Told anna. He says barclays is becoming the bank he wants it to be. Boosting pressure on north korea, Rex Tillerson echoes trumps warnings, but says to is ready tona impose further sanctions. Is the market paying attention . Alphabet beats sales projections in the First Quarter and amazon continues its 20year streak of doubledigit revenue growth. Will it continue to fuel the nasdaq streak. Less than an hour away from the end of the month in trading when it comes to european equities. We start the session on a little firmer footing. The fair value calculations on your bloomberg. 1 s like we are opening up higher. Interesting to see how the stock stories perform. Lets talk about what is happening more broadly. Not a lot of action. Lets show you the gmm screen. The is the picture around world. The dollar a little firmer bid. Up by. 1 . Elsewhere, not getting huge moves. Equity markets drift and that is the story to take away as well. Do we get a sense of direction from the gdp data today . We get numbers out of the u. K. And the united states. Tomorrow is 100 days of the trump administration. Lots to talk about around that story. Here is the bloomberg first word news. The u. S. Secretary of state Rex Tillerson will be making his first visit to the Un Security Council to show north korea the world is united against its Nuclear Weapons program. No resolutions are expected to be made at this meeting that comes as donald trump warned a major conflict with north korea is possible if Diplomatic Solutions failed. Trumps comments came as he approaches his first 100 days about this. Datapan, economic indicating the worlds thirdlargest economies continuing slowly for a fifth straight quarter. Growth 2 sure here of growth. Thanry output fell by more 2. 1 . The figures come a day after the boj held its Monetary Policy. European Union Leaders excluding the u. K. , gather in brussels tomorrow to finalize brexit negotiating guidelines. The eu warned the 27 remaining reducewill remain any cost. Frexit negotiations brexit negotiations to continue. A little over a week until the runoff vote in the French Election. The candidates have stepped up their battle. On radically different views frances place in the globalized andd is putting macron marine le pen. Today has tone who create unity within a fractured france against mrs. Le pen who is the face of the national front, a party we have known for decades. I unfortunately grew up with the french Political Landscape marked by this party of hate, the refusal of the other and a shrunken france. Because yes, my friends, i am telling you this president ial election is a referendum for or against france. I call on you to choose friends, not mr. Macron. His platform is rather to about the dissolution of france. The ds construction of france. David global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Guy . Collin , they did. One sector [indiscernible] collin Beat Estimates for the quarter. I want to take you to the anr function. This is the price target and where we are with stocks. The white line, that is the price target. The stock is above where analysts see it. The potential for upgrade in where we stand. Can the analysts themselves to do that after what we have learned today . Cfo, talk to the companys good morning to you, sir. The queue for joining us. I have to start with the diabetes space. Lets talk about what is happening. Worst on the the news on diabetes, or is there more bad news to come . Forou know, we had planned 2017 to be a difficult year for diabetes activity and the reason being that since midlast year, it was clear that some plans in the u. S. To exclude our own and this is leading to decline of our sales and second, clearly there is more pressure on pricing which is by one of our competitors asil and stolen drug insulin drug. With the guideline we gave, which is to be minus four 8 . This is just telling us that we are planning the next quarter to be tougher. This was expected. There is pressure on our diabetes activity. At the same time, as you saw, the other activities we have done that he well. Maxine activity, special care activities and emerging markets which we post an increase in profit. And toof 3. 5 topline beat consensus. Altogether, diabetes remains under some pressure and that is what we expected. To ask many questions around what you just said and this is why i came in saying whether analysts will upgrade you on the back of the numbers you delivered today. Just to spend another moment, if i might on the diabetes. Minus six at the moment in a range that is four to eight. You expect in that guidance to be in the bottom half . Six where you think you will end up . You expect that to be the guidance that is more negatively skewed and positively skewed . Jerome what we said on several quarters and again at the end of our results in february, was that we should be in the range of minus four minus eight, from 15 to 18. Each year could be different from another and one quarter could be different from another. What we said already and have probably, this year is the toughest one as long as we andhave more competition the pay environment i described. Insulin well be that specifically, we could be a bit low end of the range and below the range of the minus four to minus eight. Nothing new here, but i can just confirm that our diabetes sales are going to continue to decline for 2017, possibly on the low end and a little low end of the range. Is is why we have been cautious when given the guidance at the beginning of the year on our profit. 3 , but at the same time the declines of our sales in ates, we are investing breakthrough drug. Start. Good guy give me a bit more detail on that. Treatment, extreme eczema is treated. Give me a idea of how that is received. How that market is developing and how you expected to develop . Approval by the fda in the u. S. At the end of march. Disease has not seen any treatment for the last 40 years. This is the first treatment coming to market which is making the difference. Sufferingu meet from this disease, this is changing from their their life. Altogether, it is a great improvement and it is where i things, one of the those suffering from severe eczema, this drug will change their life. Anticipated that in the u. S. , pricing was an issue now so we have some interaction with payers before the drug was at thed and we got just time of approval, we managed to fix pricing for the specific number of patients, covered by one of the two largest plans in the u. S. Being cvs. Pretty unique, such a drug being accessible commercially the first day of launch. These things are going well because prescriptions, two two weeks to get reimbursement because of the process, but i think the start targetingd it is patients. Guy let me wrap this conversation up. We are waiting for a number of big policy developments to become a reality in the united states. Health care is one of them, tax formulation is the other one. Sitting back and looking at the u. S. Market, waiting for these kinds of development to crystallize before you decide what you do next . First of all, when it comes to health care, the u. S. Market will remain the largest market in the world. It is true that pricing is an important issue, access for patients is an important issue as well and there could be changes triggered by the new majority under President Trump when it comes to access of everybody to health care and drugs. But altogether, i dont think it is going to change our overall vision that the u. S. Market will remain the market where innovation is praised the most. Providing you with innovative drugs giving value to patients and you can measure that. It is important not to price it at any price, but to take into andunt economic value burden of the disease when you price a drug, which is exactly what we did with our drug. The u. S. Remains a very attractive market. Sales and of our other markets are interesting as well. Tax reform is going in the right direction. There is obviously still a lot to understand. We know what has been presented by the new administration and it seems to be brought. Timing is not clear. Wait and see. You tend to believe it will be slightly positive to businesses, but to what extent remains to be seen. Guy absolutely. Thank you for sharing so many of your views with us this morning. We are interested to hear how the company and wider market is developing. The cfo of santa fe. Coming up, the latest. France releasing data ahead of the residential runoff. Experts have their say on President Trump as he approaches the first 100 days in the white house. Those conversations coming up. The open, 16 minutes away. Francine just getting data coming throughout of france. Ive got an eu cpi harmonized number year on year at 1. 4. 1. Nth of month cpi number. 2. Ppi running at 2. 9 . That slowed from the 3. 9 the previous time round. Lets see what we are getting around the world. Ubs says fees from Wealth Management have dry driven and 80 rise in profits. Under 1. 2e just billion swiss francs beating estimates. Also investing 20 billion francs in the first month of this year. Amazons unbroken twentyyear streak of doubledigit revenue increase shows no signs of slowing this year. Imates this quarter reinforcing its message to investors that big spending was all part of a winning formula. It was helped by an influx of Online Shoppers abandoning stores. Hasle parent alphabet beaten analyst expectations this year First Quarter, a fouryear streak of missing estimates after the holidays. A rise of 21 million billion dollars. Google benefiting from ads and smartphones. Updates ceo also gave an to its response to the sea to ad placing controversy. An update when it comes to united airlines. Court with one of its passengers. The terms of the settlement to , the terms of the settlement are confidential. That was your Bloomberg Business flash. Guy . Guy thank you, david. One day shy of the first 100 days of the trump one day shy of the first 100 quite a while to get policy through. The problem is that trump promised so much. Wasave the impression he going to deliver so much so quickly. What happened is he got access optimism after the election and in january, that started to fade. Then, it slumped. We are due for a bit more optimism. Maybe after the gdp figures today which reach capitulation point. The trend has been expect access optimism. The shouldnt have been too much delivered, rather than believing the promises. Beenthe promises have quite high so maybe expectations were raised too far. Off inm swings too far both ways. Lets focus on what else is going on with the president. In north situation korea that seems to be developing. Nobody is quite sure exactly what the communication is designed to deliver to the various protagonist parties involved in this. Markets dont seem to be paying attention. Our markets confused by what is going on . Dont care what is going on . Too early to price it in . Give me a sense of why north korea isnt calls causing a big blip question mark a big blip . Trump said there is a major risk of conflict in north korea. A year ago, that kind of comment would have caused massive panic in markets. Two things going on here. Power of trumps statements, whether treats tweets or otherwise, have lost impact. So many statements have flipflopped, many now seen as threats and not definitive action. The power of his comments have lost impact. Today, we areven seeing different message from the administration. While trump made that comment, he said he would refer a diplomatic outcome. Rex tillerson made a very different stance, saying we are working with china, china is prepared to impose sanctions and very much sounding like war was not in the agenda at all. Investors are confused about what the administration is trying to signal and not reading too much into everything trump says. Living it time to verify it. Guy we are into the end of the month. If iould you describe am to window dress my end of month portfolio, how do you think funds have done this month . What is the Market Positioning story versus expectations . Mark a good question. Overall, the market is long cash. We get the survey from bank of America Merrill lynch that shows consistently the the market has remained long cash for the last year or so. It has picked back up recently in particular. In april is market lopsided again in that there is optimistic, then we slumped and everyone is turning bearish to the bottom. Now you have arisen back and the market isnt ready for that. We break for the highs and a lot of people are underweight and have to chase this market. We pull back lower and everyone gets excited and starts trading those bearish narratives again. Guy mark cudmore, mliv strategist. Smart analysis throughout the day, always a safe go bet. , anre getting breaking news interesting scoop from bloomberg. Deutsche bank set to be naming close to naming cities close to naming a new cfo. I want to also play a whole bunch of sound we have got from the last hour or so in terms of the conversations we have been having. Stocks to watch include barclays, ubs and rbs this morning. Interesting that the calls we are seeing at this stage seem to indicate that we are going to be seeing a positive start for those institutions despite the fact that maybe we had concerns surrounding the trading revenue line on the q1 for barclays. How much of that will weigh down the story, i dont know . Ubs looks interesting as well. Manus cranny will give us more detail on what is happening out of zurich in a few minutes time. One stock i want to mention is zodiac. Allre getting changes, kinds of things going on with zodiac. You saw what happened with airbus earlier on this week. Zodiac has been having problems making the stuff that makes inside goes inside the barrel, the airbus airplane. There has been a delay on that and that has been a problem over at airbus. And even bigger problem for the zodiac Management Team and it continues to raise questions about the future of the business. The saffron story did not go well. Keep an eye on this, it has a Ripple Effect in the french industrial and worth paying attention to. Where i would look would be to what happens with banking institution. Whereng to see what barclays goes. It looks like the stocks 50 opens flat. The dax flat as well. The market open is next. A great morning for you here on bloomberg. The open is next. This is bloomberg. Guy welcome back. We are one minute away from the stock crash trading in europe. I dont think we have much of a sense of direction from european stocks today. We are waiting for the gdp number out of the states. It is a market of stocks today, rather than a stock market. , we have a flat 50. The ftse looks like it will open up further, but not much. In terms of the details, watch deutsches. That will be the interesting story with the cfos breaking. Watch barclays. It will be interesting to see how the trading miss comes in and affects the top line performers. Manusl be hearing from out of zurich very shortly. A bunch of things to think about. In terms of where we think the market is going to go, we think, flat. This is the picture. Market is opening up. Let us see how the Market Makers settle this story down. Most markets funny enough, the deutsches bonds sold off. We are seeing a bit on the ftse 100. We expect it around. 3 droid i dont think it will go anywhere in a hurry. It will be interesting to see how switzerland performs today. Cac has Different Things to think about. Honest, i am more interested in what is happening with the individual stocks that i am with the stock markets. Let us go to anna. A host of things could be influencing markets today, and none of them seem to be sticking and capturing investors imaginations. The gdp numbers, we have gradually coming through throughout the morning. The geopolitics, none of that seems to be shifting Market Expectations in the way you might expect it to do. Let us have a look at how we are doing across the stoxx 600 right now. This is the imap function on the bloomberg. It gives you a sense of where we are on the various sectors. Energy, not too bad. Materials, not too bad. Sort of downside, real estate and utilities picking up. Moving onto the gilt market, we have the yield on the 10year gilts. 1. 073 . This is the move we have made coming downwards over the last couple of days on yields. The u. K. Economy is holding up well, according to moodys. We are looking at gdp numbers grid 0. 4 , that is the member to look at quarter on quarter. That would be a fall from the previous quarter where we saw 0. 7 . Housing data out overnight as well suggesting we have seen this surprise second consecutive housing prices. Moving on to the shanghai market close, this is where we are on the shanghai market. A little bit of a move to the upside at the end of the session over in shanghai. A little bit of window dressing. This is a market that has underperformed. Msci hitting record levels earlier on this week, and this chart from the start of the year on shanghai. We have not been participating all that well in the most recent rally. Things could be moving markets that arent. Guy what you go below the headline to the next level and there is a lot going on. As you say. Not a lot moving the headlines, but the barclays story is amazing this morning. Barclays is being absolutely hammered. Absolutely hammered. It looks like a trading story that is affecting the numbers this morning and as you can see, we are down by 4. 5 on barclays, so barclays really feeling the pressure at the moment. Jes staley says this is an institution that is becoming the one he wants, but trading is not delivering. Maybe expectation management is not delivering. Please down by 4. 49 at the moment. Santander coming down. Standard chartered, 2. 5 on the pace as well. Bnp paribas down as well. Some banks are not softer. Let us flip it around the other way and show you what is going on. The cfowe spoke to earlier on. There are problems and diabetes. That is the bottom end of the range they have talked about. Nevertheless, there are other more positive stories coming through and the market looks like it is applauding the outperformance at the morning at a group level. Sanofi up 1. 59 , trading above where the analysts think it should be, so maybe there are upgrades coming through from that stock. Ubs, up byhing is 2. 76 . A much better day for that ceo than mr. Staley. Let us talk about barclays and what is happening with ubs in more detail. Barclays became the latest European Bank to post disappointing First Quarter trading numbers. They failed to deliver to expectations in terms of the gains we have seen from the american rivals. Barclays is an american institution. We spoke earlier on to jes staley. He weighed in on the impact that brexit is having on his business. Jes we will add employees within the European Union. We have had to restructure the bank for new regulations in the u. S. We had to restructure the bank right now to create the bank in the u. K. K. We will have to deal with the changes come to us visavis the European Union as a result of brexit, but we are committed to role in the and united kingdom. We think that london will stay the dominant Financial Center for europe and barclays is committed to do its part for that to happen. Guy barclays is now down bouncing around all over the place. Looking at the bug in the right hand side of the screen that you othere over here, and side. It is tv, everything is reversed. , sore down by 3. 84, down 2 it is bouncing around. Market is trying to get to grips with it. It is a negative number that has gone down two to four. We are bouncing around a little bit as we try to get prices settled on that. Ubs is the other bank we are watching carefully. 80 rise in First Quarter profits. Spoke toe business, he manus cranny. Manus joins us now from zurich. A pretty positive picture from him. Absolutely. Just look at the stock price, up 3. 6 , smashing it out. You talk about the other two institutions. Have bet the house on fixed income commodities and currency. He pulled back from the business and reduced the amount of capital he would allocate to that business. He talked about money coming into the bank, Wealth Management. There is nice momentum coming across from the fourth quarter. Talks about he the ability to get to a sustainable level of business with a concrete plan, a danger of fatigue with the private clients. Wealth management as a whole, profitability up by 19 , so that is the real story here, but the Investment Bank is key for ahmadi. He reshaped it, changed the dynamic and pulled back from certain orders. He questions the prophet bill daley the profitability of the other institutions. It is something you have been seeing for the last three to four years. The superior return on reallocated capital. We had a 24 return on capital for dab. Without compromising on quality and excellence on what we do, so we are a leader in many areas of the business, but there is the one we choose to compete. Here are some competitors showing good momentum, but some verycoming off of weak. Second, if you look at certain businesses, they may deliver topline profits, but if you look at the consumption of capital of certain businesses, why not still say im very happy with our business . The repeated question is i will give it another go. Are you or would you be prepared to allocate more capital to any part of the business . Absolutely not because they do not need it. They are performing exceptionally well because they have a clear Business Model and they are very focused on what they do and they are one of the best. We are one of the leaders in the world. We do not need more capital. What we are investing on is technology. We try to bring ourselves to the next level of Client Service and the balance of capital allocation, within the group and within the abe is just the right one for us. Manus there is no moment of regret for you at all, not a moment of the change . Absolutely not. We would be diluting the return abe and of thehe group. Manus there is the essence of it. There is a bank number one in fx. They are obviously heavily involved in rates. The nearlyt drove 50 rise in the numbers at the i. B. , but in the bit of the business he steps back from, that is what cryan and staley are doing on the credit business. He did not flinch. He is sticking to the strategy. You have seen this guy quarter in, quarter out. Give me to read right now. He looks pretty happy. I have not seen that smile on his face for a little while. The body langead which, read what is going on here for me. Have got together pretty much every quarter since he started running this institution. I have never seen the man look as relaxed come on form. You has money coming into the Wealth Management business. He has turned it around. If you get another four quarters of this and you win some market shared Investment Banking, where is the extra 50 of the business that is not back at deutsche . Wealth management is on form. The clients are doing pretty much as he wanted them to do. Not fully locked and loaded, but i have seen many a ceo. This one looks fairly relaxed at the moment, delivering a return on capital in his Investment Bank. Not so bad. Guy as you say, you can see that smile. I have not seen never for a little while. Manus cranny in the red. Thank you very much indeed. I want to take you to another story in the Banking Sector. Goinge got ubs, a story on with deutsches, but the one that a lot of people are focusing on right now is what is happening with barclays. Barclays smashed lower this morning. This is the chart im just kind of watching take my take at the moment. Almost to 212 pence this morning. We bounced off that. We are trading down 3. 6 this morning, but i have seen a choppy start as we try to digest what is happening at abroad group level of what is happening in trading revenues. Is that trading revenue missed . That disappointment seems to have caught traders attention at the moment, investors attention at the moment, and barclays is trading as we speak, down 3. 64 . Still to come, the Central Bank President cautions inflation pressures will remain to week. The fall back on the stimulus story. He likes what he is seeing in the european economy. Kind of read between the lines. Is French Business reacting to the elections firstround results . The chairman of companies. France operations. Atis going to be joining us 8 35 u. K. Time. Plenty more still to come. This is bloomberg. Guy welcome back. You are watching the european open. Friday morning. Let us check in on the markets. To be honest, this graph tells you almost nothing. It is what is happening below the surface is more interesting. Ubss is well bid. Barclays is not. That is a story in the Banking Sector. Sanofi is trading higher. That is what is happening in the drug sector, which is largely disappointed this earnings season. Let us find out what is happening with the midcap movers. Nejra cehic. In midcapsmoves this morning. A ton of shares hit a record high. This Company Operates call centers. We are up 7 at the moment. It has risen the most since 2012. This is after it confirmed its guidance and First Quarter revenue came in at a beat. Largely moving on the numbers and really, it is about a lot of earnings for the midcap today as well. Electrolux shares rose 6 after First Quarter earnings. Risen the most since june 2016, hit the highest since june 2015. This is the appliance maker, it up one percent and also commented on the north america appliance market demand, up 2 . 3 is what it is forecast for the full year. First quarter operating profit was a beat. Seems to, the market be focusing on the positives. Looking at the negative side, gemalto hits its lowest. We had the ceo commenting on the numbers. What we heard was secondquarter revenue lower by 8 to 10 year on year at constant fx. The ceo said it had difficulties estimating the needs of u. S. Banks. Conduct a Strategic Review and staff reallocations. It is also to cut some u. S. Industrial capacities. Guy thank you very much indeed. European Central Banks unchanged. President mario draghi struck an upbeat note on the state of the euro zone economy, but not totally without concern. Incoming data since our meeting in early march, confirmed that the cyclical recovery of the euro area economy is becoming increasingly solid and that Downside Risks have further diminished. The risks surrounding the euro group while moving towards a more balanced configuration are still tilted to the downside and really predominantly to global factors. The change in language was subtle, but i think, quite important. It was incredibly dovish from some peoples point of view. Have a single needle in your compass and that is inflation, that is kind of what you do. Michael krautzberger joins me on set. Michael in the past, the ecb has been criticized for having sometimes moved too fast, but i think this time, they want executors to be very patient. I think that is the correct thing to do. A year ago, we spoke about the on of the eurozone. They confirm this again. But on the other side, core inflation is still very low and we will be looking at 10 00 when we get the eurozone members but there is no rush whatsoever. The market is now very relaxed about the French Election but i think they did not want to make a proper change on the language in between the first and second round, so i would expect a bit of a stronger change, but overall, very patient, and i think, correctly so. In when that change language comes, the market will extrapolate. How careful do we have to be around that. The language will be so important year. He does not want a taper tantrum. He does not want anything resembling a taper tantrum. He isl i mean, i think almost preparing it very carefully because this time, there is Downside Risk, but it is moving to a balanced configuration. Guy do you think it moves the Downside Risk sort of element . Michael i think he will possibly move the Downside Risk element. He is kind of preparing it so the market does not go crazy, a taper tantrum. I would not be surprised if he also says rates stay here or lower. I think, when the downside growth is lower, i do not think the market will be too upset. I think the main question will then be in september, october, how exactly will they guide us about the potential starting of tapering, 2018 . Guy how do i position myself with peripheral spreads once we start to see the process of unwinding . That bid that has existed within the peripheral bond markets will start to fade. How is that going to work . Michael yeah, many people are worried a lot about that. I am not as much worried. On the one hand side, we have reduced it from 80 billion per month to 60 billion per month. It has not caused a wobble. I am not sure the market would have agreed. It would be so easy. You look at sustainability, i mean, we have negative nominal gdp growth in spain for pretty much three years, and now, we saw this is 3 . , real gdp growth inflation is back up to 2. 5 , so we are now basically approaching nominal gdp growth around 5 . That actually means we can sustain quite a bit higher. Evels of yield spanish yields are up from their 80w, but more like 70 business point. I actually think that eurozone is probably in a situation to endure a wellmanaged restore, but obviously, some question marks on the political side of some of the countries to themselves in the foot. What we have seen from france is making is hopeful. Guy what should this number be . This is the bond treasury spread. We have come in a little bit. A year from now, where is the number . Michael a year from now, i would see it tighter, more towards 150. It is a relevant move in the bigger context. Outright, but i would see the spreads tighten a bit because bunds are artificially epressed by the technical market. Guy Michael Krautzberger will stick around. Tomorrow marks 100 days of President Trumps presidency. What has been accomplished. We will chart his course, next. This is bloomberg. Guy 24 minutes into the trading day for equities. Headline levels going nowhere. Barclays, fascinating. We will come back and talk about barclays in a moment. Let us talk about what happens tomorrow. Today is 99. Tomorrow is 100 days of the top administration. Always seen as a landmark. Here is a chart of x rotations before and after he entered the white house. You can see the red line is november, the election. You get a reflationary surge that comes up. The white line is breaking two years, five, and 10. You have a different approach from the front even. Michael krautzberger is head of european fixed income at black rock. Did we get ahead of ourselves . Did we go too far too fast . As we approach 100 days, underestimating actually what the president will deliver. Michael yeah, i mean, this line is very interesting. You can see it in the outperformance of the u. S. Stock market until the end result europe. There was this honeymoon period when the market was very euphoric about what trump will achieve. Recently, there has been more doubts about Implementation Risk theobviously, i think French Election played probably a certain role here as well, and you could almost argue we are seeing a little bit of a bounce. Yeah, exactly. Especially on the twoyear. Probably more influenced by the commodity trade. So i am more in the camp that doubtsthe implementation are a bit too high and i would not be surprised if we now see another leg of the reflation trade. We are seeing a huge theme that was a certain break, which was election, about the Implementation Risk. Personally, i think there is a good chance we are now seeing another leg of the reflation. Guy a quick thing about this chart. This is market pricing, the fed 1 contract,. Nuary we are at 1. 5 here. That is half where the dots are in terms of the fed. The market has almost learned a little bit too much from 2015 and 2016 because each time, the fed told us we are going to hike three or four times. And they just delivered one height. I think that left the market very skeptical about the delivery, but i think the fed is in a much different mindset this year. What you also see, they changed the speed of hikes from one year to threemonth and i would not be surprised if they go in to bring. Guy moore on the banks, next. Tually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. Hey youve gotta see this. Cno. N. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. Bank has its shares punished after it posts a surprise drop in q1 trading revenue. The exclusive interview with jes staley in a moment. Boosting the pressure on north korea, china is ray to impose further sanctions. Easy as abc, alphabet beads sales projections. Amazon continues its 20 year street. Will it continue to feel the nasdaq 20 streak . Mastecs winning streak . It is friday morning. 30 minutes into the trading day. How are things shaping up . Let us show you what is happening at a headline level. This board tells you almost nothing. In terms of what is going on with market sentiment. That probably is something you need to Pay Attention to, but below the surface, things are definitely stirring. Let us talk about what is happening with barclays, reporting disappointing q1 figures today. A surprise drop in six income trading revenue. That is the gap lower. We are now down on the today basis by 5 . Certainly feeling the pain trade this morning. Ceo jes staley, about the number. Jes we had a great First Quarter growth. It was quite strong. Pretaxg the profit speaks to the core earnings potential of barclays. Are of the story is we getting very close to closing our noncore business, so i think one of the big differences between this year and last year is the difference between our core results, and our group results. It was a 600 basis points difference. We are almost on with closing noncore and getting out of the business as we do not want to be in, so about two months from now, barclays will be the bank that we wanted it to be as he launched the strategy in march of last year. That sounds like it is on track. Are you still on track to close the noncore unit in june . Is that still your target . And what about other strategic matters, like africa. How are you on that one as well . Jes noncore, we are down to 27 billion, down 5 billion in a quarter. Our target is to close noncore on june 30 of this year. Assets to close the sale up. One being egypt. That will close next week. In the final asset to sell to close the noncore, our retail bank in france, which is well on track. The Biggest Issue is africa. We have an agreement with the management and Barclays Africa in terms of how we will separate the two banks. We are waiting for the Regulatory Approval and south africa from the minister of finance. The dialogue continues to be very constructive, and we look forward to receiving that approval in reasonably short order and then we have time to down to stake in africa a level that allows us to do you consolidate the African Business as a regulatory matter. That is some of the strategy around the businesses you do not want to be in, but you are throwing your weight behind the Investment Bank, so let us talk about how you have been doing on Investment Banking revenue. How have you performed on that particular revenue line this last quarter versus the same quarter in 2016 . Jes the strategy is to be a transatlantic, consumer corporate, an Investment Bank. The Investment Bank is a very important component of that. The corporate and investment rt a littleed an north of 8 , 100 basis points better than last year. On a strong note, in terms of banking fees, which is mergers and acquisitions, bet Capital Markets, Equity Capital markets, we had a great First Quarter. The best debt Capital Market revenue number in the history of the bank. Rate andof the currency, one of the things you have to look at is that we had a very strong First Quarter last year, so on a quarter to quarter comparison, we did not have the uptick that a number of the u. S. Banks did, but in part, that was because we had a Strong Quarter in the First Quarter of 2016. We always want to do better in the business, but we are comfortable with how we came out and the overall profitability of the corporate and Investment Bank is making good improvements and i think we feel pretty good about the quarter. Guy stocks down 4. 82 . Tough morning. Tradingless, the hurting jes staley this morning. Let us talk about something else. Just saly has a lot to think about and that is brexit how the u. K. Economy will perform. Michael cranford of the european fixed income Michael Krautzberger of the european fixed income is still with us. It looks like the u. K. Data is going to slow down. Brexit part and parcel of that, but not entirely responsible for that. Give us your sense of where we are as we head into this weekend where the rest of the e. U. Is going to decide if negotiating tactic. Where are we from your point of view . Michael i think it is actually quite interesting. You mentioned consumer confidence. It has cooled off quite a bit. If you contrast that on the continent, we are making new heights there. Would argue that brexit is having an impact. We are seeing it in many things, so moving so moving house prices. Slowmoving house prices. I mentioned before that in other markets, we like breakevens, probably for that reason. We do not like it as much in a surprisesse relatively high. The economy is slowing. It will be interesting. For the brexit negotiations, interesting meetings taking place on the continental europeans i. Everyone preparing. I think the argument is a bit about the order of negotiation, but on the other side, i think hand if thetter election goes as we all expect and the majority guy let us talk about this chart for a moment. What do you expect to move here . The pound is strengthening a little bit. We are shy of 130 on the cable rate. We have seen some movement and it is getting more positive, kind of the huge negative positions unwinding a little bit at the margins. Atit that mina comes down the pound strengthens and the inflationary impulse fades a little bit or is that so much in train that will be hard to stop . Or that the prices down at 1. 082, because there is a safety bid with what is happening with france and a bunch of factors. Which one of those is wrong . Michael exactly, most people would argue they do not fit to together fit together. Exactly. I would probably argue that in the next few months, the move could come a little bit more from the white line, from the breakeven side, because if the economy is really slowing and not really taking off, maybe the blue line can still correct the bid because i would argue it prices in a really relatively im not sure we will get the crest of slowing. I think it will be more driven by the white line here. Guy how does the bank react to this . Holdel i think they will a trial for quite a while. The initial projections of slowingere much more they revised it to a more moderate slowing. In that sense, i think they are not guy and the bank has lowered its target. Do we have an understanding around how the phillips curve is working or not working . Do we have an understanding of how slack is transferring . None of these mechanisms seem to be quite working in the way that they should. Fair to it is probably say that the market and academics do not have a full understanding here because we keep constantly you revising. Guy a lot, arent we . Reality happens. As a market participant, you need to be quite pragmatic on that not necessarily belief the models, you can forecast it. I am absolutely sure, which is slightly related, that the economy recovers, that we will continue to revise. We will revise it down and down it is a, so i think work in progress. It let us call it that way. Guy it is easy to provide that afterwards and understand it, as you say. Headel krautzberger is the of european fixed income and will stick around. I want to take you to the bloomberg and a function we like to promote here, particularly on Bloomberg Television and that is the radio function. The page. Click into it and you get a whole bunch of other things that are really cool as well. It is this bit over here that i would focus on. Less so on what is happening over there. The feature function, tv , so you get the function, who is on air three of that is michael, oyster useful to know. Data, what is going on in terms of the market. We update you on the headlines. It is a great function. What it allows you to do, and you can whip through this as well, is get into some of the charts as well. Earlier on, we were talking about what is happening with the breakevens. You can click in that chart and it takes you to that chart. You can access some of the functionality that exists around the functions we are using and the charts we are using on that left side panel. It has been updated and is quite cool. I would advise you to make sure. Up next, the French Election heating up. Just over a week to go before the runoff vote. That conversation next. This is bloomberg. Guy 43 minutes past the hour. You are watching the open. Let us talk about what is happening around the world. Bloomberg first word news with david ingles. David thank you. Will be using his first visit to the Un Security Council today to try and show north korea that the world is united against his Nuclear Weapons program. No ne new resolutions architected to be considered at this meeting. That comes as President Donald Trump warned that a major conflict with north korea was possible if Diplomatic Solutions fail. The comments came from reuters. Asia, japan out with a flood of data. Friday, indicating the recovery of trading along quite nicely. Thirdlargest economy continued for another quarter. Rate stood atnt 2. 8 . At the same time, factory output fell by more than expected, to. 1 . Retail sales rose by that same amount. The figures come one day after the boj held its Monetary Policy unchanged it european unchanged. European leaders gather tomorrow for brexit negotiating guidelines. Yesterday, the e. U. Warned that its remaining 27 countries are still its chief concern as it seeks to limit negative consequences. Brexit negotiations are scheduled to begin shortly after the june 8 general election. Now, earnings. Streaks unbroken 20 year shows no signs of slowing this year. The Company Topped profits in the First Quarter. Its message to investors that devices are all part of the winning formula that was held by new business for its Cloud Computing division. Take earnings here. A for that has beat analyst sales projections, ending a four year streak of missing estimates after the holiday. Revenue in the most recent just 20. 1e to billion. Google benefiting. Speaking on the companys the ceo gaves, an update on his response to the controversy. Agencies understand how hard we work to create the safest possible environment. We do this by being very careful to ensure youtubes innovative creators can earn money to support their unique and popular content. They have been actively engaged in conversations with client about the new tools we are providing and we are having very productive discussions. News, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Guy. Guy thank you very much indeed. With over a week to go until france alexa new president , polls between the two candidates, tightening a little bit. Emmanuel macron still hold a commanding lead over the far right candidate, marine le pen. Macron has been criticized as being a little out of touch as the pair battle for a place inside the elysees palace. His is thejs w function, a special page set up. You can enter where you think will be. 0 but the numbers will be for the pen and macron and where the Exchange Rate will be. You have seven days until this closes. You can enter your estimate over your. How much le pen is going to get. 42 at the moment. I dont think it has moved as much. The polls are indicating a site for me, so that is not what we are seeing at the moment. You can put it over to show what is happening with the Exchange Rate. Seems to be the consensus at the moment, although we have been at 112. Take part. The more people that take part, the more useful it is. You never know. That is get back to the conversation surrounding france in more detail. Michael krautzberger is the head of european fixed income at blackrock and joins us in the studio from paris. We are joined by olivier marchal. He is the Vice President of consultants over in france. Let me start with you first of all. Ceos, your sense of how how big Company Bosses are feeling as we enter the last week . Are they feeling as relaxed as the Financial Markets look . Is there a difference between how Financial Markets are and how ceos are feeling . Olivier well, first of all, i guess ceos after the result of morenaction, definitely relaxed than before the first round. There was a potential catastrophic scenario to have two populist enter a euro populist antieuro candidates. We are in a wait and see period before the second round of the election. A sentiment of cautious optimism on the part of the business ,ommunity given that macron even though he said, the polls are getting more narrow, he will win the election. What kind of a honeymoon period do you think that companies and markets will give mr. Macron were he to win . Voteve the parliamentary coming up. That will be a critical factor in all of this. How long do you think he has got to kind of figure it all out . We have not heard much actually in terms of concrete policy formulation. That is right. I think the honeymoon period is going to be very short. As you mentioned, rightly so, it will depend on the outcome of the parliament election, which is going to determine whether the new president will have the means and power to govern and passed reforms. Once we have clarity on that, i think the Business Community will be very impatient to see what they expect, which is a set of Structural Reforms that the French Economy badly needs. Guy michael, do you share that view . In some ways, winning the elysees palace is the easy bit. Getting the French Economy to stop underperforming is the more difficult it. Michael absolutely, that is true. We saw this morning, french gdp data is for example lacking quite a bit. If you look at sentiment indicators, that is looking a bit better. Some hope that he will get the support from parliament. Thanll get more votes people give it credit for because it is a new party and i think on the other side, they will get some support from the established parties because i think the established parties as a whole do not have an interest for complete blockage. That will just pave the way for one of the other parties in the election. An easyfinitely not task to reform france and not an set some new impulses in the eurozone because that is the other side which he has on his agenda. Guy very briefly, the spread oats unds and do you expect the honeymoon period to write and out again widen out again . Michael we are trading 53 in the tenure at the moment. I would not be surprised if we settle around 40. Obviously, it will trade up and down, but if you look at the previous government, it was not that always good and reform. So i would not expect an extreme widening again. Guy can i come back to the event of earlier on this week at the worl one point factory the whirlpool factory . This will be a critical relationship and i am wondering how he is going to make it work. That is a very good question. I think the attitude of the trade union is going to be critical in the ability of the government to progress on the path of reform. As you know, change in france is not very easy. As Woodrow Wilson used to say, if you want to make enemies, there is a simple recipe. Try to make change happen. Thenis more true in france anywhere in the world than anywhere in the world. Ability of the president to develop a constructive dialogue with the trade unions will be very important to make reforms happen. Guy where do you see france in five years time . Do you see it as a reformed economy . Again, depending on the outcome of the president ial and parliamentary election, i think there is a chance, an opportunity, and i am quite optimistic actually, that we could have regained a lot of the that we hadess loss in the last five and 15 years. That will depend on a number of things 33 in particular. The ability of france to reform high levelsvel of ambition, reform aggressively the tax system in france, and finally, a good ability to reduce red tape, Administration Complexity in the market. Guy plenty to do. Big job, coming up your gentlemen, we will leave it there. The polls at the point in this point in time, in favor of mr. Macron. One week is a long time in politics. Michael krautzberger, head of european fixed income at lavrov. Thank you for spending time. Olivier marchal, a great pleasure to have you on the program. Let us move on and talk about some of the top stocks stories this morning. Let us go to nejra cehic. Nejra Bank Earnings are very much in focus. In showing an 80 rise firstquarter profit. That was given by Wealth Management gains and that was a beat. Chairs up 2. 2 right now, i must high this session. Rbs, First Quarter. Cost cuts on track. Thewe have seen shares hit the highest. Barclays be on the pretax number. A posted a surprise drop in fixedincome trading revenue and worse than forecast equities. It is failing to live up to its u. S. Peers. The shares have dropped the most. Jes staley has touted the need for europe to have a successful Investment Bank based in the region as american firms have seen shares in the trading and m a advisory business. Anna edwards did speak to jes staley earlier about the results. Strong first very order last year, so on a quarter to quarter comparison, we did not have the uptick that a number of the u. S. Banks did, but in part, that was because we had a strong First Quarter of 2016. We always want to do better in the markets business, but we are comfortable how we came out and the overall profitability of the corporate and Investment Banking is making good improvements, and i think we feel pretty good about the quarter. Nejra those are the Bank Earnings. Guide. Guy we are going to carry on the conversation. She highlighted some of the key socks we are watching. The Banking Sector front and center for European Equity markets. Equity markets are not going anywhere in a hurry. We are waiting for gdp data, particularly out of the united states. Today is the final trading day. Remember as well it is 100 days tomorrow of the trump presidency. There is a great deal to talk about. That conversation will be happening on bloomberg radio. Remember, live on monday and dab radio. Up next, surveillance. That is london this morning. The markets down a touch. Barclays, down a lot. Bank earnings bonanza. Barclays slumps as trading results disappoint. For ubs. Donald trump saber rattles over the nuclear program. Rex tillerson talks tough at the u. S. Security council. An expectation to show a slowdown in the u. K. Economy. How will this alter the Brexit Debate and the general election . We speak with former conser p
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