Transcripts For BLOOMBERG Bloomberg Surveillance 20170302

You. First thing is first, we always check the markets. On whates us guidance investors think. The Federal Reserve continuing to drive a rally in the dollar. Asian shares falling, u. S. Equities higher. The topix finishing at the highest since december 2015. Yen was lower. Tokyo shares jumped after the dow at 21,000. Little bitocks a unchanged after closing at the highest level in more than a year yesterday. The dollar extending some of these gains after brainard became the latest fed official to support the case for an Interest Rate hike. Lets get to the bloomberg first word news. Heres nejra cehic. Nejra the u. S. Justice confirmed that attorney general Jeff Sessions had conversations with russias ambassador to the u. S. While he was a surrogate for Donald Trumps campaign. He said during his confirmation hearing that no contact occurred. Sessions said in a statement that he never met with russian officials to discuss the campaign. The news has prompted Top Democrats to call for him to the ousted. President trumps new travel order is said to drop iraq from the list of nations who citizens will be barred from entry to the u. S. For 90 days. According to white house officials, trump has delayed signing the new directive until at least friday. The order is a revision of a travel ban imposed in january by courts. Ocked snapchats Parent Company is going public at a valuation four times more costly than twitter. Snap inc. Sold 200 million shares in its initial public offering. It has a market value of about 20 billion based on 1. 1 6 billion shares outstanding after the ipo. The stock will start trading today under the ticker snap. The u. K. Government has suffered its first parliamentary defeat on the draft brexit law with the house of lords rejecting a plea to leave the bill intact. The upper house voted for an amendment that protects the right of e. U. Nationals to remain in britain. Prime minister may once speedier approval to trigger the bill. French president ial hopeful Emmanuel Macron is due to set out his election manifesto within the next hour after the centrist front runner was eight while attending an event in paris. The 39yearold has been gaining on the antiimmigration , inidate, Marine Le Pen polls of firstround voting, with a survey putting the gap between them at one point. Little news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Francine thank you so much. We are less than two weeks out from the fomcs march meeting and the odds of a tightening have risen again. The market now sees an 80 chance of a hike east on fed fund futures after governor neil brainerd, who has a reputation for being on the dovish side, echoed the more hawkish tone weve heard this week. Were closing in on full employment. Inflation is moving toward our target. Foreign growth is on more solid footing and risks to the outlook are as close to balanced as they have been for some time. It will likely be appropriate soon to remove additional accommodation, continuing on a gradual path. Francine the feds latest economic record reveals modest to moderate growth in the u. S. Economy. The beige book sees further tightening in the labor market but no significant acceleration in wages are inflation. Lets bring in trevor greetham. Right to have you on the program as always. Since the last time i spoke to you, look at the wirp function. Bute also looking at ois, 86 probability, is it a done deal . Trevor it looks like it. Weve had brain art and dudley come out in the last few days, putting march echo the table. The Economic Data is really strong. It is quite hard to argue for waiting. Of fede the pricing apectations, this was repricing on communication by the fed. Do we not believe the data . Are we just listening from austere fed officials . Trevor i think we all know which way the wind is blowing. In terms of deciding if something happens in march or june, people do hang on every word the fed makes. Theres a lot of guiding of expectations going on. The bundesbank would have told you march because they wanted to do june. In america, they seem to guide you to what they are actually doing. Francine because they are concerned they will catch the markets in a wrong way . Trevor i dont think they want to cause an upsurge in volatility because of a rate hike. We got the rate hike in december of 2015 and that was unexpected. That was part of the reason we had a second selloff. Francine trevor, lets bring you to the ois, one of our most popular functions. Probability of a hike in march is 92. 7 . Are you surprised that they still want to hike despite the lack of details from President Trump and congress . Trevor we didnt hear any major details from trump. We didnt hear anything that changed the picture either. People are expecting the tax cuts to come through. Theyre expecting some form of stimulus. Was ak every time boeing break in the backyard, that will s trillion as trump dollars of infrastructure. More importantly, the fed is looking at current data. Business surveys very strong. They really ought to be starting to raise Interest Rates again. Francine what would you point to to make the argument on the other side . Growth, that you are more worried about now . Trevor why shouldnt they hike . Think they should i think it is a question of where you start from. Low level oft of unemployment, i think they should start raising rates. Had aboutdebate to be how low the Unemployment Rate can go. But were not at a point where were at neutral Interest Rates. Francine what does it mean for dollar . Today we are seeing strength. Is there a level or a trend, if it goes fast, that it becomes dangerous . Trevor i think it will be a ratcheting move. Youve got times when the Dollar Strengthens because the fed is in play, and maybe a month later, not so sure about june because the dollar is strong. We find that the global reflation trade has been a oneway trade. The dollar has a sawtooth pattern, generally positive. Francine what do you do with treasuries . Trevor underweight bonds globally. Francine on the whole curve . Trevor broadly, yeah. On average at the 10year duration for the things we are doing. Equities seem to be the place to be. We had justago, gone through 20,000 on the dow. Francine only three weeks ago. I have a great chart showing how fast we gained extra 1000 points. Trevor greetham stays with us. Remember, if you are a bloomberg customer, go on to tv. Look at your terminal. Go to tv and you can ask questions directly to trevor through me. We have some great charts. We have data points. Then you can reach us directly. If you have any questions about where the dow goes from here or some of the best plays that trevor is going into, we will get those to him in the next couple of minutes. Stay with surveillance. The trump rally rolls on as the dow hits another record close in a presidency less than six weeks old. We will ask how much higher u. S. Equities can go. Plus, ahead of a major speech Emmanuel Macron, we will focus on the fastmoving rates race for the presidency. And we talked to former Goldman Sachs Asset Management chairman and member house of the lords, jim oneill. This is bloomberg. Francine this is bloomberg surveillance. Lets get straight to the Bloomberg Business flash. Heres nejra cehic. Nejra ab inbev has raised its target for cost savings related to the takeover of sab miller. The budweiser maker said synergies should reach 2. 8 billion at the same time adjusted fourthquarter fell to 5. 25 billion, missing estimates. Blackrock is said to have reduced annual employee bonuses by 2 to 4 from last year, the first such cuts since 2011. According to people briefed on ae matter, bonuses were flat year earlier. A spokesman declined to comment. The business is under increasing pressure as money flows into cheaper offerings. Mcdonalds has announced plans to roll out mobile ordering and delivery to all u. S. Locations in a bid to win over customers. The fast food giant is embracing the same Digital Tools starbucks and dominoes have used to grow sales. Many mcdonalds overseas restaurants already offer delivery, especially in asia and the middle east and the Company Generated almost 1 billion from the channel last year. Francine thank you so much. The trump rally rolls on. The dow jones hit a record high for the 12th time in a presidency that is only 28 trading days long. Let me bring you to my bloomberg terminal. This is the line you have here. To can see that, 20,000 21,000, tying for the fastest trip between round number milestones in the gauges history. The second fastest was the nine weeks it tough to hit 20,000. The s p 500 has also hit a record high. Where do u. S. Equity markets go from here . Trevor greetham is still with us. You like equities. You are probably heavily invested in the dow. Why . Trevor what we seeing is an upsurge in Global Growth that started before the trump election. The promise of stimulus has supercharged it. You are seeing a global pickup in growth synchronized across the major economies. Where are the Central Banks . The fed is talking about maybe doing something small in march. Printing money in europe, the u. K. , japan, very loose policy, and growth picking up, therefore equities are the best place to be. Francine it is picking up a little bit. When you look at earning expectations, they are higher than they were, but mainly on cost cuts. Could this actually reverse quite quickly on either cost cuts not being up to scratch or the president saying something that was already priced in . Trevor the data we look at suggests this is the biggest upsurge in nominal growth, growth plus inflation, since 20092010. You ask yourself, what was the crisis that gave you that springboard. You can see it back on your screen there. It was the china devaluation panic. We had one in mid2015. We had one in early 2016. Everyone thought the world was ending. China was in deflation. China is now growing strongly. Other Central Banks cut rates. Now we are the benefits of this. We are in the later stages of this particular move. I wouldnt be surprised if we hit some turbulence over the summer. I dont see anything at the moment that is going to put us back. A lot of tweets from the president but they have not pulled us back. Francine a lot of people dont believe he will go through with it. We talk about a new global order, globalization coming to the end, having to rethink how you distribute wealth. And yet indices ignore that there are a lot of western countries, thinking of brexit and the u. S. , that are more inward looking. Trevor it does make me more concerned about a fiveyear outlook for equities. There are some scenarios which would be quite negative. Where we stand at the moment, theres enough slack for growth to be quite strong without serious inflation. I do take your point that there are some pretty concerning things out there. We call this the wall of worry. Did you see what happened yesterday . All this kind of stuff. The markets are good at the moment. Francine what could be a canary in the coal mine . We mentioned china and concerns about how they deal with it, the nonperforming loans and the banks. Do we need to look at french politics . Could the possible election of Marine Le Pen actually mean this goes down significantly . Trevor we could get some corrections. I keep looking at the screen here. Where it says u. S. Election data, a little spike down was actually the brexit and it. Radaridnt trigger on my because it was only a oneday connect. You can get those sorts of things quite easily. Is someink there potential for that around the French Elections. It is likely that le pen will win the first round and people will be more worried about her winning the second round. The macro backdrop at the moment, the policy backdrop, is very positive. Tightening,t to get once we see Business Leaders rolling over, then we can talk more about these other trends. Francine all right, thank you so much. Trevor greetham stays with us. Up next, french president ial candidate Emmanuel Macron is to avoid getting egg on his face as he launches his campaign manifesto. We have the latest next. This is bloomberg. Francine this is bloomberg surveillance. The french president ial hopeful, Emmanuel Macron, is due to set out his manifesto within the next hour after the centrist frontrunner was egged in paris yesterday. 39yearold has been gaining on Marine Le Pen in polls of firstround voting with a survey yesterday putting the gap at just one point. In germany, Angela Merkel turned up the heat on her rival, martin schulz, accusing him and his party of being backward looking. Schultz held a rally of his own, bashing the rise of nationalism that propelled donald trump into the white house and britain to vote for brexit. Well wait the latest eurozone inflation figures. Trevor greetham, head of multi asset at royal london Asset Management, is still with us. I dont know whether you are focused more on ecb or the inflation data, or Political Risk. Trevor as a multi asset investor, we are focused on the big Global Trends that support different asset classes. We would be more focused on the Political Risks and how that might affect equity positions or exposure to the euro, rather than the european bond markets. I think you will get some wobbles off the back of this. Francine big wobbles . Worstcase scenario . What are the levels . Trevor the worstcase scenario is le pen wins the second round. Francine and that is negative for euro . Ive heard researchers saying there is not that much she can do in terms of getting friends out of the euro. Trevor theres not much she can do, but theres a lot she can try. I think you would see quite a big effect on the euro and quite a big effect on peripheral bond spreads. The ecb would want to do something to calm that down and that would make it much less likely they would enter into tapering and tightening. I think it would be euro negative. It would probably rattle stock markets. It would result in some kneejerk reaction probably from the ecb and stronger activity and stronger stock markets further on. I think it is more of a dip than a derailment. Wayight get that in a small en. You are worrying le p will talk about brexit and whether theres a chance of early elections in italy. I hear rumors of possible bailouts. We still havent sorted that. Are you short european equities because of it or attractive . Trevor we have three big themes. You talked about this global synchronized recovery, the dollar, the third scene is Political Risk. If it werent for the Political Risk, we would be overweight japanese and european equities. We are overweight japan, but underweight europe. Ande get through this year, the bad things dont happen, or if the markets reprice a lot lower because bad things do happen, then i think youre starts to look attractive europe starts to look attractive. Francine when is that time, after elections are over, the end of the year . Trevor maybe sometime in the middle of the year if we get a general market correction. If there are worries about europe at the same time, i would be interesting in seeing if there are contrarian positions. Francine and you would by Industry Groups . Trevor broad indices, the euro as well. We talking about my scenario, buying these things at a lower level relative to other asset classes. I dont think we have any firesale in europe yet. It may be that the political agenda result in a bit of concern. Francine trevor, thank you so much. Trevor greetham stays with us and we talk brexit next. Hes from royal london Asset Management. As the u. K. Government suffers a parliamentary defeat on brexit, we speak to a former member of the house of lords, jim oneill. We are seeing a little bit of movement. If you look at european equities , they are fluctuating a touch. Yesterday, they closed at the highest level in more than a year. Lael brainard he came the latest fed official to support the case for an Interest Rate hike. That is moving fed fund futures. It is now quite fully priced in, i would say. Dollar versus yen, 114. 26. This is bloomberg. Bloomberg surveillance francine bloomberg surveillance. Im Francine Lacqua in london. Heres nejra cehic. Nejra the u. S. Justice department has confirmed that attorney general Jeff Sessions had conversations with russias ambassador to the u. S. While he was a surrogate for Donald Trumps campaign. He said during his confirmation hearing that no contact had occurred. Sessions said in a statement that he never met with russian officials to discuss the campaign. The news has prompted Top Democrats to call for him to be ousted. President trumps new travel order is said to drop iraq from the list of nations whose citizens will be barred from the u. S. For 90 days. According to white house officials, trump has delayed issuing the new directive until at least friday. The order is a revision of a travel ban imposed in january that was blocked by federal courts. Company is going public at a valuation at least twice as expensive as facebook and four times more costly than twitter. Snap inc. Told sold 200 million shares at 70s dollars each 17 each. The stock will start trading today on the New York Stock Exchange under the ticker snap. Have. K. Government suffered its first parliamentary defeat on the draft brexit law with the house of lords rejecting a plea to leave the bill intact. The upper house voted for an amendment that protects the right of e. U. Nationals to remain in britain when the country leaves the bloc. Theresa may wants speedier approval to the bill. French president ial hopeful Emmanuel Macron is due to set out his manifesto within the next half hour after the centrist frontrunner was egged in paris yesterday. The 39yearold has been gaining on Marine Le Pen in polls of firstround voting with a survey published yesterday putting the gap between them at just one point. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Im nejra cehic. This is bloomberg. Francine thank you so much. Were getting some data out of the u. K. This is the u. K. Construction for the month of february. It is a little betterthanexpected. It is 52. 5. We were expecting 52. Im looking at pound. Theres not much movement. A lot of currencies are moving on the back of what the fed will or might do. The u. K. Prime minister suffered the first parliamentary defeat on her draft brexit law yesterday after the house of lords voted to protect the rights of the you nationals living in this country. My next guest entered the lords in 2015, baron oneill, i did not know that. Baron oneill of godly, sounds great. Former chairman of Goldman Sachs Asset Management appointed to the u. K. Government as secretary to the treasury. He quit in september last year. Hes also a lifelong fan of Manchester United. This is like your life story. Jim oneill, welcome to surveillance. Royal greetham from london Asset Management is still with us. You were at the house of lords yesterday. Jim it was busy. Francine what was the mood like . Jim in terms of the functioning of the house of lords, it was very exciting. Every now and then in my wonderful experience in the place, there were moments where the place feels like it is going to have an influence. That was one last night. And theres going to be more in the next few days. There a why is difference between the house of commons and the house of lords . The house of commons dont feel like they can interfere. The house of lords has, i dont know how you would describe it, more of a conscience . Why is it so different . Jim first of all, of course members of the lords are not elected mps, so they are not constitutionally representative of the people. Thats why some of the british media will no doubt be having a go at them about this today, ignoring the will of the people, but the flipside of that is, many members of the house of lords are amongst our countrys most experienced people. Across all walks of life. They dont have the same pressures that go with the house of commons and can think more objectively. Certainly from my experience as a minister, the quality of debates about things, including economics, all sorts of ex chancellors in there, much higher level when you get there. They are generally more thoughtful about all these things. I have to say, i was one of the people, one of the ones that spoke for six minutes last week. It went on for 19 hours, but it was i wasnt there the whole 19, but you have to be there at the beginning and the end. It was worth it. You learn a lot. Francine what will happen on tuesday . Whatevermendment about is negotiated in the article 50 bonds it triggers then have to come back to both sides and half another proper debate and a proper vote as opposed to the one the pms offered. I would imagine, sadly im going on a short trip to australia, so im not going to be there, but that is a big thing in my opinion. That is going to be probably a closer vote. If i were a betting person, i would say the government will lose that too. How the government responds, they will kick it back without acknowledging the amendment, and i wouldnt be surprised if the opposition kind of withers away in the lords. I think tuesday is going to be a bigger deal. Francine trevor, does it change the way you manage money . I dont know if it automatically extends the deadline or it means theresa may wont be able to trigger article 50. Trevor the main place where this would all show up is in sterling. Were watching sterling closely. On the one hand, youve got the potential for negativity around sterling. If the negotiations get difficult, if it appears were maybe there is no wto to fall back onto, those are the kinds of things where sterling likes to weaken. The macro data has been strong in the World Economy is strong. The postbrexit slowdown hasnt happened. Were watching sterling volatility the way you would trade and emergingmarket currency. If volatility starts to pick up, we move away. Jim is that what you guys think . Trevor i think that is the way to deal with politics when it impacts currencies. Francine is that rough to hear . Im somebody that believes emerging markets should have been that believes the phrase emerging markets should have been banned. I would have thought a lot of my should the microworld have had a lot of fun. Where do you see the Biggest Movement in 12 months . Jim markets. Francine on brexit. How difficult is it to predict or to map out how negotiations will do, who will do what . My sixminute contribution last week is on the record, but let me first of all, the most important thing is that people need to remember that the whole reason why this thing happened is primarily because of tory Party Politics and there was no thinking about why we were doing it. It has generally not been the case building up to this point, which is why it is good that the lords is doing what it is doing. Lets think about this. The second point is, i actually dont believe it is the single most important thing for britains economic future. Things to do with our productivity performance, the neverending challenge in education and skills, the whole unbalanced nature of the economy , in my view, are all more important. That thelikely event consequences of leaving force policymakers to deal with those issues bigger than they are, maybe it wouldnt be a bad thing. It doesnt look like they are. They are focused on politics. Bitdly, on trade, it is a like kindergarten at the moment. Given my background, i have some pretty strong views, and the u. K. Could benefit in a postbrexit world if it was really passionately and professionally devoted to focusing on the countries that really matter. The most Interesting Data ive seen by a mile this year was last friday, germanys trade data. Guess who germanys number one trade partner is. China. I spend a lot of time with george osborne. Brexit of the emotion of and playing to the politics, they talk a lot about commonwealth and trade deals for new Zealand New Zealand is a beautiful place, but it is not going to change our trade future. We should have ministers in china every week. Same in india. Francine jim oneill stays with us. Trevor greetham from royal london Asset Management, thank you for joining us. We are getting live pictures from Emmanuel Macron, the french president ial candidate. Under francois hollande, hes now an independent candidate. They arent and neck with francois they are neck and neck with francois fillon. Micron is laying out his political plan. Hes expected to talk about benefits, who can touch benefits, capping some of these benefits. He will talk about the welfare state. We will talk about politics and france next. Plenty coming up, including a march rate hike emerges as a likely scenario. What does this mean for emerging markets . Plus, investors snap up the latest tech ipo. Later, failing to connect with investors. Deutsche telekom shares fall as it writes down shares in bt. We speak to the ceo. This is bloomberg. Francine this is bloomberg surveillance. Plan Francine Lacqua in london. Mark . Mark i was going to tell you the msci all country index had hit a high. It is unchanged but the trend is clearly upward. This is the all country world index. The focus once again on the fed continuing to drive the Global Equities rally. We had data on u. S. Manufacturing expanded last month. We had german inflation data yesterday. We will have eurozone inflation data today. It was a progrowth speech by trump a couple days ago. That is propelling equities higher today. This is also propelling equities higher, the probability of a rate hike moved from 40 to 80 in just under a week. Lael brainard, who has been the key does within the fed, said the economy appears to be in transition, assuming continued progress, it will likely be appropriate soon to remove additional accommodation. Busy week for fed chat. From had hawkish comments William Dudley and of course san franciscos John Williams already significantly boosting expectations for a rate hike. On chair janet yellen speaks friday. The dollar is rising on the back of all that. The bloomberg dollar spot index gaining for a fifth consecutive day. Year,un since may last highest level since january 27. Lafarge holcim, the worlds biggest cement maker, demand expected to grow this year, including from u. S. Infrastructure projects. It expects doubledigit like for like growth and demand growth between 2 to 4 . It is on track for its 2018 target and plans to pay a rancsend of roughly two f a share. Francine thank you so much. The past week has seen the expectations of a march rate hike from the fed the from unlikely to odds on. The prospect of rising rates has seen the bloomberg dollar index move higher, climbing to a twoweek high. What does this mean for emerging markets . Who better to ask lynn jim oneill . The man who coined the acronym bric. The economicss in department actually. Francine what has changed the most . What changed the most when it comes to emerging markets . Jim you mean now . Francine in the last 16 years. Jim gosh, china, china, china, china. I just said earlier. Aggregate imports and exports, the first time ever, china has become germanys number one trade partner. Germany does more trade with china than it does with france. Francine how open is it . I was in davos and you had five days before the inauguration, president xi talking about cooperating. Is this a message for a broad were does he believe in it . Jim i could spend hours about three quick things. It amuses me, and im not overly surprised, but in some ways, the trump thing has sort of highlighted what has been going on already. The nature of the World Economy has been changing for a long time. Because of the way trump talks so emotionally, people are like, theres all these it has been going on for ages. Secondly, theres a dangerous presumption in trumps had that the u. S. Controls everything. Me in pretty obvious to 2001 that when it came to the World Economy, the u. S. Doesnt control it anymore. If you look at the influences on world growth, the last decade was the strongest growth for the past three despite all the problems we had because of china and india. The third thing in terms of where we are now in the cycle, despite all the hundreds of reasons why seemingly every human being perhaps other than me is bearish about china, chinas economy has shown signs of accelerating. China is already the number one importer for more than one third of the worlds countries. By the end of this decade, china will import more than that he you put together then the e. U. Put together. Francine theres talk that we need to rethink globalization because of this wave of populism. You speak to a world leader from emerging markets and the world has never had it better. Does globalization stay with emerging markets . All, you have to separate the rhetoric from reality. Have beenhis advisers very good at the rhetoric and it plays well in two parts of the world. Ive written something saying that he needs to develop some kind of american version of the Northern Powerhouse strategy, to turn it into something real. At some point, people in pennsylvania, ohio, and all these places are going to say, this guy just talks but hes not really doing anything. Second thing is, it looks like he is trying to change the rules of engagement for the u. S. With the rest of the world on trade. Francine will it work . Jim well it is a really stupid time to do it. China is the u. S. s thirdbiggest market. If you take one of americas apple, howcesses, much they sell into china is way more important for apple than a lot of what is going on. When his trunk going to have a conversation with these guys . Trying to do what hes doing at a time where the u. S. Brand is going to benefit more into rising aspirational middle classes is daft. It is not even very sensible. Thirdly, will it work, i dont want to get too economist, but external deficits are because you dont save enough domestically so you need the foreign capital. If the u. S. Tries to change things purely by tariffs, what it will do is cause u. S. Inflation, and it will simply shifted somewhere else. Francine he also has a trade advisor, peter navarro, who believes jim i think he needs to reread his economics. We aree jim oneill, some breaking news out of Emmanuel Macron. The front runner in the french president ial race is speaking to paris. I think it is from his headquarters. He saying the future of france is not the u. K. s 1980s reform. This is clearly a punch at francois fillon. Francois fillon was in hot water because of allegations of misuse of public funds. Hes considered a thatcherite. You have macron saying, im not like him. I dont want to reform the french system almost at any cost. But he is laying out his exact plan of action. Now lets get straight to the Bloomberg Business flash. Heres nejra cehic. Nejra ab inbev has raised its target for cost savings related to the takeover of sab miller. The budweiser maker said synergies should reach 2. 8 billion. Tousted fourthquarter fell 5. 25 billion dollars, missing estimates. Black rock is said to have reduced annual employee bonuses by 2 to 4 last year, the first such cuts since 2011. Bonuses were flat overall a year earlier. A blackrock spokesman declined to comment. The Asset Management business is under increasing pressure as money flows into cheaper offerings. Mcdonalds has announced plans to roll out mobile ordering and delivery to all its u. S. Locations in a bid to win over customers. Giant is embracing the same tools starbucks and Dominos Pizza have used to grow sales. Many of mcdonalds overseas restaurants offer delivery in asia and the middle east. The Company Generated almost 1 billion from the channel last year. That is the Bloomberg Business flash. Francine thank you so much. It is the biggest social media ipo since twitter. Snap inc. Goes public today. The company sold 200 million shares, giving it a valuation of 20 billion. That makes it bigger than tesco, ryanair, swatch, and fiat chrysler. Joining us now is adam. Jim oneill, former Goldman Sachs Assets Management chairman, is still with us. It is dogit is great, filters. How much money is it actually worth . Adam as of today . Francine a lot. Adam theres a few different arguments. The list is long in terms of the skepticism. You have a company that is losing a lot of money. Growth is slowing. It has a Corporate Governance structure that is unusual. The people are going to have essentially no voting power. There is very stiff competition jim sounds like the ownership of Manchester United. Francine i knew you were going to bring up football. Adam at the same time, this is a company that is growing rapidly, that has captured a desirable audience, and you are essentially betting that this is a company that is early days and has lots of run room to grow with advertising and some hardware products. What somebody said about amazon, right . Francine are these adam all the time. Francine is it the younger you go into a Market Segment that will actually be the future . Adam so lets say next time youre out with some teenagers, ask them what they use to communicate. This is the opportunity and the challenge for snapchat. They will likely say snapchat and instagram. These are the major platforms. Facebook has almost been cast aside. My parents are using it. Francine im so last year. Jim i havent even got around to facebook yet. Francine im going to get jim on snapchat during the break. I promise, if it is the last thing i do. Adam theres a huge backlog so i think a lot of Companies Like spotify, airbnb, dropbox, are going to be watching, hoping the ipo is successful. Theres a lot of Tech Companies who have very lofty valuations, that their investors are hoping live up to, so a successful ipo could unclog the drain for some others to come down. Francine jim, you have personal investments. Jim theyre all in a trust. I had became a minister, a trust. I actually kept it. I have views on all these things, but my trust francine fair. But do you like tech Companies Like this . Jim yeah, i think. But my experience, i liked before i went into government, and did more and more of it, taking quite a bit of vc risk, and one of my criteria, anything, it either had to be tech or inability to with stand francine the threat of tech. Francine but you would still buy man u . No, because you cant buy shares that give you any rights. For me, the little ive read about this, the most remarkable thing. They are not actually giving away anything. Why would an Institutional Investor adam this has been a trend with each generation of Tech Companies. The founders seem to get a tighter grip of control. Jim how does the New York Stock Exchange francine i love this. The next hour, tom keene will be quizzed on this. Adam, thank you so much. Jim oneill stays with us. We will be talking more about pound and currency volatility. This is bloomberg. Francine the odds of a market rate hike rise as they say a move will be appropriate soon. The trump rally rose on, dow closing 1000 point game. Gain. Emmanuel macron is setting up his election platform, he says he does not want france back to the 1980s. That morning, this is bloomberg surveillance. I am Francine Lacqua in london and tom keene is in new york. We have snap. Tom nobody cares. Francine talking emerging markets and telecom. Tom i have snapchat for three weeks and i cannot figure it out. Taylor riggs what try to snapchat me and i never got it. Francine great babysitter snapchat. Jim you are not cool enough. Will get it so we can go backandforth on snapchat. Francine getting some with theebruary ecb will or will not do with bond purchases. Before snapchat, lets get to the bloomberg first word news. From snap to politics in the u. S. , more questions about Donald Trumps Residential Campaign and alleged ties to russia, Jeff Sessions had conversations twice with the Russian Ambassador while a surrogate for the Trump Campaign. In the Senate Confirmation hearing, Jeff Sessions denied contact had occurred. Anyonessions affiliated with the Trump Campaign communicated with the russian government in the course of this campaign, what will you do . Sessions i am not aware of any of those activities. I have been called a surrogate at a time or two in the campaign and did not have to munication the mutations with the russians communications with the russians. Taylor one of the federal is signaling the u. S. May be Strong Enough for an Interest Rate hike soon. That governor bernard says the central bank is closed to reaching its goals on full employment and inflation, that policymakers start a twoday meeting march 14. Or it is Prime Minister theresa may has lost a key vote on her brexit bill in the house of lords, the unelected lawmakers voted in favor of an amendment that protects the right of eu nationals living in the u. K. , she wanted the bill and sacked. She is inspected the bill and sacked the bill intact. Global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Tom a rate rise data check. 60 probability for march and futures after the big day, this is important, the twos and tens going up together and the yield curve is not changing all that much. We will explain that through bloomberg surveillance. This morning. Jim oneill will provide wisdom in a moment. Next green next screen. That is a typo, nowhere does is not, 21,000whatever. Sterling is a big deal, a chart in a moment. 104 print on dyx, which is a big deal, we are not there yet. Havinge the dollar is gains, hawkish signals from the fed. Treasury dropping and gold retreating. Time on the euro area inflation which is exhilarating and it gives more arguments for the ones saying the ecb is doing too much. A monetary Stimulus Program which gives them argument for this. I am think of germany in particular. Tom lets do this chart for jim oneill. Here is the volatility of sterling before brexit when Manchester United gave it up and went straight down, that would be brexit, excuse me. Within this tight trading range, we have recent rollover. Torts weaker sterling. Interesting towards weaker sterling, the politics between lords, comments, and 10 downing street, did i get the right, the politics of it . Jim nigel is after one. M, you would have 19 hours of debate. Ard from jim oneill huge debate and you had to resented your case on brexit. Jim one of the fascinating things about lord, the courtesy and manners supersede every thing else so it is expected that if you will speak at the beginning at the end and the end. Francine should we formally introduced jim . Baron oneill. Lord jim oneill is with us for the next half of half an hour. Jim shall we talk about the dollar . Francine lets not talk about the dollar, lets talk about brexit, will it end badly . Jim badly for the u. K. . Francine and europe. Jim deliberately taking on a risky thing. Has donen why the u. K. This is because of conservative Party Politics and the fact that the labour party was not collected enough or Strong Enough to oppose it which is why this happened. Nobody thought that it would result in a decision to leave. A lot of people have been scrambling around. Until this point, as weird as it may seem, i do not think that much thought has been given to the economics. Francine is there a turning back . A referendum in scotland, could the Prime Ministers say we have a second referendum, or is it a done deal . Jim if we got to a stage when it looked like one of the consequences would be a breakup of the u. K. , not many people talk about it, a significant issue about the irish border, it may have people thinking more about it. One reason it is right that the lords and commons have a genuine debate about what is agreed before the final button to actually mechanically leave happens, because there are all sorts of potentially be consequences which in reality i do not think many people have thought about. A lot of it was a game. Francine is the government thinking about it . Jim they do not have to because the reality of negotiating is about to start at the end of this month when article 50 is trickle triggered. Said, as i havent much as the trade issues are important, of even greater , we have so many talented people from all over the world, including the eu, contravening positively to the british economy after beating contributing positively to the british economy, we have the best universities in the world, we have so many overseas people for our size. If we lose a lot of those people, british universities will struggle to be as good as they are. These are huge issues which the government is now, unfortunately for some of the people involved, have to come up with a thorough strategy of how to cope with that. Of interpret the optimism sir james dyson, we all know him, i have a vacuum cleaner i think he built for me personally but he does not agree with the gloom, he says this will work out. We will be the united kingdom, onward we go. And trevor that for our global audience interpret that for our global audience. Jim i like what he said. Views, what i learned in finance is that stuff happens, including things you do i used tothe crisis, think the mark of a good analyst is how you deal with things that happen you do not expect. Same for policymakers. Given that it is happening and has happened, the u. K. Has to make the best of it. As james is saying, especially in areas of technology he knows well, the u. K. Is in principle pretty wellpositioned. To be at the center of this in the world but it means things like i just said, we have to make sure we can still access or welcome the worlds most talented people, despite the imposing selfimposed immigration target. Usually important in my opinion because otherwise his hopes tom you lived out of a suitcase for decades, i assume you have been to brussels 42 times and belgrade 14 times. Jim never been to belgrade. Tom neither have i, we will meet for a cocktail. Jim we can do snapchat. Tom help me where the jobs will go out of the city, i do not buy making 42 making a nice piece of change wants to leave london, where will the jobs go jim i important rate where will be jobs go . We had the days when previous debates about threats to london and finance, i used to say the biggest threat to let it would be if new york changed its time zone by five hours. You are not open as the same e as shanghai, bombay mumbai, sorry, other interesting places in the world and we have developed over my lifetime this remarkably deep and flexible labor pool, Skilled Labor pool that is perfect for finance. All the housing and facilities that go with it, london i often call it the Brick Capital of the world and it attracts people that love that environment, london is the sixth most populated french city. O Work Overseas in europe i think it is unlikely, unless we have the most savage of exit in terms of access to the Single Market for finance, because of the reason you say. More risk of is using to new york than any paris, dublin, frank for. Frankfurt. Francine morneau neil stays neillus for lord o stays with us for another half hour. Tom is not on camera. Is stillmacron speaking in paris, the French Republican candidate, currently the frontrunner but the polls in france between scandals, allegations, misuse of public money, have been fluctuating. Emmanuel macron positioning himself as a lot more centrist and trying to back away from Francois Fillons proposal from breaking away. We will talk about Emmanuel Macron and the future of europe. This is bloomberg. This is bloomberg go bloomberg surveillance. That jet begins trading today, going public in evaluations of at least twice as expensive as facebook, they sold 200 million shares at 17 each. They have a market value at that price of 20 billion. That implies a multiple of 21 times sales. No bonuses for most of top management at ab inbev after the beer makers earnings estimates missed estimates for seven straight quarters, a nose dive in spending power in brazil, its secondlargest market and the Company Raised its target for cost savings related to the takeover of sab miller. The largest bank in russia shook up because in that countrys recession posting a record profit for 2016, return on equity higher and the amount the bank set aside for bad loans was lower. They are government controlled and it weather the recession better than its competition, in part because of lower funding costs. That is your Bloomberg Business flash. Francine i have to correct myself, i did say that Emmanuel Macron was a republican but he is independent and a former tom will come down hard on me, independent and former finance minister. Jim a guide not part of the establishment. A guy not part of the establishment. Francine hedge funds. Rench politics continental said it will raise dividends for 2016 as net profits improved slightly or the year. A biggest supplier to the Automotive Industry says it would benefit this year from further growth in global auto production and return on investment and self driving technology. Thank you for joining us. Give me a sense of how concerned you are about currency fluctuations. I am thinking of pound and peso. Doesnt make your life that much more difficult does it make your life that much more difficult . We are used to dealing with fluctuating change rates. Normally we are wellbalanced which means we have impact on the absolute figures but not on the relative. Francine how do you prepare . You are a worldwide tire maker, how you prepare for trade wars . What is the possibility of the trade war . Something ugly between the u. S. And china, and what does it mean for your supply chain . We appreciate and are supporting free trade. Convinced thate freetrade cant help can help to save jobs and will create wealth for all parties involved overtime. If a trade war would start, there would be no winners and losers, only losers, it would the Automotive Industry with a difficult time, you cannot prepare for that. We have to see how the decisions of the u. S. Government look like, it is too early to say. We had such situations in the past. To adjusto be fast your business accordingly. Longterm. Investing we cannot simply take a facility located somewhere and move it to another market or country, it simply does not work. We are dependent on our suppliers and customers our customers depend on our location. The costs situation would be decisions impacted by of the u. S. Government or another government, the consequence would be we would have to raise prices probably and that would be negative for the consumer. Tom thank you so much. With continental of europe, we appreciate it. Coming up, after a conversation with jim oneill, we look forward to speaking without imposing adam of the Peterson Institute on the fed in march. Stay with us. This is bloomberg. Francine bloomberg surveillance. Tom, lets talk about President Trump and more questions about his president ial campaign and the ledger ties with russia. The attorney general Jeff Sessions had conversations twice with the Russian Ambassador while he was a servant for the Current Campaign according to the department of justice. Lets bring in Stephanie Baker and we are still with jim oneill. An update on how contentious this is, people are asking for him to resign already. Democrats clamoring for him to resign, saying he was not truthful during his Senate Confirmation hearings when he was asked about this. He said he had no contact with the russians and it appears he had met with the Russian Ambassador twice in july and in september. He is saying it was part of his routine meetings with ambassadors, given his role at the Senate Armed Services committee. Tom i looked at this last night, the uproar of this for the global audience is tangible, i know we have Speaker Pelosi and senator warren saying you have to resign, the predictable garbage but this comes down to, is this guy going to be in the process of investigation . The attorney general, are they going to be in the process . What is your take on whether he will recuse himself from any of these investigations. I think this makes it very likely he will have to recuse himself. He hasise compromised his ability to distance himself from this investigation and there will be serious calls from democrats and some republicans. We saw Lindsey Graham Say Something along the same lines, it may be perfectly innocent but there is a need to know more information on this and that he may need to recuse himself. Francine how do investors react to this . Unless the American People start caring about it, should we just ignore it . Jim with a caveat, i do not do this every minute of every day of my life, the market, the Foreign Exchange market is tracking what is going on in monetary policy. Rather than this. With my long time looking at things like this, i keep seeing reasons to have doubts about the persistence of Dollar Strength that so many people are focusing on. Because there is a lot of things that are raising many questions about the noninflationary Growth Potential of the u. S. And the way the u. S. Is being governed, president bush said an interesting thing in my judgment about free will, he spends his time trying to get turkey to have free press and in the heart of it, the opposite is happening. At the moment i cant i reflect back, the fast money drives what is happening today but if i were in my old life, i would be not so convinced about the sustainability of Dollar Strength, simply because the fed is finally going to raise rates by another 25 basis points. Francine thank you being with us. This week, we are launching a noon. Ow every friday at back in a couple of minutes to talk about credit expansion in china. This is bloomberg. bloomberg surveillance. A gorgeous new york, everett and winter but what a warm spring for much of the United States. A beautiful new york this morning. Lets catch up on the news with washington front and center. With the first word news, here is taylor riggs. Taylor the truck administration will kick off a giant infrastructure program, at least 15 Government Agencies will meet , the president wants to spend 1 trillion to rebuild roads, bridges, courts, and other infrastructure. The number of earthquakes in oklahoma has fallen since regulators begin cracking down on the injection of wastewater on oil and gas wells but no other state that has a higher risk of manmade earthquakes. According to the u. S. You logical surveys, oklahoma and southern kansas are likely to be hit by five magnitude quakes this year. High magnitude quakes this year and in asia the taliban claiming responsibility for two bombings that killed people and kabul, afghanistan and another 120 people were wounded. One bomb went off in a Neighborhood Police headquarters and the second exploded near the office of the Afghan Intelligence agency. Global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Tom, francine . Francine lets turn to the euro. The french presidency. Bringing down its currency single currency, what will be the biggest threat . Joined by the city head of europe g10 affect strategy. Great to have you here and seeing so much great to have you. How do you measure Political Risk in europe . Spread, i look at the is politics and political ferences arising as markets measuring the dispersion across markets is the best way, it is trending higher, differences in the variants of how people are placing in these risk which is the simplest way to do it. The currency is another way but you have to look deep into the curves and the care risks before you before you see the real impact. Francine what is the one thing people are mispricing . Every time a french politician or ceo says Marine Le Pen risk is not really real, you speak to International Investors and they say what if. I want to take positions on that. Richard there is a split in the market, domestics do not see a real probability but the Broader Market is just very uncertain about that, given the fact we had the brexit vote and the unexpected Trump Victory in the i think that it is probably underpriced because the ramifications are much deeper and much longer than we could price into markets now. Tom jim oneill was on and suggested the dollar certitude is overwrought, where do you sit on this . Is it certain that if we get , wenards fed rate increase will have a strong dollar, or is there doubt . Richard there is two dollars in the markets, eurodollar, overly that brought e. M. Against the dollar, they correlate very well against until the mid of 2016 and this correlation break, headed in other directions. You have the dollar weaker against emerging markets because Global Growth, global data, macro trends are very strong at the dollar stronger against the majors because the Economic Outlook is better and the risks are lower, the risk to the u. K. Higher and the risk to your are higher. You have these two dollars in the market and that is how we think about it. Tom i will steal that from you for tomorrow. Asian currencies, is that a way to play this, adxy goes up and i you up in value . Richard the answer in the shortterm is yes, that is the way to play it. What can change it, if there is a borderomentum behind adjustment tax or in terms of the tax overhaul in the United States, depending on how that lays out over quarter one and quarter to, you may see less certainty over emerging markets but for now, because that is left to august at the earliest, or maybe 2018, the market here is fairly certain that this Growth Outlook has momentum, the ball remains low and the riskadjusted rewards are very good on the em side. Francine what is your favorite pairing right now . Richard on a set height and continuing to price it in, there is no doubt in the shortterm dollaryen is higher but when we look at europe, i do see some of the town risks as dissipating and more portly the growth momentum behind it. If we look at the european inflation front, german we got yesterday, the strongest since 2011. All of that suggested that there is interregional plays, we like euro sterling higher as well. Thecine talk to me about ecb, euro area inflation hit 2 and this goes back to what we were talking about, fresh arguments to those asking for the European Central bank to do less stimulus. Will they actually succeed . Germany is worried about that they terrified saw what happened 20 years ago come back, will they influence the ecb . Is too earlyink it for the ecb to change it stand because you have the uncertainty and the political elections for the next 7, 8 months. We are looking at ecb policy unchanged but they have a communication challenge, essential how mario draghi presents this case because he will be grilled on it in the press conference. A challenge for the ecb, they can be policy unchanged but it is about communicating what are they planning and thinking about doing in 2018. There is uncertainty on the political side until then but the macro momentum remains wrong and the ecb, its mandate is price stability. Tom help me with the border tax. You mentioned it earlier. Our angle is that is less than likely we will see it. Assumingollar peso, i this is a way to we have had this rebound, is that the opportunity of all time to get back on short peso . Richard in the shortterm, no, because we see the border tax as quarternt theme in three and quarter for but august at the very earliest it could happen. In the shortterm, you will see emerging markets with risk or reward still relatively stable. When the border adjustment tax does come back, peso is one way to do it and the other one is asian currencies which will be sensitive. If i could walk it back to the ,10, a question of switzerland this is a country which is small and very open, depending upon its trade and border adjustments ask is something that impacted dramatically. You look at the swiss data this morning, 0. 1 for quarter for gd. K j quarters in a row andt retail sales negative since 2015wo. That is something that is too early to address but something investors will need to think about it. ,om i am putting this out exactly how we do it on the show. You see it in realtime how we make surveillancesausage. The Swiss National bank does not 2015,nother january of how will they fight by giving the wall of money moving into switzerland richard switzerland . Richard basically, what we see is the extension and the growth of the Balance Sheet and through the site deposit, that is mostly how they counteract the normal market momentum. Basically, the swiss has a couple of tools in its basket, you look at capital controls and deeper into negative rates and more intervention. It has to choose between those, what is the optimal policy mix, the current environment may not be stable throughout all of 2017 and that is where we think there has to be longerterm thinking on the deeper end of the curve in 2018, how does this change . Tom if something is up secure, is swissie hi gary and foreign hungarian and foreign . Weakerss franc compared, with the success of the euro for eight years. How does hungry i doubt to President Trump i doubt to President Trump . Richard that is a question that is difficult to answer. Where i would begin to think about it is with the hungry trade relations, where is there alternative markets because, if you find the u. S. Becoming a more close market, do other markets open up, something from a political side, europe can have a much bigger hand and not only its own Domestic Trade but trade on its border and trade on the u. K. As well. As one market closes come ultimately, economic says there will be whether that is asia or closer to europe . This shows atom second and third round of facts of an action we think has nothing to do with switzerland, nothing to do with the united kingdom, nothing to do with hungry, we are hearing from richard there is knock on effects. Francine we saw it when switzerland government of the cap, huge impatience of mortgages in poland. On pound, does ago much lower from here . Richard against the dollar it can drift lower, there is a balance of risk, their fear is dissipating a little bit around the eurozone politics and refocusing on the weaker data we have had in the u. K. , pound will weaken versus euro in the shortterm but over the course of the first half of this year, in 2017, you are in a range bound environment, does it weakened against the dollar . Absolutely. Arian lovead ali your interpretation. Interpretation. He knows you can look at to go. Go. Is tv i am ugly this morning. You go back to hug arian foreign hungarian foreign. Good morning to dr. Elerian. Osen in the next hour. This is bloomberg. Francine this is bloomberg surveillance. Francellis talk about and the printer will looking candidate we must talk about france. Frontrunner Emmanuel Macron is in line to benefit potentially. He set out his Campaign Promises and says he will not change the retirement age or cut pensions. Emmanuel macron is speaking live from paris. He pledged to defend european Single Markets and brexit talks. Our executive editor is with us. You travel all around the world. How much are people focused on the French Election . Could this be a game changer for markets and politics in europe . That along with the donald trump is the biggest story in the world and from a market standpoint, it is important, the question people have is whether the earthquake we saw last year will continue into europe this year and to mainland europe. , marine leut europe pen has campaigned on it platform to take france out of europe. Could this is a crucial election for investors. Francine what are they voting on . As a french voter, do i vote on the economy or terrorism . Security is number one when you talk to people in france. What is deeply important to people, look at the history of france over the last 2, 2. 5 years, the paris attacks. They are moving around a lot for fillon and macron. Round, a ring the pen needs to get 50 in the runoff and she has not told about she is stable around 40 something percent, a gap between now. Tom on the 40s anniversary of the american classic, slap shot and but cassidy and the sundance kid, who is that guy . Run the film of Emmanuel Macron. Is he the Second Coming of trudeau . Where does he fit in to the culture and the fabric of france . That is not a bad comparison. Macron is there , a little bit younger than you, tom, he came from nowhere, a huge gamble to get into the race. Everything has fallen his way. He looks like the man to beat. Francine he is not as smooth as justin trudeau, he comes from a long line of politicians, his father was front minister. Macro is liken my the markets but a hedge fund person three years ago so he came out of nowhere and getting to the campaign, when he talks about tom if i am smoking a cigarette ina cafe with im jim paris, are the french people engaged by these three candidates . If you look at who people like, Marine Le Pen is the most popular candidate, she is charismatic and knows how to speak with voters. Fillon has problems with the allegations and macron is seen as too smooth and clinical. If you look at the establishment candidate, the candidate in the middle, he is the one making the fewest mistakes. Are,d the fewest scandals if he is the front runner, almost the frontrunner by default. Smoking, if you are you are probably have are decided to you voted for. When we talk about theresa may, she said she wants to trigger article 50 by march 31. Will she stick to that time when . Timeline . She should, hard to predict the exact date but we knew there will be problems along the way. By the end of march, she should be able to trigger this, possibly in the next two weeks. Francine thank you, great to speak to you. Our editor who oversees the government coverage internationally. Coming up on bloomberg daybreak americas, a trump advisor at 8 00 a. M. In new york and 1 00 p. M. In london. We will ask about tax reforms and global trade. And the little thing called the dow at 21,000. This is bloomberg. This is bloomberg surveillance. Lets get to the Bloomberg Business flash. Exxon mobil new ceo shifting investment to quick earnings shale oil. He is trading in longterm projects that pump oil over decades for u. S. Shale drilling that can be switched on or off as crude prices change. Is that hurting about a third of its there has been a shakeup of yahoo in the wake of those data breaches, general counsel has left the company and investigation found that the legal team knew enough to warn further inquiry into the hacking but did not sufficiently pursue it, the Security Breaches threaten yahoo sale of its Internet Business to verizon. Shares of the maker of disappearing photo at snapchat begin trading today. They sold 200 million shares at 17 each, at that price, the company has a market item of about 20 billion. That implies a multiple of about 21 times sales or twice what facebook sells for. That is your Bloomberg Business flash. Francine tom got on snapchat, i am not, i am trying desperately because i said jim oneill i would show him how it works, must be a europeanlegend problem. It is the other way. Adam covers global tech for bloomberg. ,s this one of the biggest ipos will it be more successful than twitter . Im sure their bankers and executives would hope so. This is the most important tech internet ipo since twitter, for the company itself and because what it says on the backlog of Companies Like airbnb, dropbox, uber, Tech Companies that have high vibrations from venture capitalists that will need to get an exit at some point. Francine i do not understand, i know tom does not use it, filters, talk to me about the business model, how do they advertise and grow . There is the photo sharing aspect where you can take a picture of yourself and interrelate the different filters to make yourself look like a dog or cap things all around your head and share those. There is also a platform for Media Companies to share different content ranging from the silly to the serious. Of the givennation getting the audience to stay on their that advertisers are drawn to. You have a coveted audience of young evil who use it a lot young people to use it a lot and that is the point. Tom i get the facebook versus twitter, a single factor which is bringing in revenue. , i likele is phenomenal what michael did in the new york times, this dog is trading at 24 times revenue, if they get to 1 billion of revenue. What is the certitude they get to 1 billion of revenue . If i was a procrastinator, i would be more than a lowly journalist but the revenue is growing rapidly, the user growth is what has been slowing down. The comparisons to facebook and istter are fair because it the two Different Directions in which the company could go. Quickly, will we go, when will we know if it is twitter or facebook . Thursday, next week . I think that is too soon. Tom i am kidding. A year to figure out where it is, facing a lot of these tom we have to go. Help francine how to use snapchat. Francine i am on it. Hour, craignext moffett on technology. Tom this morning, the doves capitulate, the trump zeitgeist s risk on. Chair yellen well play catch up with the bond vigilantes. Is laughing now. There is chaos and wireless. Tmobile. Ur chaos, meeting the Russian Ambassador is hazardous to your career. And the tweetsli to come. Bloomberg surveillance by the new york. This morning more than any other, people are waiting to see how the president tweets out his mood. Francine yes, and the implications for the rest of the world. This could be huge. Could be a Seismic Shift in the u. S. , or is it . Even if you have allegations, do people care . Dont care, will it have any impact at all . Tom some guy named Kevin Cirilli will show up and give us wisdom. Right now with more on washington here is taylor riggs. Morer in the u. S. , questions about, trumps president ial campaign and alleged ties with russia. Jeff sessions had conversations twice with the Russian Ambassador while he was a surrogate for the Trump Campaign, but in his Senate Confirmation hearings, sessions denied any contacts had occurred. Anyone affiliated with the Trump Campaign communicated with the russian government and the course of this campaign, what would you do . Senator franken, i am not aware of any of those activities. I have been called a surrogate a i did not have communications with the russians, and i am unable to comment. A sessions spokeswoman said it was part of his work as senator. The u. S. May be Strong Enough for an Interest Rate hike. To central bank is close reaching its goals on full employment and inflation. Makers start a twoday meeting on march 14. Theresa may has lost a key vote in the house of lords. Lawmakers voted in favor of an amendment that protects the rights of eu nationals living and the u. K. To try toected overturn the vote in the house of commons later this month. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Tom thank you so much. Lets get to the data, Interesting Data today. What a huge day, risk on, melt off. Wait and see how we open and how we move . Maybe snapchat plays into the effervescence. Next screen please. The euro at 104. Are you kidding me . I am in the allcash fund. I am getting killed. Francine will explain a weaker pound well under 1. 23. And gold is where i want to be. The dollar extending gains as we had another hawkish signal from the Federal Reserve and the odds can 10 you to pileup for a march hike. Taking a bit of a breather, but yesterday much higher. 50 Goldman Sachs migrating to 60 on a rate hike. We will get to adam lee and adam pozen later. Chieft further ado, our washington correspondent in charge of russian intrigue, Kevin Cirilli. Let me step back from the news flow, the news from the post last night. Help me here with the Senate Intelligence committee. Will they go forward with an investigation . Kevin they will have to. Members of that u. S. Haveligence committee pressured this administration, and john mccain is republican, to continue onward, but the white house is defending attorney general sessions, saying this is a partisan attack coming from senator al franken. They are saying that senator sessions was acting in the capacity as a senator. They are trying to turn this into a partisan attack, but either way, it is another day and another story about russia. Tom i get it. Speaker pelosi and senator warned standup come out with the bum. He hasnt picked up the gold curtains for the office yet. How does the Republican Leadership respond to the day after day russian angle . Kevin we heard from paul ryan the other day, who said the administration will have to put this behind them somehow, and so as this continues and as the pressure continues for them to put this behind them, it will pose more of a risk for republicans in the house. Francine what happens next . Will there be an investigation . Democrats versus republicans, or are republicans coming out on this . At jeffhen you look sessions, he would be the person in charge of investigating the administration, and so what did these allocations of do is add a new layer of political toxicity to the situation because the democrats led by senator franken argued that Jeff Sessions cannot lead this investigation in his capacity as attorney general that shee is involved should be investigated himself. Francine all right, so who will investigate him. Are we not the wiser . Evening . T until this im not sure who we are following, and to the Americans Care . Do the people in the street think this is outrageous . Care, yes, people do especially democrats. This is a divided country right now, but amongst trump base, they do not care, and in terms of the investigation, that is where the political implications are interesting because you have a republican in the white house and a Republican Congress, so it his his party in power. If those democrats are able to put pressure on the Republican Congress to get action done, then that would be the only way for there to be any type of substantial investigation. Tom 15 seconds, is the border tax debt . Businessm not in the of predicting, but i continue it is going to be very hard for that to get through with all the pressures in washington. You. Kevin cirilli, thank he will not recuse himself from us tomorrow. This is a joy. William lee joins us right now of citigroup. He has written a brilliant six page dissertation on the border tax. After hearing from and krueger , do you agree this border tax is a bad idea . What did the republicans get wrong . The republicans have to raise revenues to pay for tax reform, but how will they do it . All the advocates a dont worry about it it will be completely neutral for the economy. Yes, maybe 510 years, but the Immediate Reaction of the border tax will be distorting, the dollar will not appreciate as quickly as they think it will to offset the distortions. At theos like you look timeline shortterm, mediumterm, longterm effect, then you also look at the income substitution effect of any economic model. Our big exporters are also big importers, so they are crushed going both ways. Do you buy that idea . I do. It is difficult distinguishing importers and exporters because there is a lot of flow in the production of the final good, so there is an administrative aspect of how to do the border tax, but lets get back to conceptual arguments. We need this revenue and it is a great revenue raiser because it will freely give us the money without distorting the economy an increase in 20 to offset the Corporate Tax. Tom you dont buy the 20 move . I looked at the data and set how long does it take for it to react. It takes about five years for exchanges to react in the balance of trade. Wouldgument to push back be a dozen change because the minute the dollar goes up, you dont have any change in imports and exports, but what is the mechanism . In the real world, you have to have importers and foreignexchange. Im an importer and i dont want the dollarsore, and have to flow in, and the time is not an instantaneous jump in classrooms, but the five years on average we see in the data. Francine he mentioned some of the Corporate Tax reforms. What happened to the 15 . , is it dead in the water and the markets have not realized yet . Theithout the revenues from border tax, about 1 trillion, the Corporate Tax reform will cost about 1. 8 trillion dollars, so you have to find some way to raise revenues, and since the border taxes gone, then what are you going to do . Francine right, so what is he going to do . We dont get the border tax immediately. It may come in later in a modified form, but what we are assuming is that we dont get the 20 reduction. Navy 25 Corporate Tax rates, so a massive tax cut, but not as massive as trump and brian had initially proposed. Then we will pay through it through other the ductions it have to be closed off. That itself is controversial because they are also wanting to expense investment, eliminate appreciation, spur capital investment, and that is a hard thing to do through a tax system, especially now when everyone operates under capacity and no firm has Pricing Power to margins tond profit justify buying equipment. What firms will do is take the extra money take it from taxes and give it out to shareholders stockvidends and buybacks great for the stock market, but not gdp. Francine thank you so much. Coming up, we speak with the Deutsche Telekom ceo and talk about everything that is happening in the United States. Shifts andhuge, huge price for tmobile shares, and we talk about acquisition and what he will do with his holding. This is bloomberg. Francine this is bloomberg surveillance. Taylor i am taylor riggs. Lets get to the business flash. Snapchat begins today. Snape sold 200 million in shares and 17 each him on market value of 20 billion. That implies a multiple of 21 time sales, or twice facebook sales multiple. That is your Bloomberg Business flash. Tom thank you so much. I thought that was great with adam. It you ever figure out how to use snapchat . Snapchat. I am on the London Office is trying to figure out snapchat so we can show it to the older generation. It is not working right now. Tom see how rude she is . Francine not to you. People in london, tom. Tom ok. With us right now is billy from citigroup, the guy on wireless on cable, years at sanford bernstein. We will talk about deutsche telecom, tmobile. Wonderful to have you here on the absolute kipnis of crazy tv. Dumb start with a question. Is our relationship with cable tv now going to be the same in 2022, which seems lightyears away . We think they are changing very rapidly with youtube tvs announcement. We are expecting to see hulu tv coming soon, their fullservice cable replacement, and to me what is really interesting about these things, i look at them as an economist, and it should be obvious, but price is what matters. We keep seeing new services and they are 35, and now we have set a clear line in the sand that says over or under 35 is what matters. Tom what is the first derivative . Is 1. 7 if you measure it from the perspective of let me be more articulate than that. The shrinkage of the pay tv universe is 1. 7 , not exactly cord cutting. If you measure it from the perspective of the distributors. From the networks, it is about 1 . Tom is content still king . When you and mike get together over snapchat, what are the benefit with cord cutting and the chaos we have seen . First of all, i would check to the idea that content was ever king. Content, i always thought distribution was king, not because it was a better business, but it was a relatively less competitive , at least in the cable distribution side, so moving around the ones and zeros would good was Good Business for the cable companies. So for the mobile companies p michaels argument, and i agree, we are going to see this new profusion of skinny bundles come if you will come and include fewer and fewer packages. So the ones that were always be on, fox, disney, they will do better. The other guys were struggle because they will be on some of these packages, but not all, so their growth will be pressured, and that will also pressure their ability to negotiate fees. Francine give me a sense of who will buy who. We saw the global going after european players because they want that content, and there is nothing to put on those Cable Networks if you dont buy the stuff. Will we see crossborder m a . I dont know. My focus is the distribution side. That has never been a terribly crossborder business anyway. The struggle i have is i think people have gotten ahead of themselves. The end of the wireless auction that is coming up in the first week of april, when the window opens for dealmaking, is, there is such overheated expectations now for a flurry of giant transactions that will happen within three hours of that window opening. I dont think that is a realistic expert tatian. It will take a lot longer. People are expecting to see sprint and tmobile, somebody trying to do a deal with dish, i am skeptical that anything will happen quite that quickly. Francine skeptical why . Funding . It is not so much funding. Each deal has its challenges. While it hasle, industrial logic, it is hard to make that deal work because the stock has party priced in the probability of a merger, and the relatively rations are problematic because sprint is so highly valued relative to tmobile. Om here is the game plan we will come back with billy of citigroup. Moffetttalk to mr. About the true battle an american wireless. Things have changed in just the last couple of weeks. It is a good time to speak to him about the guy with the pink tshirt. Caught deader been in a pink tshirt. The former vice chair of the fed, look for that, 10 00 a. M. This is bloomberg. Francine this is bloomberg surveillance. Francine and tom from new york and london. Deutsche Telecom Reports a 2. 1 billion euro loss for the fourth quarter. Expansion inn the the u. S. Where it owns tmobile. Back in europe, that strategy might eat backfiring, a 12 British Telecom led to that right off today. We are joined by timotheus hottges. Give me a sense of what you will do. What is your intention with that British Telecom stake . Hi. ,n the First Quarter last year 2. 5 billion, a value down of 2. 2 billion, this is net up to 300 million positive, so dont look at just one quarter. Look at the story. Great asset, great company, number one and mobile, fixed, content, and it is the portfolio we are driving for our businesses in europe, and therefore nothing is changing. We do everything to support the bt stock. That is our role as a partner. We will see. You will see the recovery. I am convinced in this team and this business. Francine i understand to why was it moved to the noncore unit . That is what investors are trying to figure out, your intention, moving the bt stake into a noncore unit comest just into the markets you are looking to sell . Look, a Deutsche Telekom we have our classical business units, but aside from that one, we have built a Property Development unit which is more entrepreneurial and independent. We have the dutch business there we could do some m a, more private equity mcmoran investment banking, freedom. Are inority shareholders this portfolio as well. We will see how we develop value out of this portfolio, and this is going forward, but with regard to bt, nothing has changed. Francine good oldfashioned Telephone Companies and giants compete with google, amazon, and ibm, how . Are doing what we every day. Deutsche telekom had a great year. We were growing by 6 on revenue , 8 on profitability, and 9 on free cash. We have been able to increase our dividend payout by 20 . Are doing everything to improve our position. We are providing the connectivity for the internet, so we are trying to work with google, amazon, and facebook. Our current customers expense the best Internet Services in our infrastructure. I want to have a network wherever you are, you have the fastest data, then you automatically increase revenue and have success in the u. S. And europe. Tom you have been with the firm 17 years. I want to know the view forward. You have mentioned twice that you have a port folio approach. I want to know what you are going to do in m a to advance the portfolio. Is it about getting rid of week acids or weak acquisition to get you to a doubledigit space . Thing is thatirst in that telcos face, Deutsche Telekom is the fastestgrowing entity and europe and the biggest one. Vodafone has a market cap of just 10 billion lower than ours. We have significantly improved how we are doing things over the last year. The second thing, how we are looking at things. If you cannot do something that is improving the value of the company on a standalone basis, you have to consider m a, partnerships, and other things to improve the value, so it is a good question. I think they are doing well in the integrated market these days , just some smaller markets where we might consider that. The u. S. Market, look, we have done a terrific job on improving investment significantly to this business, almost 20 billion euros over the last two years in infrastructure, and therefore lets check the option audi. Tom i get it. I love the magenta behind you. How are you going to bring magenta worldwide. You need john legere to run everything worldwide in wireless but are you going to see the price battle worldwide you brought on in america . Winning is always the mentality, and we have 45,000 people in the u. S. On the ground, people with magenta heart. I love them all. They are the reason for this success. It is a great team we have there. We have the same attitude and mentality here in europe. This is the magenta family. We are not striving for world leadership for magenta. We just want to be beating and the markets where we are operating. There is a lot of opportunities in the markets where we are operating on the ground, and there is still a lot of growth in the u. S. , which we foresee. Francine do you worry a little bit about politics in germany, and europe in certain cases, at the brink . You have crucial elections in france, then germany, where Angela Merkel is being challenged. Do you worry about having a german discount eight months from now . No. Look, the first thing is if you prepare the two markets, it is good to be in. In u. S. , and in europe, it is a good hedge. The u. S. Telecommunications itset is better from regulation side than the european market. Europe is very fragmented. We have 28 regulators. We do not have a digital Single Market, and i am fighting more getting this disadvantage out of the way that we create one Common Market in europe. With regard to the german position, and look, in germany, we are investing on an annual basis five alien euros, 5 inlion euros, 20 infrastructure. So whoever is leading this country needs us because we have to make the society more digital. Whichore i see our duty we have is the Market Leader and all these categories, but at the end of the day, we are not a political company. We are driven by the markets come and that is our intention going for it as well. Francine are you worried about regulation . You mentioned it a digital sociu have donald trump the regulating a lot of the industries, including yours where europe is a different story. That is true. Europe is by far overregulated, one of the reasons a lot of investments are not taking place in the european markets. The regulation 20 years ago when all the incumbents got de regulated is not adapting the current situation, the moment i do a cooperation with somebody, i in fact automatically be Small Companies with the regulation i am bringing to them which is stupid and not fostering investment. Same is true for spectrum, in the u. S. You can buy spectrum and you are more efficient the way trading it. In germany and europe, we are renting spectrum for 15 or 20 of theso the efficiency spectrum is significantly less productive. This kind of difference we have to overcome. The u. S. Is a blueprint for what we have to do in the european Single Market. Tom thank you so much. I love the magenta socks. Thank you, so much. What a privilege to have Craig Moffett with us. The magenta guys have blown it up. They have with tremendous success in the u. S. Market. Driven by not just pricing but also by Real Investments in the network they have invested aggressively in their lt network and a good story about data speed for customers that has resonated along with their low prices. Tom bring up the chart. This is an extraordinary chart. There is the magenta chart, tmobile back to 2012 when the world changed and verizon has gone nowhere. A price war in the United States with verizon capitulating, will sprint and t capitulate to the guy with the magenta shirt . Theyt was verizon did not start a price war, tmobile ands friend started it. Verizon started it. Craig i was recommending tmobile all the way through until i got off of it and said it is finally fairly valued for the first time. We just downgraded it and upgraded verizon. People misunderstand what verizon did, they always believe that network is the source of advantage and that there is differentiation to be had in the network and while everybody believes otherwise and it is a pure undifferentiated commodity, verizon has thrown down the gauntlet and said you want to compete on network, lets offer customers free uncompressed, unlimited hd video and see whos network when which is a pretty interesting strategy. London,r francine in our our cell phone bills too expensive . You are the expert. It is outrageous what bill lee spends every month on cell phones. In germanyasked tim whether he would bring the price war in the u. S. To europe, it is exactly the opposite. Tom thank you. Craig we have brought the tremendous price wars that have been going on in europe for the better part of a decade to the u. S. Francine right. Craig and europe, they look at the u. S. And cannot believe how high revenue per customer still is. Lower in europe. Francine because of regulators, i do not pay roaming charges, i did a couple of years ago, a benefit of a commission that looks into consumer protection. Part craig partly, a lot of different things, part of it is the roaming charges, part of it is the fact that perversely or ironically, because the u. S. Is such a geographically diffused market, a large space, returns on capital would arguably be lower here and therefore it tends to attract less competition. Hack the density you need to compete in the u. S. In europe, u. S. Had tumultuous smaller markets where you constantly get these investment cycles of players trying to get ahead of each other and eight inch ruinously. You are ahead in europe of the Cable Operators entering the market which has had a depressive effect in markets and we will see that coming in the u. S. Tom thank you for staying with desktop Deutsche Telekom Deutsche Telekom as well here taylor Emmanuel Macron is laying out his platform today, saying he will not change the retirement age or cut pension. He pledges to raise takehome pay by reducing payroll taxes. He promises what he calls a massive effort on apprenticeships. In the u. S. , the Trump Administration will kick our planning for a giant Infrastructure Spending project today. According to a senior white house official, taking Government Agencies will meet, the president wants to spend 1 trillion to rebuild roads, bridges, ports, and other infrastructure. One of the Federal Reserves biggest skeptic about the strength of the Global Expansion is signaling the u. S. May be Strong Enough for an Interest Rate hike soon. Fed governor brainerd spoke at harvard. Closing in on full employment and inflation moving gradually toward our target of foreign growth is on more solid footing and risked to the outlook are close to as balanced as they have been for some time. It will likely be appropriate soon to remove additional accommodations, continuing on a gradual path. Taylor fed policymakers for a twoday meeting march 14. Global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Tom thank you. William lee of citigroup will not recuse them him himself from a fed discussion. While brainerd is out of her mind you are saying. She should stay a dove. If she changes her mind, she should do it for a good reason. Big becauseashing maybe we can get fiscal policy in gear, if it is a change of the policy rule, she should of said she was not basing her decision on hard data. Tom lets look at the twoyear yield. We have shown the chart one million times. In december, rate increase, huge disappointment, up we go, the last rate increase. Here is the big mystery, march 15 meeting we will see on soft data, or do you stay or do you wait . 1917,nstitution back to why will it move to expos to x and i. Antitheory. They want to be relevant but the markets are trapping them in the markets now leading them in a sense that if you do not move in march, you will disappoint markets. Are they willing to take the fight and say we will base the decisions on hard data and we should wait. There is a good reason we should start raising rates, we have been a zero for way too long but when you change a regime and give excuses for soft data, that is a change you should tell people. Maybe that is why we should have a rulesbased policy. Francine if they talked it up s, much, looking at the oi 94 , they wanted it there, a message from the fed saying we want the markets to believe in march. They want to say every meeting is relevant. Did they do too much . They wanted the option of not moving . They talked themselves into a box where they do not have the option nobody of not moving. I am worried about the Market Reaction to future moves, will we believe in soft or hard data . Francine the data has not moved, then you had five, six of them saying, fed president say march is live, they must know what they are doing or am i too naive . We all looked at the same data and have the ability to assess the data, the fed has got a lot of phds working on this step so lets find out what the secret sauce is they are using to shift the way they assess data. That is worth coming to the rest of the world. Tom the only one who has a bz azillion phds is out of adam posen who is on fire at the Peterson Institute. Thank you for speaking on the advanced of the Federal Reserve. This is bloomberg. Taylor this is bloomberg surveillance. I am taylor riggs. Shares of the maker of snapchat begin trading, they sold 200 million shares at 17 each, at the price the company has a market value of about 20 billion. And flying a multiple of 21 times sales, or twice what facebook sells for. That is your bloombergs nest flash business flash. Of joining us is adam posen the Peterson Institute who has brought in people. Who have you hired . Jason furman . You took nathan sheets from the government, who was with bill l beforeee at Citigroup Lee before at citigroup. Is the white house in the real world . No. Tom the independence of the fed, she will raise rates and they will be at sweat that upset. Upset. Adam a divided republican party, they want that some want to raise rates but ultimately most of us believe that donald trump is a real estate President Trump is a Real Estate Developer and someone who wants to go with the economy and will not like raising. Tom they assume he is a rockefeller keynesian, izzy is he . Adam an accidental keynesian, he know what he wants to spend money on, he does not care about the business cycle. He is looking at a bunch of tax cuts with chairman speaker ryan. Accidental keynesian. Francine that means he will not be able to do the tax cuts which is why we have not heard about the tax cuts for a while. Adam you are going to come in washington that is the number two issue with number one being aca in terms of economics. Number two is Corporate Tax cuts, and then the stupid idea to try to pay for them. Francine who should he listen to when it comes to economics in his administration . Who should he call up at whatever time he wants to call and say what do i do on this . Adam i will Say Something radical, nice if he listens to senior Civil Servants to permanently or have a long time been in the u. S. Government. A lot of good people at treasury and the fed. Occasionallyr, listen to people. Tom mentioned nathan sheets who is a wonderful technocrat, not partisan, spent most of his career at the Federal Reserve. Francine how would nathan advised him and how would you advise the president . Adam i cannot speak for nathan but what i would say is if you want to do tax reform, you should not be trying to blow it out, he should not try to change all the rates at once, you should increase investment and do spending expensing of investment. You should not be doing the border adjustment tax, if you want a real valueadded tax for the u. S. , which would be strange for a republican to do, but if you wanted a National Value added tax that is neutral across sectors and raising revenue, you compensate poor people for having their prices in food and clothes going up, you can do that, have a debate and do that. Real posal is not a is not neutral and will hurt poor people. Important, here is the fed funds target rate, we have not looked at this in a million years because it is been zero. This is measured. This got us into trouble. Up. Up, up, up, should we do a measure to redo or what is wrong with saying one and done . Brainerd says they will raise rates and set, by definition to they have to redo greenspan and the measured . Adam i was talking with you 1. 5 years ago about one and done. At that time it made sense because you were not sure where the economy would be or how fragile things would be. The Obama Administration and the yellen fed have delivered a robust economy, working for most people, closed if, inflation going up, a one and done does not make sense. We believe that the Participation Rate is a much better target on labor market and unemployment in which case you should not be raising at all. Tom vice chairman fisher says we are fully employed, brainerd took the koolaid, professor blanchflower said they are nuts, youre not full employed, all are around a table, are you an agreement they are both crazy . Adam i feel guilty about being disagreeing with danny because we worked together a few years ago, saying that the cyclical aspect of unemployment was underrated. Now i have changed my mind, denny may be right but i changed my mind and i know my colleagues and i think it is time to hike. Change, hehe facts changes, we can go with. Quote. Francine we will be back with adam posen of the Peterson Institute. And his cool tom charge and you can ib us and the producers. You can ask some questions directly to adam posen. This is bloomberg. Shortly, coming up daybreak americas with david westin, Jonathan Ferro, and alix steel. What are you most looking for two . You just had dow futures slipping into positive territory, set to open another record high, over 21,000. The twoyear yield not yet at 1. 3 . A little bit of a selloff but yields not up one basis point which does not make sense. We will talk about it with the Research President and chief investment strategist. I am going back to my hometown and talk oil, Credit Suisse cohead of energy, Global Capital markets, what is going on with ipos and m a which have been picking up and we will begin to that. We will get into that. Texas. Rom i do not know about chemical engineering. Tom ask about kktone. I will do that. Tom we continue with adam posen. You are truly one of the nations expert in germany, tell me about germany after merkel. It will bet know if after merkel soon, one country in europe and in the advanced world were a moderate left already stands a shot at winning. Party stand aft shot at winning, can you have a normal debate in a world where everybody else is having crazy parties. , merkel isalso finally reducing the surplus because they have this election, the refugees, that could be a change. Francine talk about the crazy parties. Are we underestimating the linkage that there is in the world . There hasewer ask, been so much credit expansion in china, does that get hit if we have Marine Le Pen Marine Le Pen winning in france . Adam when we talk about her, i am not a french expert, Marine Le Pen is a nuclear scenario, you used to worry about war in europe, no point in worrying about it because once you go down that route, everything is off the table. China is like the u. S. And largely like the eurozone as a whole, driven by domestic issues. We just got a new reformer, old reformer was in a new role as head of the China Banking Regulatory Commission and that is an important signal with how seriously they are taking the issues. If Marine Le Pen goes, then the money leaves china and comes more to the u. S. But does not change china. Tom the revaluations of the Deutsche Mark, every analyst is about depreciation and evaluation, Marine Le Pen takes the friends out frank out, this is lira, Deutsche Mark lira, euro, the stability, the straight white line on the right. In the extrapolated devaluation of italy is huge, what you would see, a large presumption. The other way is the revaluation of the Deutsche Mark. Germany will not fall apart with a stronger Deutsche Mark, are they . Adam they would not, it would take them from this unbelievable situation they have been in, like the u. S. In the 1990s, they break records of employment, great growth, a huge shock to the Deutsche Mark would interfere with that but not throw them off. Germany has decent fundamentals after all. Francine we need you for three hours. I have a viewer asking adam posen, because border adjustments act creates incentive to export versus selling in the u. S. , would not put artwork pressure on domestic prices and hurt u. S. Consumers . Adam the answer is yes, the only way it does not hurt consumers is is if you get a 141 jump in the dollar, even that is not a perfect offset because there are a lot of things in the Financial Markets like we were talking about with china or france, that would get tighter if we had a u. S. Dollar rise. That will not happen. Tom and an essay this weekend on the big exporters of the United States, are also the big importers, the dynamics of your academics have moved on to a process on multinational systems come right . Adam Richard Baldwin talks about this. If you move prices a little bit, it is not the end of the world if some Automobile Companies have to shift production, not the end of the world. In general uncertainty, unraveling of supply chains, especially with countries like mexico and canada, where rebalance trade, it will not work. Tom we will do this again perhaps in washington, forex report, stronger dollar, sterling 122. 82. Good morning. Jonathan snap things much the federalipo reserves chief governor endorses another rate hike. Thernor brainerd suggests economy is on a much firmer footing. U. K. Inflation is the highest since 2013. European growth stabilizes in a year of messy politics. A warm welcome to bloomberg daybreak, im Jonathan Ferro alongside david westin and alix steel. Northstars executive chairman is joining us in about an hour and this man, for the last six months has been the biggest supporter of President Trump that i have seen come on this program or elsewhere. David in an investor, which is a twofer. For ahe has been saying while that the President Trump you saw on the campaign trail is different from the one that will get in the oval office and we have not seen that since tuesday. Jonathan