The odds of a fed rake hike hovering around 90 . Is this the calm before the storm . Is the company the juggernaut that its evaluation suggestses that it is. Manus were less than half an hour to the european open. Check out the major stock equity indexes. Here you see down across the board like yesterdays trade, the cac was gaining slightly. The ftse was up just lightly yesterday and had a pretty good week looking like a 4. 5 gain for the italian index on the back of some recovery in the bank stocks. Take a look and bunds here. E are down but after yields. After the yield rallied up to 0. 32 yesterday so down to 0. 3. That is a level in the yield that came through yesterday morning and were back down to it now. There was some selling yesterday. A little bit of buying it looks like today. Over all were remaining in this range now, guy. Guy matt, lets walk around the g. M. , m. And talk about whats happening there. Asia. Aussie, singapore, the s p town. 6 . Lets back that off and talk a little bit about whats happening with the curnspism you can see it over here. Down here. And you have the hong kong dollar down. The euro is up. The japanese yen is trading higher as well. That is important to Pay Attention to. Lets move on and show you hats happening with the turkish lira. Turning out not to be a great day tr the turkish lira. The dollar trading higher. It has not been a good couple of weeks for the lira. The turkish story has been front and center. The fed raising rates. Big current account deficit. Not exactly the greatest combination. Lets get our first word updebt. Thank you. U. S. Attorney general Jeff Sessions has removed himself from investigations into russian influence in american politics. The move comes amid calls from democrats for him to resign over his conversations last year with the russian ambassador. President trump says he has total confidence in his attorney general while sessions said his discussions with the ambassador were not related to the election campaign. I never had meetings with russian operatives or russian intermediaries about the Trump Campaign and the idea that i was part of a continuing exchange of information during the campaign between trump surrogates and intermovie immediatiaries for the russian government is totally false. U. S. Vice president mike pence regularly used personal email to conduct public business while serving as governor of indiana and his account was compromised last year by hackers according to the Indianapolis Star which said he communicated with top state advisors through the a. O. L. Account. He criticized Hillary Clinton for using her perge email to do business as secretary of state. Some hope that price gains may begin edging toward the b. O. J. s 2 target. Inflation is at the heart of japans economic resurvival efforts with hopes of a turnaround pinned on higher obal prices and a weaker yen. This is bloomberg. Matt . Matt juliette, thanks very much. Janet yellen will speak at 6 00 p. M. G. M. T. In chicago. Giving the fed chair an opportunity to cement or walk back expectations for a rate increase this month. Joining us now is bloombergs macro strategist. Do you believe yellen is going to confirm . Does she have to confirm a large hike tonight . I dont think she has to, but certainly if she is to try to fight back against the guidance given by her peers earlier this week would cause a lot of confusion in the market and give a negative signal. I think she is likely to implicitly confirm one. She will be relatively vague but consistent on the message that the economy is ready for a hike soon. Guy why has the curve flattened out in the u. S. . This is strange. Tell me whats going on. In 2017, the curve has flattened out a bit. It is a bit of a negative signal for the u. S. Economy and policy. Ere getting the flattening. What this is saying is that you know what . Were not sure were going to get a sustained cycle or sure the economy will cope withan a sustained cycle. We might get a couple of hikes. The fab fact that the curve is flattening is a slightly more negative signal about the u. S. Economy. People are not as bullish as hey were two months ago. Guy the Communications Job she has to do is probably less to do with what happens in march than what happens further down year. How does she manage that story and how does she not go too far . Thats a great question. Actually i saw someone in the market today that made the observation that it is like threading a needle to basically guide the market towards a rate hike now and say were not goin it is starting to price in a june hike. That is talking about a real rate hike cycle. December, maup, june. That is a whole different role. T is going to be hard today to toe that line of not being overly hawkish. It is a tough message to give today and they are risks to kind of equities, etc. , to the downside if she messes up that delivery. Matt mark, thanks so much for joining us this morn. You can follow live Market Insights on the bloomberg and live go. It is something guy and i look at every morning and probably every night and every afternoon as well. Now were going to bring you full coverage of Janet Yellens speech at 6 00 p. M. U. K. Time. Incidentally, you can get to ny go. Tylego gets you a bigger universe of the coverage we have of the most Important News events. Guy . Guy busy day. It is starting out quiet but it is going to get busy. Apparently france is being pillaged by the Global Economic order and must learn from what is going on in washington, beijing and london. Thats what french president ial account Marine Le Pen told supporters last night in paris. This is a moment to put an end to the borderless economy. Just look at the world. Everywhere from donnel trumps china to theresa mays britain, the economic patriotism is wing. Look at the tens of thousands of jobs repatriated. In the u. S. Companies are relocating. We are done with the illusions of free trade and naive globalism. Guy many have said they can no longer support Francois Fillon who is charged with embezzlement. You have the legal battles with fillon. How is that feeding back into the macro cap . How is that feeding into le pen . Again, what they are saying, how does that fade back into the republican story . Technically, the legal battles are having a big impact on Francois Fillon. Since the first investigation started at the end of january. It is having virtually no impact on Marine Le Pen because her supporters, her base already feels persecuted by the system. So they already feel that the judges are trying to attack their candidate and of course oosting the chances of macomb. If you look at the latest pole we had this morning, le pen is stable at 27 . And macomb is at 24 . In the runoff, this is from yesterday, we have a more recent number exactly. Le pen is still leading. Fillon is below 20 . Also Francois Fillon is not benefiting from some of the electorate of sarkozy, the former french president. A big portion of sarkozys base has gone to ma home or le pen. Youre seeing all of thisexodus of lawmakers, republican lawmakers who used to support fillon who have now decided to resign. Now you have the campaign treasurer. Everybody is calling for to come back. Anything could happen. Matt he said he doesnt want to be the runnerup here. Do you think he will step in, if needed . He would probably only on one condition. If Francois Hollande agrees. Basically he doesnt want to put the party, the process of Francois Fillons nomination, the republican primaries that were held in november and he came in second. He has repeatedly said he doesnt want to be a backup plan. But that could change of course to rancois fillon asked him replace him. Guy thank you very much indeed. The beautiful paris. Up next, key economic targets. What can we expects from the National Peoples congress. Beijing. E from he Company Reports earnings. And snapchat. Will the game disappear just like it photos . Matt welcome back to European Market open. We want to get to the business flash now. Juliette . Juliette thanks. Evan speigel and bobby murphy have each added 1. 6 billion to their fortune. 44 above their listing price. Other winners, benchmark capital. Stakes rose 904 million and 613 million respectively. P. S. A. Group is said to be closing in on a deal to buy General Motors opel unit. Both companies are planning to continue intense negotiations through the weekend with the aim of announcing a deal on monday. It would create europes second largest automaker. Pimcos new bond chief has hit an important milestone. His income fund has overtaken the fund that was run by bill gross, who left in 2014. According to data compiled by bloomberg and morning star, it is 75. 4 billion, larger than the Pimco Total Return Fund which was once the worlds largest. That is your Bloomberg Business flash. Guy . Guy thank you very much, juliette. Housands of lawmakers in beijing getting ready for the peoples congress. That starts sunday. The focus is on ping who wants no surprises. Tom mckenzie joins us now from beijing. Is the economy the top of the agenda here, tom . Tom it is, guy. And there is a debate that is going on amongst lawmakers here. Particularly around the question of just how much to rein in the credit that has done so much for the stabilization of the economy here and tackle the Financial Risks in the year that is ping cally crucial with and the congress. Were going to be looking at the g. D. P. Target on sunday when that is expected to be announced. Between 6 and 7 last year. This year it is expected to be owered somewhat. It may be increased matt it sounds like we have a pretty weak connection to you. Were going to try to work on that for our viewers. One of the questions, guy, that i wonder, does donald trump dominate Chinese Foreign policy discussions. Is it all about President Trump or are they going to the cuss r more what to focus on what they have to deal with domesticically . Have we got tom back . Guy i expect the best person to answer that is tom mckenzie. Lets go back to tom. Talk to us about how donald trump will or will not dominate Foreign Policy discussions at this meeting. Tom i dont think trump is going to dominate the debate here. The economy is front and center for policy makers and the internal and domestic politics. But thump is not far away. We know guy ok. Im going to jump in here and assume that we are not doing well on the communication front. Beijing is a long way away. Maybe that is something to do with the traffic behind him that is confusing the technology. You could make a good point on that. Matt, were minutes away from the market open. Up next, market coming in above expectations. The stocks to watch this morning. Look, were all waiting for what jan etc. Yellen says later on. The stock market has as much skin in this game as anything else. If she is too hawkish today as we were hear rg earlier on, you have a full rate hike cycle priced in, you would think that is not great for stocks. As get to about that the open. That is 10 minutes away. This is bloomberg. Guy welcome back. This is the market open. We are seven minutes away from the start of cash trading in europe. Ftse 100 looks like it is going to open a little soft this morning. London looks soft this morning as well. Lets talk about where we think the terminal is pointing. Lets talk about the fair value of where we are now. Yesterday fairly flat open. This morning, we think it is by. 3. Open down germany looks softer than most. Looks like germany is going to be down by. 5 . At the getgo of trade in a few minutes. Matt yeah, we saw the rollover in crash trade roll over into weakness in the u. S. Trade. I have a chart, 6454. You can check it out on your bloomberg there if you like. It shows the european cash trade here, the stoxx 600 kind of rolling over and then the s p 500 picking up the negative baton there. Another chart i like to look at a lot. This is 3186. A little bit further back in the library. This shows s p 1 move. Anything above or below this yellow dotted line. You can see we havent had an s p 500 drop of more than 1 since october of last year. It has been a long time. Yesterdays moves were down across the board in the u. S. People are going to be talking about that a lot today but it has been a long time since we have had a significant or at least a sized move down in the s p 500, guy. Guy matt, i have have a question for you. How much money have you spent since arriving in germany . This morning we have german retail sales and they were soft again. The market was expecting the retail sales number for january to pick up. We had a positive. 3 penciled in. We have minus. 8 and minus. 9. I thought the germans were feeling pretty good about life. Whats going on . Matt im a special case. I moved here. I had to pay a lot of extra fees that youll not have to if you lived here in a regular basis. Germans dont spend a lot of money. They are not given the opportunity to spend a lot of money. Shops are normally closed by the time normally people get out of work. They are closed on sunday like in the u. S. You cannot do that in germany. As a result, they dont have the big consumerist drive that the states and britain have. Guy that used to be my life walking up and down kings row spending money. Hat was a long, long time ago. Im curious to find out whether or not that that is based on that expansion is based on the trump trade. The w. P. P. Is talking about a fairly slow start to 2017 which is fairly interesting as well in ability to spend money. Lets talk a little bit about where we think this market is going to open. We think it will be soft. Paris and london down. 2 . Im curious to see what germany is opening more softly than that. We expect them to be down around. 5 . The market open is four minutes away. All of that coming up. A great show. Another great hour coming up. Well talk a lot about french politics as well. This is bloomberg. Guy welcome back. Lets talk about where these markets are going. Cash open a little softer this morning we think. Down by 3 10 of 1 for the ftse. The German Market looks a little more soft than that. Turkish lira under pressure but we are all waiting for janet yellen. Matt we are and that is going to be a very important to get for the euro dollar trade. I have a chart that i swiped off of and live. Us is the eurodollar chart over the last two months lets say two weeks and they have been pushing down against 105. Bears are hoping it helps them out on this trade but they are fighting against options expirys at 105 as well as support from euro, swiss franc buying. It will be interesting to see how much more weakness we get here in eurodollar as we head into the yellen speech tonight. Chart. At charge the market open is coming for now. Opening softer. Stocks being marked down, 73. 78. We are expecting the cap bronze softer as well. Down by 1 10 of 1 . Expecting more on the downside. 49. 57 is where we are trading. Dax is going to open even more softly than that. That is the purple line. Dax is just opening up there. See where it underperforms from here. That is the expectation. We will get you through the numbers, run you through the figures. Down half of 1 . Cranny, i know you like the euro chart but what else have you got . Take when other people things that you like you take it as a compliment. Are you losing velocity . That is what essentially happening with these markets. Every percent probability of a rate hike to 90 in five trading days. Equity markets are going one third of 1 down on financials. We saw weariness come through in financials on the market yesterday. That is the question for european stocks. Are we going to play catchup . Line and is a white s p 500 is your blue line. Question is this. Profits in ller europe are at the strongest level in two years. Europe is outperforming the United States on a profit basis for the first time in over a yearandahalf. Profits in europe are up 11 . Usa 5 . Gapyou close close the between the stoxx 600 and the s p 500 . Another gap you may want to have a look at is the u. S. And the u. K. 10 year divergence. Government bond yields in the blue, they are moving lower versus the United States which is moving higher. Ubs making the point that he thinks more quantitative easing into the latter part of this year into next year and the bank of england will be forced to issue more quantitive easing. Spreads are us. Die . I will pick up the idea of europe underperforming. Lets talk about where we are in sense of movements here on the European Market open this friday morning ahead of janet yellen. A couple of stocks to Pay Attention to. To, we talked to the boss very shortly. Stock up by 5 . The miners. Anglo softer, glencore is off as well. Wrangled is down. Point. How you the index it is the miners knocking off these this morning. That is where money is rotating out at the moment in terms of the equity market this friday morning. Lets talk politics. Matt yeah, by the way i am noticing sap as well as jamaal to helping. Into politics. Marine le pen reiterated her promise to take the country out of euro as part of a broader sweeping across the globe. The National Front leader made the speech last night in paris. This is a moment to put an end to the borderless economy. Look at the world. Everywhere from Donald Trumps china too india, from theresa mays britain, the economic patriotism is winning. Look at the tens of thousands of jobs repatriated and the u. S. Companies are relocating jobs in factories are being reopened. We are dumb with the illusions of free trade and naive globalism. With us, the Investment Committee member where he helps manage 53 billion euros of assets. Guy and i are thirsty for company news. We want to talk about business, but these political stories keep sucking us back in and taking up all of our time. Is that true for you as well . Know, what i think we see right now is between this tugofwar between economics and politics, probably economics is winning right now for politics in the market discounting the rates. Probably they are right to because Political Risk what we have seen over the past few months, whether in the u. S. Will thehat judiciary power can actually hinder the executive willingness. I guess making the parallel with whatwhen peoples people start to realize is that after the president ial election, there is a parliamentary election and that the road for the president to call a referendum on the euro ngings is actually quite goes for everybody as well. What you are telling us is whoever wins this in france is unlikely to be able to significantly change the economic trajectory of france question jean what i am saying is the president ial election is not the end game. After parliamentary election. That can be a strong mitigating factor with regards to any kind of direction the president wants to take. Either way, the two candidates, which are leaving in the poll right now with Marine Le Pen and most willmacron, struggle to build a majority in the parliament. We may see a situation where politics is all bark and no bike in the sense that the capacity agenda isradical restrained by the nature of the institutions and power of the parliament. What we have seen in the u. S. And u. K. Over the past month is clearly showing us that it is not as clearcut as what we would want to believe. Would describele the reflation trend to these populist politicians that are winning, but maybe it is happening despite these populist politicians winning because they dont seem to have executed on any of their points yet. Are you able to take it vantage that reflation undercurrent as we all worry about the political situation . Jean i think as an investor, we t to take advantage of our we have been positioning our portfolio. Cyclical upswing and some of the reflationary trade that we have been seeing in the markets for the past month. What we want to do is do it in a selected way. We know that not every Cyclical Company is poised to benefit from the current environment. To give you a clear case in point, in the u. S. , it seems that airlines have lost major position as a being more domestic. Also probably a lot less vulnerable to rising rates in the sector, which relies a lot on credit financing. It is all about capturing what is happening on the economic front. Being selected and not just trying to buy indiscriminately every stock or cyclical sector. , lets talk about what is happening with the performance of European Countries versus u. S. Countries companies. Which goess back a really long time. Out of that same story on my bloomberg this morning is this one. This is the outperformance. You have seen the underperformance, but this is the outperformance of european stocks versus u. S. Stocks. And it is always there, but when does the discount between europe and the u. S. Close question mark jean close . Jean we are close to it and it is time for europe to catch up and it is clear because we have more slack in the european economy potential to see earnings acceleration is greater. Not to to be careful over extrapolate the potential for catch up for europe because there are significant differences in terms of index breakdown between europe and the u. S. Particular, u. S. Definitely because europe is more geared towards industrial sector or exporter, manufacturers, those sectors are benefiting from the reflationary environment. Something investors have not fully factored is the reflationary trend and therefore to earnings momentum. We saw the results yesterday, one of our key holdings. What was very important was not so much the gross, which was in line, but the pricing was a lot stronger and led to a very strong uplift of the operating profit and earnings upgrade. I think this is where this is the story for europe right now and here is the opportunity in europe. Well i love the chart as and the idea that european earnings are catching up or overtaking u. S. Earnings, but how much does the currency move play a part in that and how important is that to your outlook . Dollar strength that is . Euro weakness. Jean we have a much more neutral view on the dollar euro with a view that ultimately, the market is already very bullish and very polarized on dollar strength. If anything, i would actually argue that there is catch a potential for the euro because of the more hawkish policy from the fed and the rate hike that we are expecting, whereas we have fewer markets which is very complacent with regards to the inflation outlook in the eurozone and the leeway that the ecb will or will not have to maintain such an aggressive Monetary Policy going forward. If anything, i would refrain aggressive an bullish view on the dollar right now. 105 level on eurodollar interesting in the way the bears will struggle on that one. A Committee Member at cardiac, you will stay with us. Ofittle later, an indication u. K. Economic resilience. The big Service Status number is coming through. We are going to talk about u. S. Stocks, receding slightly after a rally. Is it a pause or something more significant . Yellen is important in that factor. She starts significant signifying an aggressive cycle and the first day of trading, the company ways in. Intohe companys value revenue . That conversation to come. Is this this is bloomberg. We are seeing losses across the board as miners weigh on european indexes. Down three can someone percent, the dax off 4 10 of 1 . The cap kind of hanging in there. The cac wasnt the only gainer. Maybe france will end the week on a better note than england or german or. But ordinary change and get your market news. Tell, one of the biggest movers on the upside come over 5 . Full year operating profit and revenue were a beat. Some analysts positive about the 2017 Profit Guidance as well. The ceo spoke at a conference saying the company aims to expand in the u. S. And of course, who spoke exclusively speak with the ceo in about half an hour. The bpp, one of the worst performers on the downside, down seen as aalways bellwether for the global economy. The bpp talked about tepid growth. Relatively slow start to 2017 and budgets conservatively. Also seeing weaker comparative new business trends. Finally, isnt one of the biggest movers, but interesting. Exchange raging its fouryear dividends 20 . Investors reckoning with a deal. Those things offsetting each other in the share price move. The lse did comment on the deal. Guy thank you very much indeed. Service revenue makes up the main part of the uks gross domestic product. Still with us, Investment Committee member. There is an expectation that we are going to see a slowdown in the british economy. I am wondering how much of that is now consensus. As you sit in your office and watch what happens on the side of the english channel, what do you observe and is there a difference between what people who spend time in london and outside observers . Jean there is now a bit of consensus that there will be a slowdown of british consumption here by virtue of the discrepancy between the Inflation Numbers on one hand and the wage evolution on the other hand, last year consumption was the main driver of u. K. Economy and 20 billion in additional spending of consumers last year. Financed with credit. Sustainable forever. It is fair to assume there will be an element of slowdown, definitely because of the pickup at inflation, which is not matched by an acceleration of wages. Matt and yet you dont seem to sound so bearish on the longerterm outlook. Is that a correct read . Jean the longer term outlook is very uncertain because as you know, brexit will change shape a lot of these longterm outlooks and what we see this is that these process is taking longer than what people thought initially. Some nine months after the referendum and we are still struggling just to trigger article 50. This is back to what i said, which is policies right now are all about bark and no bite. What we see is that the actual Political Risk so far has not thereforey strong and isnt really shaping Market Expectations and corporate expectations. Ask you a question i asked yesterday. Im using the same chart. This is the question we were asking. Our gilts expensive . Here is the breakeven, 3. 1. Here is the u. K. Tenure tenure 10 year guilt. Gilts are expensive. Bunds are expensive. We have quantitative easing right now in the u k, back in august of last year. Yes, this is expensive. Forrtheless, and this is equity investors. If we have low Interest Rates in terms of long nonlow Interest Rates, we havent yet reached real Interest Rates. This kind of discrepancy between the nominal rates and inflation, actually there is some support for this discrepancy to stay where it is. Jean stays with us. Bankxt, the ceo of swiss would get rate hike investors out of the cash pile. Snape is an interesting indicator that there is a lot of money out there and people willing to invest. Or on that conversation next. This is bloomberg. Matt welcome back to the European Market open. I am matt miller in berlin, guy johnson in london. He expects the u. S. Federal reserves to raise rates between march and april. Speaking with has linda, he said it will let them deploy their cash. Increasing rates is a signal of strength and i think that is what we all need right now, especially wealthy clients. There is still a lot of cash on the sidelines waiting to be deployed and i think it could be one more stone in getting people back into action in the markets. Us, investmenth Committee Member at carmen yak. Cashu buy this theory that will going to the markets, make purchases, by risk assets . Definitely. The idea that we can raise rates ona signal that the comment inflation momentum is stronger so this is probably a positive new signal. But if we have two strong rate hikes, the equity market is vulnerable to Interest Rates. What is interesting is we have the probability of a hike this month. The number of hikes which are being priced for the next 12 months has remained pretty stable around 2. 5. What will be important for janet yellen is to give us indication of whether or not we are changing the timing of the hikes but not the pace or are we going to accelerate the pace of the rate hike. Should we have the latter, there is an element of vulnerability. She is more hawkish today and mirrors the comments we have been seeing over the last two days from some significant fed speakers. Done, tobacco away from march would be amazing. Two back away from march would be amazing. But do we go from pricing two hikes this year to four hikes this year . Back to equities, how important would be going from 2. 52 four be . I think this is a risk for the equity markets. The pace of the rate hike will be very important in the market. Obviously this will create some multiple compression if we have an aggressive pace of a rate , ifng and in front of that you accelerate the pace of the rate hike, it also means the inflation and the economic momentum is accelerating and that is why you support the idea to be active and be very selective in your exposure is what we will have in my view will be some companies that will deliver some outstanding earning flows and some which will struggle, in particularly ones who are sick sensitive to financing conditions. The name of the game for now the investors will be not to be market and engaging the because there will be headwinds. But to position yourself on the companies that will be at the fully capture this momentum to deliver strong Earnings Growth. What we have seen over the past few weeks is been indicated of that. This morning, you are looking at the results of companies today that when we have good results, we have good reaction. When we have poor results, we have poor reaction. Jean, we got to cut you off there. He will stay with us. This is bloomberg. Matt welcome back to the market open. France republicans jump ship. Politicians say they can no longer support france volume scandal. S but where will they go . All quiet on the fed front until janet yellen speaks tonight. Odds that a rate hike this month are hovering around 90 . Is this the calm before the storm . And snap pops, the social media 44 ,ny posts 40 poor but is the company the juggernaut its valuations say it is . Or are other companies not worth quite as much should be . Good morning, i am matt miller in berlin alongside guy johnson at the European Headquarters in london. At 20 times forward earnings, snap is worth a lot more than lotsnp isnt worth a more than the snp question mark my metrictric guy is where does facebook trade . And it trades in the tens, not in the 20s. Matt shouldnt Tech Companies trade at a higher multiple than the Broader Market . There are plenty of them that dont. There are plenty that dont. When you think about where amazon trades and the difference in the Business Models reflect back into that story. Its talk about where these markets are this morning and think less about instagram versus snapshot snapchat etc. We have a negative story in europe. The fed front is the big story. If you look at futures and the way bet investing goes around that story. People have made peace with what happens later. The equity market probably has a lot of skin in the game. Wehink that is something need to be paying attention to because if janet yellen is hawkish a little later on, equity markets are one of the areas you will see some pretty interesting moves. Lets talk about u. S. Stocks and where they go. U. S. Stocks declining the us and be and dow the doubt past the 21,000 line for the first time. I am waiting for matt to provide me with my 20,000 jacket. But we have moved on from there. Lets think about equity markets and how you invest in them and how overweight or underweight you need to be right now. What i got from your notes this morning was that while fixed nervouss making people at the moment, you cant ignore it. And while people may be getting us aeight equities give sense of how my portfolio structure needs to look at right like right now . And a reflationary economic acceleration environment weve got is supporting equity. But you need to be selective in the sense that certain sectors are delivering the kind of Earnings Growth which is priced by the market. ,e discussed the Political RiskPolitical Risk is still high on the agenda. Be quite resilient, avoiding structural stocks which can be vulnerable to political upheaval is important. In point,u a case when you look in the u. S. At the Retailing Sector right now or the spread between wg i, it looks like the market is more discounting that there wont be any kind of readjustment tax. That may be too harsh a call to make. I think this is all about portfolio construction. Markets, fixed income this environment of accelerating inflation and growth is a difficult environment for fist fixed Income Investor roles. I think in bund isar the idea, the considered a safe haven in europe and probably wrong replace wrongly so, i think it makes a lot of sense to capture the reduction of the spread between the bund and the u. S. Treasuries of the 10 year. You also have to be global and active because in the emerging world, we still have plenty of interesting opportunities. Rates, which have a high level of real Interest Rates but a positive momentum in economicbetter figures, particularly in terms of trade balance, trade surplus and current account matters and also such a stronger momentum in terms of lower inflation and easing cycle which is just starting. Matt i want to ask you to help us do our jobs here. Will bes ceo, we speaking with him in a moment. Is that one more company that should be focusing on u. S. Growth . Thehe u. S. Where opportunity lies for a Security Company like that . Jean for many european what is happening in the u. S. Is the driver of their growth prospects. Showing veryart good performance of not only gemalto but others. The story of those companies is not just driven by the european activities but what is happening in the u. S. What is interesting is the different environment is obviously helping to unlock the investment cycle of corporations and this is quite interesting. I cant help but make it thislel between the rules morning, which is a demonstration of the fact that ifsumers are little more we have tighter financing conditions, where is on the other hand we see we see a renewed element of bullishness and positive momentum for the investment cycle of corporations. It is real. Guy i just want to come back to this. You talked about this miss pricing of german bunds, the nt the safe is haven people think it is. This is why people are mispricing, because basically they think youll get this redenomination risk through and be safe. But you need to look at the other side of the ledger . Jean absolutely. If you really want to consider the bund as a safe haven, you cant help looking at this 800 billion credit of germany. Guy that is germany, that is the net claims and that is italy on the other end of the spectrum and that spread is too big. Jean if you want to hedge your eurozone integrity, probably you should look at the other side of the atlantic, the other side of the channel. Guy we will have to leave this here, but we are not dumb with him yet. On will join that and i radio. We will be carrying on the the conversation. Get tv and you get this screen here. Bloomberg radio, you can listen to matt and i. You can get some of the great conversations we are having. The breaking news and events we have coming up. You can also get some of the charts we have been using as well heard tv function and you can also i be the team. Let us know if we are doing a good job. By the way, guys. Our friend jon ferro starts a new fixed income show. U. S. Nd u. K. Time noon time. 5 00 u. K. Time. Up next, securing a beat after a strong set of results from chipmaker gemalto. We speak with the companys ceo next. Matt this is the European Market open. We want to get to the bloomberg first word news. We go to sebastian salek. Sebastian Jeff Sessions has removed investigations into american politics. Calls from democrats to resign over conversations last year with the russian ambassador. He hasnt trump says total confidence in the attorney general while sessions said discussions with be a massacre were not related to the campaign. With the ambassador were not related to the campaign. The idea that i was part of a continuing exchange of information during the campaign between trump surrogates and intermediaries for the russian government is totally false. Sebastian u. S. Vice president mike pence year regularly used personal gmail to conduct business while serving the government of indiana. That is according to the Indianapolis Star which said pence communicated with top state advisers through a private aol account. Hillary clinton was criticized for her use of personal servers while Court Secretary of state. Theresa may has accused the scottish Prime Minister of sacrificing Living Standards in scotland. She told bbc scotland she didnt think the people wanted a referendum. This comes as the Prime Minister prepared to discuss at the conference later. Global news global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Us is bloomberg. This is bloomberg. Guy lets talk about Tech Companies. ,emalto has reported numbers that beats on the top line and bottom line. The gross margin looks pretty touchy as well. This is according to 2015 numbers. It will project this will rise to around 520 million euros. The ceo is sitting by. The me run you through the function on your bloomberg this morning relating to gemalto. Holds, these are the buys. What is interesting is this is the 12 month price target which sits at 58. 53 for analysts. The prices at 62. 19. Theprices punching through price target and doing so in fairly spectacular fashion. The analysts look like they are behind the curve when it comes to what this company is delivering and what its ceo is achieve. To good morning to you sir, thank you for your time. The Analyst Community is behind the curve. Tell me why. Well, i think what is important for us as far as we have concluded 2016 is the fact that four out of our five through and we are favored on our 2016 object objective which was to deliver by 150 basis point. I am very happy that we can deliver on our commitment. Lets continue to focus on the stocks, because that is what our viewers are interested in. How can you get back to the glory days that your predecessor oversaw in the 1980s . You are trying to save a turnaround that your predecessor started here, getting away from the bank card chips being the and share of your business getting into security solutions, are you going to get back to those levels . Successfullyalto diversified and now we are serving five different markets. Markets are still poised to grow and the intent of gemalto is to invest in the right set of technologies and the right set of Human Resources and we can really deliver growth. I have beend talking about multiples today. I have a bloomberg screen appear. The ge function on any equity will show you a number of things as far as pricetoearnings. I have your trailing pricetoearnings highlighted in forwardbout 30 and your priced estimated earnings in brown here. It is about half that at 15. What kind of multiple you think your company should be valued at . I think what were working on, the enterprise in cybersecurity, which is an important part of the diversification of gemalto. It is important in both segments. This is where enterprise needs protecta protection, to our business, to protect our consumers and the customers. Us is where this is where gemalto has an important action to deliver. Encryptions and where we guy just to wrap things up. , Conference Call this morning you said you are focusing on the United States. . Is that trump trade an infrastructure trade . Is that an economic outperformance trade . By the United States . There are many reasons, i just curious to know what years are. Has alwaysemalto been involving the United States. This country is important for us. We manufacture in the u. S. , we have a facility in austin, texas. We sell to u. S. Customers, banks, enterprises. For me, this is a country where we are still involved and the mp administration, we need we are attentive. Knew be involved in this very important country because when it comes to innovation, this is a great country where we need to be present to innovate and serve customers. Guy your stock is currently the the stoxx 600 this morning on the upside. You are outperforming significantly. Stock up by 7. 4 percent. Congratulations on that performance. Thank you for taking the time to be with us. The ceo of gemalto. Stocks to watch. Nejra gemalto outperforming on the upside. On the downside, berenson that 17. 5 atthe biggest the moment. It has fallen as much as 19 . The biggest drop since october 2016 and shares in the session have sick hit their lowest since july 2013. Operating profit came at beat, it seems that investors are focusing more on the 2017 which came in below estimates. One of the purple worst performers on the stoxx 600, down 4. 7 . I think it has to do with the gold price because this stock has to be sensitive to gold. After four weeks of game, gains, it has its biggest weekly drop us year. A feds expectations of rate hike have been ratcheted up. Goldent is not just the precious markets falling, we are also seeing Industrial Metals miners down. One of the worst performing groups on the stoxx 600. Matt . Matt thanks very much for that. Just looking at my screen here for the french data we are getting out right now. Vices and composited composite pmi, service pmi that at 56. 4 andweaker the composite slightly weaker at 55. 9. French data there. Onnext, snap shares soared the first day of public trading, but will those gains disappear, just like its photos . Details next. This is bloomberg. Guy welcome. Pops, a 40 44 , gives market valuation over 28 billion. That is bigger than deutsche bank. Adam joins us now. We are done with the ipo, we go from here. Where does the company go from here . To prove it deserves the valuation that puts it above one of the biggest banks in the world. Essentially, needs to prove this Business Model. People are betting on an advertising business that will grow and grow along the lines of some of the big other internet social networking companies. Thus far, it is unproven. Company loses lots of money and every dollar it makes in revenue, it loses about 1. 20. Getting more Media Companies to come onto the platform and bring down some of the costs it takes to generate that revenue is going to be key. Otheri am looking at some we talk about facebook all the time being valued 10 times forward earnings, apple is valued at 15 times forward timesgs, netflix 100 forward earnings and amazon is 120 times. Where should snapchat be . Which kind of company is it . Nowell, being rated right in the peers of facebook and Companies Like that. Good really isnt comparison at this point. So many things about this ipo are unusual. The voting structure for the company, as is the first time in the u. S. There has been a listing where people who buy shares have no Voting Rights in the company. A couple analysts are showing skepticism. A couple sale ratings have come areshowing that there concerns about whether the Business Model for the company is going to be able to pan out in the way they are describing. Guy we will limit there. We will come back many times to talk about what is going on here. Adam satariano from bloomberg. It is surveillance. Conversations happening there. We will carry on the conversation on bloomberg digital radio. What are we going to be talking about . We will carry on the conversation about what is happening with the fed. Snap is fascinating and a big story. Thishe equity market is conversation we will have with janet yellen a little later on. That and i carry on the conversation. European equities are softer in advance of that. This is bloomberg. Your turn, yellen. Markets with the speech from the Federal Reserve chair with expect nations for a march rate hike at 90 . The French Republican abandoned the president ial one of the. Does that strength the feds position . Is a company yet to make a profit really worth 28 billion . Good morning, this is bloomberg surveillance. I am Francine Lacqua in london. With me on the program, catherine hughes, a managing