things, in my mind, is whether or not the devolved administrations in the United Kingdom get some sort of a say in this process, because that could have an effect on thit. Anna absolutely. Its not entirely clear to what extent the justices are going to actually, in great detail, dictate the way in which parliament is consulted, or the way in which assemblies are to be involved. Could they give the devolved assemblies some sort of veto . That would be extreme, but not necessarily effective. It would result in a real constitutional crisis. That we might hear something about the soeoul, convention. That could be brought up in the conversation. And whats difficult for the government is that its not all that easy to find a good outcome when it comes to the scottish assembly, the scottish parliament, because if theresa may wins here, if she loses here, sorry, she has to ask edinburgh for their input. Even if she wins on this particular Supreme Court verdict, then it strengthens the snp plan for independence. Watching this particular aspect in how much the justices decide to way into this for a constitutional issue will be crucial. They certainly wont want to appear on the front page of the tabloid papers again, being called the enemies of the people. They will have to choose their words carefully. Guy they certainly are. Anna willy back throughout the morning. Plenty of coverage coming up from outside the Supreme Court, which if you know your geography, is just on the opposite side of parliament square. I want to show you a quick chart, which i think is probably instructive as to whether or not todays important from a market perspective. We know that the pound iswe kno. I would argue that the dollar story. This gives you an idea of where this skew is. This is the brexit speech, the volatility that was priced in around that speech that we were talking about. Since then the market has priced it out. Is the market looking for anything today . Tim crockford, Hermes Investment management, joins us now. He hopes oversee 28. 6 billion of assets under management. Lets talk about the currency. The speech was important. It set a tone, give us an idea of the negotiating parameters. Isnt this just process . Isnt this just what we have to go through . Yes, thats absolutely right. Its going to have a lot of bounds, and we will jump around in terms of sterling. The grand finale doesnt come until much further down the line, when we have a much clearer picture of what brexit is going to look like. Matt what do you expect brexit to look like . What do you expect todays outcome to be . I wish i could give you a comprehensive answer, but i think no one really knows, and i think the issue we have Going Forward is that this is not just a simple onesided or twosided situation. Its a very dynamic situation we have here. The British Government and theresa mays government has done as much as they can so far, at least to make sure that this is going to be a situation where they can get the best outcome they can. Of course part of that involves having conversations and being seen to have conversations with other countries such as, most u. S. Tantly, the but its a long road, as i said, and we are still at the very beginning of that road, u. S. So there will be a lot of uncertainty until at least two years. Matt tim, is it safe to say keeping in mind guys chart, which i think makes an excellent point we see these shortterm movements, the longer, its not even longerterm mediumterm, they always go back to where they were. Is it safe to say unless you are investing in the very short term, you arent going to be making decisions based on Something Like the Supreme Court today . Absolutely. Theres no point in making a decision when you dont know what you are basing it on. Certainly for the longterm, you are right. There is no point in trying to call it at this stage. I think in terms of the pound as well, it is very much a weight and see game. We have a range bound volatility, and i think right now we set the range. It depends very much on where the dollar goes and what trump and his a ministration are saying. Guy lets talk about what he is saying, and more particularly, what it means for the u. K. Right now. Clearly, he has a protectionist agenda. There is already evidence for that. Theresa may is saying exactly the opposite. The two are going to meet on friday. What is theresa may needing to get out of that meeting . What is the british economy need to get out of that meeting . I think, obviously he will want to go there and have reassurances that, is things dont go britains way in terms of negotiation with the eu, that she has a good plan b to present and secure an alternative route in terms of international trade. But again, i have to come back to what i am saying in terms she is not going to come away with the copper has a plan. Its very muchbut again, i haveg him out, getting a feel guy starting the process. Exactly. And opening to medication lines. Matt all right, tim, you will stay with us. Tim crockford. Coming up on the show, trump on trade. Speaking of starting the process, the u. S. President signed an executive order pulling the u. S. Out of the tpp, the Transpacific Partnership. Details next. Plus, Easyjet Brexit turbulence. Earnings affected by the weaker pound. We will talk about the carriers outlook. Turkey. E talked the central bank is likely to step up efforts to boost the lira. We will bring you details. This is bloomberg. Matt welcome back. As the European Market opens, President Trump struck a protectionist tone yesterday did to withdraw the u. S. From the Transpacific Partnership. We just officially terminated tpp. [applause] and just signed a document, a very powerful document. Were going to have trade, but oneonone. If somebody misbehaves, we will send for guy President Trump. Meanwhile, the treasury secretary nominee says and excessively strong dollar could have a negative effect on the economy. This comes from answers he gave to u. S. Senators. Goldman sachss chief Economist Says he expects the greenback to strengthen from here. We do expect a strong dollar. Its mainly based on Interest Rate differentials for eurodollar. We expect parity by the end of the year. Our view on Monetary Policy is that the fed does need to normalize, and will normalize, whereas the ecb and the bank of japan can keep policy very easy for a long time to come. Guy lets bring in bloombergs mark strategist, tugmore. In some ways hes correct, but if you have donald trump and his treasury secretary, if he is confirmed, tried to talk the dollar down, that is a big deal. Yes, but its important to understand that his comments were misunderstood. He was saying that in response to a hypothetical question, and the question was if the border tax is imposed, people have said the dollar will rally by 25 . What will the impact of that be . Thatid a 25 rally, excessive strength that have shortterm negative effect. But that is not what we are seeing right now. If you look through his full set of questions and answers, he actually said he is encouraging a strong dollar. Our administrations follow a strong dollar policy, and i put back in air quotes, because of course they dont really follow a strong dollar policy. What is this a ministration really want from the dollar . Ever since ruben said he loved a strong dollar, and it was everyones favorite treasury secretary, it has become the thing to say. It is early mean anything. I think its important to note what jan from goldman sachs, in terms of the fact that it will have to normalize,. And that is true but is important he is saying that against the euro. It may rally against the euro and the yen, but it may not do well against other currencies, foruse that expectations rate hikes may not come as quickly as the market was hoping. Guy what do you think the feds read of Donald Trumps presidency thus far will be . He can use executive lines to be able executive orders to be able to change things, that he has yet to get into the full kind of negotiation with congress. What are the key clues we need to look for along those lines . Is a going to be the ability to raise the debt ceiling . What are they going to be, that will tell us that congress and the white house are working together . Well, and the things that is worrying the market at the moment, and why the dollar is falling, and why there is risk aversion, is that the policies we are seeing are the more negative ones, the trade protectionism. We are seeing very little talk about the fiscal stimulus that was the real focus point only a month ago. I think the thing that is most like it are some of the tax cuts. Less a focus on the extreme border taxes, and that may be part of it, but more the Corporate Tax cuts, to cut from the middle class, which he has promised. That wish of the government is working with the president for constructive policy, less of the trade protectionism. Guy thank you very much. You want to figure out exactly what his thinking is right now . You want to get his great analysis for whats going on . I have four letters for you analyzmliv, market live. A great blog to get yourself up to speed. Tim crockford, european equities Portfolio Manager from Hermes Investment. What is your outlook on the dollar . Well, a one of the things that mark said i agree with. There are 101 reasons to be long dollar. But what i do get nervous about is the fact that this seems to be an increasingly everyone seems to be piling onto the same side of the boat. Somee starting to see cracks come through in terms of the rhetoric from people like donald trump, and of course more recently mnuchin. It might start at some point this year, but theres a bit of a tugofwar between all those positive forces driving up the dollar and this rhetoric coming out of the administration, trying to dampen expectations. I agree with what mark said yes, they arent talking down the dollar, but essentially what they are trying to do is put a tap and put some of the fizz out. Guy does it make you want to buy european equities . [laughter] if you look at the relative valuation of europe versus the u. S. Equities, if you look at the relative valuation ofparticulary adjusted basis, even when you factor in things like the tax cuts we are going to get under very muchstill looking more expensive than europe is right now. In terms of europe, there is still Political Uncertainty on the horizon, but we are kind of getting used to that. I think that this type the fact that we have three or four major elections coming up, i think the opportunities in europe from evaluation point of view are increasing and we do definitely like europe. Matt tim, do you see anybody best set up to profit off the u. S. s turn away from free trade . If the u. S. No longer wants free trade deals with asia, does that mean the u. K. Or europe is in a better position to win deals . , well i dont know about europe, but i think certainly the u. K. Will be the first go to country in terms of trade deals. Is i dont think that trump going to start ripping up papers everywhere. Its about renegotiating more than turning away. Countries have gotten onto this, are approaching this delicately, but we will see more resolve as time goes by in terms of trades happening, but on renegotiated terms. So you like europe, you are worried about whats happening in the states, you are trying to figure out where the evaluation opportunities lie, and you are definitely leaning against the euro. That is not the consensual trade at the moment. How much probability would you assign europe doing something significant that makes the want to cautious on what is happening in europe, what is it going to take to get me invested . I have heard what you had to say about the dollar in the u. K. Im still not over the line. Give me over the line. First of all, im not worried about the u. S. In terms of the actual business outlook. Is a lot of optimism, and rightly so. But obviously, theres a price for everything, and when i compare the u. S. And europe, particularly largecap u. S. , is that valuations seem to be too out of whack. Within terms of europe, that broad brush of buying europe, of course typically what happens, when you have long periods of negative sentiment toward a particular region, you get all companies being tarnished. If you start looking amongst the European Companies that are there, you can pick out from a bottom up approach, you can pick out the winners, which are still trading at attractive valuations compared to their peers. Matt can you look at centralbank policy and say may be draghi is the most dovish, and that will support european equities more than you will see the bank of england with the fed supporting equities in each of their respective countries . Guest said the European Central bank has a scorchedearth policy when it comes to Monetary Policy. Yeah. I think thats correct. Certainly with the ecb, for the time being, we have their support. But this is not the reason why i would recommend europe over largecap u. S. It is more to do a simple valuation. As the year goes on we will see increasing pressure from particularly germany for the ecb to start drawing to a close. As i said, in terms of the u. S. , although we know whats coming from the fed, we know that rate hikes are on the horizon. I think we will start seeing some of that hawkishness tempered, possibly by what the ministry she has to say. In terms of the spread between the two, its now not so much about what Central Banks are doing, its just about good old fundamentals. Guy lets talk about the stocks we need to watch. One of them is easyjet. The stock had a really decent rally i turn you to my anr and talk about the price. I want to send this to a oneyear. This is the price. Since october, and it doesnt look like much, this stock was up over 20 , and is now trading above where analysts thought on their 12 month price target. The story is significant, and it is certainly hurting the stock. We have seen it likely to be at 105. Nevertheless, maybe we overdid it on the downside. Maybe the market is gaining altitude. Really topline beat be enough to boost it . Earningsalso had sap out this morning. If you take a look at sap, you can see that stock lets take a look at the indication for sap. That is that we see revenue and forecasts being raised, so you should see the stock rising after its up 14 year to date. Its really an incredible story with Bill Mcdermott at the helm and how they are able to continue raising revenue and a slowing Global Growth environment. Coming up, it is the market open. Futures pointing higher. The openness next. This is bloomberg. Guy this is the european open. Im here in london. Matt miller in berlin. Moments away from the start of trading tuesday morning. brexit get its day in court. We get a ruling shortly on whether the Prime Minister needs parliamentary approval before she triggers article 50. It is a loss for the government already priced in . The greenback bounces back despite steve mentioned describing the dollar is very strong. Easyjet frexit turbulence, the Airlines Says the sterling weakness may impact pretax earnings by over 100 Million Pounds after rising over 20 since october. Canada shares continue to climb . Can the shares continue to climb . Guy the french pmi numbers have come through stronger than anticipated. 53 points nine is the number we have got. Lets go to the market to show you what is happening with the open. A mildly positive start, london market is already at. 3 . 71. 73. Similar lines this morning. Cranny with the details. Manus the lafrentz. La france. Dollar getting squashed on those comments by admonition that you and matt were talking about. Look at the swiss franc and the aussie dollar, we are just dolling just jumping off of those blows. Far right hand side you see commodity compacts are dead. Oil is up in terms of compliance. Goldman sachs talks very specifically about an upturn on global activity. The impact of chinas stimulus through the first half. A physical object across the globe. What is need for Global Growth for protectionism . Is the end of capitalism . That is the question on daybreak. Parliamentarians get more of a say. Is it due to the great brexit debate, does it make a hard brexit . Lowest ever since the 1980s on the pounds. Bob said youre still going to see a slight probability of a higher pound in the very nearterm versus the people who are saying we are nowhere near pricing it. Heres a lovely one in terms of a longterm chart. This is eurosterling. There is your crash on the far left. Again, the market is trying to reconcile. What if the part of get more involved . Come and join me, in the meantime you have stocks to watch. Ive just come from radio. Even more fun than that the stocks are moving this morning. We are waiting for easyjet and bt group to shift but philips is certainly moving in line with the analysts and we are down almost 4 here. Estimatester profit met. 3 in theth rose Fourth Quarter and the company is expecting sales growth in coming years. There is some negatives in there frome market is taking this seeing the stock lower. ,asyjet Sales Beat Estimates fiscal firstquarter sales. Revenue per seat, a measure affairs fellow less than expected. This was found to resilient demand to the holiday. The ceo didnt say the operating environment remained challenging. These shares have been called lower, down 6 . Tripled ay more than right down at its italian unit. Pounds after more faulty accounting and inappropriate behavior then become the first identified. I apologize we are not seeing these move but we are expecting decent moves on that when they finally ships. Guy blame the market makers. S. A. P. , one of those we should be watching as well. Shares a little bit under pressure this morning. Down. 8 . Is that a place you want to put your money right now . Find out. Reporter this is a collection of general commonhe themes in the european attack is because it is European Tech and not u. S. Tech you have an opportunity to pick up Great Companies that are actually trading that are not reflective of their growth potential. That has been dampened by the european discount, if you like. Exposed to themes that will play out regardless of what happens with brexit or what happens with macro. Longterm structural themes, if you like. Generally speaking, we see it is opportunity to pick up some of these names at a great valuations. Guy s. A. P. Happens to be based in europe. It is the Market Leader in its space. Are there other Tech Companies that have the same kind of massive global footprint to tim a Great Company and a great story as well. I think it is a fantastic story and a fantastic company. Once that typically get more what my favorites is a difficult dialog semiconductor. A much Smaller Company van s. A. P. Exposure to the iphone a cycle. Particularly the iphone eight coming up later this year. Also trying to, bigger picture, diversify away from the apple business and brought in their revenue base brought in broaden their revenue base. Smaller European Tech companies have been lost in the wash. Guy bc has open as well. It is down by 16. 69 . I want to see if i can get a g. I. The up on generally this morning. Its stock is absolutely rocketing. Where do you sit on european financials . We are seeing, obviously, the banks being affected by a number of things. The Italian Insurance Company trading by 12 this morning. Little bit ofve a background. According to the republic up, the italian newspaper. ,n all stock offer for generali they did not initially sel a limited price. The stock is punching higher this morning as well. To a bigger this theme, consolidation within the european sector. Much talk, little action. Are we starting to see the action . Imagine possibly there will be a flurry of deal making. We dont have the balance sheets. This was in terms of really attractive businesses to pick up out there. This is interesting particularly because it is good quality, it also comes at an interesting time in terms of where we are in it yield curve. Going back to the sector as a whole we have seen a rally in financials driven by the steepening of the yield curve. The sector still needs to recover and that needs to happen from earnings growth. That needs to happen from alone a growth. We are still waiting in terms of the banks to see good growth loans across the region. If you check out ma go, you can arrange a number of different things. Looking at the western european deals, here in a yellow you see the volume is erratic. In a red ecb deal account. As goes back to 2012, steadily climbing. While you may not see a huge influx, you do see a slow growth of deals. It will be interesting to see the what a number whats best number looks like in 2017. Tim crawford will stay with us. We will talk easyjet in the first quarter. The week pounds will not a chunk off the first year earnings. We check in on the airline it next. Rate, not onesh but three hikes from turkish banks. With president erdogan calling for lower rates, willow bay have a big fight on their desk willow bay have a big fight on their bigs will they have a fight on their hands. Theresa mays big call from the Supreme Court, we will see if it is priced in. This is bloombeg. Guy welcome back to the European Market open. 12 minutes into trade, as far as the big indexes go you do not see a lot of movement. The ftse looks unchanged. You see slight green arrows in germany and paris. For themay be waiting Supreme Court ruling on theresa mays triggering of article 50. Doesnt she have devoted before parliament before she makes the decision and triggers that, leading the u. K. To a possible hard brexit . People may be sitting on the hype lines sidelines. There are interesting and big movers. Im going to take a leaf out of your book and do the mov. I had the other one ready to go but actually this is probably more interesting rights now. Lets run through what is happening. Generally is adding on the upside significantly on the index. We will try to get an analysis but it is some of the Oil Companies and the banks providing index points upside momentum for the market this morning. By 3. 5 . Wnside, down philips is trading well as well. More specific stories related to today. If you change your bank percentage point, a similar theme on the upside. Easyjet, one of those stories. Down by 7 . One of the big losers in terms of Percentage Points relative to where the market is right now. Lets talk about the news coming out of china. We have some breaking. The pboc iss conducting operations at 3. 1 versus 3 previously, injecting 245 billion it you wanted yuan liquidity. They are entering into the Lunar New Year holiday and because of that seems very worried about bank cash liquidity issues. We had news last week and more today. It looks like the pboc is doing every thing it can to keep cash in the hands of its consumers. Guy the biggest human migration. Amazing some of the numbers that is happening around the Lunar New Year. Easyjet revenues did ok but effectively what we got here is a warning on fuel. A warning on sterling. What do we make of this . Know sterling was not looking promising. With the airlines obviously most of their fuel and currency is hedged. Only so much of that is so. Percentically the other that is really causing them the nightmare this morning. Guy i hope i can get this to work. What happened with easyjet . A really big hit the run of the brexit vote. Rallying since then. Plus the moving averages. Did the market over do it initially . Are we starting to get some of the worst fears confirmed . Compare and contrast where the market has been going in terms of direction with easyjet. Benjamin it contrasts to the other airlines. If you look at the original drop a lot you can see that it continues to decline into october. The recovery we have seen has not brought as back up the odd levels well where we were. Issues we are seeing is two things. Not threats related at the end of the day. Mainly related to demand issues and the issues easyjet has structurally, in terms of higher costbased than its competitors such as ryanair. Pressure coming from the top. Movement from ig, trying to get into that market. It is really difficult position that easyjet is in. What we saw is on top of it again. Toare now expecting profits fall again this year. Last year they fell almost 30 . This year we will see them climbing from 500 million down to 210 million. We will see what it does after the update. Guy when you look in your analysis at a company on the bloomberg, im using the screen here. What you think is the most important in the kind of situations that easyjet finds itself in . You click on the little graph theyou can check out progression. The lastf evened out few years, one billion. What do you look at . What is key . One area is the cost base. This will be key because this will be the main area where airlines compete. Are seeing across this industry a huge increase in capacity. Baseu have a lower cost like ryanair, it has a lot of exposure at home in gatwick. A primary airport. Therefore it makes it harder to manage it. That is the line i will be watching Going Forward. Certainly one area which could surprise on the wrong side. Guy a couple of quick questions, interesting on the government. A are consolidating into one terminal which could make life easier on a cost basis. It will be fascinating to see what effect that has. They do to this business right now to get it back on track versus its peers . It is a squeezed middle in terms of what is happening within the airline sector. If you cant do it, what happens next . Benjamin a good question. One that analysts are struggling with at the moment. I think at the moment we are seeing them committed to an operational review. To the extent that it has been a vague. Hopefully that will reduce produce cost savings. Whether they can weather this fuel environment. Out of the middle east they the ones that have been propping up the lossmaking terriers carriers guy a report out of italy, sources say that is complete nonsense. Interesting to see at what stage easyjet can recover when fuel prices started lifting. Unprofitable carriers actually started to move capacity. Benjamin it is still an Investment Case but the next couple of years when oil starts to increase we will know where they fair. Guy great to get your take on that. Tim called crawford will stay with us for memories. Proceed with caution, how should the electoral agenda in 2017 shape your Investment Strategy . Next at the brandenburg gate. This is bloombeg. Guy l matt tim crawford from Hermes Investment management taking a look at the european political scene. Paperlding the most red in germany. Widely readost papers in the world as far as actual circulation. There is an article on donald trump and his cabinet. Talking about Steven Mnuchin and the dollar. Is this going to be the most important issue for the shortterm or do you think that relations with europe will be more important as we see Elections Come up in 2017 . Guy in the very short term starting off in march with the netherlands and quickly after that we have the french elections. As we move into the European Election cycle that will be more of a driver you of course shortterm volatility. Earnings at the end of the day will win out but in the short term as we get to the end of the year, there could be volatility. Matt if we get to parity is that a screaming by four european equities . Are you concerned that there will be limitation of trade when bmw puts together its , will they getf7 turbochargers from germany without high prices for that . Thanos i met a bunch of German Companies last week and i think corporate and their management in europe are very much in it wait and see. I think as ive said before, in terms of nafta this is something they want to renegotiate not rip up. I dont think it will be doors , it is wait and to see what the actual numbers are. I think trade will happen in the meantime certainly. We will see when we get concrete numbers of the u. S. Administration. Guy thank you very much. Bp is down hard this morning. Easyjet down hard. Generali stock is bouncing around. More about what is happening in the u. K. On the Supreme Court ruling. Us breaking news, german Managers Index coming far below matt the analyst and economists that we surveyed expectations. Youre looking for a reading of 55. 3, and expansion over the level of 50. We get an expansion of 54. 7, far below the Bloomberg Survey and the 55. 2 reading of the previous month. That is the composite for germany, the market pmi for germany. Much weaker came in than anticipated at 53. 2. We were looking for 54. 5. Manufacturing pmi came in stronger than estimated at 56. 5. Better than expected or anticipated in manufacturing. Guy han expected guy lets talk about the mining sector. Rio tinto decided it would walkway from energy sources. We have had a confirmation rio is going to sell its portion to him for tag. Illion is the price a little billion is the price tag. It will be in line for royalties as well. 1. 95 cass pavement as a result. Get out of its in australia. Starting with generali, a little bit of background. There were reports that allianz was a possible inquire require are seeing this as a possible defense move amid that speculation. Italys biggest insurer may be required. We are seeing up 8. 6 at the moment but the stock did rise the most since 2010. Another massive move we are group, theith bt biggest drop since 2008. Down 17 at the moment. This after they more than tripled the size of a italian unit and said that weakness in the u. K. And International Corporate markets would hurt results this year and next. Im looking at sap. Not a move but we have interesting numbers. The company raising its target for 2020 results. The latest suite of applications at a faster pace and we spoke exclusively to sap ceo this morning who had this to say. Our business in it u. K. Is actually up postbrexit more than it was before the brexit announcement. We tend to grow faster in times of change because you need digital to manage through disruption. He was also pretty positive on the u. S. Guy thank you very much indeed. Lets go back to the politics in the judiciary. May int day for theresa the Supreme Court. 11 judges decide whether she has the authority to trigger article 50 and leave the eu without parliamentary approval. Anna edwards outside the court. Outside the Supreme Court in london, lets get legal expertise. Forlegal correspondent bloomberg, patrick morning. 9 30 we get the verdict handed down. What we expected to hear . Patrick you expect quite a short readout which will be televised. People will be watching around the world. You expect a quick summary, firstly saying he rules a certain way and a summary on whether it needs to be legislation or not. Anna you were looking the data on the number of times the Supreme Court of goolsbee outrules. Patrick it is about 50 percent. At sounds like ministers have been doing a little bit of expectation management. Anna one of the suspects questions is whether or not able way in is that is something we can expect him to talk about or that something they will try to avoid . Patrick is not clear how much they will go into that. He british judiciary unlike the American Spring court they a load to get involved loathe involved in politics. Scotland and ireland were in favor of remaining. Anna the last of the legal challenges . Patrick no it isnt. Didsays the brexit vote not cover, theresa may said she intended to pull out of that to get what we needed. 50o the question of article itself and whether it is reversible. In that case we could reverse it. The that could go to European Court of justice. Some irony in that. Manus thanks very much matt with us now on the phone from brussels is the director of the center for european policy study. Off, what you first do you want to hear from the Supreme Court in britain . Daniel they need to know who thethe authority to start process. Is it government alone or a vote . Governments how works. This is how a country with a functioning legal system and the rule of law does its business. This was to be expected wasnt it . This is not something that will change the overall sense of direction of what is happening . Just process. Am i wrong . Says asometimes process lot about the politics behind it. Why did the government not say immediately parlance would be involved . Everybody would be assuming that for such a position a parliamentary vote is necessary. It tells us a little bit about how the u. K. Works and how it will behave during the brexit negotiations. Guy what do you expect the next big events to be . May todayeresa with the court case. It yesterday she was dealing with industrial policy for the u. K. Friday she meets donald trump. Are any of these events significant on the road . Well, particularly in friday, how will your you the meeting . Itll be important to see whether theresa may will do what she promised, to say that it is in british and u. S. Interests to have a strong European Union. I think that will influence the atmosphere and make the other european leaders more inclined to say ok, the u. K. Is leaving but lets give them a good deal because theyre not badmouthing the eu. Theyre recognizing the European Union is valuable. Manus matt figures he did not want to go on the record with this opinion, behindthescenes we were saying the eu does not want theres a lotat of clearing going on in other countries, in other currencies they will leave that alone. Are the banks in london safe . Daniel no they will try to get the clearing in a euro as close as possible to frankfurt. That is really a piece of the internal stability architecture and those Central Banks would like to see all or most of its domestic currency done somewhere else. Some might remain in london but i think it will shift sooner or later to the eurozone. That does not matter that much. Very few drops attached to that. But themputer programs content is very low. Interesting to get your thoughts. What he of european had to say about how the you pay uk in the eu is good thing and it could win them brownie points. Next, Turkey Central Bank is expected to lift this is bloombeg. Manus\ welcom matt youre looking at a live shot of london. It is looking surprisingly colorful and not great, although im sure it is cold. Business flash right now, we go to sebastian. Bastian a profound moral faulty accounting and inappropriate behavior from the company in first identified. The increase from 145 Million Pounds. By about 120uce Million Pounds. The ceo says the firm will take and shares of lunch. Andjet beats estimate pretax profit fell 28 . The rebound inflated foreigncurrency expenses and attacks across europe due to demand. This is the plan to lift capacity as much as 9 this fiscal year. One than doubled semiconductor sales. After the notess 7 debacle. They will also buy back 8 billion worth of the own share which will be canceled you that is your business flash. Turkey central bank is likely to step up to prop up the lira. Raising rates after a series of extraordinary measures to tighten liquidity. President carter wants officials have called for lower rates. That has been hit as a result of a number of factors including the terrorist attacks and julys coup. Pted what is the market expecting . A rate hike inevitable . Abu the reason everybody thinks that is if you look at the cost of Central Bank Funding for turkish banks at the moment it is actually already surged above the official Interest Rate corridor. That is after the Turkish Central Bank introduced all these really unconventional measures to tighten liquidity and try to prop up the lira without officially raising borrowing rates. Ok. Lets pick up there. We are having communication errors with tracy alloway. We will gettion is, a rate rise. That is what is priced in but is it going to be big enough . the range is enormous from 0150 basis points. Do whatat be enough to the central bank would like to happen . Also, what kind of fight does this set up with strongmen an president erdogan. He is allotted more power since the two. If he does not want them to raise rates, how far can they go anyway . Guy i wonder whether as well if we are in a situation where he is saying something that is behindthescenes giving the central bank the room to maneuver. There is some evidence of that in communications we have had coming through. Were going to get a lot of Coverage Later on on bloomberg. Lets talk about the Italian Financial sector. It is getting interesting. Reviewing all the options that it has for a share bid for generali. According to reports in the ublic, part of the basic there is expectation that generally is buying shares in intesa four defensive purposes. Lets figure out exactly what is happening. Lets talk to dan leaf green. What is going on . Daniel good morning. Insurer, the biggest appears to be in play basically. A bright movie yesterday. They disclosed they had a 3 holding in italys largest bank. Presumably a defensive move in the sense that italys cross shareholding rules would prevent intesa from building a stake more than 3 in the insurance company. The only way to get around that rule is if they launch a fullblown it did for 60 of the company. That reports this morning there could be a joint bid alland alley ends ianz. Regulators would closely examine any deal such as that. Why theycan understand would want generally. I would under white i would wantstand why axa would generally. They . Uld the thinking as they would be more interested in the Asset Management is this. As it managers such as the generality have a very good year in 2016 or still growing. Banking intesa would be interested in having that additional mass of assets to add to their existing Fund Managing units. Way in terms of the generally share price is performed, is the market playing is this speculation or is the market refocusing on the way that it has not . Is largelyhink it speculation that has been brewing for a while. Oksana has been mentioned in the past. Axa. They are reducing cost, read rejige business their business. Guy as ever, thank you very much. We will see how this turns out. Thank you from joining us. Trump targets of trade. Assigning an executive order to withdraw from the tpp. This is bloombeg. Guy it is 3 00 in london. Smashed this morning, the shares are down the most since 2008 which tells you a lot. To 500 more than tripled Million Pounds. 40 accounting and inappropriate behavior. The company has first identified it started at eight, it has been ongoing. Some of the latest coming through quite significant. Says the authorities may need to consider the implications of this revelation that has come through. Some proper transactions in italy involved others. Unlikely there will be insurance for these italian costs. The different confidence in the longterm business conflicts. Bt says it is a reflection on why the auditors, i will dig around to figure out who they were. They failed to spot italys problems too soon, but the company is saying to comment on the auditors wrong. Stock is down nearly 19 . This certainly coming as a big surprise to the market. It doesnt sound as if this comes as a bit of a surprise to the Committee Management team as well. Manus th matt this will affect 120 pounds. They are currently in their Fourth Quarter in the march calendar. Affect nextoing to years earnings. Goppropriate behavior could read on the would know to 45 Million Pounds they are taking for the Fourth Quarter. That is the concern. This is the uncertainty that investors not do not like to see. The next numbers are on the 27th. Maybe we will be able to provide more details at that point. This investigation looks like it could have a very, very long tail. We will revisit the story through the morning as the seat more and get more analyst reaction to what is going on as well. Quick, before we wrap things up on the united states. A stronguchin says dollar could have a negative shortterm effect on the economy. The answers he gave two u. S. Senators. President trump speaking in a professional tone yesterday. Signing an executive order to transpacific the partnership. 20 more coverage coming up on what exactly is going on. Plenty more coverage coming on about what is going on with the u. K. Court today. Gina miller expected to arrive shortly as she continues her legal case against the government at the moment. More coverage coming up. Mass and i will wrap things up on the bloomberg television. Up next it is surveillance. Coming up but we will be live outside the Supreme Court when that decision comes out. Francine supreme decisions. Brexit gets its day in court with a ruling on triggers. This will delay theresa mays timetable for leaving the e. U. Currency concerns. The u. S. Treasury secretary nominee, Steven Mnuchin, says the dollar is very strong. Does the buck stop here . And trump donts the tpp dumps the tpp. And shares in a Telecom Giant plunge. This is bloomberg surveillance
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