Transcripts For BLOOMBERG Bloomberg Markets European Open 20170323

That question of john curtis. A prescription for failure, equities could be in for disappointment if Congress Rejects the health bill. Could a lastminute change inject life into the legislation and the stock market . Matt good morning. Lets take a look at the future flat futures, but with a green arrow on the ftse, now pointing down while the dax and the cac higher. It was the biggest loser among the three major indexes and the biggest loser in terms of futures today as well. Bumd look at the trade, pushing the yield down. It opposite, which is interesting. The french trade is going the other direction. Wantoks like now investors safety and german death. This is the picture we found yesterday. It doesnt look like we will get any clear sense of direction, but will we once we get clarity out of Congress Later on . The ftse in line with the rest of the market. Lets talk about asia. The aussie dollar, why . Leg in had another down the iron ore trade. Calling is significantly lower on iron or. The correlation with the aussie is something you want to Pay Attention to as well. We will see the u. K. Retail sales number come out, but the biggest story is the backdrop of what happened in the u. K. Matt londons worst terror attack in more than a decade , the police dead officer and assailant, and 40 injured. Theresa may said the u. K. Will never give into terror. Tomorrow morning, parliament will meet as normal. We will come together as normal, and londoners and others from around the world who have come here to visit this great city will get up and go about their day as normal. They will board their trains. They will leave their hotels. They will walk the streets. They will live their lives, and we will all move forward together, never giving into terror, and never allowing the voices of hate and evil to drive us apart. More on this story, lets go down to westminster. Give us the latest. We are awaiting a statement from the police any minute now if it has not already begun for an update on the investigation. We know this is being treated as an and assistrelated terror attack. Claimedization has responsibility for the attack that happened around 2 45 in london yesterday. There is a stepped up police present today. This is on the south side of Westminster Bridge, a ways away from the houses of parliament. There are police men and women 34 police vans in the vicinity. We are expecting parliament to continue as normal. Theresa may has said london should continue as normal and we are expecting her to dress the lower house this morning, so it is business as usual as it were even after the worst terror attack or london in more than a decade. Thank you very much indeed. To follow the latest on this story, you can you should terminal and go to the tv function, interact with the team, and use Facebook Live as well. Here is bloombergs first word news. Juliette the European Central bank is to give lenders a last term offer of free cash. The final round of refinancing operations at an Interest Rate that starts at 0 and could go lower will be allotted at 10 30 a. M. U. K. Time. The ecb will get a sense of concern over the outlook for extending this. Stimulus. The fbi has information indicating President Trumps associateds communicated with suspected russian operatives to coordinate the release of information damaging to Hillary Clintons campaign. This is partly what fbi director james comey was referring to when he told congress his agency is investigating the Trump Campaign ties to russia. The white house and fbi did not comment on the report. Head of the House Intelligence Committee has offered some support to donalds claims that trump tower was wiretapped. He said the Intelligence Community collected multiple conversations involving members of trumps Transition Teams during legal surveillance of foreign targets after he was elected. Somewhatd reporters i do feel vindicated by the latest development. Scandal. A speaking under oath, he said that he was handed an envelope containing 9,000 during a visit to a kindergarten. A spokesman has denied the allegations. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Guy thank you very much indeed. It is one month until france goes to the polls. Besidential candidates will jostling for position with acron goingen and m headtohead. After a debate, the far left candidate as the most successful candidate. Good morning. Tonk you for taking the time be with us today here on bloomberg. Nearly half of french voters still have not made up their minds. What does your candidate need to do to convince them to vote for him . Good morning. Clearly france has a problem of a low intensity democracy. One out of two frenchmen does not vote in every election and that low turnout is characteristic of the current politics in france. So we are addressing people and saying it is fine if you dont trust politicians. We are not calling upon your trust. We are calling upon your will to orrganize our institutions actual constitution, and their main proposal is to have this constituent assembly to build sixth republic, the next constitution, where you will have more citizen control over elected officials, including the process of recall. Bad behaviorhave a problem, on ethical behavior from politicians come and that is what we need to address first. To your usualing leftwing people or far left. Far left. From the that is not what we are doing. We are democrats. Candidate did incredibly well in the debates. A lot of people thought he on, butsecond after macr still trailing at a distant fourth in the polls. Why do you think voters arent going to put him up there in the results as they did in the debate . Polling institutions have got it all wrong in france. On thatld not rely information as information. On is hype, put up there by the media and the polling institutions. Ive he revealed himself as too young, too fresh in the debate, where is he is the oldest candidate at the five years old. His political career is behind him, so he showed himself to be , theof the philosopher cultivated man that the french people like, and that is one of the solutions to the current situation, terrorist attacks, violence, intercommunity hatred. I think that anxiety calls for peace, and the french are wanting that opportunity, the empathy among ourselves to build something new, and he is proposing that. Gives the power to the people so they use it as they wish. May be french voters have had enough of the old guard, people active in politics . Maybe they want a young, fresh join forces with the socialists and make a run with them . I think it is up to him actually. The socialist party is in a bad position because they are in power. They are one of the reasons that the french people are so disgusted with politics. Candidates have been promising all sorts of stuff when they come and they campaign, and when they are in office they do the opposite. Things. A long list of our strategy is to bring on board all those disgusted, and it is hard to do so with the discussing, you know . I think that it would be smart supportalf of him to him, but im not calling for an apparatus agreement. I think that would not talk to the majority of the french people. Guy in some ways there is a comparison between your candidate and Jeremy Corbyn in the United Kingdom in the base that he attracts. The problem with Jeremy Corbyn is many people are now arguing that he does not represent or capable of leading a credible opposition. The comparison with Jeremy Corbyn is fair . Yes, becausepects i think Jeremy Corbyn is talking to the working class, addressing those simple issues of wages and what to do in life when youre jobless and you have health problems, very basic problems that the people have, but the situation in france is different because we decided to launch this campaign aside from the political parties, including the left political party. Is a Grassroots Movement within society that calls for more ethics in politics and for more citizen control, and that signifies a distance with those well rooted parties from the current political system,ncluding the socialist party which is not what Jeremy Corbyn is doing because he is in the labour party. Matt thank you for joining us. Coming up on the show, bill of health, a vote on Donald Trumps Health Care Bill taking center stage in the u. S. We ask if markets are set up for its failure. Then the pound rebound, resilience after yesterdays horrible terror attacks here in london. We would discuss the implications on the u. K. Currency and beyond. U. S. Agree a deal with the us or else, the chief negotiator warns the u. K. To not walk out of talks or there will be serious consequences. We get analysis from a leading political commentator. This is bloomberg. We are going to stick with it and go talk about the press Conference Take place at Scotland Yard right now. Lets listen in to what is being said. Terrorist was shot dead by police at the scene. Hundreds of detectives have been working through the night and haveg that time we searched six addresses and made seven arrests. Birmingham, london, and other parts of the country are continuing. Explicit come at this stage, we have no specific information about further threats to the public. Clearly the investigation is ongoing and we continue to focus on his motivation, preparation, and associates. That you thee media are making progress identifying the attacker. I would continue to ask his name well we areshed still conducting searches and arrests. This large and complicated crime scene remains in place, and i would like to thank everyone with patience as we finish the work. As people are out and about today, they will see more officers on duty armed and unarmed and a mix of police. Andave canceled leave increased our duty hours and are working hard to make sure we can reassure the public that they can go about their normal business. Tomust not allow terrorists so discord and fear in our city. And Scotland Yard are meeting with faith leaders coming together. The work will continue with vigor. I want to thank the public for their support and good wishes. Appreciated by all our men and women out there today protecting us. Would like to ask the public for the continued help and vigilance, and again, i say anything that you see causes concern, dont hesitate to call or in an emergency call 999. Has the public been helpful . Cctv from the scene, videos taken by the public, and piecing together the exact detail from those videos. Have you identified the attacker at this stage, can you confirm whether he was a British National . Not saying anything more at this stage and i will not identify those who have been killed. There is a mix of nationalities there, so announcing it on television is not the way to do it. I have said as much as i will say. I have talked about six addresses, seven arrests. About activity in london, birmingham, and elsewhere. As our investigation continues, more. Ll be he is acting commissioner, very experienced. We have a full team. We have Investigative Team doing the work. Any other questions . So you will see the closures restricting at the moment as we have final searches to do around parliament. Parliament will be doing normal business today. There is a bit of disruption around westminster. People will understand. More Police Officers on the streets. One last question. The three Police Officers who were injured, their conditions . As i say, we have seven in hospital who are in Critical Condition. Thank you for your patience and time. That is the commissioner laying out the details of what he is prepared to say to the press at this stage. They have made seven arrests, seven people in Critical Condition in hospital. Give confirmation on the nationality of the attacker as investigation is ongoing. Lets get a Bloomberg Business flash with the juliette saly. Juliette thank you. Londons worst terror attack has left five people dead including the attacker and Police Officer he stabbed. At least 40 people are injured. They are working on the assumption that it was islamicrelated terrorist action. The values our parliament represents, democracy, freedom, human rights, the rule of law commands the admiration and respect of free people everywhere. That is why it is a target for those who reject those values. Today, me make it clear as i have had cause to do before, any attempt to defeat those values through violence and terror is doomed to failure. Said the toshiba has board of its Nuclear Unit Westinghouse would decide whether to file for bankruptcy. Toshiba grapples with the cost of construction delays at westinghouse projects. Conglomerate has estimated a writedown of 6. 2 billion. Googles advertising crisis has gone global after some of the biggest marketers hold spending companys and the display network. At t and Johnson Johnson are pulling ads amid concerns they are running alongside offensive videos. Tools andlemented new policies, but many advertisers are waiting to see further results or details before placing ads again. That is your bloomberg is this flash. From janet yellen today, but markets are more interested in a certain till that may or may not pass in the u. S. Legislation. How is the market positioned ahead of that vote in congress . In,s bring mark cudmore bloombergs mliv strategist. More about Donald Trumps mandate to get legislation to the house, am i correct . Thats not exactly right. No one was concerned about the Health Care Bill a couple of weeks ago. It is not the stimulus we are waiting for, but it sends a message that if he cant get this through, trump will struggle for every change. If it fails, it sends a bad message and the markets will take it badly. On the other hand, since there is doubt about it, it could turn into a relief rally if it gets through. I think either way that there is more bad news for stocks on the way. Market positioning for this is expecting it does happen or does not happen . How is the market set up . Up and tell last night it was looking most likely it would get through, and yesterday there was an assumption that it will pass. This is drama, but dont worry. It will be fine. Last night it seemed like there was more news that this is more at risk and traders are expressing negativity today, so we havent seen Much Movement from that yesterday. In fact, people are positioned assuming it will pass. Im not an expert on the political situation in the u. S. Thejust going on what markets are feeling, and that is an assumption that it is ok, so a little bit of money off the table and nervousness but could become a shortterm relief rally if it gets through. Matt do you see any indications and markets that traders are worried yesterdays terror attack in westminster gives le pen a boost in france . It is one of the good things about the market, that we saw little of those connections. Seen too i have not much at the moment. Overall, there is an expectation that the worse of the le pen risks have passed. People are not scared as they were a week ago, and i think that will remain despite the terrible events yesterday. Guy thank you very much indeed. Giving us smart analysis to work our way through out the day. Yourber mliv on bloomberg. We are minutes from the open and the market is paying attention, but the big focus is on this bill and the nine states and janet yellen speaking later. Face it looks like markets that down and showed some resilience. We had initially a dropped in the pound. Today, we are seeing dollar weakness against the euro and pound, so interesting to see the dollar action and how that affects other currency pairs. Guy it is thursday. You will see some action in the london market. , and theecap as well authorities and the u. K. Are still conducting searches, but arrests are being and made believing the attack was inspired by International Terrorism. The market open is four minutes away, the flags in london flying at half mast. Guy equity markets open in one minute. We are expecting a mildly positive start. Sky, a attention to how it moves around later on. Generally we are up on the stoxx 50 by around 0. 3 . We did see a negative day for european stocks yesterday. Positioning ahead of yellen, positioning ahead of the vote in washington on health care, critical factors for these markets. Watch for the retail sales number out of the u. K. As well. Matt yesterday we saw a dip in the pound after that terrorist attack in westminster. The currency was resilient. This morning of got oneday charts of the pound gaining against the dollar. It has now come back down under that level. The euro had a spike around the same time and has now come back down. Guy lets show you whats happening with these markets. Lets deal with the cash open for equities. We have an unchanged ftse, expecting mildly positive. Exactly farg up not on the front foot. We are 0. 3 . Were expecting a similar story for the cac 40 when it opens. We will wait for that to come through. Looks like the Market Makers are taking their time as the ftse retreats back down to the flatline this morning. Retail sales out later. Vodafone well bid this morning. Mark barton has the details. Mark are we finally seeing some signs of volatility across Asset Classes . Thought we would start with the ftse 100 volatility index. On friday, it reached a record low. We are up for the fourth consecutive day. We climbed by 30 . This is the u. K. Benchmark volatility index. It has risen more than any other european volatility gauge. The headline index, the ftse 100, headed for the biggest weekly loss in two months ahead of wednesday when theresa may triggers article 50. The second chart i want to show you ahead of the big vote later in the house of representatives on Trumps Health care plan is dollar versus yen. We are seeing dollar rise against the yen today, but weve had a sevenday losing run for the dollar, longest losing run in two months. What we are seeing from this chart, the yen breaking out of its trading range. Any delay to that u. S. Health care reform bill scheduled for later could be a catalyst for , uncertainty about progress in Donald Trumps policies is putting the pair on course to trade around 100 level this year. Thats according to mizuho bank. Big piece of u. K. Data today, retail sales. This is a chart that shows you the year on year gauge excluding autos. Last month it rose 2. 6 year on year. Economists expected to rise 3. 2 . This is so pivotal. A sterling fall, inflation rises, and that could put pressure on Consumer Spending and real wages Going Forward. Key piece of data at 9 30. Brent crude, yesterday breaking below 50 for the First Time Since november. Also yesterday, the Global Benchmark breaking below the 200day moving average for the First Time Since midnovember. Concerns about rising crude inventories pushing prices to close the lowest level in three months. Any are Energy Information Administration Reports showed stockpiles soared. Supplies of cushing oklahoma climbing to the most since may. Brent crude breaking through its 200day moving average. Guy thanks very much indeed, mark barton. Key levels on these markets. Lets talk about where we are seeing action in the stoxx 600. Lets run through the screen. Were going to start off with the percentage set up. A Specialty Chemicals company, welded. More importantly, and this is where matt miller gets excited, were going to go to index points. The market is buying banks this morning and some pharma stocks as well. Banks and pharma stocks seem to be where the money is rotating into. Back to the pharma story. Lets show you what is happening. This is the index point. Novo nordisk, unilever, standard chartered, so the banks are fairly mixed up. Some of the miners softening as well. Novo nordisk, the big drop. Reason i really like the imap function and i use it a lot on a daily basis to see where industries are moving around each particular index. I would like to take a quick look at currencies now. Options show investors are becoming more pessimistic on the greenback versus the euro and the yen. The dollar has almost erased its gains from the socalled trump reallyprogrowth policies have yet to materialize. There was a massive rally from november. Guy i have a chart. Tv. T bt 7047 is the number if you want to access that from your bloomberg. That was when the dollar index reached a high point. It has since come down a little more than 5 . Were looking at a gain of less than 2 since trump was elected president. Guy where do we go from here . How important is this Health Care Bill . Are we going to see a bounce in the dollar . Marinov. E marti valentin date is the case that todays vote in the house, the one big test for trump. Our central case is that the bill will pass. There is sufficient support in our view following the last minute interventions to the president himself and the house speaker. Down the road, i think the hurdles will become greater. That is an easy test for trump relatively speaking. It is kind of a must pass test. Down the road, there may be more political uncertainty. Needless to say, that also has to do with the growing opposition. We are seeing the result ultimately will be tax reform and improving u. S. Fundamentals, which will matt just to hammer home todays trade, if you are watching this Health Care Vote in congress and it passes, if it passes easily, that means Dollar Strength because that means trump will have an easier time passing more difficult bills like tax reform. Valentin i would agree completely. The reflation trade has been put to the test. That whole thing went handinhand with some risk off. Commodity currencies have been suffering. Golden, euro, swiss franc, have been doing well. If you think of that, your trade on Congress Passing the bill would be dollaryen higher, potentially dollar euro lower. Guy janet yellen speaks later today. Valentin that is the other thing. Part of our bullishness on the dollar is the fact that fiscal stimulus is only part of the reflation trade. Dollar assetsing stocks because the u. S. Data has improved so much. The reason the fed hiked rates was the improving u. S. Data, not the prospect of fiscal stimulus. Even if the vote tonight disappoints, i think that some negatives are already in the price and i think that investors will be quick to refocus back on the improving u. S. Fundamentals from here. Function, favorite dots. Lets talk about it. Is that underpricing the fed . Valentin in our view, the fed is on course to deliver six rate hikes next year, five more by the end of 2018. We think that the convergence between the fed view and the market view, which is still a gap of about 40 basis points, that convergence will translate in growing great advantage for the dollar and could see the index appreciating by another 2. 5 , 3 . That is what the correlation would imply. Normalization of policy with or without aggressive fiscal stimulus makes us bullish on the dollar. Matt i wanted to talk about race because theres a shortage issue that people are looking at in bonds. Were going to take a break right now. Valentin marinov is going to stay with us. Guy plenty more still to come. The u. K. Wakes up to the aftermath of its worst terrorist attack since 2005. Were going to go live to central london. Were going to focus on the european Political Risk and the fx markets. And were going to talk brexit, scottish independence, and u. K. Policy with Professor John curtice. This is bloomberg. Welcome back to Bloomberg Markets european open. Im matt miller in london alongside guy johnson. Lets take a look at whats going on in markets. 12 minutes into the cash trading session, we have fairly flat trades, although losses on the ftse, losses on the cac, the dax really unchanged here. After what we saw yesterday, losses across the board, a little bit of resilience after the recovery in the u. S. In yesterdays equity markets. Guy we do have a number of big events coming up later on. Maybe it is fingers and thumbs away from the keyboards at the moment. Just watch and see what happens. There are some movers. Lets run through what is happening in terms of the mov screen. This is the screen. By 4 as well. Im going to show you the index points. Anheuser, unilever, some trade coming softer this morning. Novo nordisk is down as well. Reckitt benckiser, some of the stocks down a bit. Xd today. What are we buying . We are buying pharmaceutical stocks and banks after yesterday. That is where we are seeing the positioning coming through at the moment in terms of the rotation at an index level. Matt u. K. Police have been conducting raids and making arrests in the wake of londons worst terror attack in more than a decade. Yesterdays incident left four people dead including the assailant and a Police Officer. The Deputy Police commissioner in london just gave an update on the situation. Hundreds of detectives have been working through the night and i can confirm that we have searched six addresses and made seven arrests. The inquiries in birmingham, london, and other parts of the country are continuing. We still have a belief that this attacker acted alone and was inspired by International Terrorism. Guy speaking outside Scotland Yard, just around the corner from where nejra cehic is. She is in westminster. Some conflicting signals about what has been going on. Lets get some details of what we know now. Nejra thats right, guy. Revised met has now down the death toll. Originally they were saying five people were left dead. They are now saying it is four. Tens of people injured on top of that. You heard the u. K. Deputy Police Commissioner say arrests and searches are continuing. They do believe the attacker was influenced by International Terrorism. They do not want to name the attacker yet, although they do believe they know it is. Also, he said the u. K. Parliament would continue with business as usual. That does echo what Prime Minister theresa may said late last night, that parliament will stick to normal. We are expecting the Prime Minister to address the warehouse today. The Police Presence continues where im standing. Westminster bridge is still closed off. There is quite a heavy Police Presence. Police men and women around the streets. We know there is a steppedup presence across london. Matt nara, we hate to connect those tragic events with economics or politics, but we are getting closer and closer to french elections, to brexit. Give us the context in terms of that timing. Thats right. When this attack happened yesterday, it was exactly a week before theresa may is due to trigger article 50 on march 29. This comes at a time where the u. K. Is already in quite a tumultuous position politically and economically as we head towards brexit. The attack also happened exactly a year after the terror attacks in brussels and it is the worst attack in the u. K. In more than a decade. The last one being the seventh of july bombings back in 2005. We have had president ial candidate Emmanuel Macron already speaking today and making comments about the security threats for europe. This is one of the questions that will come up as theresa may goes into those brexit negotiations. Sharing between the u. K. And they you for example. A lot of questions are being raised and this does come at what is already quite a difficult time. Matt thanks very much. Nejra cehic live at the scene at westminster and she will continue to follow breaking developments. You can follow the latest on the terminal using tv or on Facebook Live. Guy lets talk about how the pound reacted. Sterling has a number of factors built into it. This may be a little surprising for traders, but end of the muscle memory of recent events kicking in fairly quickly. It really didnt have much of a down leg, and the british pound popping higher after the 20th and minute window in which there was some nervousness. Valentin marinov of Credit Agricole joining us now. Valentin i agree completely. We had a similar response in the euro in france and down jim. From that point of view, that could explain it. On the whole, it seems that talking to clients, traders, it is about the u. K. Fundamentals. Seems like brexit is a done deal if you wish. Political risks are not really the driver of the pound. People are buying the pound. I guess it is really about the retail sales. Is it just an inflection story or a stagflation story evolving in the u. K. . Our view is that it is more of the latter, the fact that the costs push inflation on the back of the sharp sterling depreciation last year. The real purchasing power of the u. K. Consumers, that is going to be a big factor down the road. We saw a little strength in the pound. It has since come down. We saw also strengthen the euro. It seems the consensus that we will get near parity is kind of flying out the window. Valentin in our forecast, we thepotentially revisiting low range, not necessarily parity, but that is depending on the outcome of the french president ial elections. In our view, the mainstream candidates will be the winners. Le pen will lose those elections. An important caveat should apply here. Withlast year has shown the brexit referendum and the u. S. President ial election, that polls may underestimate the antiestablishment vote. Matt what percentage chance to you put on a look and victory . Valentin if you are to compare fillon and le pen, all i can say, i think that is a reasonable estimate. Guy if you dont believe the polls, what are you going on . Valentin i think what could be interesting, i was in paris earlier this week to attempt to visit french clients. Going to the first round, what is the panic level . Pen is the level for le polling rate in the first round which will make people panic about her performance in the second round . Is it 30 , 35 . At the moment, there is no real worry in the markets. Guy 40 of the french population havent made their mind up. Valentin if you get to the first round with 30 , 35 , this could actually mean that she may actually win. View, thereint of is a sense of complacency in the markets. That is similar to what we had last year. That is one of the reasons. Mays the case that the euro enter the next quarter a little lower than we are at the moment because those risks are not necessarily all in the price. Guy talking about what is in the price, i want to come back to the pound. The market is incredibly short the pound. It is hard to see it getting even more short the pound. An historical the market has never been this short the pound. Valentin our longterm fair value models, it is not the only driver, but it is the most undervalued g10 currency. The pound is cheap. I think it is cheap for a reason but it is really the outlook, it is a tugofwar between excessive market short on the one hand and the u. K. Fundamentals, which in our view will continue to deteriorate. Will that be a reason for the markets to sell . Maybe. We think the markets will be not really buying the pound for the time being. Our focus in terms of cable is staying close to the lows. The only currency where we see further downside is another currency which is also fairly undervalued, the euro. Looking beyond the french elections, we could revisit 90, 95. We also have that decoupling between the u. K. Fundamentals, gradual deterioration, and gradual improvement in the eurozone data. If you want to sell the pound, do it against the euro, not the dollar. Matt stay with us. Valentin marinov. Lets get right now to a Bloomberg Business flash. Sebastian . Sebastian u. K. Police have made seven arrests during raids in the wake of londons worst terror attack in more than a decade. Yesterdays incident left four people dead. Authorities are working on the assumption that the attack was islamist related terrorism. No organization has claimed responsibility. Hundreds of detectives have been working through the night. We have searched six addresses and made seven arrests. The inquiries in birmingham, london, and other parts of the country are continuing. Sebastian toshiba has said the board of its nuclear unit would decide whether to file for bankruptcy. That suggests it is one of the options under consideration. The japanese conglomerate is estimated it will need to take a right down of 6. 2 billion. Googles advertising crisis has gone global after some biggest marketers halted spending. Are and Johnson Johnson among Companies Pulling out amid concerns they would run alongside offensive videos. Google tried to head off the backlash, implementing tools and policies that many advertisers are waiting to see. That is your Bloomberg Business flash. Matt thanks very much, sebastian. We are getting some news from the ecb. In an annual report, we are getting comments from draghi and a number of ecb board members. Draghi saying that low bank habitability weakens support to the recovery. If you talk to the ceos, they blame that low probability in part on Mario Draghis policy. Also getting comments from daniel inouye, chairman of the Supervisory Board of the ecb. She is saying that right now the banks are in a waitandsee mode and cant continue as far as what they are seeing here. , these ecb take comments. Pasti has admitted in the that week Bank Profitability is a problem and it may be related to his policy. Lately it seems the ecb is turning less dovish as the fed seems a little bit less hawkish. This kind of plays into your euro view. Valentin it is the reason why eurodollar has stabilized. We do see a widening in the rate spread even though it is coming from more than 10year lows. The question is, is that going to be sustained . There is some speculation in the markets about a potentially premature normalization of policy. I guess the deterioration in the Bank Profitability, rate environment, has been one of the reasons for that. I think it is a bit too early. What could be interesting is that take up of the loans. It will be a measure of the demand for cheap funding by the banks. I think the market is going for Something Like 100 billion. Matt the range is broad. Valentin the point is if you get a larger number, the signal will be there. Cheap loans. Those unless you see a significantly lower amount, im not sure those ill call them speculations could be substantiated. On the fed side, the fed is hiking, obviously in view of the upcoming stimulus. I think it is predominantly because of the u. S. Economy. No real scope for further significant widening. No real push for the eurodollar higher. Guy we will leave it there. Us from marinov joining Credit Agricole. Up next, back in westminster for the latest. This is bloomberg. The biggest week in tv is back. Wow, watchathon has netflix . Hey, drop a beat. [ beatboxing throughout ] show me orange is the new black. Wait, no bloodline. How about bojack . Luke cage. Oh, dj tanner. Maybe show me lilyhammer. Mmm, show me last chance u. On second thought, maybe pompidou. Narcos, fearless, cooked, the crown. Marco polo, lost found. Grace and frankie, hemlock grove. Season one of. Show me house of cards. Xfinity watchathon week starts april 3. Get unlimited access to all of netflix and more, free with xfinity on demand. The dinosaurs extinction. Got you outnumbered. Dont listen to them. Not appropriate. Now im mashing these potatoes with my stick of butter. Why dont you sit over here. Something for everyone is awesome. Find your awesome with the Xfinity Stream app. More to stream to every screen. Matt parliament will get back to work after londons worst terror attack in more than a decade. Four people are left at including the assailant and at least 40 are injured. How will the attack affect britain at a time of huge uncertainty . We will ask john curtice, professor of politics. And, prescription for failure . Equities could be in for more disappointment if Congress Rejects president Trumps Health bill, but could lastminute changes inject life back into the legislation . Good morning and welcome to Bloomberg Markets european open. Guy matt miller alongside johnson in london. Guy lets talk about where these markets are. A number of factors affecting markets. We have a number of key events. This is our markets are positioned now. Markets are positioned to wait and see. Big moves yesterday following what we saw earlier in the week on the s p. This morning we have the story we are waiting to hear about on capitol hill in terms of the legislation. We got janet yellen speaking later on. We have the ongoing situation as well in london. Matt u. K. Police have now made seven arrests during raids in the wake of the terror attack. Yesterdays incident left four people dead including the assailant and a Police Officer. At least 40 were injured. Authorities are working on the assumption that the attack was islamist related terrorism. No organization has stepped forward to claim responsibility. Lets get to nejra cehic at westminster with the latest. Beautywe heard from the Police Commissioner just a little earlier this morning, saying the arrests and the investigations are continuing. They do believe the attacker was inspired by International Terrorism but that he acted alone. They are asking the media not to disclose the name of the attacker while the investigation continues. That attack yesterday left four people dead and more than 40 injured. We have had the u. K. Defense secretary speaking on bbc radio as well, saying that he has no specific information as yet about the attack but that parliament is reviewing security. In terms of the security around parliament, yesterday, it was on lockdown for several hours. Today we are told that it will continue as normal. The police said it will be business as usual and theresa may has said the same thing. She is expected to address the lower house of parliament today. She did make a Statement Last night, saying it will be business as usual from london too. Not quite business as usual where im standing. There is an increased Police Presence. Several officers standing around and police vans. On the south side of Westminster Bridge, we are blocked off. We cannot go any closer to the palace of westminster. Guy this comes at a time of huge uncertainty. As talk about business usual. How will this ripple into the factors affecting britain now . We heard from the french president ial candidate, Emmanuel Macron, earlier, and he made reference to intelligence sharing between e. U. Countries. That is one of the questions that is likely to come up. This attack happened a week before theresa may is due to trigger article 50 on march 29 to start the brexit process. There will be questions about what happens in terms of intelligence sharing and security between the u. K. And that you and the e. U. We have had leaders not just from the e. U. , but globally, come out in solidarity with the u. K. Over these attacks. Sympathy, but is this does come at a complicated time for the u. K. , both economically and politically. Guy thank you very much indeed. Nejra cehic joining us from westminster. You can follow the latest on your terminal. Go to tv. You can also follow all the details on Facebook Live. Mij rahman. In this attack follows a different theme now. What does it tell us about the security situation in a number of european capitals and where does it take us Going Forward . Mij thank you. It does tell us that european Member States are vulnerable to this type of terrorist attack. I think it is interesting that Emmanuel Macron has been out in front of the story because in the context of a very competitive election in france, macron would be vulnerable if the issue of security was to displace that of economics. Concern forne voters has been economics. Macron has been a little bit vulnerable on the security factor. I think that is part of the reason were seeing his campaign move aggressively to address this question of Security Cooperation. I think there is a read across to what is happening in france, which the french establishment is concerned about. In the u. K. , i do think this will change the atmospherics around the article 50 trigger next week. I think a very historic moment. Politics are likely to be a little less tribal. Goodwill and the atmosphere when negotiations begin, i think are going to be very important for the kind of agreement leaders are able to come to. I think this will facilitate those discussions. Matt one of the issues of contention has been how much the u. K. Is going to have to pay to exit the eurozone, or the e. U. I should say, when it is going to have to make that payment, and if it has to pay for programs after november. Theresa may has said she doesnt want to pay for anything that happens after november of 2016. Do you think the europeans are going to be softer on that negotiation . Think the attack yesterday affects the substance of the negotiations. I just think it affects the operating context, the atmospherics. On the financial settlement, it is clear the u. K. Is going to have to acknowledge that it is liable for historic, future, and contingent liability. There will need to be some acknowledgment around the european methodology, not necessarily the final number, but the methodology europeans are working to calculate this figure. If the brits acknowledge that, and i think they will have to, then i think the europeans will be willing to acknowledge the fact that under article 50 there will have to be discussions about a future trade agreement. Those discussions will not be conclusive under article 50. It is a different legal mandate. I think the brits will have to acknowledge theres a bill to be paid. The europeans will have to acknowledge theres a deal to be done on trade. Guy look at the optics on this. Think of it about how britain feels. Does britain feel more european because of the commonality and the nature of the attacks that has taken place, and is that significant if that is the case . Mij to be honest, i think theres something of an around theion vice attack. I think those who voted to leave the European Union will feel even more strongly around the importance of securing control of borders as well as moving aggressively to address the security situation even through legislation. Was home secretary for a large number of years. She understands this dossier. I think for the remainders, this will reinforce the notion that we can only be safe through cooperation with europe. Level, it on some will reinforce peoples existing bias on this question. Matt great to get your insight. Thanks for joining us. Eurasia groups mij rahman. Next, we will be joined by political commentator john curtice. He will be with us on set. This is bloomberg. Matt this is the European Market open. We are over 40 minutes into the trading session. Lets see how things are shaping up. Not a heck of a lot of trading going on. On the stoxx 600. Very little change as traders around the world await this legislation in the u. S. Congress to see what kind of mandate President Trump has on capitol hill. Lets get the first word news. Sebastian . Sebastian the European Central bank is about to give lenders a last offer of free longterm cash. The final round of refinancing operations for Interest Rates that start at zero and could go lower will be allotted to banks today. In return, it will get a sense of any concern over the outlook of its extraordinary stimulus. Reportedly, the fbi has information indicating President Trumps associates communicated with suspected russian operatives to coordinate information damaging to Hillary Clintons campaign. According to cnn, this is partly what fbi director james comey was referring to when he told congress his department was investigating Trump Campaign ties to russia. Republican head of the House Intelligence Committee has offered some support of Donald Trumps claims that trump tower was wiretapped. Representative devin nunes said the Intelligence Community had collected multiple conversations involving members of trumps Transition Team after he was elected. Trump told reporters, i somewhat do feel vindicated by the latest developments. In japan, the head of an Educational Foundation is at the center of a real estate scandal. He told parliament he received a donation from shinzo abe via his wife. Speaking under oath, he said envelopehanded him an containing 9,000 during a visit to a kindergarten operated by the nationalist group. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Guy thank you very much indeed. Londons worst terror attack in more than a decade left four people dead. At least 40 people were injured. Prime minister theresa spoke after the incident. The values our parliament represents, democracy, freedom, human rights, the rule of law, command the admiration and respect of free people everywhere. That is why it is the target for those who reject those values. ,ut let me make it clear today as i have had cause to do before, any attempt to defeat those values through violence and terror is doomed to failure. Guy the Prime Minister. With us now, john curtice, professor of politics. Does yesterdays attack change anything . John it clearly will mean that politics will not be normal at least until the weekend. I think out of respect of the harbor and shock of what happened to those innocent people on Westminster Bridge and the Police Inside the parliamentary estate, dont expect politicians to be as they usually are. Parliament is going to resume today. I expect that will be respectfully. I expect Jeremy Corbyn will also be listened to respectfully. The Scottish Parliament was due to make that historic vote, asking for a second independence referendum. That was suspended. I suspect that vote will not take until next week. Much as in the murder of the labour mp, i think on monday morning, we are back in two regular politics. Theresa may is due to give formal notice of the u. K. s wish to leave the e. U. On wednesday. I dont see any reason that should be delayed. The Scottish Parliament i guess will pick up its debate on tuesday. Matt will this reduce at all the attention that seemed to be building over the last week . Theresa may has said she doesnt want to pay for anything that happened after november 2016. I spoke with Wolfgang Schaeuble and he said, i suspect britain will continue to pay as they are required to in the contracts. The austrian chancellor has put the price tag at about 60 billion euros. John there has been so little domestic debate about this issue of what should be the bill that britain pays in order to deal with the legacy of commitments. The focus has been so much about, can we get a trade deal, and to what extent we should be trying to limit freedom of movement. Theres been very little debate issue, letsst agree to the size of the bill. One needs to remember here, although the opposition may feel the u. K. Government is going for too hard a brexit, dont expect unionback the european when it comes to the size of the bill. The u. K. Iscepts going to leave. Expect every politician in the u. K. To back reducing the size of that bill. What yesterday does do, is of course, one of the concerns that there is about brexit is the Security Cooperation between the u. K. And European Union countries. That it likes to think has rather good intelligence services. We await the explanation as to why they didnt manage to spot this one. This is something the European Union will want. Matt can i just ask where you stand on the payment debate . I feel frankly, if im checking out of the hotel and i tell you im going to, that doesnt mean i get to stay there for free the whole week. John of course the u. K. Does have longrunning commitments to pensions and other programs. Doesnt wantrnment to be paying a large upfront bill. On the other hand, the u. K. Government has not said has kind of said, we are willing to continue to pay for those things we might still be involved in. If there is continuing collaboration on university research, which i suspect both sides might like, the u. K. Government has signaled we might be willing to pay for that. The start of the negotiation is going to be about the reasonable size of that bill. The two sides are going to start a long way apart from each other. Guy is there any risk the u. K. Walks out early . John if the words of u. K. Ministers are to be taken literally, the answer to that is yes. There clearly are some ministers, those campaigning for brexit such as liam fox, do seem frankly, the view that faced between paying a large bill and having an unacceptable deal, im not sure if other u. K. Ministers are of that view. Clearly the u. K. Has to try to thee European Union reason why theresa may did not was to try to strengthen her bargaining hand. In other words, to get the European Union to think about, if they were just to leave without any deal, would we be worse off . That,are those who argue actually given that the value of the pound has gone down so much, the imposition of tariffs actually takes us back to the status quo. There are deep currents. In the end i suspect both sides will want to make an agreement, but clearly the u. K. Has to try to strengthen what might otherwise thought to be a weak hand by giving the impression. Guy were going to read a lot about game theory, i suspect. John is going to stick around. John curtice staying with us. Expectation management is something we need to think about as well. John has alluded to the position the u. K. Public finds itself in. That conversation is next. This is bloomberg. Flying at half mast in westminster. Guy 8 53 in london. Lets continue our conversation with john curtice. Is the British Public r eady is the british, public going to accept a hard brexit . John the British Public is still divided. Opinion polls consistently find around half of people think the decision we made is the right one. Around half think it is the wrong one. When it comes to the crucial question which defines whether you are a hard or soft brexiteer, you find maybe slightly less than half say the crucial priority is to end adherence to the freedom of movement provisions of the European Union and slightly over half think the priority is to maintain free trade. Point that decision is going to become crystallized. That is how you think it is going to break . John the truth is that the u. K. Public want both. The u. K. Public do not accept the theology of the European Union, which is you cannot have you cant have free trade without freedom of movement. People say, trading goods and trading people is not the same thing. Not least of course because people come with cultural attributes and social consequences in the way that goods do not. Economistords, for an , labor is a factor of production like capital. For ordinary people, they are fundamentally different. That is at the heart of this debate. Still 5050 as far as remainleave, but is that the case as well in scotland . Have all the events that weve seen boosted the remain and the independence camp . Thehe difficulty person for whom the fact that the public want both is particularly an issue is for theresa may. The group of voters who want both free trade and to end freedom of movement are conservative supporters. That is the group that most disagrees with the European Union, and both elements of that deal. The truth is weve not had that much pulling in scotland postbrexit. Scotland would still vote in favor of staying inside the European Union. The reason why it does is not simply to do with attitudes toward the European Union. It is not because people in scotland take a more benign view. They do to a degree. But even in scotland, youre a is much more common than it was. Thatlso have to understand the vision of independence has been independence in europe. Therefore in scotland, being part of the European Union is regarded as one of the ways in which nationalist aspirations can be realized. In england and wales, the question was, this is a constraint on our sovereignty. Differentlys framed on the two sides of the border. Guy thank you very much indeed. I will leave you with a shot of london as we digest what happened in london yesterday. Tom parliament will work this thursday. The Prime Minister will speak to the lower house. The nation will more and three threend 29 will mourn dead and 29 wounded. Islam related. Conservative and moderates demand change. For wendy john and michael darling, it will never look the same again. This is bloomberg surveillance. I am tom keene in new york. London, guyed johnson. Westminster station will never be the same again . Guy an incredibly busy bridge coming from the south side new waterloo station, one of londons main train terminals, and over the bridge. That is the shot you are looking at. It remains closed