Management urges bhp billiton to unify in australia. And slashing staleys salary. The barclays board decides on an very significant pay cut for the ceo following a whistleblowing probe. Will regulators go further, matt . Matt interesting breaking story that we will continue to follow. I want to take a look at the half hour to go until european open, at what futures are doing, at what the other risk assets are showing us. It looks like a risk on day to some extent. We see futures rising, although not huge gains. The euro stocks 50 futures up, more significant gains in london and frankfurt, not so much in paris. But if you take a look at bunds, it looks like investors they had been selling off german debt, and that push the yield up at the beginning of session. They have been buying at the route the first half hour of trade. You can see the trend here is risk off. If you look at the other asset classes, you see a risk off signal from the asian trade going into european trade as well. Guy yeah, it will be interesting to see how the stock stories play out. Barclays and bhp are two to watch. The pound is better on that trade. They will be interesting to see how the sector will trade this week very important meetings coming up. I think the tillerson story is fascinating. That the meeting is still going on this something to Pay Attention to. Wonh korea down by. 8 , the has been softening up. We also have the indian rupee trading. Brought ended out broadened it out. Take a look at the french risk reversals, the european risk reversals, eurodollar risk reversals. This is one we will pay a lot more attention to, the skew very much to the downside. Lets get the first word news update with juliette saly. Juliette guy, thank you. U. S. Secretary of state Rex Tillerson travels to moscow on wednesday, newly emboldened by the decision to drop 50 tomahawk missiles on a syrian air base. He is likely to face a tongue lashing over the attack from the foreign minister sergei blackrocr he was forced to retaliate after a chemical weapons attack. U. S. Secretary of state Rex Tillerson has said america isnt interested in regime change in north korea. The comments came as u. S. Warships were diverted to waters near the country amid heightened tensions over its Nuclear Weapons ambitions. Tillerson also told this week that the country must stop all weapons testing before further diplomatic talks can take place. Declaredpresident has a threemonth state of emergency and created a powerful new antiterrorism body after a Palm Sunday Church bombings claimed by the Islamic State left 43 people dead. The declaration suggested a tough approach against whose simmering war with the government has strained efforts to stabilize the economy battered by years of unrest. Reportedof england is to have repeatedly pressured commercial banks to lower their settings for the benchmark london interbank rate, offered during the 2008 financial crisis. The bbc report cited a secret recording in which a senior manager at a large u. K. Bank instructed a libor to lower his rates. The boe was quoted as saying that libor and other global benchmarks were not regulated in the u. K. Or elsewhere during the period. The central bank added that it had been assisting with the investigations into libors manipulation. Will be sworn in as the 113th justice of the Supreme Court today after Senate Republicans on friday treated the socalled Nuclear Option to allow his confirmation. The role change means future Supreme Court nominees can be confirmed with a simple majority vote and will no longer face a 60 vote hurdle. The dramatic rule change could deepen bipartisan division. Global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. Bloomberg go this is bloomberg. Matt the fed focus shifted last week after the central bank made an explicit reference to winding down its more than four chilean dollar portfolio of mortgage and treasury securities in the second half of the year. The bond market took the message in stride. The volatility may be on its way back, as analysts say the effects of ending the reinvestment will be felt in the markets. Bloomberg spoke to James Bullard about his concerns. One of the issues i have felt is important about the Balance Sheet is that its putting downward pressure on the medium and longerend of the yield curve, while the increases in the policy rates are putting upward pressure on the shortend. Its kind of a twist operation, and im not quite sure that there is any eerie that says thats the right thing to be doing in this situation. What you would like to do is allow the entire yield curve to adjust to the rate increases in a more natural way, and i think one way to do that is to begin allowing some of the Balance Sheet to run off. Guy just remember, he doesnt get a vote until 2019. The jobless rate unexpectedly dropped to the lowest in almost a decade, suggesting the labor market is returning to a more sustainable process. The markets only expect one more hike in 2017. You can see this on that chart. The market is beginning to price out the possibility of the wtwo it had. Richard jones joins us on set. Good morning. Richard good morning. Guy you could argue it is down to a whole bunch of factors. Maybe the data is soft, but you could argue it was good on friday. You can look at whats happening with the debate about the Balance Sheet and argue, if they will do that, maybe they wont go through the rate hike. Maybe the market is pricing out less inflation. There are a whole balance of things in the mix. Give us your sense of whats going on. Richard well, i think the tradeoff that you highlight between if the Balance Sheet the fed starts to normalize, perhaps it means that fed funds will become less important. I think that tradeoff is one that has gained a little bit of traction over the past few weeks. Going forward, im not so sure that its necessarily the way it will play out. I think the important thing we fastforward a year from now, and i think this Balance Sheet normalization will be a thing we look at as the big development. Im not sure what it means for fed funds, that i think the market has run with this idea that, ok, Balance Sheet normalization means a slower path. Matt is it risky, richard, to embark on that kind of movement at the same time as so Much Negative yielding debt around the world is flipping to a positive yield, thus removing buyers from the system . You know this well, im sure, go on the terminal shows you who the holders are of u. S. Debt. I always find it fascinating, because sometimes we see little countries like the cayman islands. Here the Federal Reserve is the biggest holder of u. S. Debt, and you get china and japan, down here you get ireland, another instance of people putting money through Different Countries if we get more positive yielding debt in these places, those Foreign Investors will not be buyers of treasuries as the u. S. Isnt reinvesting the proceeds. Is that a problem . Richard there is potential for that to be problematic. I think that is something that Market Participants are going to have to adjust to. Hasnt think that process really started yet. I think if we get closure to balance closer to Balance Sheet normalization being an actual reality, and it will get interesting. There are indications not only for bond markets, but i think equity markets will have an adjustment as well. If you think about the whole period from the Global Financial crisis, we have had low rates. We have had qe. Even when qe ended, the investment of fed proceeds is something that has been a reality. If that changes i think there will be a reckoning across a lot of asset classes. Guy lets broaden it out. We will look at treasury levels. This is the treasuries lower in range now. Are the markets pricing as they price in this lower rate trajectory, are they also pricing in what paul ryan said, that it will take longer for tax benefits to come through . The fed is saying a lot of the gains we have seen an equity markets are driven by that. You put those together and maybe equities are writing forward. Richard what this tells me, the chart you just showed, is that investors arent certain. There are a lot of things going on, there is no certainty. We have been shopping around a net 30 basis point range. It will take something unexpected for us to break out of that range. Wait for a lot of the Political Developments to work their way through the markets. Matt all right, richard. Richard jones, fx and rate strategist. You can follow live insights on the mliv log. We suggest you do, because it is incredibly timely and it comes rolling across like any blog would. Fantastic access tool. Coming up, the state of the race. We are live in paris to see where things stand with just two weeks to go until frances president ial election. Is it still just a twoman race . Later, we will hear from the ceo of ford about his take on the meeting. How did ago in what is it mean for the Automobile Industry . This is bloomberg. Guy were now under two weeks away. Things are looking interesting, different from where they looked yesterday. A bloomberg composite of the polls show support for the leftist candidate, eurosceptic candidate, Jeanluc Melenchon, which surged 18 . Fillon is also gaining ground. Known for a town taking the presidency is a big upset ahead. Lets show you what the market is seeing. This kind of multipolar environment is very much being priced into the risk reversal, which capture the main events surrounding france. Thats brexit over there. This is where we are now. The market is buying insurance aggressively. Thekews to the downside, market is buying a defensive position and paying for it. Lets go to Caroline Connan in paris. Held ralliesoth over the weekend. They are gaining traction. What is the signaling . How do they perform . Caroline Jeanluc Melenchon, the far left wing candidate, backed by the communists, held this big rally in marseilles. It was different from the one with macron, it was open their in the old port of marseille on a sunny sunday. He gathered 70,000 supporters. He claimed to be the candidate of peace, signaling that he didnt agree with francois lond and Angela Merkel backing the airstrikes in syria. Jeanluc melenchon knows he has the momentum and is taking advantage of it with this openair rally. Meanwhile, francois fillon, the republican candidate, is also making a slight comeback in the polls. Paris, as rally in gathering of 25,000 people. The interesting thing is that he was joined by nearly 600 rightwing candidates who are going to be representeing republicans, attacking emmanuel macron, who as you know doesnt have all the candidates in place yet. Francois fillon saying he will for sure managed to secure majority in parliament, which is uncertain at the moment for emmanuel macron. Ist so it looks like fillon gaining traction in a race we thought was only going to be between le pen and neck. And macron. But we are also hearing more about themelechant. They are starting to look at what would happen in the event of an extreme left win. Do we really expect an upset of the two candidates the only ones we have been talking about over the past couple weeks . Caroline anything is possible. If you look at the polls, they have a margin of error of around 2 . If you take the low risk candidates, then the best call melechont, if you take these margins of a, you could still see it over the next few weeks, 40 of the french voters are still not sure. You also have to bear in mind that Marine Le Pens base is much stronger than the one of emmanuel macron, with 80 90 of those planning to Marine Le Pen absolutely sure, whereas 50 60 of those planning to vote for emmanuel macron. Only 1600y, its People Living there, but they have been correctly predicting the National Results for the past four decades. Fillon in the runoff. Matt obviously burgundy is very important. Caroline connan on, joining us from paris. The war in syria and the fight against the Islamic State will top the agenda at the meeting of g7 Foreign Ministers in italy today. Day gathering presents an opportunity for Rex Tillerson to ease strains with his allies there just 10 days after acrimonious nato talks in brussels. Joining us now, James Hertling intn dubai. How our colleagues likely to receive him, considering the last time they met and what has gone on over the last week in syria . You know, if we didnt have the syrian missile attacks, wed be pretty clear that the flight the talks would be over that desire to have european nations contribute more to defense spending. Since the syrian missile attacks, which were applauded by the european allies, and since tillerson seems to be finding his footing and his voice, it will probably be a more normal looking, diplomatic how well that what we saw diplomatic powwow that what we saw last week. Guy we will come back and talk about this through the week. Jim hertling, joining us out of dubai. Russia will be fascinating. What do they need to learn about where the u. S. Stands on the situation in syria . We are minutes away from the market open. We will take a look at the movers shortly in todays trading. , bhp barclays. Breaking on those businesses over the last hour. We will watch those stocks very carefully. The market open is nine minutes away. A lot of stock stories begin. Cant wait. See you in a moment. Guy a few minutes away from the start of cash trading in europe. Keep an eye on the mining stocks. Bhp billiton is the big one, Elliott Management saying it should consolidate its structure in australia, rather than having one in london as well, also saying it is looking to release value. The stock up sharply in australia. Keep an eye on anglo. A couple stocks you want to watch out for. Bhp billiton. Matt yeah. When paul singer talks, people tend to listen. He is usually a front runner, sometimes a lone wolf, in these activist movements. Barclays, about because some fascinating developments this morning from the bank and from the fda. Barclays out with a statement saying jes staley, the ceo, has admitted to errors in trying to find out the identity of a whistleblower who wrote a letter about a senior executive, and it has accepted his responsibility. Stanley has agreed to participate, or cooperate i should say, in the investigation, as well as the prudential regulatory authorities. An investigation about a whistleblower situation, jes staley taking an very significant cut in his pay after the board reprimanded him, both financially and with a written reprimand. Interesting story. Guy matt, couple things standing out in terms of their values, one of which is that london could underperform relative to the wider market. The pound is firm, and we will keep an i on the minors. An eye on the miners. We have argument talking about the political story, risk reversals coming down sharply in terms of eurodollar. You also have the spread widening oatbunds. The market getting increasingly nervous about the situation in france. The dax, on the other hand, looks like it will outperform. Four minutes away. Guy good morning, welcome back. Lets take a look at where fair value is on the bloomberg. Weve got a fairly flat open. Its going to be interesting, more the stock level. Cac, a political story, called down by not much. Its softer. London looks like it will be up by. 2 . Keep an eye on the Mining Sector. Matt miller, what have you got . Matt im looking at a number of things here, guy, too kind of gauge how we are reading investors. The japanese yen in white, oil in yellow, the 10year in purple. As these things climb, that means investors are less worried. In blue, gold. As that falls, investors are less worried. Investors are not as concerned it could be a risk on day. Guy matt, lets talk about where the markets are going. The Market Makers are likely 73. 48,o drift, ftse at absolutely flat. Well see how miners trade through the session. Barclays also one to Pay Attention to, having a tough monday morning. Keep an eye on anglo as we work our way through the day. The french political story is getting more and more interesting. French stocks could be an area of focus, cac 51. 26. Manus look at the local elections over the weekend. Our last guest made the point that the fair left, the populists, came in at number six. You extrapolate that forward, and he said that changes the thinking ever so slightly. Lets give you the shanghai composite, just rung the bell. You can see the majority of the market on a downward slump. Commodities at the most at 2 . Exporters rising. We are waiting to see what does the 100 a negotiation between the United States of america and china actually deliver in terms of trade. Rebalancing that relationship. European equities are open, and heres the stoxx 600. You will talk more about the barclays story through the day. In terms of European Markets, financials are incredibly important. I. T. Is a bitter been. A better bid. Oil back up above 52 per barrel. My chart of the day, have a look. This is the giltbund spread. There are a couple different pieces out there. A fantastic opportunity for risk reward. You want to sell gilt, by treasuries. The widest spread on the gilttreasury. Sell, says you want to pimco says the same. Inflation is going to be our focus in the u k market this week. Inflation is expected to come in, the weight expected to drop to 2. 1 . Get ready for the spread to pop and blow. Guy a your people taking different positions, which is interesting. Take a look at what happens on a currency adjusted basis. Lets talk about whats going on with the mov screen. Ive get to see a price on bhp, not trading at. Novartisoche and picking up, this is where the weighted money is. On the downside, nestle is seeing some softness this morning, down by over 2 . Well find out what that is. And bhp, not trading we need to pay more attention to these stocks when we get full price discovery. Barclays does have an indicative price, but i think bhp could be a real over. Lets talk about the barclays story in more detail. Its boardlays said will issue a formal, written reprimand, and also make an very significant adjustment to the ceos pay after he tried to identify a whistleblower in 2016. The u. K. Financial conduct authority and the Prudential Regulation Authority have now commenced investigations into staleys conduct. We are joined on the phone by our reporter suzy ring. Tell us in more detail what happened here. While we know from barclays this morning is that in june last year, a whistleblower complaint was made related to personal allegations against the ceo, and also jes staleys allegations for a previous employer, and perhaps whether that attitude have been recruited in the first place. He tried to identify who that person was, and once he found out it wasnt appropriate, he one month later tried again. Barclays said it was an honest mistake, that he has apologized, but it raises a lot of questions about the integrity of the whistleblower process at barclays, and why jes staley. The actions were appropriate. Guy what does this mean for mr. Staley himself, for barclays, Going Forward from here . Is is a very senior guide to be caught up in this kind of thing, and the regulators are now involved. Absolutely. Is this is a person who looking to shape the culture of barclays, and lets not forget that this has been an uphill battle. He has been dealing with lots of legacy issues and we are weeks away from a decision as to whether or not there will be charges brought against senior employees amid the emergency fundraising in 2008. This will be an extremely Unwelcome Development as barclays awaits the outcome of another huge, serious regulatory decision. G guy. Guy suzy, fascinating stuff. A bunch of things we need to tell you, one of which is nestle. Were still waiting to see a price actually, bhp is now opening, starting to get a price on the london this morning, up for 25 . Up 4. 85 . Its now coming through. When it comes to the bank story, remember that jpmorgan and citi report toward the backend. Our guest joins us on set. It is such a difficult story, the banking one, to understand. And once again you have a left field story that brings regulators in and unnerves investors. Europeanis it to own banks right now . You could argue that a lot of the legacy issues and concerns about management integrity and so on are to some extent priced into a lot of these banks. I think clearly these kind of events remind people that they havent necessarily gone away, they havent necessarily ended, but i think people have focused more on the economic environment, on the Interest Rate environment. Sure that there is such a big deal anymore. Banks, unfortunately, are tired with a fairly negative are tarred with a fairly negative perception and this adds to that. Matt let me ask you the same question i put two wayne bowers earlier today. , doad a big remit in apac you see any areas in those two regions of equities that are currently overvalued . I think that you also see cheap assets in emerging markets and asia, not necessarily overpriced equities in europe either. Yeah. I think generally, when we look around the world, equities as a whole are probably no longer cheap, but in some cases look somewhat expensive, particularly in the United States. If you are looking around for value opportunities, you are more likely to come across them in emerging markets and also in nonus equities. Particularly in sectors that have been relatively out of fashion for most of the last few years, more cyclical equities, financials to an extent, being the runup. For us, the value is outside. I guess the question is, is value enough to drive the market . The u. S. Has led the equity bull market over the last six, seven, eight years. The evidence for a shift in momentum hasnt happened yet, but we are certainly watching for it. Guy could be the catalyst to cause a correction . Was interesting listening to the fed over the last few days, talking about the fact that equities look punchy, and they marketsthe fact that arent expecting a lot with tax reform. Paul ryan has indicated it could take longer. Have we front run this story to aggressively . Maybe. Our view is that the equity rally has more to do with the synchronized upswing taking place before donald trump was elected. He may have added a little bit of optimism or enthusiasm towards some parts of the market which could benefit from his policy agenda, but since december a lot of those traits have faded quite badly. On a lot of the charts it is quite hard to see the relative performance of trumprelated trade. Our sense is that not a lot in the market in terms of expectations of tax reform and other policy measures. Andcan get surprises, potentially now you can get them more positively if you deliver something. Matt all right. You will stick with us. A great day to have with us. John stopford. Still to come, digging in. Elliott management urges bhp billiton to unify its listing in australia and sell its u. S. Petroleum business. Will others back billionaire paul singer with a 4. 1 stake in bhp . Plus, ready for launch. Italian Aerospace Company a vio is going public. We will speak with the ceo ahead of take off at 8 45 london time. Matt welcome back to the European Market open, im matt miller in berlin alongside guy johnson in london. Lets check in on how the markets are faring just 13 minutes into the trading session. For that we cross over to nejra cehic for a look at your been cap movers. Capa matt, my first big has hit a record high today as another step is made the consolidation of the generics drug industry. Strada agreed to sell itself for 5. 3 billion euros, the price at 49 above the level in december when talks of a takeover first surface. But i am looking at a real estate company, shaftesbury, gaining on reports that samuel tapley is eyeing the company of first takeover bid. Moment. 4. 3 at the downside, the tier gold producer centamin, a number of other gold producers declining as well. Much. Hank you very bhp billiton being targeted for an overhaul by elliott toagement, calling for it unify its Corporate Structure, spin off more access, and improve capital returns. Are destined joins us live from melbourne, australia. David, give us the details on what exactly paul singer is urging bhp to do. Good afternoon from melbourne. As he said, there are three things that the hedge fund is calling on ehb to carry out. U. S. Is a demerger of its onshore conventional oil assets. Assetss to see those bundled into a single entity, which would then be listed on the new york stock exchange. It is also looking to simplify its complex structure, it is essentially two companies, one in london and one in melbourne. That has all manner of legal consultations and brings up a number of complexities in the issuing of dividends. Bothtt wants to see that, companies to become a Single Company headquartered in on thene, with listings london and melbourne exchanges. And there is another investor calling for improved returns to shareholders. Specifically it is calling for more buybacks. It also wants cash to be taken out of the hands of management score underes could that on acquisitions as we hear from the big mining companies. Those are the three areas. Elliott says it has already been in discussions with management over some of these concerns, and today has released some of those details publicly. Lead elliott tends to sometimes a small groups of dissident shareholders or bondholders. Get sometimes goes it alone and has the ability to say these things, to wait them out for years. Im not suggesting this will be a court case, but to their proposed changes make sense to fellow investors, or is this another example of elliott being a little bit of a rebel . Yes and no. Some of the issues elliott has gone over today arent necessarily new. There have been concerns of the complex legal structure a php for some time. Its kind of a legacy of the 2001 merger between londonbased billiton and australiabased bhp that created the company we know today. That has been something that has been looked at previously, raised by investors, that i think the reality is the company said they simply havent found a way of addressing that structure that wouldnt be messy and expensive to carry out in terms of returns. That the familiar refrain. Perhaps the more interesting one is the discussion of the d merger of the u. S. Oil business. That is kind of contentious, in some investors here point to the fact that bhp sees oil as a better longterm that than some of its current topperforming commodities. It is certainly investing more in that area. So from the companys perspective it would be a key part of the business longterm rather than a collection of assets they want to spin out. That is difficult to reconcile. Guy interesting story. Thank you. Us, the head of multiasset income. I think this is a fascinating story, for the simple reason that in some ways paul singer is saying what a lot of people still worry about with the Mining Sector. If you have too much money knocking around, you may spend it. The chances of you spending it on the right thing are pretty low. Give it back to us and we will find something sensible to do with it. Are we still in that game . I think so. I think the history of Commodity Companies is they tend to get overexcited toward the top of the market splurge, then you pay for it on the way down. One of the things that has been driving both Commodity Prices and also share prices has been better capital, discipline, raining in future supply, reigning in the supply. I think investors want to see capital discipline. You can see whats happening to stock prices now that the market broadly sees this as a good message to be sending in to management. Matt john, talk to us about paul singer and elliotts rep on the street. I know in default situations, they tend to be a lone holdout. Situation like this . 20 people think about elliott . What kind of a force are they . I think they and other people like them, i think they play a useful role in terms of putting pressure on management. To some extent, it is selfserving. Im sure they are benefiting quite nicely from the balance we are seeing in bhp billiton share price. Nice to build a coalition and get people behind you, but it also helps push the trade you have put on. Ultimately, they are in it for the money, looking to make a return. But i think its an important consideration for management when these kinds of events or pressures build. Certainly, more broadly, they have quite a lot of influence, whereas maybe smaller investments, it is harder to push the agenda in the same way. Although i think shareholder activists have generally become a big part of investment approaches, with most hedge fund companies. Up ive got the screen which has the structure for bhp. Im trying to see if investec is on the list. Have you seen a time when European Investment management would say thats not big enough . If you want to make changes to the company, by the company . Buy the company . Has that time faded now . It is becoming a more recognized and accepted form of shareholder pressure. I think if it is pushing on an open door, it is easier. Certainly we and other Asset Managers put a lot of emphasis esg,called looking at government and how they are looking after shareholder capital, how they are behaving. I think there is more influence it used to be that a lot of shareholders are relatively passive and didnt really engage management very much, didnt vote on resolutions and so on. I think that has changed significantly. We are, along with other people, looking after other peoples capital. Thinking appropriately about how we look after that and how we engage. Guy you are going to stick around. Lets get the Bloomberg Business flash with juliette saly. Juliette guy, thank you. Barclays has said its board will issue a formal written reprimand, and make a very significant cut to the ceos pay after he tried to identify a whistleblower in 2016. The bank said staley made an error and not applying appropriate governance and attending to identify the person. Meanwhile the u. K. Financial conduct authority at Prudential Regulation Authority have started investigations his conduct. The largest investor in Telecom Italia has put its own ceo on the top of the list of proposed candidates for the phone carriers board. Typically, the first name is used to indicate the nominees for chairman. The significance we are seeing wasnt explain in a Statement Released yesterday. Has said it is in talks to buy a generic drug maker, europes biggest publicly traded health care provider. They say there is no certainty of a deal. Bloomberg reported on the discussions on friday. Following that report , shares closed 18 , the biggest oneday gain since may, giving them a market valuation of 3. 7 billion. Thats your Bloomberg Business flash. Matt thanks very much. Frances president ial election is becoming a fourway contest as support for far left candidate Jeanluc Melenchon surges less than two weeks before voting in the first round begins. The bloomberg composite poles show the lashawn and melechon and fillon are pretty much and i connect. Neck inty much in that i neck. The market has been concerned about a le pen victory. What what a melechon victory look like . I think it certainly throws a cat amongst the pigeons. I think the market has become increasingly relaxed until fairly recently, that it was likely to be a runoff between le pen an macrond, and macron would win comfortably as a middleoftheroad. If you end up with a second round, which is now possible between the far right and far left, it will make it much harder for investors to decide who to vote for. Having said that, the way the french president ial system works is that a French Assembly election coming up fairly soon afterwards, it may be that whoever we end up with us president doesnt actually control and up with as president doesnt work with a majority in the assembly and might be relatively powerless. But he would speak to markets if we got either of those outcomes. Guy will you make any changes to your portfolio . We have a few positions which are essentially insurance against elevated european risk, although we have fought for alongside that france wasnt the big concern. The bigger concern was in italy. And even though there are significant changes, there is a small probability. Guy how would Global Investors react to this . We talked earlier about valuation with an equity markets and European Equity markets have performed relatively well recently, but they have underperformed to the u. S. For a long period of time, and i think there is a value or risk discount in European Markets. Clearly, the euro is relatively cheap against the dollar. You can see some premium between peripheral and core bond markets, and i think it potentially exacerbates that. It will not encourage people to rush in. Opford. Hn stumpo this is bloomberg. And france decides, macron Marine Le Pen maintain their ground. If the market seeing a binary outcome . And taking in. Billiton toge bhp sell its u. S. Petroleum business. Will other investors back paul singer . Slashing staleys salary. Board decides on a pay cut following a whistleblowing probe. Will regulators go even further . Good morning. I am matt miller here in berlin ourgside guy johnson at european headquarters. Individual stock stories that are fascinating. Let us go to this green. This is where the weight is. Be aware of that. Elsewhere, we are seeing some of the money coming out of the oil sector. Some of the european banks are also on the move. Remember, later on this week, we supportingd jpm both numbers. The paul singer story having an effect. Bhp billiton come up by 4. 39 . Sector with miner it as well. You have glencore there as well. That ise bhp story really driving the Mining Sector higher. Being taken with a capital positions. Let us talk about capital positions from a different angle. Deutsche bank ceo says he plans to restore growth. Helping to alleviate concerns about the lenders strength. Let us talk about a derivative factor of this. Could this help frankfurt steal some of londons share of the pie as well. The managing director at frankfurts main finance, frankfurts biggest lobby. Good morning. Nice to see you in london. Let us talk about deutsche bank. Is that a big weight off your mind . It certainly is. Beenche bank has always the poster champion of frankfurt. This is very good news. Went so capital weight smoothly and it will help us in our effort to gather pace in being at the front row of the profiteers from brexit. Matt it does not solve all of the problems. Deutsche bank still has a lot of issues. Staying you are going to start raising revenue and doing it are two very different things. Especially when your businesses seem to be eroding. Deutsche bank is not completely out of the woods but they have made a big step. And here, we are optimistic that this is only the beginning of a good journey. Matt what do you think about the regulation coming up . Our twoortant is basel F Deutsche Bank and growing the revenue and concerns about their capital cushions . Mind in on everyones the industry. The key question is will it be applicable, not only to european banks that also to global banks. And clearly, it would affect the capital position. Everyone could be prepared for the situation as soon as it is coming which is not yet foreseeable. Ksw news a the little while back. Will it be leaving london . It cannot be avoided. The ecb has said it wants it under its supervision. There is also academic influence. For the upcoming financial crisis, europe would be a focal point and the ecb made its opinion very clear. The u. K. Government has been successful at the European Court of justice to make sure that euro clearing could be in london. But with the European Court of justice no longer being factored rule wouldt, the very much be in due course showing which way the decision will go. We will likely not see an immediate move but i think it would be naive to think that it will be good in london. The thing about currency clearing is that it is efficient if it all takes place in one place. Factorse other slipstreaming behind the fact that euro clearing has to go . It calls for one place. It is a natural monopoly if you want to call it that way. It is likely going to happen this way and it will be more costly. And that eventually will mean more capital to back it up. It is not something that Market Participants would like very much but i do not think it can be avoided. Matt how likely is it that people leaving london and up in frankfurt . Is that the most attractive place in your eyes in europe . Clearly, yes. From the beginning, we asked decisionmakers where would you likely be moving your business . On top of it, step stone has asked for hundred thousand professionals on its website. Was written in 44 . Frontrunner. Frankfurt is a smaller Financial Sector but is the likely winner. However, and to make this clear, we are out with a quote where we expect 10,000 jobs to move. That is a lot for frankfurt. To theyou compare it effect on london, we are talking 1. 5 of the Financial Services jobs here. I think the entrepreneurial tribe in london would be incapacitated. Matt thank you so much for joining us this morning. We will see what happens. It will get interesting i suspect. If you are a bloomberg customer, you can watch the show. You can also use all of the functions. That we are accessing. Great functions. You can find the video stream. And also, you can use the radio stream as well. Up next, we have liftoff. The italian rocket liftoff. We will be joined by the ceo of the company, next. This is bloomberg. Matt welcome back to the European Market open. I am matt miller in berlin. I believe it is a gorgeous day outside. There you go. Look at the Brandenburg Gate with the sunshine. Let us get to our top stock stories. Nejra let us start with some a nurse gainers. Bhp billiton. Urging theagement worlds biggest Mining Company to unify its Corporate Structure into a single australian headquarters company, spin off or assess and improve capital returns. Elliott says those changes could boost shares by 15 . Hitting a record high. This after a drugmaker has decided to sell off buyersl would give the access to german and russian markets for overthecounter and copycat medicines. It also marks another step in the consolidation of the generic drug industry. Up by 11 , starter hitting a record high. On the downside, we have our place. Cheers dropped by as much as 1. 2 . Now, it is 0. 4 . This is after the ceo, jes staley will be reprimanded and have his pay cut as investigators begin to look into how he began to unmask a whistleblower last year. He did apologize in a statement and said he would incorporate fully. Matt let us get the bloomberg first word news. And for that we go to juliette saly. Feds James Bullard has told bloomberg that Interest Rates can remain relatively low since the u. S. Economy is growing slowly. The Federal Reserve bank, st. Louis president says this is a good time for the central bank to begin shrinking the Balance Sheet. A half trillion that we have right now is way above anything like something in the 2 trillion range. We should allow it to run off so it at least we are making some progress toward that eventual gold. The committee has not decided what it wants to do. But even if we ran policy with significant amounts of reserves, we would only need a Balance Sheet in the 2 trillion range. Juliette u. S. Secretary of state Rexx Tillerson travels to moscow on wednesday. Americasldened by decision to drop tomahawk missiles on a syrian airbase. He is likely to face a tongue lashing. Unless the president snubs him. The u. S. Says it was forced to retaliate after the syrian president used chemical weapons in an attack that killed dozens of people. Tillerson has that america is not interested in regime change in north korea. These comments come after heightened tensions over the Nuclear Weapons ambitions of the country. Tillerson also said that the country must stop all weapons testing before further diplomatic talks can take place. Global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. This is bloomberg. Guy thank you very much. Theack on aerospace italian Aerospace Company, avio is the first publicly run Company Interested in running rockets. Good morning to you and congratulations on the ipo. And a public listing the right option for a Rocket Launch Company . Well, because our industry is changing a lot at the moment. There is an unprecedented move towards a more commercial demand and therefore, to want to be able to compete in a competitive market, we need to be able to mobilize resources, and bring new products to the market. Competitors,your including some very famous names, as we think about jeff bezos and elon musk. And have very deep pockets they are really going for this business. How will you compete and how does this ipo help you compete with some of those companies . First and foremost, we will be flexible because being on the Capital Markets will give us flexibility to source new capital whenever needed in a rapid format in order to divert them to new investments and create new products. You be profit fiting on thero reliability of our products. Matt how about reusability . Is that a key part of your plan . Reusability is a fascinating technology. We do have several technologies available that will be useful in usability including the liquid Propulsion Technology using liquid oxygen and methane which is a new technology suitable for reusability. At the same time, we do have carbon fiber motors with unprecedented performance in terms of a technical performance and cost performance. We think the combination of these technologies will drive the future. Guy how big will the market for satellite launching become . Observers, the number of satellites that will be launched into space in the next five years will be doubled what was launched in the last five. Satellites are becoming smaller and many more people want to go to space. Launch into space will see a growth into mind but at the same and growingd demand in complexity. Is a substantial shareholder in the business. What will your relationship be with leonardo . Leonardo, first of all, has been a shareholder to of io to avio for many years. We have always believed in the story of launchers. It has shared in our vision. Why . This is a marvelous performer. , by participating directly in the equity of the company. In essence, this is a massive management buyout in combination with leonardo. Guy great to speak with you this morning. Congratulations on the listing. Matt up next, amid sharp drop in car sales in the u. S. , ford is steering towards china. Continues to steer towards china. We interview the ceo, mark theds and get his odds on ford growth company. That is up next. This is bloomberg. Guy after a scorching we can come at london cools a bit today but nevertheless blue skies prevail. They last. How long enjoy it. I think today could be one of the better days. I am here with the Weather Forecast as well as what is happening in the markets. Let us talk about what is happening on this screen. Is the big name at the front and center of the downside. This is just a mechanical process. On the upside, the story is more interesting. The singer letup is having a galvanizing effect on the Mining Sector. Bhp billiton now up by nearly 6 on the back of this. Elliott management suggesting the company rationalize a little bit. The main message is do not blow any excess capital you have. We have seen what has happened in the past. Rio is also trading higher and glencore is also coming out. A decent move in the Mining Sector. He rand the affect of the downgrades coming through. And concerns about what is happening in south africa. This is a picture. You can see that we are now trading back up to that 14 level that seems to be a key line in the sand. 13. 90. The greenback versus the rand. Matt ford has big ambitions in china. For new growth areas. It is planning to introduce pickup trucks and make 70 of its vehicles in china, fully or partly electric. We asked mark fields about those plans and how the meetings between President Trump and the chinese president would affect automakers. When you have two leaders meet facetoface, they become people to each other. And that basis, and reading from the reports from the meetings, that is a Firm Foundation to go off and make concrete advances to strengthen ties between the two countries. Ties is a norm us, mutual between the two countries from a trade standpoint. We have to tread carefully on that because the economic relationship is the basis of the overall relationship. And i am glad to see both leaders meeting early on in their 10 years. The auto sector is one area where china could make steps to level the playing field. Whether that be in joint ventures or terrorists or tariffs. , china is. Businesses an important market. And tangible reforms and openings are needed. The thing there is how do you make sure you decrease policy uncertainty, boost Business Confidence and at the same time create equal opportunities for each nation. If i sit on the manufacturing counsel. We all share the same objective. We want a healthy, vibrant u. S. Economy. What are the opportunities in china in terms of sales and how much will that be reliant on the relaxation of the rules . Less than 2 of the total market here in china is pickup trucks. Even with that, it is the fourth largest in the world. What we have seen is the government is thinking about potential he changing some of the restrictions which we think would growh up the customer appeal of pickup trucks. The research we have done and the initial orders on our f150 raptor is a huge opportunity for us to continue to build the ford brand in china. Mark fields there with tom mackenzie. I should point out for our european and u. K. Viewers who do not really get why the pickup truck fits so well in china the chinese like big luxury vehicles with a lot of space front and back. Pickup trucks which used to be to door vehicles for hauling stuff have become in the u. S. The luxury vehicle of choice for middle america. Doorse they now have four and room in the cap as well as the bed. Guy do i get the feeling that matt miller mrs. His pickup truck misses his pickup truck . Raptor. Miss my i will admit that. Is up next, surveillance coming up shortly. Then miller and i will continue our conversation on the radio. Will continuea with surveillance. We will talk about what is going on in france, barclays, and bhp billiton. London looks lovely. Doesnt it . Francine the barclays board orders a significant pay cut for authoritiesr u. K. Launched investigations. Meet with ministers u. S. Secretary of state Rex Tillerson as he prepares to visit russia on wednesday. And a fourway fight for france. Polls,surge in the stoking more uncertainty about an already unpredictable
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