Glory . And a brutal time for banks. Earnings kickoff this morning with jpmorgan. It looks like chinese data is goingy behind the markets higher. The imf is not impressed. The donors on this economy, saying that the numbers are not as rosy as they seem. Later this week, we will get gdp. We talked a lot about japan, but we could end up talking a lot about china and that is a positive story. Guy breaking news coming through from peabody. Saying the majority of its u. S. 11. Ies filed for chapter more details on that story as we work our way through the story. We will get the chapter 11 details coming through. We will come back to that time. Ocused business in we do have a very positive call on where we stand in terms of the European Equity open. European stocks up by 1. 7 this morning to london is a little bit of a laggard. It looks like the dax is going to be storming ahead on the back of the chinese data we are seeing it looks like a very positive figure. What else is on the move . Hans oil. It is up almost 13 over the last three days before today. 40. Wti and brent over shanghai rallying on the back of those numbers. We are seeing a slightly weaker yen. Not a huge move, but gives you an idea of what is happening in the world. Lets get the latest from the firstwere news desk in london. News desk inword london. Oil futures have extended their drop in london and new york are reports that the Iranian Oil Minister will not attend a meeting of producers this weekend. In hopesces have risen that talks in doha will help cut the global got glut. To form arm transitional government. With a crucial Impeachment Vote looming in the lower house of congress on sunday, he plans to spend his early Political Capital on reform after the worst recession in the countrys modern history. Tesco has reported annual profit that beat analyst estimates. Adjusted operating profit rose by 1. 1 to 944 Million Pounds compared with estimates of 936 Million Pounds. Improving sales helped the u. K. Market leader mitigate the damage caused by an Industry Price war. Business groups from some of britains biggest continental trading partners have voiced their support for David Camerons bid to stay inside the european union. The trimester will meet employers groups from the u. K. , germany, spain, france, and the netherlands as well as heads of businesses including siemens and gloria and loreal. News 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world. Now with more news, i am going to send it back over to my colleague in london, guy johnson. What do you have for us . Guy lets talk about this china stuff. It is interesting. It is questionable. That is why it is interesting. Chinese exports rose 11. 5 in march. , bringing theed trade balance down in what appears to be a sign of stabilization. The question is, is it sustainable . Lets go out to beijing, where our chief agent columnist is standing by asian economist is standing by. The headline numbers look great. Many them, there are a whole bunch of other factors. That is right. I think the exports are not as good as the headline numbers suggest. That, thereeneath are a couple of factors at work. Firstly, there was a huge slump in exports in march of 2015. That is flattering the growth rate in march of 2016. Secondly, holiday affect. All of china took a week off in february. They came back to work in march. That probably moved some shipments from february to march. If you are looking at it in yuan terms, there is the currency effect. So if you strip all of those effects out, we look at exports year to date. On that basis, exports are down around 4 so far in 2016. Positive headline number for march. If you dig into the details, things do not look so pretty. For theat does it mean gdp figure that we are going to be getting on friday . We have a monthly gdp tracker which provides a monthly reading on how growth in the economy is doing. We have numbers for january and february. They put growth in the First Quarter at around 6. 7 year on year. That will be down slightly from 6. 8 at the end of 2015. But it will be squarely inside the governments target zone of 6. 57 percent growth for the for the6. 5 7 growth year. There was a dragon in the equity market in 2015. That can treated to a big boost in Financial Sector outlook. In 2016, the equity boom has turned to bust. That would be a drag on the Financial Sector output. That is one of the reasons we are expecting gdp growth to slow slightly in the First Quarter. In the other direction, huge government stimulus is a force for stability. Great stuff. Thank you for giving us the headlines and taking them apart. Ets bring in james bevan good morning. James hello. Guy equity markets look like they are going to this morning. Roar this morning. A nice piece of data and everyone feels more comfortable. Is that a good thing . Market has not resolved how it anticipates the Global Economy to move going forward. The imf is saying guys, it is risky. If you want to contemplate what the probability of recession is in the United States, we began the year with a 15 probability and went up to 50 . That down to 20 and it is currently at 30 . This is a market who has not yet decided where growth is going. I think we will see a lot more turbulence in markets. Today is an update because up day because the markets look good. Hans why are the markets looking past this imf downgrade . It is not like 3. 4 was a good number to start with. James i completely agree. This is a question of traveling be better than rising. At least in chinas case, there fiscaliderable flexibility. Chinas government can spend more money. I do think a lot of investors are queasy about the lack of capacity that Central Banks have to use. In that context, relatively modest growth is fine. Were we to see a retreat in growth and inflation, i do think we would need to see more fiscal response rather than more Monetary Policy. On where theut governments are prepared to write the checks. Hans we have had strong indications that there are political roadblocks to writing checks, especially here in germany. One thing that struck me about the imf report, comments that there was a concern about brexit. Do you think madame lagarde is overselling this . Is there an economic basis for this and could it backfire with british voters . James it is very hard to determine how the british voter will respond to this external pressure. We will have president obama no doubt entering the fray within the next month. That said, i would suggest people believe it would be better for britain to be out of the eu to anticipate that the twoyear negotiation period will be tricky. Their challenge is not about the next two years but what the longterm looks like. It may be necessary to have shortterm pain in order to get that. I would say that madame lagarde, in the context of World Economic outlook, quite rightly pointed and theisks uncertainty. The last thing that a fragile Global Economic outlook requires is a major jump in new uncertainty. We will leave it there and come back. Plenty more conversation with james bevan ahead of us. Up next, we will talk about peabody energy, the coal miner, now filing for bankruptcy. Its debt was seven times greater than its equity. That made the short sellers job a little bit easier, i suspect. Details next. Guy welcome back. Lets get a Bloomberg Business flash. Tesco has reported annual profit that beat analyst estimates. Adjusted operating profit rose by 1. 1 to 944 Million Pounds compared with estimates of 936 Million Pounds. That is as improving sales helped the u. K. Market leader mitigate the damage caused an Industry Price war. Inorgan has cut 5 of jobs its asiapacific Wealth Management unit as it refocuses staff on suppliers with higher investment thresholds according to a person with knowledge of the matter. The approximately 30 job cuts were said to have involved mostly relationship managers based in hong kong and singapore. The bank is due to announce firstquarter earnings at 11 45 u. K. Time this morning. Pharmaceuticals is facing pressure from bondholders to file its delayed financials. Intent to issue a notice of default, according to a person with knowledge of the matter. Valeant says the notice of default does not interfere. They reiterated they are on schedule to file its 10k on or before april 29. That is your Bloomberg Business flash. Guy thank you very much. Breaking news in the last few minutes out of the u. S. Energy sector. Coa announcing a it is filing for chapter 11. It wants to reducel company, debt amid the downturn in economies. I want to take you through the bloomberg and show you the Short Interest in the stock. This is dating back to 2012. Ryan chilcote joins us with the details. Ryan 6. 3 billion dollars of debt. This is presumably connected to the fact that they may not be able to make that Interest Payment as early as tomorrow. A lot of news the company has put out over the last 20 minutes. They are saying it will affect the majority of u. S. Entities. They are looking at selling assets in new mexico income and colorado. The inability to complete the sale of those assets is one of the reasons why i think we are getting this voluntary chapter 11 bankruptcy filing. In addition, companies saying they have sufficient liquidity to function elsewhere. All mines and offices are continuing to operate. A group of lenders led by citigroup is providing them with i. P. To the tune of 800 million. They are giving them a hundred Million Dollars but are first in line to get their money back. Thatto what extent is going to rescue some of these Energy Companies . I know this is a coal company. James i do think that coal and tar sands are both economically nonviable, not just because of a shift in oil prices, but the huge impact of shale and the increasing pricing of renewables. Ryan if you look at the first three months of this year in wyoming, which is where peabody owns the largest mine in the United States, produces 1 8 of all the coal in the United States, that has been an extremely cheap place to produce coal, but even that has been squeezed. Is it on the back of the shale revolution and lower gas prices . Evidencehat is kind of of what you are talking about there. You know oil so well, i do not know if you are going to be off to go hot or not, but give us a sense of how much the market has price tag the prospect of an agreement. We have seen this remarkable run in the last three days. Is the market assuming that you are going to get a deal . If so, why . We dont have any assurances from the iranians that they are going to play ball. Market isink the assuming there will be a deal and you and i would have been much wealthier had we bought oil on february 16, when the saudis, russians, qataris, and others got together and preliminarily agreed to a deal. Oil is up about 30 since then. That is a pretty good rise in the price considering it has only been two months. The reason why there is this assumption that there is going to be a deal is because they have been talking about it so much. Market seems to be happy with all of the talk that we are going to get some kind of cap. That seems to have been enough to motivate the price forward. I think the big risk is, and i am not alone in this Goldman Sachs is talking about this and a lot of banks are talking about this the real risk is that they do not come out of the meeting with something substantive or binding, something really meaningful. Satellite sack so bank dont,k saying if they the oil price could give up all of its gains since february that oil has seen as a result of all of this verbal intervention from oil ministers. Guy are you buying this rally . James i think we are in a trading range that is 3030 five dollars. Broadly, 35 50. I would be surprised to see oil back above 50 or below 25. Guy what does that mean in terms of the implications . Ryan you are playing it safe there. James in the last five years, there has been a low channel of oil prices. We are going back to 40. That is the key call in my view. Ryan what people say is, and this is what will be on their minds as they meet in go hot, if and theagree to a cap market gets more excited about the idea that we will not get any more capacity out there, you could see the price rise to 50 a barrel and then the shale guys come back from North Carolina and wyoming. Do they really want to tell the oil markets yeah, we are really concerned about this . Have been through a lot of pain over the last 18 months since they have worked on a strategy to punish the u. S. Producers. It is just sort of starting to work. James when one thinks about where the oil majors are positioned, it still seems to be 60 a barrel. That still seems to be high in the sky. If you said to me, if you are in an absolute punt on the market, what would you buy that would be enormous in 20 years time . It has got to be tesla. Guy not because they are a car company, but because they are a battery company. James absolutely. The renewable story continues to gather pace and completely removes the hydrocarbons from the Motor Vehicle market. 30,000 to take yourself off the grid in the United States at the moment. Improve the technology, tesla could be the Worlds Largest company in two decades. I am talking about a punt, not an investment. Hans james, thanks for staying with us. You are going to stay with us. Also thanks to bloombergs ryan chilcote. We are minutes away from the open. It is time for the chart battle. James, you get to decide whether my chart is more illuminating or whether you will accept a bribe him guy johnson. That is the only way he can win. Guy welcome back. Six minutes until the market open. We are going to put james bevin on the spot. It is time for the battle of the charts. Ahead of the tesco opening, i show you eurosterling, the yellow chart spiking up that is the brexit risk. That then i show you food price inflation. You can see the correlation with eurosterling. We have this divergence here. Two things. We might be looking at higher inflation in the autumn as we start to import more food into the u. K. That could be good news for tesco is that will allow its margin story to start to improve. I am feeling like i have it made today. Hans either way, you are going to win because you get to talk about a british supermarket. I know that make you happy, the provincial fellow that you are. I am going to explain this to you. Have is the world index. We also have wti. The important thing is we see them moving in tandem. The correlation is increasing. It is the highest correlation since 2013. James, if you like oil, you may like equities. That is what this chart shows you. James, give us your decision. Buts i likeguys chart, not for the reason that guy suggests. These are both great charts. Let me talk about your chart for a moment because i absolutely agree we have rising food prices inflation. To me, that is reducing margins, not increasing. Guy give me a winner. James hans. Guy you are watching on the move. Im alongside hans nichols, over in berlin. We are moments away from the start of european trading. You have our brief china gets back into europe; exports jumped the most in a year, pointing to a stronger gdp number on friday. Ad tesco goes to st. Louis new tesco ceo restoring the retailer. A brutal quarter for breaks, its earnings season on wall street. The forecast is a perfect storm. Jpmorgan kicks off this morning. Lets take a quick look at fair valuations and what they are trading. Looks like we are mostly in positive, mostly green on my screen. Lets check in with Caroline Hyde at the touchscreen. Caroline hans, thank you. Asia is on a tear. We are up to the highest level in three months. Six Straight Days of gains for asia. Will we continue to see this uptick . Denting that Risk Appetite flowing into asia. We are up 3 10 of 1 on the ftse. Tinto,ers in vogue, rio bhp at the top of the leaderboard. Lower, though it was expecting some uptick. We will talk about that later. Cac 40 opening flat. Look at that. I wonder if there is not one single stocks falling on the cac. 0 it is those related to commodities that are on a tear. Lets check in on commodities and on oil. Coming off those fourmonth highs, speculation is swirling about what will be achieved on sunday in delhi. In doha. Will we see a realigning in terms of the supply glut . On thestill above 43 bridge contract. Elsewhere, metals pushing higher, chinas export data helping to fuel it, the imf saying that it will be better than expected. Gold not invoke; you dont need a haven when you have risk on. Look whats going on in the bond market. Yields are really coming off, spiking higher. But we weremoment, at 1. 8 at one point. Money coming out of bonds. I want to take you under the stock market. Tesco is Still Holding onto the lows. We saw profit better than expected, off by 1. 3 . They are talking pretty bullishly about their next first half. This is their fullyear numbers. Net inflows for this particular asset manager up a percent on fullyear earnings, better than previously expected. Guy thank you. Lets see how the Market Makers are getting an early price on tesco. I have to say, the premarket indications seemed like it would be higher. Lets take a look at the entire wheel on the imf. The stoxx 600 trading in positive territory, the material sector, the energy sector, the financials. We look forward to the Earnings Seasons and start with j. P. Morgan. The high fee for trades are certainly leaving this morning. Lets talk a little bit about what is happening with tesco and show you what is going on there. The price is bouncing around all over the place this is the anr function, the giant supermarket retailer. This is the fiveyear chart. It shows you how price and price targets have largely moved and we have this breakdown. The analysts are starting to get it right it has been coming down, but the price has been coming out, to the tune now that is roughly in line with each other and it has been a bounceback, batching where we stand in terms of the price. Their target is around 195. The profit is beat. What is causing the stoxx abounds around . The market is perhaps unconvinced. Charles allen joins us on set. James bevan is with us. Charles, morning. Walk me through why tesco is down by 1. 2 . S i think one of the reasons we have seen the price bounds is earning estimates have stabilized, both for this year and for next year. It stabilized with the expectations of a 30 increase in operating profit, and in the early comments, dave lewis has said it will be a challenge to meet concerns. The stock is up more than 30 this year; youve got to think that people are maybe just a little bit nervous. I certainly think this is a case where the share price is grasping the numbers. However, i wonder that we will see downgrades now. I say that because when when cuts out the numbers that were announced, one sees reasonable volumes and decent margins, bu t an increasing focus on investing in prices and particularly in fresh food. I believe we will see margins at tesco stabilize around 1. 5 , which for me means we will likely see downgrading the mediumterm earnings forecast. Got to ask ai question that i should probably ask off their. Explain the british up session with supermarkets. I get that its an important company, that they are trying to tell a retail story, but this seems like an awful big focus on tesco. Explain that to a broader european and international audience. Sure. If one thinks about why people enjoy the stock market, it is generally because they make a lot of money. And where you can be unreservedly bullish about the prospects for tesco, and by extension, the share price. Were you an investor in the late 1980s and 1990s you would have made a lot of money. People hang onto those memories, and they think i can make a lot of money. More recently, they lost a lot of money, and that makes them nervous and upset. S changing of the guard its an everyday shopping experience, just as the bookshops a relative to the amazons. These are issues that absolutely connect british people. After all, we are nation of shopkeepers. Guy have to go back to that one. Charles, Simon Ballard says that the cbf has been a more cautious story. The bond market has rallied in terms of their position, but cbf maybe more cautious. Have the equity markets and analysts historical precedence . Charles maybe a little bit, in the shortterm. Its always very difficult to say whether the margin will be 1. 4 or 1. 6 . A little bit of inflation in the system could make it easier for it to be 1. 6 , and then the earnings estimates will creep up again. Isally, the other question theres this big number of their lease commitments, and it is a question of what they can do to get that down. Its important both for operational reasons, because they are paying too much rent, and for financial reasons. Function,is the dbs which shows you a fairly big company need to get over. How big a concern is that going to be . Charles in terms of financial debt, i dont think we are in a particularly bad position. Its the big concerns that are the lease commitments, and to a lesser extent the pension funds. Theres about 5 billion, but the cash flow is pretty good at tesco. They should be generating more than one billion or 2 billion. Guy kimi have a quick discussion of this issue of the margins. I pinched your charts, unashamedly, to talk about inflation coming through the system. It was a nice chart. James, though, believes that it will be a net negative for tesco, because they will have to compete on price goods. As a result, there will be an erosion on the margin story rather than a positive. Charles yeah. Ryone isspeaking, eve buying essentially the same vegetables from spain, and if the price goes up, they will all move the price up. 3. 2 ,tesco moves it up by and someone else by 3. 5 . But the praises of Fresh Produce do tend to move in line for everyone. If there is some inflation the system, it just oils the wheels of profitability for supermarkets. Optimism. Share this i think we are in a different environment. Tescos leasing challenge, we want the largest fiscal footprint in the u. K. , we want to be everywhere, we want to be in everyones back garden. But they now have to do is to shrink that, to get back to the basics. As you rightly identify, it is heavily being price competitive. A big part of that strategy. That in that environment, rising cost inflation will be taken on the chin, therefore eroding the margins. 1. 5 is the margin im looking for. Hans that kind of gives me my next question. You are saying this is an indicator species for how well british retail is doing, with some important caveats. When we will get sales from the United States in march. We have seen this oil price go down; its a big question. Do you think we might see more confidence in the American Consumer when we get those numbers later today . Interestingly, when i plot what has happened to the oil price windfall, i see that british people have spent more than windfall. In other words, they have raised their spendings. In europe, it has been roughly 80 . In of the states it has largely been ssaaved. Hans thanks for that. Can thanks to Charles Allen of bloomberg intelligence. As always. Up next, banks on the back foot. Jpmorgan kicks off earnings this morning. Just how bad will this round of Bank Earnings be . We will look ahead, coming up next. Guy welcome back hans welcome back. Lets get the bloomberg first word news with juliette saly. Thank you. Standard exports have jumped the most in 18 months, adding to evidence of stabilization in the worlds secondbiggest economy. Shipments rose 11. 5 in march from a year earlier, compared with a 25 slump in february, when factories and offices were closed for the weeklong lunar holiday. Oil futures have extended their drop in london and new york trade; on report that the Iranian Oil Minister will not attend a meeting of producers this weekend on freezing output. Current prices have risen in recent weeks on hopes that the talks would result in a deal to cut the global oil glut. Brazilian Vice President michelle tema is drawing up plans to draw a transitional government, amid accusations that he is the mastermind of a coup. With an Impeachment Vote looming ema plans to spend his early Political Capital on reforms that will stem the worst recession in the countrys modern history, according to a n aide. Business groups from some of britains biggest continental trading partners are giving support for David Camerons bid to stay inside the european union. The Prime Minister will meet with players from the u. K. , france, germany, and spain, along with the heads of businesses. Day,l news, 24 hours a powered by our 2400 journalists in more than 150 news bureaus around the world. You can find more stories on the bloomberg at top. Guy thank you very much. Quarter past the hour. Tesco is still down, but lets talk about banks. It is earnings season on wall street. Jpmorgan kicks it off at 11 45, and investors are preparing for an ugly quarter. They produced m a activity and historically low rates which created the perfect storm. Profit estimates were slashed. Lets bring in our banking reporter michael moore, and the global head of equity derivatives strategy at bnp p. We have been told it is going to bad. How bad is it going to be . Michael pretty bad. There have been a number of headwinds not just on the negative trading front but also if you look at low losses, the energy price issue has reared its head again. People are expecting higher provisions for those loans, and you also have the Interest Rate environment not helping. There are number of things. Bad. How bad is it going to be . Michael pretty bad. There have been a number of you also have wealth and asset management, the lower stock prices and market values hurting that as well. Every business is facing something this quarter. E trying to show that they can cut costs to offset this, but certainly, there are a number of issues. Guy i think the news and heres why. We do this was coming. They have all told us. Listen to them all he told us is going to be ugly. The market is ready is it . Michael to a large extent, yes. If you look at analyst estimates such as consensus estimates, they have been dramatically downgraded. Guy we have a great chart we can bring up which will show you a downgrading. The markets got ready. Michael they got ready for that. Estimates. Ere the real question is whether we will see a recovery in the following quarter. If you look at the mapping for earnings, quarter by quarter, going out on the s p, we are expecting Earnings Growth this quarter to plus 8 or 9 by the fourth quarter. Clearly, the banks have got to help our that. But the question is can they. I think a lot of it is based on equity markets going back up, on m a starting up again, and on trading revenues improving. At the same time, you have got to expect the stabilization. Thats what i worried about. Hans you look at equity, you look at m a, you look at trading, it is hard to be optimistic about either of those in this quarter. This Current Quarter my question is how much correlation is there between the american financials and their european counterparts . Are they moving in tandem, or is it more of a zerosum game where the benefit of the u. S. Banks invariably means a law to, say, Deutsche Bank . There is definitely a zerosum game because they have been taking share lately, but they are all facing the same issues this quarter. To guys point about this being known, i think that is why there is so much emphasis on the outlook. Analysts are saying, what are these management teams going to tell us about the rest of the year, given that we know how bad the First Quarter was . That . Do you agree on when we see a lot of that negative side in europe, is that going to filter through to some Positive Side in the u. S. . I certainly think lets be frank. If we look at the investment seen, there is no doubt that european banks are still behind the curve in terms of restructuring. They are losing market share; that much is clear. In any resurgence, clearly the u. S. Banking will benefit a lot more. Seen, there is no doubt that european banks are still however, let me just point out the fact that valuations are dramatically different from the u. S. And european banks. European banks really are ultra, ultracheap. There are many reasons for that, but they are much, much cheaper. If you look at book values, up to half the valuation of their u. S. Compatriots. You could turn the other way and say, on the other hand, so much bad news price into european banks, what happens the day we see some good news . Maybe european banks rally more. Guy teams this apart more. You have a not as bad season at u. S. Banks. Say, the u. S. Takes are doing quite as badly . Is there more spread in this . Or have we reached the extremes of the evaluation . Edmund i suspect we are at the extreme. The way to play it might not be through the equity markets. One of the cleverest ways maybe through the credit market, bonds rather than equities and maybe they will benefit more from the action of the ecb. This tributeael, the banks little more. Walloes it look like street in terms of the Banking Sector . What will the spread look like through the earnings season . Michael i think you will get more, better news out of the consumer side. They have been building the positives; they have some levers there. Whereas on the corporate side, you have got the issues that we have all talked about, volatility, and you also have the lending issues. On the consumer front, the consumer is a little healthier. There has been a lot of competition in the credit market, the credit card market, but it is a little bit they have a little more control theirre. Theyre certainly its a little more manageable. Guy we will leave it there, come back to it in a few minutes. Ichael moore, an dont bank on a sustained rally for the pound. That is the call from some traders. We will discuss that next in our chart of the hour. Hans welcome back to on the move. The dax is on a bit of a tear, up almost 2 this morning. We are looking at some of the major movers volkswagen is up, it gives you a sense of how related the german stock equities really are to that chinese data. Now lets get to nejra cehic for our chart of the hour. Nejra thanks, hans. I have a chart here looking at the net cost of threemonth contracts that are hedging against sterling losses. The threemonth contract that is the purple line. And these are the premiums, the costs. 4. 7 ,iden this week to the most since bloomberg began compiling the risk reversals data in 2003. There are also similar premiums to protections for the fixed and 12 month. Options prices suggest traders are more pessimistic about sterling, not just against the dollar, but also against any other of its g10 peers, and not just in the wake of the referendum, but over the next year. This is after the pound has already fallen more than 3 . The worst performer against the dollar out of 60 major currencies tracked by bloomberg, and it is dropped even more against other currencies on a trade weighted basis. Down almost 7 this year to close. Guy i am going to ask you for an opinion on the brexit. Im sure they will be delighted. With how the looks like it is going to be under pressure for a le according to the charge to the charts. Give me a sense if you believe current pricing. Edmund i have to say, i was just talking to my fx colleagues yesterday, and it is interesting to look at the positioning on the pound. Investors are more negative on the pound, as negative as they possibly can be. Everyone is already short. The question you have to ask yourself is if everyone is short who was left to sell . Guy i guess in the event of an exit, a be there is still downside momentum, that point yet. Edmund exactly. On a 612 basis is that the pound is undervalued. Not that the market is wrong, but that it is pricing a lot of volatility, given the shortterm event we will have, one way or the other. But volatility can disappear after that point. Guy it can, and quickly. Thank you very much. , we will talk the Health Care Sector. Valeant very much in focus once again. You shouldnt have to go far to get the help youre looking for. Thats why at xfinity were opening up more stores closer to you. Where you can use all of our latest products and technology. And find out how to get the most out of your service. So when you get home, all you have to do is enjoy it. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Shoshow me more like this. E. Show me previously watched. Whats recommended for me. X1 makes it easy to find what you love. Call or go online and switch to x1. Only with xfinity. Guy welcome back. We are 30 minutes into the trading session. It looks beautiful outside. Equity markets are on the front foot, great on the ftse, not on the tesco. Caroline hyde, what are we watching . Caroline we will dig into tesco in a moment, but i am looking at the leaderboards and what you can be keeping a close eye on as the stoxx 600 pushes higher. This is the bestperforming company. Its having its best day september, in six months. As a maker of medical devices, ones that can help you with cancer, there is a big vote of confidence in the new chief executive. It was may last year that the previous ceo stood down amid for performance. Isy had an interim ceo, who now to be replaced by a new man on the block who will be coming to join richard housman. He will join the company, taking over on june 10. Look at the voting confidence on the new chief executive. But so far, they continue to disappoint in terms of overall numbers. Ono charging ahead, miners iteris we see metals galvanize, and the biggest deal maker in the world is up 6. 7 because Credit Suisse is going long. Credit suisse upgrading, saying it is time to outperform the company. Theres a cycle recovery. This company just raced 3 billion earlier this month, and now they are paying down earlier this month. This company could see itself on a surer footing. Tesco, the, not on the sure footing. Higher,s were driving we saw profits up more than a percentage point, but it seems to be what the chief executive has been coming out to say. It looks as though overall we are starting to hear from him concerned about living up to expectations, saying it would be hard to achieve if they live up to where the consensus ranges for this years fullyear forecast. They are still facing some really tough areas in terms of the overall pricing competition. Clearly, to make the profit that they want to, it will be a significant achievement. Some concerns on how they might not live up to this optimistic hope coming from various bank analysts. Guy great stuff, thank you. Lets go to the top of her chart and talk more about pharmaceuticals. Valeant pharma is facing pressure after a delayed financials. It has notified the companys of its intent to issue a notice of default, according to a person with knowledge of the matter. The company also reiterated that it is scheduled to file its 10k on april 29. Shares fell in afterhours trade. Bloomberg rates intelligence st for sally joins us. Give us details. They are saying they wont accelerate the indebtedness story, but if they were not to file financials, there is an option to receive payments on the bonds as a result of that date. I think was important is to go with what we know. Bondholder has notified the company, and he gives that 60 days, that takes it to june 12. Theyve already committed to their Loan Investors that they and they late may are saying they will file by the 29th of april. All of this falls at the timeframe that the bondholder triggers. Perhaps there is nothing to look at here. There is a lot of speculation that perhaps they are short of the stock, a little bit of fear mongering going on. I dont know what the details are. Not my speculation but there is an influence from different people. The reality is that the overall game issue with valiant is that even though they filed, this is the first time we will see 2014 in 2015 numbers. Details, howull ugly that will be will be determined. The biggest question for any investor is what is the Global Growth profile looking forward . Rises, locked out of both of those, what is it going to look like . You will have to start spending r d like a normal farming company, andarma your margins completely change. Its very tough to know how this company will look in a year or two years. Guy interesting. This is kind of the antithesis of what else is happening within the rest of the sector, where analysts are becoming increasingly positive. With whats happening with evaluations to have the Health Care Sector, its a bit of comparing contrast with the Banking Sector. Is the market getting overly optimistic about whats happening in health care . No. I think there is some fantastic longterm drive i have been a huge proponent for the sector and also for biotech because i think everything points the same way the demographics are positive, we all get older. And as we get older, if you are lucky enough to have 75, your chance of getting cancer is massive. Its exponential. If you make 75, cancer will get you sooner or later. The industry is doing a lot about it, and a lot of people who get cancer in their 80s survive for a long, long time because the treatments are getting that with better, partly because the Drug Companies are bringing out new drugs all the time. And you have a conference that will come up, where you will hear a lot of good news, particularly faces two and three. People will get excited about the prospects, and on top of that, health care in places like china and india is growing much faster than nominal gdp. They are becoming more middleclass, spending more on health care, and so do millennials, which are the biggest sector in the population today. They worry more about their health care that a previous generation. Hans edmund, i will take your point on china and india. Tease me through why you see it will increase that much more in, say, western democracies, especially when there are real Structural Forces trying to keep costs down, mainly the Affordable Care act. Edmund again, it comes back to the same thing. At the end of the day, the u. S. Spends too much on health care, 74 of gdp, nearly twice as much as we spend in europe. But if you then breakdown where that money is spent, only 9 is on prescription drugs. 91 of the u. S. Health care budget is Everything Else 50 spent on hospitals and doctors and clinical care. If you want to reduce costs anywhere that is where you cut drugs,t, not on the which can be Cost Effective if they keep you out of the hospital or make the stays shorter. The real cost is every night in the hospital; thats whats killing the economy. Guy interesting. Sam, lets pick up on some of these themes. And we are heading into these key conferences. And we have an earnings season coming up. Put that all of the mix for me, if im investor. What is going on . Everyone is getting very excited about the Health Care Sector is that justified . Absolutely. I couldnt agree with him more. One of the analyses we just put out this morning, on people investing money on r d, there is a lot of talk said Pharma Companies about becoming less effective in developing new drugs. We have some numbers showing potentially that it has peaked in terms of how much its costing them to get a drug to market in 2010. I suggest that perhaps it is falling its still a big number, if it is just a simple division. Take the total number of r d, the total number of new drugs they go to market, is still 2. 3 billion. Thats not how much it cost to get the drug to market but its simple math that allows you to do comparisons. That has fallen since 2010. We aretom line is getting this science that we have been working on for 15, 20 years. Genomic revolution is bearing fruit. We are literally seeing discoveries, particularly with the little ways that cancer cells find ways of protecting themselves against being killed literally on a daily, weekly basis. This will have to be monetized that it is happening. The one we will see this quarter is the best Earnings Growth at aside itstting generic drug exposure, its novel drug growth, driven by cancer drug upheavals, is phenomenal. That drug is heading to 10 million, which will be the second largest cancer drug ever. I was fascinated by edmund s breakdown on gdp figures heres my question. Do we have good numbers on plasters per capita . My own theory is that if you over plaster, in a country like germany, you rarely get one. You have to be bleeding profusely. Does that data exist . And i willakdown, give you bonus points if you can how many break down on of those bandaids have a hello kitty theme. Edmund [laughter] on the first point, there is data from the world bank and im sure simon knows where it is. I will agree with you that the dogsdoes overprescribed but what it doesnt do is overprescribed surgeries. Remember, doctors and surgeons are paid by the surgery. Unfortunately there is every incentive for them to overprescribed surgery, when maybe people dont. This is a problem because of the large state funding that exists and yet we dont have the same problem which is largely private medical insurance. I think that is something the u. S. Needs to get a grip on, and that is where one of the obvious efficiencies can be made. Hans thank you for the answer. Hellol get a sign Kitty Bandaid plasters per capita. I have my own theory on who will be the leader but thanks to bloomberg,. We will have sweden bent on its economic boom to help pay for a record influx. We made a live in stockholm with the details next, if we can get the technical issues sorted out. Guy 44 minutes into the equity session. This is on the move. Wes gave caught up with what you need to know. Theres juliette saly. Juliette thank you. Tesco is trading lower in the morning session, despite reporting annual profit that beat estimates. Adjusted operating profit rose by 1. 1 to 944 Million Pounds, compared with estimates of 136 Million Pounds. The uks biggest grocer says profits will be held back this year by the cost of improving its product range. Its ceo continues his turnaround efforts. Jpmorgan has cut 5 of jobs in its Wealth Management unit as it refocuses on clients with high investment thresholds, according to a person with knowledge of the matter. There were at least 30 job cuts this week, involving mostly relationship managers based in hong kong and singapore. The bank is due to report fourthquarter earnings at 11 45. Peabody energy house voluntarily filed for bankruptcy. Trading shares were suspended immediately; all of the min es and offices are expected to operate through the process. No australian entities are included in the filings, and operations in that country are continuing as usual. Thats your Bloomberg Business flash. Hans thank you. Swedens budget was unveiled this morning. The government raised its Economic Forecast for this year and predicted a narrowing deficit helping the nation cope with the record influx of asylumseekers. Lets get more from the chief economist, joining us on the phone from stockholm. Thank you for being with us. Walk us through this refugee the fact. We have something similar in germany. Yes. For sweden, we received over 160,000 refugees last year. That may not seem like such a high number, but far country was less than 10 million, its like the u. S. Taking 6 million refugees in one year. You already had a very expansionary Monetary Policy, and then on top of that, you are getting large fiscal stimulus, unexpected. It means that the economy is booming at the end of last year. We had the growth of 4 in 2015. Hans what is the multiplier effect, in terms of fiscal stimulus spending on refugees . Is it more or less than, say, traditional infrastructure spending, or is it more like a direct tax rebate . I think its quite large. I think it is larger than infrastructure spending, because what you get is population growth; more people into the country by spending money given to them by the government on simple consumption who did clothes and beds. That, you employ a lot of people. You have a large Public Sector like sweden, and you need to employ teachers, social secretaries, all sorts of different requirements. We see underemployment dropping quickly in sweden, particularly among swedes. Unemployment is rising among the foreign, who cant find a job. But the unemployment among swedes is declining. They are helping in the refugee crisis. They get balanced employment increase and population growth. I would say it is definitely larger. And with whats happening the swedish krona, what is this going to have in terms of an effect in the Second Quarter in moving forward for 2016 . We seethe swedish krona, a clear depreciation pressure, and the swiss bank is trying hard to get it to strengthen too quickly and too much. That will put a downward pressure on inflation, and inflation has been the major issue. So you are seeing negative rates, and we are expecting that to continue, just because growth is so strong. In terms of growth, we do expect it going forward. We still have an expansionary Monetary Policy, fiscal stimulus, the government announcing were fiscal stimulus, 10 billion krona per year to different municipalities, mainly with the refugee crisis. So we do expect strong growth, but maybe not as strong as it was last year. Last year was exceptional. Guy guy in london. I have listened to what you had to say, and as i was sitting in a number of european and i have looking at Monetary Policy not delivering the pickup and employment or that feedthrough into the real economy, and im looking at sweden is sweden an advertisement for the rest of europe to say, we are focusing on the run channel, we need to go fiscal . I definitely think you need to go fiscal. I think sweden would have been in a better position and that had done more fiscal compared to negative rates, for example. Because the transmission mechanism from regular rates is smaller. It doesnt function as well. The key issue is that when you go fiscal you have to think about what kind of fiscal stimulus you do. But i am concerned about is that there is a discretionary fiscal and i would really like to see more reforms that increase longterm growth, investment, infrastructure, Structural Reforms of the labor market. Unemployment is increasing among the foreignborn. And it is decreasing now for swedish people. So you get a very polarized labor market. Sweden is not a good example of that. Guy but to use an american phrase, what youre getting is shovel ready. To feed through to the economy is very quick. You need those kinds of nearterm areas in which you can spend money, and maybe some of the larger Infrastructure Projects take some time to feed through. At least sweden is demonstrating it has shovel ready stuff to do now, ill be at in rolet albeit to the migration story. Exactly, and its not the politicians were hoping for. They were trying to get the budget back in balance, and they get this crisis. You do get fiscal stimulus that is really helping growth right now. I think that is true, but longterm, you still need to look at Structural Reforms and longterm investments. I do think it is good shortterm. It is very good for taxes, and the incomes and budget balances that are better than expected. Tax income, tax revenue has increased more than expected because of the fiscal stimulus. But i do think it is a good way forward, and fiscal stimulus right now has a larger effect on the margin and more Monetary Policy. Guy that has been great to talk with you. A really interesting conversation. And the bremen. Up next, we will talk u. S. Retail sales. Jpmorgan numbers out plenty more coming up. Theve to take into the tli function after the break. Guy u. S. Retail sales out this afternoon. We get them at 7 00 p. M. U. K. Time. The beige book will be a story; lets bring in the first word strategist, richard jones. Richard i think the beige book will be of interest. We have had a lot of speakers the doves are still in control. Any said dieter any fed data will be good. Guy oil markets climbing, equities bouncing back, more risk on. Will the market lean into that, or do you think it will fight it . Richard in terms of said expectations, i think the reason we are seeing what we are seeing is because the fed will be dovish. As long as the fed stays accommodative, risk will probably do all right in the coming months. Guy earnings season will be fascinating. Thank you very much. For our customers, let me take you to the tliv function. I urge you to use this around the big events that are happening. Jpmorgan firstquarter earnings, 11 45 london time. Crude inventory report also out this afternoon. Tomorrow we can look forward to Vladimir Putin and his usual q a. Thats it for this show. The pulse is up next. Great coverage into the morning. Stocks are higher. Francine trading higher. Your short europes stocks open higher. A warning from wall street to jpmorgan kicks off bank Earnings Seasons. I deal or no deal. Crude slides from us highest after doubts emerge over the attendance of irans oil minister and this weekend is this weekend upon meeting weekends meeting. Francine welcome to the pulse, life from europes headqurs