Transcripts For BLOOMBERG Bloomberg Surveillance 20170309

Days, brexit, and global banking. This is bloomberg surveillance. Im Francine Lacqua in paris. Mark barton is in london. Im here at the j. P. Morgan Global Markets conference and we have some great guests lineup. Where going to speak to alain minc. We also have jeanClaude Trichet , former president of the ecb, and we also speak to the publicis ceo. We are the focus on france. I know theres a lot going on in the markets. Tell us about it, mark. Mark counting down to the culmination of that meeting. Stocks are falling for the second day in europe. Ive looked at the last 10 days. They are down for seven days in 10. Europes benchmark 0. 2 lower. The euro is up against the dollar. Earlier it was falling. Ahead rebounded slightly of that ecb meeting. I think the data point to watch today is the u. S. 10year yield. 2. 58 . The yield rising for the ninth day. That is the longest stretch since 2012. Were hovering around 2. 58 , highest level since december. Gross, 2. 6 is the level to watch. That signifies the start of a bond bear market. 2. 5 is where we are today. Oil rebounding today after falling 5 yesterday as record u. S. Stockpiles begin to raise doubts about the effectiveness of opec efforts to ease a global glut. But francine, it is all about the ecb today. Francine certainly is. Lets get to the bloomberg first word news. Heres nejra cehic. Sebastian chinas factory gauge prices surged at the fastest pace since 2008 last month. The index rose 7. 8 from a year earlier. The news lifts the outlook for global reflation as manufacturers look to pass on higher costs. Oil has halted losses after the biggest drop in more than a year u. S. Crude stockpiles began to raise doubts about the effectiveness of opec efforts to ease a global glut. Wti threatened to fall below 50 after stockpiles rose to the highest level in weekly data since 1982. South koreas socalled trial of the century has begun. Prosecutors are trying to prove that the samsung chairman and funnelred to millions to park in a. Hearings at Seoul Central District Court are said to last up to three months, during which lee will fight charges from bravery to embezzlement. The bear is about to rule in the treasuries market. That is according to bill gross. Benchmark yields reached 2. 58 yesterday. Reports showing unexpectedly strong hiring in february. They are approaching the 2. 6 mark that gross said will signal the start of a bear market should it hold on a weekly basis. Demand for u. K. Housing dropped to a sixmonth low in february according to the royal institution. A measure of inquiries fell to zero from three in january. Economists expect praise growth to cool this year has brexit uncertainty clouds the economic outlook. 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 . Francine thank you so much. Today is ecb day. We will hear from mario draghi later on. Were also hoping to have a little bit of a better picture in terms of inflation and recovery for the eurozone. Matt miller is outside ecb what are we expecting from the European Central bank . Matt as far as policy, we expecting no change today. Almost every economist that Bloomberg News surveyed said that mario draghi isnt going to change the rate now come a but he may have set himself up well in december for this policy divergence between the ecb and the fed. Starting in april, hes going to reduce bond purchases from the size of 80 billion euros down to 60 billion euros a month. That is going to continue through the end of the year. The interesting thing will be to see but the ecb thinks about inflation. Weve seen euro area inflation at 2 , the headline number. The core number is down below 1 . It is on a downward trajectory since it peaked back in 2001. What is the ecb going to say about inflation . We are expecting them to raise their forecast for the year. Right now they see 1. 3 in 2017. Were expecting to see a 1. 7 rate at the end of todays meeting. The decision comes out at 12 45 p. M. U. K. Time. Investors are going to be hanging on every word to see what mario draghi thinks about inflation and what hes going to do about unemployment. Here in germany it is a postwar low. Around the rest of europe, it is still too high. That is why the ecb wants to keep its foot on the gas pedal. Francine thank you so much. Matt will be with us throughout the day and we will bring you special coverage of that European Central Bank Decision at 12 45 p. M. U. K. Time, followed 45 minutes later by Mario Draghis news conference. Bloomberg customers can follow all of that on tliv. Mark lets bring in Stephen Isaacs, head of the Investment Committee at Alpine Capital management. If you are draghi today, what is the message you want to get across . Stephen all talk and no action. He was very clever in setting up a path late last year. Depends on how you look at it. It can look like a tapering or not like a tapering. Theres some talk that american investors are comforted by the fact that theres a tapering. The quantity of purchases is going to drop by 20 billion. European investors say you are still plowing ahead with a vast amount of money. I think this is a narrow path. Weve got politics rearing its ugly head. With got elections coming next month. I think it will be extraordinary to see any action today. ,rancine how would you model if you were the European Central bank and you believe mario draghi is modeling the breakup of the eurozone this year . Stephen do you think they are doing that . There is a pretty interesting question. I think the assumption amongst the establishment is still, there will be squalls in the zone of politics that Emmanuel Macron or somebody like that will be president of france and the whole problem is going to go away. I dont think people model the scenarios anymore than the bank of england model brexit. I think the establishment is going to hope this will all go away. Mark shouldnt they have modeled it . Havent we learned that maybe modeling the likes of brexit and a Trump Victory is wise . Stephen it would be great to model it, but as weve seen, all predictions proven false. Lets move on and say, if it did happen, i think it is worthwhile contrasting what happened after brexit and trump with the possibility of a le pen victory. His is a very different game trump was a republican, although he may have been a maverick. He still constrained by Republican Party politics. The National Front is completely outside the mainstream of french politics. The program that Marine Le Pen has issued is very dramatic. Mind that ifn my one were modeling it, you would be modeling something close to a cataclysm. What can you do . Populism, all see populism, as somehow beneficial for markets. There are types of populism. The National Front is one, im afraid, which would lead to the breakup of the e. U. And the end of the euro. Those are big events, putting it mildly. Francine stephen, do you believe the polls . When we look at Marine Le Pen, and i have alain minc, who im looking forward to, one of the most wellknown political advisers, but from london, do you look at the polls . Do you have your own polls . What are the chances of the markets getting it wrong . Either they are jumping at shadows or they ignore it. Stephen i think you can look at polls, but there is probably ingrained bias. If you say that on the second round, which is crucial, i dont think theres any doubt that Marine Le Pen will be in that second round, that against micron, she is losing 6040, i would add 5 to her vote. Is close enough to say there is a possibility she could win. , for somel view is commentators saying there is no way Marine Le Pen can win, i think that is false. I think the female vote im indebted to my wife on this one again. Sorry to bring her up. Marine le pen has been very clever. Obviously she is a woman, but traditionally populist figures have tended to appeal to the male vote, the industrial classes who have been disadvantaged by globalization. Marine le pen has been never enough to see that the female vote in france can also swing her way. The female vote perhaps has got the most to lose by a number of trends. It was president hollande that said marianne, the symbol of france, could wear a burqa one day. When Marine Le Pen was in lebanon, she kind of picked a fight with a muslim cleric and refused to wear a veil. She was making the point that female rights are very entrenched and maybe theres a risk of them with certain longterm trends. I think she got her dog whistle message across effectively. In france, the most powerful leaders are women. I think shes playing the female card. She can win, but it would take an external event. Much as in the u. S. It took the fbi to reopen the investigation against hillary a week before the election that might have been the crucial to percent or 3 thats one it for trump. We would need an external event. All of which we hope dont happen. Francine thank you so much. We will come back to that with alain minc in a couple minutes. Were looking at french politics here in paris. A little bit later on, we will be speaking to jeanClaude Trichet, the former ecb president. We want to get his take not necessarily on the governing council today meeting, but we want to get his take on inflation, on models that a lot of the Central Banks should be using. Then i want to get his take on what the fed does given the insurgency of this reflationary beenthat donald trump has putting on the markets. At 12 40 p. M. U. K. Time, we speak to the ceo of jpmorgan, jamie dimon, one of the rock stars in the finance world, one of the most recognizable wall street titans, and we will be asking about brexit, Financial Regulations, and the impact on the world economy. First lets get straight to the Bloomberg Business flash. Heres nejra cehic. Nejra the ceo of of eva says the firm will use excess capital to payout to shareholders. Mark wilson spoke to bloomberg after a 12 rise in fullyear operating profit. Our Balance Sheet is transformed. We have this problem of having too much capital. Were going to invest in our business. Were going to give some of that back to our shareholders and where going to pay down some pretty expensive debt as well. Nejra Royal Dutch Shell is to sell all its Undeveloped Oil sands interest in canada. The company also plans to reduce its share in the Oil Sands Project to 10 from 60 . That will net 7. 25 billion. Akzo nobel says it may separate its 4. 8 billion euro Specialty Chemicals business after rejecting a bid for the company from u. S. Rival ecg industries. Akso said the 83 euros a share proposal substantially undervalued the company. Z agreed to buy general electrics water unit in an all cash deal. The French Company and the Canadian Pension Fund manager will hold 70 and 30 of the unit respectively. The deal enables the french utility to expand outside europe. We will bring you an exclusive interview with suezs ceo. That is the Bloomberg Business flash. Francine, mark . Francine thank you so much. We are six weeks array from the first round of the president ial vote in france and it does seem that Marine Le Pen is starting to make a little bit of inroads with certain ceos. She actually met with a lot of ceos from the cac 40, but the countrys banks or investors are very wary and shunning her antieuro agenda. This is the latest poll. We had a poll this morning putting independent candidate Emmanuel Macron on ahead of le pen in the first round. Overturning the le pen lead seen in most recent polls. With me this morning, the former , one ofNicolas Sarkozy the most famous political advisers in france, one alain minc. Thank you so much. Foreigners, the people outside france, get wrong about your political system . Does Marine Le Pen really have a chance of becoming president . Alain when the markets think politically, we have to be careful. I think the markets are politically stupid, usually. What do they think . First one was brexit. Second one was trump. The third one will be le pen. It is crystal clear. What is the situation . What are the differences . First of all, the referendum [indiscernible] the french president ial election is a tworound vote. It is not the first time mrs. Le pen is in a good position. Instance, she was [indiscernible] and the fact is that i think sees there the world is a Glass Ceiling for her to reach 50 . I am deeply convinced that it is the situation now. In five years from now, i dont know, but the markets dont care about five years from now. Francine lets focus on the next three months. Does Marine Le Pen have a bigger chance of winning . You think this is not possible but does she have a bigger chance of winning against Emmanuel Macron or Francois Fillon . Alain i think her best chance is against fillon, because after fillons personal situation, many left voters would abstain. If macron is at the second ballot against le pen, he will have most of the leftist votes and a significant share of the fillon votes. Reach 40 ,e pen may possible, but i think she cant go farther. I think the risk is really pretty low. There is the market, another scenario which is very interesting. Lets assume once again that in France Macron wins. Macron is strongly proeuropean. Germanysume that in Martin Scholz becomes the next chancellor. [indiscernible] cine you regain elected, macron is there are two important things. Macronscholz or macronmerkel. European ch more [indiscernible] merkel is logical. Wins, thatf scholz is the end of the schaeuble doctrine. I dont say [indiscernible] but i think the markets should look as carefully to this scenario as they look to the scenario of le pens victory in france. Francine why is Francois Fillon still hanging on . Why has Francois Fillon not stepped down . Alain it is a shakespearean tragedy. How people behave in shakespearean tragedies. I think it is a psychoanalysis phenomenon more than a political one. Francine you called the market stupid. Had a believe the markets role in the populist wave that we saw in brexit and the election of donald trump . Alain not at all. Ok, brexit won 5248 even though mrs. May has forgotten that 40 of the British Population [indiscernible] and in the u. S. , trump is elected because of the constitution. But democratically speaking, he lost. What does it mean . It means people are behaving as if brexit would have won by 70 against 30 and trump would have won by 70 against 30 . Balanced evenre though the results are what they are. [indiscernible] there is a populist tide everywhere. Interesting, and thats not what the markets these states vote for trump. These were formerly unionized states. Francine is a globalization . Is it innovation . Alain everyone who has been director in a u. S. Industrial that younows perfectly approved all the transfer of plans from unionized states not to mexico, to texas, to arkansas, and the reason is that these people are no more protected, but that is not globalization. [indiscernible] francine do you think donald trump will change the way we do politics and diplomacy . Alain i think donald trump is a blessing for europe. Itselfw, europe unites when there is a threat. The father of the European Union was joseph stalin. The europeans were horrified. That we we consider have no more Nuclear Umbrella protecting europe, europe will unite. When you see that in germany you have discussions about the idea of asking for the French Nuclear is a not so trump natural blessing for europe. Francine do you not think it will mean a lot of european politicians will shift to trump policies because they are concerned that they dont connect to their citizens anymore . Alain that is not a problem with trump policies. That is a problem of connecting. That is a problem of politics everywhere. There are several types of populism. You cant compare the populist tide in spain, in italy, with le pen, or with germany. But it is clear that we are facing this problem and there is no obvious solution. Francine are people not fed up . Can you not draw a line . It not the same fear of the foreigner . World,do you say to the you people, as if people were only on one side, as if people were only on brexit side . The 40 get percent of british citizens who voted for the remain belong to the people too. If the elites would have represented 48 of the British Population, it would be a highly democratic country. The same, the u. S. With 52 . What are we facing . Especially in this country. France two frances. One is very happy and the other is very unhappy. You have happy people and unhappy people. Francine is there a concern that politicians jump at shadows because they want to placate the people that are unhappy that promising protectionism . Alain i think that is a problem and macron, because he belongs to the new generation, is not to but ae will protect you, Better Future to your children. Because that is a problem of the unhappy people. They are afraid the future of their children would be even worse than their own situation. Francine do you worry that if macron gets elected, because he doesnt have a party behind him, it is going to be difficult to have support in the local election . Alain i think he will win. He will have a kind of majority of total parliamentary reelection. My concern is, how long will it last . Im sure he will be able to win with a majority for the first two years. Then im not sure his maturity will not break up. Francine thanks so much for joining us. We are in paris throughout the day. He is a former political advisor to Nicolas Sarkozy amongst many other things. Mark, back to you. Were coming back later to paris. We are talking a little bit ceo and we the suez have jamie dimon as well. Mark up next, chancellor hammond says britain is open for business. A French Communications firm. Why hes chosen the country for his European Headquarters. This is bloomberg. Ways wins. Especially in my business. With slow internet from the phone company, you cant keep up. Youre stuck, watching spinning wheels and progress bars until someone else scoops your story. Switch to comcast business. With highspeed internet up to 10 gigabits per second. You wouldnt pick a slow race car. Then why settle for slow internet . Comcast business. Built for speed. Built for business. Mark lets get the bloomberg first word news. Heres nejra cehic. Nejra ecb president mario draghi delivers the latest policy decision in a few hours as well as an assessment of the european economy. He will probably reiterate his assessment that underlying price growth remains subdued. We will bring you special coverage of the decision at 12 45 p. M. U. K. Time followed later by Mario Draghis news conference. Bloomberg customers can follow all of that on the blog. Chinas factory gige prices served at the fastest pace since 2008 last month. The index rose 7. 8 from a year earlier, coming in higher than estimates. His lifts the outlook for global reflation as manufacturers look to pass on higher cost. Oil has halted losses after the biggest drop in more than a year yesterday as record stockpiles began to raise doubts about the effectiveness of opec efforts to hes a global cut. Stockpiles rose to the highest level in weekly Government Data since 1982. Ofth koreas socalled trial the century has begun. Prosecutors are trying to prove that samsung vicechairman lee conspired to funnel millions of dollars to a confidant of park to control the Worlds Largest smartphone maker. Hearings are set to last up to three months, during which lee will fight charges from bribery to embezzlement. George osborne expect to earn 650 thousand pounds from 48 days of work for blackrock. That is more than 13. 5 thousand pounds a day. The conservative politican acts as an economic adviser to the firm. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. I nejra cehic. This is bloomberg. Mark just over three weeks until the governments deadline to start the brexit process, the u. K. Chancellor using his Spring Budget to send a signal that britain is open for business. French Communications Group havas, just the sort of company the government will be hoping to retain. Lets the to the chairman and ceo , who joins us from the new building in londons kings cross. Thank you for joining us. Why did you open your European Headquarters in london . Its a good question. Thank you for having me from london. We are delighted to open today in london. London is of course the home of many great headquarters for international companies. We thought that it was a perfect with all theas european folks in london and kings cross. It is a ringing endorsement of london as a city and as a country as we approach brexit negotiations. England is asaid key market. How has business been since the brexit vote in june and how do you expect business to fair as we commence the negotiations process . Yannick thank you very much. Of course we have been super surprised on the 23rd of june when we learned about the brexit. Our first reaction was to be a little uncertain, but after a lot of consideration, we have decided to maintain our investment in the u. K. And continue to headquarter europe in the u. K. I would say the business is very good in the u. K. The only thing i would say is i dont see any slowdown of clients investments in advertising, but we have, i would say, lower visibility than in the past. For now we have very strong results in the u. K. And the perspectives are still very good for the years to come. Mark for the moment, it is the French Election that has overtaken brexit in investors minds. As we approach the French Election and the probability of a Marine Le Pen victory is roughly 30 , 33 , are you taking measures, contingency measures, in case Marine Le Pen wins the upcoming election . Hardck i think it is very to do prediction. Our main focus is to remain focused on our business. We have seen with the brexit that britain is still in a very strong position. Electiontion the u. S. The u. S. Economy still booming. I would say the politics dont have that much impact as we described in the media. We believe that on the long trend, the business will continue to strive for us in the advertising. Mark so you say if le pen wins theres no need for havas to remove themselves from france . No, i think it is important. We have 4000 people in france. We have 3000 people in the u. K. We are supporting all people here in london. Of course we continue to support the people in paris. You know what i mean, on the longterm, we continue to support anyone. Mark the u. S. Is your main market. How do you rate mr. Trump, still in his first 100 days of office . Stock investors seem to think theres great hope of infrastructure spending, tax cuts, deregulation. From your standpoint, how do you rate mr. Trump so far and his impact on business . Want to get any political judgment. I run a group of 20,000 people around the world. People in my group have mixed feelings. Some of them are republican. Some of them are democrats. I dont want to be involved in two political judgment. But what i can tell you is that the economy is very strong. Our clients are very optimistic for the u. S. Economy. I would say that we anticipate and we foresee strong growth in the u. S. For years to come as well. Mark youve been asked about this a lot. Vivendi is interested in buying havas. Is it only in matter of time before the two of you unite . Yannick i cant tell you anything. Im sorry. [laughter] mark ok. Yannick thank you. Mark we will speak to you soon. Yannick bollore, chief executive officer of havas. Stay with surveillance. We speak to the chief executive of suez as he teams up with a Canadian Pension Fund manager to buy ges Water Division for 3. 2 billion euros. U. K. Chancellor Philip Hammond faces a budget backlash as hes accused of breaking a tory election pledge. And at 12 45 u. K. Time, we speak to jpmorgans ceo, jamie dimon, on President Trumps first 100 days, brexit, and global banking. This is bloomberg. Lets check on the markets. Nejra cehic is watching the action. Nejra european stocks down for the fifth time in six days if you look at the stoxx 600. The ftse off by 0. 5 . Donna continues to climb in the week of better than expected jobs reports. 0. 1 ahead of the ecb Rate Decision. Sterling off a little. The 10year treasury yield and bund yield a little higher. You can see how that is shaping up in the rest of europe. In the commodities space, gold down for a fourth day, metals lower on the london metals exchange, with stockpiles rising, oil rebounding. Brent has disappeared. I can show you this wti chart. Oil halting its losses. Inching back from that 50 range. We are at 50. 39 a barrel on wti now. Record u. S. Stockpiles still causing those concerns and u. S. Crude futures settled below average for the First Time Since november yesterday. Then ive got to show you this chart. It is all about the 10year yield. Up about one basis point. We are 2. 57 right now. It climbed 25 basis point over the last eight days. A lot of the driver has come from expectations of the fed rate hike. That adp jobs report feeding into that. Again this2. 58 session after hitting in yesterday. 2. 6 is where bill gross says the bear market will begin. Others like Jeffrey Gundlach say that bear market begins at 3 . Finally, tom keene is going to hate this chart, but im hoping you will like it. Bloomberg dollar index poised for its best backtoback week since december as the treasury yield premium over other g7 has been rising. The currency reviving even after leverage bets on the dollar slumped for the longest stretch since 2010. Mark Philip Hammond has come under fire after his budget yesterday. His increase in taxes on the selfemployed prompted accusations of breaking election pledges. The move would almost affect 2. 5 million people. Hammonds budget overall set a cautious tone, choosing to say rather than spend the benefits of faster growth. Lets bring in Stephen Isaacs. The tone that bloomberg is taking, the line, is that it was hardly the budget of a government that is about to call an election. Was, could theresa may a snap election . The budget didnt suggest that. Stephen there have been one or two members outside the government who said this was the time to do it, but theresa may has been pretty consistent since she became Prime Minister that she was very much against it, that she felt the brexit issue needed to be the focus of the government. There is something called a fixed term act which would be difficult to overturn. It has to be overturned by parliament. Theres no certainty. It is very unlikely they would be able to overturn it. Reasons, i think it is not going to happen. The budget was hardly a giveaway. Mark the house of lords has been in the news because of those amendments. Does theresa may have enough and triggerect it brexit under her terms . Is it a blow even if those amendments are added . Stephen shes got to trigger it in march. It would be impossible mark with amendments . Stephen the amendments may be go backwards and forwards. Theres talk that mps will be able to overturn the amendments. They are not that important. They are slightly technical. They are not about the substance of the debate. I think shes going to trigger article 50 this month. Mark than the process begins. Is the economy turning . Are we at an interesting point whereby the data is beginning to economy may be isnt as strong as it has been since june 23 . Stephen there was a lot more momentum last year than people gave the economy credit for. I think people assumed the sheer shock of brexit would act as something as a break. That didnt happen. It was a political storm in a teacup. I think the problem with the economy is perhaps a problem of the u. S. Economy as well, that this is a very aged expansion. Here we are, seven years on. Traditionally, there is a credit cycle. The housing market, probably the in britain, which is always the case, clearly from london outwards, now rippling downwards, and i think it is quite likely that the momentum is really faltering fast. For from the u. S. , all us bond nerds, 2. 58 is where we are. Some have suggested 3 . Do you have a figure in mind . Are we at that point, that tipping point, where the bull market, the multiyear bull market is coming to an end . Stephen i think we are in a bond bear market. Orther you are picking 2. 60 the top last year and a we are a long way from there. By most standards, when you double yield, i think you are in a bear market. Im looking at policy. Trump is going to pick the fomc. There are three vacancies already. With yellen and fisher going, there are five picks. What is he going to do . Is he going to do a jet gundlach and say, im a debt guy, i need the market to absorb all those treasuries, and pick doves, a repeat of greenspan, yellen, but just republican labels, or is he going to have a very different view on the discount rates and want to change, create a disruption . I dont know the answer to that. Mark it will come soon. Stephen isaacs, head of the Investment Committee at Alpine Capital management. Getting some breaking news from bmw. 2016 earnings before interest and taxes, 9. 3 9 billion euros. Analysts were expecting 9. 82 billion. Have a look at what is happening to the shares. It is proposing a dividend of 3. 50. Shares bouncing back a little bit. 2016 he bit was below expectations, which is why weve seen a downward move from bmw shares. Up next, suez exclusive. We speak to the boss of the french firm as it teams up with a Canadian Pension Fund manager to buy ges water unit. This is bloomberg. Mark lets get the Bloomberg Business flash. Heres nejra cehic. Says thee ceo of aviva firm will use excess capital to pay shareholders and refinance costly debt. Mark wilson spoke to bloomberg after the insurer posted a rising fullyear operating profit. Our Balance Sheet is transformed. We have this high quality problem of having too much capital. Where going to invest in our business. Were going to give some of that back to our shareholders. Were going to pay down some pretty expensive debt as well. We will see what investors say. Nejra Royal Dutch Shell is to sell all of its Undeveloped Oil sand interest in canada. The Company Plans to reduce its share in the Oil Sands Project to 10 from 60 . That will net the anglo dutch producer 7. 25 billion. Akzo nobel says it may separate its Specialty Chemicals business after rejecting a bid for the whole company from u. S. Rival ppg industries. Akso said the 83 euros a share proposal substantially undervalued the company and was not in the interest of its stakeholders. Mark . Mark still with us, Stephen Isaacs. Week on since the snap ipo, the price 17, thursday closed 4. 48. To 27. 09 on friday was the closing high. Monday and tuesday, it lost value. Closing yesterday, 22. 81. What have we learned . Stephen do you use last minute. Com . Do you remember that . There was something ironic about it. It was the last minute of that bubble. And im saying, snap you cant see my hand snap, this is a terrible deal. Theres everything wrong about this deal. The way that the Investment Bank sort of puffed it up, got the first day pop, and then left it where all the passive investors have to buy it, passive investors and retail are the only people buying the stock, all the analysts are bearish mark this is a an hour which shows you what the analysts are saying. Lly zero, hold three, se four, 26 downside. Stephen it is poor for the industry, for the markets, that passive investors will have been forced to buy this. They had to buy it. They had to buy every day initially when the ipo comes out. If they dont get enough through the ipo process, they have to come to the market. Then unfortunately they have to sell it as well. That is one of the deficiencies of passive investing. I think this is unfortunately a bad parable of the times we live in. Mark does it harold anything like lmc did . Weve come off the top in equities. Oil fell 5 yesterday. Even gold has been declining. Where are we when it comes to investing . Stephen i think were in big trouble. I think they all blow up. 5 in one day is pretty nasty. Copper futures coming off sharply. If you look at the speculative longs, they are all time. Theres a fantastic bloomberg chart. It is a horror show. Sorry, guys. This has been an incredible rally. Of cycle rally. Im very concerned about the market. Mark do you have figures you are willing to put out there . Are we looking at some sort of correction in stocks . Stephen i think we lose this whole post trump rally. Twoink we go back down to thousand, im afraid. Im very cautious here. Mark what do we buy given what you just said . Stephen dollar is the interesting one. We are back to the fomc there. We dont know where the longterm direction of Monetary Policy is, but the Interest Rate cap between the rest of the world and u. S. Is now the widest it has been since 2000. Youre getting paid a lot of money to own dollars. Record and other money to own shortterm treasury bonds. Take that trade right now. Take your profits. Theres some nice yields to be had. I think the dollar is going to pick up steam in the second half of the year. Mark can e. M. Withstand that . Stephen i think e. M. Is dissolving into a number of Asset Classes. One of the big mistakes is to see e. M. As one big trade. There are certain markets that are ok. India has pretty decent growth. Youve got a pro business administration. China, i cant read it at all. I would avoid china. Brazil is in a mess. Russia is a commodity play. Theres one or two e. M. Countries worth looking at. Mark Stephen Isaacs there. Still to come, jpmorgan executive jamie dimon speaks with Francine Lacqua. Hes going to focus on trumpss first 100 days. Francine we are at the jpmorgan conference where i will be speaking to jamie dimon. The latest pickup, does it meet Mario Draghis criteria . We get the assessment. And budget backlash. Philip hammond is accused of breaking an election process as he hikes tax. Good morning. I am here in paris at the jpmorgan conference. Looking at the markets but we also need to talk about the possible political turmoil over what happens with this country. On may 6. Tom here and there and everywhere. Kevin cirilli joins us at 6 00 on the uproar. Gopcare, that is what is going on in washington but there are distractions in paris. Francine just a couple of distractions in paris and in europe as a whole. To two exclusively french ceos next. But first, here is taylor riggs. Taylor House Republicans work through the night to take the first steps to replacing the Affordable Care act. The ways and Means Committee approved a measure approving tax incomebased subsidies. Instead there is a tax credit based on age. A bill still has opposition. Many conservatives oppose this. A technology that efforts to retail north Koreas Nuclear program have failed. Rex tillerson will use the trip to asia next week to look at new options. Last week, north korea tested four missiles. In asia, factory prices rose at 2000astest pace since eight. 7. 8 . That lists that lists the Global Outlook for inflation. In europe, one clear take away from Philip Hammonds new budget. The government is likely to resist growing pressure for an early election. He increased taxes on the selfemployed and it prompted not nation that the conservative party was breaking one of the key election pledges. Theresa may has been urged to take advantage by calling a general election. Global news, 24 hours a day. Powered by our more than 2600 journalists and analysts, in more than 120 countries. I am taylor riggs. This is bloomberg. Tom thank you. A data check now. Oilies, commodities fell out a bit yesterday. The curve in steepening over the last 48 hours over 120 basis points. A steeper yield curve is a good thing for jamie dimon. 53. 21 not yet a 49 print. The turkish lira is off the radar. It has quietly weakened. Let me get my bloomberg up here. I dont have it up now. I am bad. Year yield do you see how i did that in real time, anthony . That is a miracle. Francine is in paris. Jobs day is on friday. How about the most vanilla of charts. Of vanilla we are getting a p again near two standard deviations. Here is the 3 level. It is a contained trend but we are getting up near the two standard deviation breakup. I am also looking at the spread between the u. S. And german 2yearold german year yeild. Deal as i was a traveling. The frenchill enable Company Based in paris to expand the operations outside europe. , with thes. Market emerging markets i am pleased now by there joined ceo. Thank you for joining us. Was it the evaluation that was attractive or did you want to go after markets where you are less present . Thanks to these operations, we will become a world leader in cuttingedge Industrial Water services. Very happy to have been able to close that deal. Francine do you believe trump will help the market which is why youre trying to enter that market to more aggressively . Well, we started to will before the election. I dont think it will have an impact. But we believe it is true that if there is a strong recovery in the u. S. Market, it seems to me do wellt trump wants to enable the American Economy to grow faster and then it is good for us. Because this business has been done with the u. S. Economy. So therefore yes,. Me a sense about some candidates who are trying to put taxes on landfills to incentivize recycling. Is that good or bad . Francine there is a difference in how you do that. The example, the british one, they put them in a landfill. But today, you have 85 pounds or and you are now a a process by which you have recycling system it is a question of to change the economy and if it is done properly, it is ok. Francine do your clients worry about the French Election . Of course, we always worry will ecb system in which we are today, with a very having Something Like 26 or 27 . So i hope and im confident that at the end of the day, the french are common sense people and we will elect someone who will move for the french economy. Fillon is the person we believe in now. Will not be the french president. Pen, i believee Economic Policy is not a good one for the french economy. ,rancine jeanlouis chaussade thank you so much. Up next, we talked to jeanClaude Trichet. Thank you so much. In london now, we are truly global now, we have geoffrey yu of ubs. The outlay or call of stronger sterling. Geoffrey yu on the Current Events of this week. Bring up the chart, anthony, of velocity which shows the yields up everywhere. It is a lollipop chart. In theknow, the twoyear United States has broken out. 2007 did wef reach Interest Rates . Try toy the fed will push that angle as much as possible. It is far more important for any central bank. It is more about prices. A Penn National left . Of the big things now is frankly, a better economy. This as ak at holistic lift . Or is it about america . And ity a holistic lift isnt being reflected in the european economy. Andu. S. Is going ahead europe is stagnant. Economic nationalism doesnt mean that everyone has to suffer. So the demand tailwind will come through. Tom i have to get out of the way, your call on sterling. Would you suggest that sterling would be stable and then strengthen . Post 120, youhere want to own it. Animal spirits, guest, on theext economy gdp, not only is it not morning in america, but is it more and g7 . Geoffrey i think so. The contributions are 3. 5 or even higher. Floorseems more like a than anything else. Strong nominal growth. And yet the twoyear is trading close to 1 there. What is the market telling you . Tom geoffrey yu will be with us for much of the morning. It is a wonderful time to speak to somebody who has been with the same company for 46 years. I think that is called job stability. Certainly job stability. You are one of the most recognizable businessmen in europe. You are really a oneman show. For joining much us. How do you describe the state of business in europe . And specifically in france in 2017 . Toi think the best word define the Current Situation is uncertainty. There are a lot of positive aspects. People arelike hesitating to pull the trigger. Francine we are live. Sorry. [laughter] the beauty of live tv. Maurice we have a lot of positive data. Same time, we see a lot of ceos who are hundred and that ceos who are hesitating to pull the trigger. So it is a wait and see situation which is led by the brexit. Theyre waiting for the French Election. They are waiting for the netherlands. And there are also waiting for the german elections. Trump is do you think good for the u. S. Economy and doing a 30to stop and start spending more . With tax overhauls . When you speak to american ceos and bankers, they believe that trump is good for the u. S. Economy. When you look at the european situation, we dont see, yet, the consequence of anything good, except on the stock market where there is some vibrancys positive,ps which is which is a kind of vote of confidence but it is not yet sustained by a strong element. So for the time being, when you look at the Current Situation in europe, we have so many things to fix. Reese is not yet fixed. Italy is not fixed. Butn is making progress still has issues. And france where we absolutely need to do reforms. Still moving from the Current Situation to a situation where and we the checkbook having anow we will be new approach, i think it is a it too early. Levy, i thinkice you have breaking news . Tom lets look at breaking news. Down 10,000. It is a level that gets headlines. Lets look at a better chart. Heres the move from 100 down. And the removal on the 200 day moving average. These are called kisses. And we go back down. Let me blow this up right now as i can and you can see that we are moving right back down on the best 200 day moving average. American west texas intermediate is below 50 a barrel. That should get your attention this morning. Francine . Francine thank you. Brusselsstraight to where we are joined by the Prime Minister of malta. They also hold the six month rotating Prime Minister, thank you for joining us. . Hat is your biggest concern the migrationu do to brussels. You speak with your counterparts. Is there a common purpose permeating through europe . Prime minister i think the situation is much more positive than people think. For the first time, the european economy is growing at a faster pace than the u. S. Economy. They have adjusted the snapshot of the situation but it is the reality. Is gainingn economy ground, once again. I think it increases our resolve to stay together. Some people believe that crisis makes us stick together even more. Francine is that an optimist, Prime Minister . We just spoke to talk about the risks of a Marine Le Pen win. But we are still talking about how we dont have a fixable solution for italy. What happens in 12 months from now . Prime minister if you want me to go through a list of risks, i will stay here until the evening and we would only be half way through the list. Obviously there are risks. There are also opportunities and that is now facing calls for free trade. That europe free trade in the world. Just an optimist. Today, we have our problems to discuss. It will not be a bed of roses. But we will go through this together. Francine will the European Union Work Together with theresa mays government to find a deal that works for both parties . Minister yes, of course. It is in everyones interest. This means it cannot just favor one part. Has opted to exit the European Union. I dont agree with but i do respect it. At the end of the day, it isnt the United Kingdom or any europeanit is the country now saying something that is a european perspective. A british perspective says that if i have control over my immigration policy and give up [indiscernible] thank you so much for joining us today. Live there, that was the Prime Minister of malta. We need to focus on rights it and it is ecb day. Tom we will have that for you. At the hotel to listen to Mario Draghis press conference. It will be hugely anticipated. Joinont forget to francine a conversation later. On theet a reset ramifications of brexit on the community. On the right is a rough approximation of the many opinions on what sterling does. Did the house of lords change the dynamic . Brexit is happening. There is no going back. One thing i would highlight is the net impact with the positive or first news is probably much more limited. It feels like the population has moved on. It is time to focus on the underlying dynamics. Been a better than good economy. We will continue with francine and paris. Coming up, what a wonderful time to speak to jamie dimon from jpmorgan. Too big to fail. An update on fortress. This is bloomberg. Francine welcome back. We are from new york and paris today because we are at the j. P. Morgan Global Market conference. We speak to jamie dimon later on. Earlier we spoke to the maltese Prime Minister. We talked about how europe will actually deal with rights it. I am pleased to say that we have for the hour, maurice levy. One of the Biggest Companies involved in a monday and personally advises ceos. Us. K you for joining how would you advise european businessmen, who live in london or who have businesses in the u. K. To deal with brexit . Maurice it is probably the most difficult question, nowadays, because no one knows exactly what will happen. I think the idea that there will be a seat change is probably wrong. A lot of things will change but when it comes to business, a lot of current things are going to happen. Business will not be barred by the u. K. Ist separating itself from the continent and the eu. Ino believe, also, i was london on tuesday and they have spoken to a lot of people, clients, media and i have to say the feeling that people stay very much attached to the eu. And they believe in the European Union and they will do aerything they can to stay in kind of even with the brexit. So i am not a pessimistic person who thinks that there will be the day before and the day after and in between is change. There will certainly be changes but not that much. Francine maurice levy, thank you so much. And half an hour we speak at the ecb we are seeing strengthening in europe he for the meeting. We speak to jeanClaude Trichet. This is bloomberg. Livestream your favorite sport at the airport. Binge dvrd shows while painting your toes. On demand laughs during long bubble baths. Tv everywhere is awesome. The allnew Xfinity Stream app. Xfinity. The future of awesome. Politics, international relations, it is bloomberg. What you need to know down with oil. This is athrough 50, west texas intermediate. Good morning. Price a little bit higher but we do go through the 50 level right here. I would say that technically we havent really breached the uptrend coming out of 29 a barrel oil at the beginning of the year but nevertheless. That is sobering, to say the least. Now, first word news on the gop. The u. S. , republicans are one step closer to getting rid of obamas health care overhaul. I committee appealed a measure that would repeal tax penalties for those who dont buy insurance and they would replace incomebased subsidies with tax credits largely based on aids. I number of conservative republicans are opposed to the bill. Hospital and doctor groups are against it. Trump has selected a former republican president ial candidate, and jon huntsman, to be the ambassador to russia. He is the former utah governor. Be going to moscow at a time when the fbi is investigating russian interference in the election. South koreas trial of the century. The same sun went on trial today. Prosecutors will try to prove oft conspired millions dollars in order to secure control of the Worlds Largest smartphone maker. He has denied any wrongdoing. Global news, 24 hours a day. Powered by our more than 2600 journalists and analysts, in more than 120 countries. Im taylor riggs. This is bloomberg. Francine we are here in paris and we are joined by the ceo maurice levy. The frenchk about election and some of the candidates. This change is attached. You have the first round. And that is how the candidates get chosen. Are people voting on when they go to the polls in the first round or second round . Security or in economy or Something Else . It is extremely difficult to know. Andas been true in u. K. Italy. In the netherlands and we have seen it in the u. S. Ofay, there is a sentiment fear, regarding terrorism. Lot,eople are fearing a what code happen in the future. The Economic Situation which isnt good in france. Is the Unemployment Rate extremely high. A doubledigit rate which is very high. Unemployed fulltime employees. Which isa situation very difficult for a lot of french people. The re china to find who will solve the problem. Program,look at the you have the program from Francois Fillon and reforms. And it is the first time that there are so many reforms which are going so the and so seriously with a lot of consequences. Including the fact that they are thinking about cleaning up 500,000 Civil Servants over five years. Is more ofve who a democrat with the socialist aspects. Modernity and extra. Francine you believe people go through the reforms and what they want to do to vote . At the end of the day, it is personality. And the trust you have in a candidate. And the fact that you believe this candidate would be Strong Enough to lead france and to defend your home interest. And to finish with the three keen the three key candidates, Marine Le Pen. Thinking about far right. Anding the eu and the euro making tough decisions on a lot of aspects including immigration. Etc. Francine geoffrey yu, lets say Marine Le Pen with a 30 chance if you dont believe the lets say she does, and if she does become president , what does it mean for the euro . The overnight reaction will be interesting but lets afterat the reaction was President Trump was elected. Eight hours when it was in a meltdown mode and then the dollar was rising with every other currency and by the time , they got into the future. So these things are unpredictable but there is an abundance of caution in markets right now. Levy, good morning from new york. The stereotype is that the french are lazy. You and i know that productivity is wonderful in france. French industry develops wonderful markets and products. What does france need to do to jumpstart themselves for better and Economic Growth . 24 hours a week or 20 hours a week, this is unfortunately not true. And i wish it could happen one day. The reality is that we are working watch more. The 40need to go back to hours a week. We absolutely need to. We have a very high level of productivity and we need to give confidence. When you look at france, you have most of the ingredients there. Secret sauce. We know the ingredients. And we just need confidence. And confidence is something that we are lacking. That is since the end of the years with the full mandate of francois hollande. They are not going to work very hard and they are not going to believe in the future. That is the reason why it is extremely important. Norman at jpmorgan in london has done an essay on the independent french franc away from the euro. What a be the impact on the french people if they were to leave the currency euro and go nc . K to the fra today, people are believing that is a complex question. Because there is the overall feeling of the people who are. Easonable people are fed up. And it is a crowd which is growing, every day. They dont see the future without some harsh changes. Including the idea of going back to the old frank. But when you speak reasonably to is just ale, it movement of the bad mood and they clearly see the advantage of being part of the euro. So i dont believe that people would be happy to return to the french franc. They understand that the euro has not been as good as it could have been for the economy but clearly, we turn returning to french franc tom it is about the depreciation of the french franc. Governor king sat in your chair in london, a few days ago, and told us that the Deutsche Mark tends to appreciate. How do you get this done . Have you take away the imbalance of a currency . A question for the entire euro zone economy. The bottom line is that there is no political will to push forward. ,ere is where going back expectations matter. When there is no confidence, you need to change that. You need to make these reforms easy or to sell to the people. But reforms have to happen first and expectations have to change. Tom how do you generate inflation in germany . How do you make that cultural shift . Looking at where Inflation Numbers are right now, 2 . The upcoming shift is a cultural shift. Pick up. T needs to maybe, dare i say it, leverage. Spending needs to pick up. , they needral shifts to send the message first. And it isnt happening yet. Francine maurice levy, these are ingrained in cultural differences. The germans remember what happened 50 years ago. Does the eurozone need to find a more common purpose . Can it europe come together . In retaliation to u. S. Protectionist or a threat from russia . Maurice i dont believe the problem is the euro. I believe the problem is the political atmosphere. And unfortunately, this is the country in which france is part of. Notclearly, if france does address the issue of reforms france is notif taking important and urgent steps, then we can start fearing about the euro and about the future of europe. But if the new government is being serious about the reforms and addressing the reforms, even if it is painful, and the problem that we have had for years is that we have talked about the reforms and we have done 5 or 10 of what was needed and people felt the pain fact, itform and in didnt even happen. An allneed to go deep in of that into taxes. [indiscernible] windows sol the there is more freedom. A lotr everyone want to do things. Engineers arech definitely not working 20 hours a week. 20rice they are working hours a day. Francine i wish tom was in paris. Maurice i have worked at least 18 hours a day. But that is because i am very slow and very old. But it was the case already when i was 30. There are a lot of people who are working very hard. We should not think about the hourly time only by the low. Week. E low is 35 hours a francine we will talk about productivity next time. Talk to jeanClaude Trichet about productivity in france and another interview when i talk to jamie dimon, the ceo of fortress jamie morgan. This is bloomberg. Francine bloomberg surveillance from paris and new york. Of thestill thinking examples from the media in the past. So the one man who has tried to after some time is maurice levy. Describe the media, i know you have told me that twitter has more gdp than a country because advertising is a new frontier. How do you see that going . Do Media Companies need to consolidate further to make sure that social media is the number one priority . Maurice we see a lot of changes so it thanks to isnt just that we have facebook and wetter in the world have snapchat and we have telcos who want to get and they are becoming strong players in the media field. Time have who is buying warner. We have verizon who has bought yahoo and we see a lot of things happening. Of scale anda game scale is essential. We have three very easy things. If you think about bloomberg, a chick years before bloomberg became global and it now is a global company. From day one, they are global. The second aspect is that they ofe an incredible crowd people listening, watching, exchanging and participating. And these articles that teenagers they are leading the way. The third aspect is that if you have an advantage for advertisers and the advertising measure andyou can optimize your message. On therefore, the return investment is something you can measure immediately. But people toreat feel secure about the investment and that is probably what is making the biggest change in the perception. Tom i have to ask you about Time Magazine going back to 1923, with henry lewis and. Redefined the weekly magazine. Has the merit of company. Help me with the magazine company. Is there any chance for magazines to survive . Unfortunately, when you see the magazine, it is without adifficult Strong Social Network Supporting that. So what you need to do is to go digital. To build a strong crowd of supporters. Can nourish that by the code creation of content. They stick to the current format, it will be extremely hard. They need to have a much stronger exchange. That is through the cocreation of content. That, they have at least three advantages. The first one is clearly that they have a branch to attract people from day one. The second is that there is a clear definition of the philosophy and advertisers know in which environment they belong to. And the third aspect is that are ve readers who more than readers today, because you can add video content who are loyal to them. So for us and our clients, it is extremely important to get access to these people. So there is a future but the future is not only in print. And maurice levy is with us geoffrey yu is in london as well. Let me tell you about tv. We spent years on this on the death star. Here we are, live. You could go over and look at an old interview. At the two year yield and you can feel you can steal the track for me. You can do this on the bloomberg terminal. Tv is better than good. From paris, Francine Lacqua with jamie dimon in a bit. Im in new york. This is bloomberg. Tom good morning. From paris and new york. Francine lacqua has an interview with jamie dimon this morning. Or threego on for two hours. Im not sure how long it will go but it is an important interview with the turmoil in restructuring the European Banking. With us in london is geoffrey yu of ubs who will not talk about his bank or any other European Bank but geoffrey yu can talk about the divergences of the time. This is something we will talk to jeanClaude Trichet about in a bit. This chart goes back to Prime Minister major. This is the difference in yields between the United States and the United Kingdom and the idea here of a higher u. S. Yield and we are finally there. The oddity of the yield structure across the atlantic, what does this mean . Geoffrey i think it is a growth three friend differential. This is a one off issue driven by the weakness in sterling in the u. S. Market. It is probably to price in a sustainable case. The u. K. Use brexit to catch up . In my portfolio, do we see stability or instabilities off of these divergences . Now, we worry we advocate that if you worried focus on the Asset Classes which are for longterm sustainable returns. Also, are you worry too much about volatility right now . It is driving cash ratios. Stay invested. Tom geoffrey yu, thank you for manning the london desk with Francine Lacqua in a paris. Coming up, a conversation with the ecbmon but before announcement, jeanClaude Trichet. This is bloomberg. Francine tom Deutsche Mark, frank, a lira. The reality, one euro for all. In this hour, a conversation with Sean Patricia a. Too big to fail again seeing. Too big to fail banking. Fortress American Finance. Jamie dimon on transactions in, nation. Divide and conquer. President trump against the Great Health Care sale. Trumpcare. Call it i am tom keene. In paris, i am not in paris, she is in paris, Francine Lacqua. Why are you in paris, francine . Francine we will give you a special turbo french language lesson. That will be before covering the french political election. Im at the jpmorgan global conference. We are talking about banks, regulation, brexit and taking stock of the world we live in. What does it mean for inflation and friends french policy . What does that mean for how you plan for the future . I am ridiculously excited to speak with jeanClaude Trichet coming up. [speaking french] taylor in u. S. , House Republicans worker the night and took steps toward replacing the need for portable care act. Proving a much arugula and tax penalties on people who do not buy health insurance. Insegislation incomebased subsidies in obamacare. There would be a tax credit largely based on age. The bill has opposition. Many conservatives oppose it as well as doctor and hospital groups. Programsacknowledging have failed with north korea. Rex tillerson will look at new options. Last week and, north korea test fired four missiles and muster the country conducted deed of Nuclear Weapons test. In asia, prices rose at the fastest space in 2008. The Producer Price index rose at 7. 8 . That is the Global Outlook for inflation. Chinese exporters are expected to pass on the higher cost to consumers. In europe, one clear take away from british chancellors new budget. The government is likely to resist growing pressure for election. Increase on selfemployed that prompted accusations conservative party was breaking one of its key election pledges. Prime minister theresa may has been urged to take the manager of the ratings by calling a general election. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. I am taylor wiggs. This is bloomberg. Tom never again will i speak french on your. Lets do the data check in english. A little bit of Dollar Strength. Oil crushed. A substantial decline in american oil. The next screen, please. Showing brent crude. That is a sideshow to our important conversations in paris. Sideshow. It is a it is not a sideshow because a lot of Monetary Policy, they will be looking at the very data you are looking at. Were lucky to have jeanClaude Trichet, the honorary chairman of the group of 30. Thank you for joining us today. How would you describe Monetary Policy around the world at the moment . Are we ready to pull back globally . Jeanclaude i think we should continue to analyze the monetary policies on the basis of the various economies concerned, and the various cycle. The cycle in the u. S. Is not at all like the cycle in europe, only because if you look at unemployment, your full employment in the u. S. And we still have very close to 10 unemployment in europe. We are in different situations. It is normal, depending on their own chart and legislation or treaty, the various Central Banks are doing what is appropriate in their own engine. There is a meditation at the very moment. I cannot comment. But if i take the sensible they have to follow their own legislation, i would say it is normal they dont make the same decisions because they are not the same situation. Francine it would help. I know you dont want to comment specifically on the European Central bank when you look at it is much easier for janet yellen to do Monetary Policy because she also has a president that may give the economy a little bit of a boost. Will we get it in europe from politicians . Tonclaude it is difficult understand exactly what would be the consequences of the decisions that are being taken by the u. S. Administration in the United States of america. There is an interpretation that it would foster formidably the great economy, and that is something that the market has much it is much more complicated because you have also the negative side of the decisions, which are taken in terms of the economy and in terms of loss of confidence in some respect. It seems to me, what the central bank has to do is not to take into account the political, but the facts and figures. It seems in the present cycle in the u. S. , rates are legitimate. It is clearly what the fed intends to do. Francine how much do you worry about productivity, that in the u. S. And in the u. K. , productivity is not where it should be at this point in the cycle . Jeanclaude i think it is probably the most important question that we have in all of the advanced economy. We had a jump in particular 19952005. Y from then we saw the productivity, even before the crisis, trend down. And now we are still at a level collectivity growth explain very well why we are going miserably. Both sides of the atlantic. It is not what we would hope for. We know science and technology is making enormous progress. Consequences. E that could be good consequences, but we dont see it yet. , we had a lot of investments in the computer fray and we do not to the productivity. But it came after a long period of maturing. I guess we are more or less in the same situation. , good morninget from new york. Help me with the future of one europe. When i look at the calls for a weakerr Deutsche Mark, a italian lira, a weaker this and that, defend for me the concept of a euro right now. Why does germany and why does greece need a euro . Jeanclaude well, you might remember that the same question was asked at the very moment of the crisis. The 2010,inning of you know. Everybody was expecting both countries, as you just said, to leave and to quit because one was supposed to prefer its National Currency and the other one would reject the adjustments in the austerity. The contrary. As you remember, germany decided to help greece and greece decided to stay and oblige its own government to say, the last figure i have is 81 of the germans are on board with the euro. And the large majority also of the greek on board with the euro. You have the underlying support , much stronger than expected. You, we should not underestimate the underlying European Union. That being said, we have a lot of hard work to do. A lot of homework to do. It is a disgrace we do not do the reforms that are necessary. Tom paris needs english invasion. How does paris and how does france attract london finance . What is the trichet prescription . Jeanclaude of course it is in english invasion. The french are now speaking english, too. That is a very new thing. A very important one. Francine very good. Jeanclaude more seriously, i would say we have the brexit, which is in a norm is issue at stake and we still dont enormous issue at stake. Personallyry much the decision has been taken, first, to say brexit [indiscernible] orond, to ask for a stronger harder brexit, how you call it, but that is life will stop that is the situation. It will put into question the very concept of European Union. As i said, the euro, it is a very solid concept. Thank you very much. We will come back and talk more about inflation worldwide and how you mitigate that and how we should be measuring it. That is coming up next. Later on in the conversation with jamie dimon of jpmorgan. Im looking for to that interview at 12 45 p. M. U. K. Time. We will be talking about Donald Trumps 100 days, brexit, and regulations. This is bloomberg. Francine bloomberg surveillance. We are talking about the European Central bank in general. A little bit of euro strength. Were talking about inflation, brexit, and the effect that donald trump will or will not have on the European Union. We also need to talk about france. Ridge politics, productivity, you get the country back working. Im pleased to say we are joined by sean Claude Trichet, honorary chairman of the g 30. Thank you first thing with us. When you look at france, how concerned are you that the political system will not give enough time percent just candidates to push the reforms through that this country needs to get back to real strong growth . Jeanclaude the country needs reform. The country needs reform will stuff you have much more flexibility in all markets including the labor market. An to progressively, the level of competitiveness which is necessary to get to the full employment. Full employment is the goal. Employment is the goal. The debate is starting. Are on thegrams table. I would say, of course, i hope havemuch the french, which a consensus to consider big changes are necessary. If we are going to get out of mass unemployment, which is a main issue and use youth unemployment. We will see how the interaction between the candidates and the people will operate. Say, i am reasonably optimistic on the basis of the survey that they will call for solid and strong reform. But we will see. Again, the problem is a question of implementation. Francine do you think the french people are fed up gekko i dont know what they would be fed up on, but there was election with donald trump they felt they were left behind. I dont know whether was innovation or globalization. Do you have the same sentiment in france . Jeanclaude i think this move toward inward looking nationalism, protectionism, is there, as it has been in the u. K. And the u. S. We see that also in the netherlands in all countries. It is that the same in germany. Sensitivity, exactly. But it is the same move. We have a lot of people in our advanced economies that feel frustrated. I think we can consider the acceleration of the necessary restructuring of industry of the Manufacturing Industry is there. We also have the competition of india, china, and all in emerging economies. Technology,nce and which is also calling for big changes in the production processes, both in the manufacturing of goods, but also in the production of services. All of that creates an element of anguish, if i may, and big, bigon, which is a issue. A big issue because it will last for many years, as long as the emerging countries are still catching up process. The pressure will be there. I think it is one of the most important problems for all the advanced economies to cope with this frustration and see what is to be done in terms of education, training, live training, and i would say appropriate training in order to cope with the challenge which is enormous one. France is like the others. France has an additional problem unemployment. Mass tom very good. John Claude Trichet with us. Much more coming up. A conversation with jamie dimon and nation sheets as well. All of this wrapped around the meetings and the announcements in the press conference of European Central we will give you complete coverage at 8 30, on Bloomberg Television and bloomberg radio. From paris and new york, this is bloomberg. Tom bloomberg surveillance. You a globalve perspective on economics. Francine lacqua in paris with sean Claude Trichet, former president of the European Central bank. With me in new york, with the peterson institute, former lou with the Obama Administration formerly with the Obama Administration and citigroup, thrilled to have nathan sheets. Ring up this chart, anthony. This is the sad case of world trade. Both esther sheets and mr. Sheets and mr. Trichet. World trade growth is somewhere back in the vicinity of the late 1980s. The president of the United States discusses a new mercantilist zero some psychology. How would you advise President Trump this morning on avoiding the 17th century . As you know, the french are very keen on mercantilism. I would say, of course, we need open economies. It is a win win game. It is a positivesum game. Tohave to take into account , to take intoople account science and technology, and also the global value chain. But to be inward looking, to close the borders, seems to me to be a losing game. This would be very visible, in my opinion, very soon, particularly, in the United States, which is such an open economy with a lot of exports. And if you are blocking the borders, you will have a lot, again, of counterproductive consequences. I would call very much for the appropriate open borders. Of course, with good negotiation. I was amazed to see the tpp withdrawal, frankly speaking, because it seems to me it gives china baton. S china the tom congratulations on joining. What a lineup. Elp me here how do we get a washington consensus back into the Trump Administration . Nathan i think those of us who believe firmly in International Trade and see that chart that you highlighted as truly a call to action. We have got to make the case more clearly. Francine can they explain how we do this . Officialsthink those understand the role of International Trade. Certainly, thinking about mr. Tillersons background. I think theyre working inside the administration, trying to said,n as mr. Trichet trade is a win win game. Francine does china want a business deal with donald trump or are we actually risking a big trade war between the china and the u. S. . Jeanclaude i hope President Trump being a dealmaker, he will have a deal, of course, otherwise it would be it would be absolute catastrophe. We will see. I have to say, instability and uncertainty seems to be the role of the game today, which is very bad. Very bad for investment in all decisions. I would say the ceos have to take in all economic agents. I hope we will see there will not be a war because a trade war. We also know francine does a trade war lead to a global recession . On theaude that depends extension. But we have to be very cautious and very prudent now. Francine they could for joining us, jeanClaude Trichet. Coming up later, i will be talking to jamie dimon, the ceo of jp morgan. We will be talking brexit, donald trump, and Financial Regulation. This is bloomberg. This is bloomberg surveillance. From new york and paris today, where we spoke to jeanClaude Trichet earlier. Coming up, we have a good conversation with jamie dimon. He is the ceo of jp morgan chase. We will be talking about donald trump, his first 100 days in power, but also Financial Regulation and possibly a little consolidation or not in the eurozone halloween brexit. Following brexit. Lets get to taylor riggs. The u. S. , republicans are one step closer to getting rid of former president obamas health care overhaul. Early today, house Committee Approved a measure that would repeal tax penalties for people who do not buy insurance. The legislation would replace incomebased subsidies with tax credits largely based on age. A number of conservative republicans are opposed to the bill and some hospital and doctor groups have come out against it. In the u. S. , President Trump has elected former republican president ial candidate jon huntsman to be ambassador to russia. That is according to a white house official. Huntsman is a former utah governor who previously was an abbasid or to china and singapore. He would be going to moscow at a time when the fbi is investigating russian interference in the election. In asia, being called the south koreas trial of the century, samsung vice chairman went on trial in seoul today. Prosecutors will try to prove he conspired to secure control of the Worlds Largest smartphone maker. He has denied any wrongdoing. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Tom thank you. This is wonderful. You get two people together, they are smart and barely on speaking terms, Steven Wieting owns the analysis of the profitability of american corporations, the impact on the u. S. Economy. Right dense come along, highly readable notes on the state of international economics. You two were on speaking terms . Absolutely. Let me start with steve wieting. What is the state of american profitability and particularly, where will that profitability go , whatever the regulation mess ends up being . Steve if you want to understand the stock market in the u. S. , you have to recall in the fourth quarter, we hit a record high eps level. Last year. About 125 per share annuallized. When you look at 2017, if we did not have Corporate Tax cuts, if we did not have an acceleration in Economic Growth driven by stimulus, you go further deep into record territory for u. S. Profits. Tom help me, nathan sheets, with his world. His janet yellen going to upset the apple cart . How many rate rises before we are normal, their say, if we get to the dreaded r word restrictive . Steve the fed has been extraordinarily gradual. I think the rate of tightening, the pace of the tightening, is likely to increase a bit over the next year. That i dont see anything from the fed that is going to significantly hinge tom is it mourning in america . It is for corporations. Significantly, business sentiment, Small Business and large business, is up over the last few months. The huge question is, does that translate into more investment . Tom i thought that. Really, i got an a . Dimon doesnt see it. Is a littlenk it early. Were throwing in an awful lot at the u. S. Economy if most of these tax plans actually occur. Full depreciation of investment immediately, tax repatriations a lot of little steps, lower Corporate Tax rate all of these things. It is a little bit like quantitative easing. We move mountains of Financial Assets and move the economy a little. On the fiscal fronts, we can talk about the long run all day. If you want to think about one year effect, to your effect, the combination of these steps is going to move the needle for the u. S. Economy. The followup question what impact does that have on productivity . Tom we saw those numbers yesterday, relatively lethargic. Francine . Just have some technical issues in paris right now. That happens. We will blame the i dont know, lets blame it on one of the two. Lets talk about the globally synchronous better economy. Do you buy it . Does adam posen by it . The u. S. Economy is solid, maybe doing a little better. Tom what about the rest of the world . Structuralas deep problems, but cyclically is looking better. China is looking, and the near little stronger. Yes, i buy it. Assumption,urrency a oneway bet on stronger dollar. A huge debate over sterling sideshow. Help me with dollar dynamics for corporate america. Steve certainly, it is going to be a drag that offsets a portion of what we see, particularly if there are Corporate Income tax cuts. It would be a clear win fall. Some would be hurt, some would gain. You have to look for industrial companies. There will be some headwinds. If there is a border adjustment tax, a portion of that ends up in the Exchange Rate, it will be one of the offsets that will be hurting on the outside. Tom please continue. Had a the u. S. Dollar has sixyear bull market. It has risen 25 . It has gone a very long way. We are not in the place where we were when reagan came to office in 1981 with the Exchange Rate extremely weak. There are valuation risks, but specific policies, including policy divergence between the fed another Central Banks, these steps would push the dollar higher. Steve wieting, help me here with jamie dimon a mr. Corbett at your shop as well. Do they need a steeper yield curve and will they get a steeper yield curve . Steve the shape of the curve may be less important in that rates are going up. This is the first economic cycle, the first the Federal Reserve is paying Interest Rates on reserves. Because of liquidity buffers in the way banks have been regulated, large Bank Net Interest margins are unusually low at this stage of the cycle. I think youre going to see significant benefits of higher Interest Rates. In the absence of an Interest Rate that is so destructive to the economy. Tom i dont know how we got helping with the state of American Finance as we go to a conversation with mr. Dimon. What about everybody else, nathan . Nathan i think we are in a place where large institutions in the United States have gone through a long period of strengthening their Balance Sheets. They now have more capital. They have more liquidity. Safer institutions. I think across the board, were going to see the large institutions do better. Tom what is it about scale . You just assume bank rathan for the smalle institutions, theyre the ones likely to get some regulatory relief over the next few years. About mergers. I would be very surprised to see further significant consolidation. Tom i have to be u. N. Charter. Jpmorgan buy Deutsche Bank . Steve i think that would be very difficult to pull off. Tom because of the nationalism . Hase deutsche still financial needs. Deutsche still has financial needs. Tom we will continue with these two for the hour and radio coverage as well. Kevins a really, kevin. Irilli a gorgeous shot of washington, next. Francine this is bloomberg surveillance. From paris and new york. Are truly global today. Coming up from paris, a conversation with the jpmorgan ceo, jamie dimon. We will be talking about the health of the banking system, consolidation in europe, about whether the Capital Raising exercise from Deutsche Bank that was announced on monday actually changes something in the perception of the investors when you look at banking models in europe. We need to talk about donald trump as well and we will talk about brexit. All of that coming up. First, lets get straight to taylor riggs with the Bloomberg Business flash. Taylor the company that try to revive the fortunes of the electronic chain radioshack has filed for bankruptcy. Filed forreless chapter 11 protection in a delaware court. The comedy was formed by sprint and former radioshack owners after the original chain went into bankruptcy two years ago. Car sales in china rebounded last month, rising on must 9 . That eased concern a tax increase on small engine cars at the start of the year would hurt orders. In january, chinese car sales fell for the first time in 11 months. Renters in manhattan and nuts in a market like this in at least four years. Rent fell last month in the city for apartments of all sizes. A construction boom has brought more buildings to market, even a price of studio apartments fell, down almost 3 . Last year, they held their own while the price of larger Manhattan Apartments fell. That is your Bloomberg Business flash. Tom thank you. It is about time we wonder to washington, our daily lovefest with Kevin Cirilli. Heaven, i dont understand all of the hate and the hating on the congressional Budget Office. ,hatever it is, gopcare trumpcare, are there any republicans who would actually like the cbo to tell them what the new health plan is going to cost . Kevin no. The bottom line is, should the Budget Office come out with a negative score, this poses a huge political threat for the republicans a President Trump and speaker ryan sibley because they will not be able to a avertt the filibuster the filibuster in the senate. That means it would cost money and procedurally though devotees to filibuster. Beyond that, this same Budget Office could release an analysis that says a number of people who would Lose Health Care as a result of this plan that is also not good for republicans of her midterms in 2018. Tom we have created the most morning boring morning mustread. Bring it up. Here is charles over at cbo making paint dry. The type is so small, i can barely read it tom this is the real world, folks, of what Kevin Cirilli of the republicans are living. Why dont they want that kind of detail on whatever Good Health Plan theyre going to come up with . Kevin theres a great story it up and go the Washington Post about how President Trump is going into dealmaking mode. Clearly, this is something republicans feel they have campaigned on consistently. When i talk to people in the Tea Party Like jim jordan, they feel this is not the right plan. There is a lot of moving parts to this. It is increasingly become the goto issue because you cant get to other issues he wants to get to unless he passes this. Tom there is a two republican senator differential. That is really small. How fragile is that two in the senate . Kevin incredibly fragile, especially if this Budget Office score says his plan is going to cost money, and which they cannot then avert a filibuster. When you play the dynamics and we talk every morning about russia or about the latest tweet scandal, that costs this administration a sense of Political Capital that when it is involved in these tough legislative fights, this is. Here it becomes a huge issue francine cavan, what is President Trump hitting right . Kevin, what is President Trump getting right . If we look at the eagle i view of some of the things put in place, do you think that Financial Regulation is probably what President Trump is getting the most right . Kevin i cant wait to watch your interview later this morning with jamie dimon. It will be interesting to see what he as say about this happening. In the first few weeks of the administration, one of the first runs of executive orders President Trump put forward was doddfrankthe 2010 wall street reform. I am told this is viewed as a firstyear priority, getting through the regulatory doddfrank policies. Top humidityrning, bakers and small bankers are going to be at the white house. This is sort of the inside the beltway banking humidity, banking crowd. They will be pushing for the direct contrary policies they think will spur growth. I know there was a story in the Washington Post about china asking the u. S. To be the intermediary in a relations with north korea and deescalations we have seen there. We understand from the Washington Post and your own reporting, this was rebuffed by the Trump Administration. His or any truth in that . Are people talking about it in washington . Toin north korea is going be dominating this year, particularly as south korea gears up for the olympics really next year for the winter games. This is going to be in evolving matter. Yes, china really grabbing headlines earlier this week with their assertion that north korea as well as the u. S. Are on a collision course of sorts. There has not been much talk about what exactly that would mean, to say the least, though, china government officials as well as the Trump Administration having an interesting back and forth this past month. Tom Kevin Cirilli is in washington, our chief gopcare, trumpcare correspondent. With this, steve wieting. Health care is an awful big part of our economy. How do Health Stocks to linkage your Economic Analysis of medicine . Steve it is different in the world versus the United States. In u. S. , the unit Health Care Cost tom 18 . Steve if you have a child, massive differences in spending. What is fun about insurance, it is like when your credit card for how much you spent at dinner. It is the underlying Health Care Cost and we are only fighting over how we are going to finance it. Look, that is a very big part of the economy. Globally, it is the only industry that grows every year. Every single recession year. I think there is a good deal of Stable Revenue growth in health care globally. Occasionally, you have worries about the United States. But a lot of Health Care Stocks in the u. S. Have beaten down, fabless dividends. Tom we will continue with steve wieting. Get is as close is a to paris. It used to be called the peter hotel. How about tv . Lets look at it right now. Tv is up. Is ugly. Lets bring this up with geoffrey yu, this id you can do when you could take a charge, you can get my great spray chart as well. Stay with us. This is bloomberg. Francine this is bloomberg surveillance. Later on today, we will be talking, and 45 minutes, to jamie dimon. We will be talking to him. He is one of the successful bankers, if not the most successful banker. I think one of his biggest rivals called him the most impressive banker of his generation. We will be talking about brexit, venture regulation, consolidation, and Donald Trumps first 100 days in office. We also need to look at that ecb decision. I know you are looking at currencies. Tom very busy day. Lets do our single best chart with Steven Wieting of citigroup. Bloomberg dollar index. This is some good math around this index. Can be these indexes flawed. Here is the financial crisis over here. Here is cyclical dollar stability. Moonshot. This is the elephant in the gop room. Tohe gets 2 , 5 , daresay percent strength of the dollar, that changes a lot. Steve if it is because of an excel a ration any was growth, the premium growth rate and higher real Interest Rates for all of the right reasons, then you can live with it a lot better than disruptive Dollar Strength. Tom full this into the different parts of the world. It is not just presumed Dollar Strength. It can be Dollar Strengthened against asia versus less of a Dollar Strength in the continent of europe. Steve we have been concerned about this issue and investing along the lines that if you want your returns in dollars, it requires a little bit of caution. I think if you look at the euro, for example, we are seeing somewhat higher Interest Rates. Today, the Italian Government bond yield is approaching u. S. Bondyearold despot yield with none of the stimulus progress going forward. Driven by policy, fair enough, not driven by the ecb or regulation. But these political elections has driven up local Interest Rates. If you think about the Interest Rate gaps between the eurozone and the United States, if it wasnt for this Political Risk premium, we get even higher yield premiums in the u. S. Versus the euro area and we think are currency would be weaker. But how much and how long will this Political Risk in europe help or hinder these yields . There are still huge questions on greece and italy and whether or some point it will need some kind of help. Steve it will be volatile. The underlying volatility of european markets may be underrated to some extent. If these Political Risks pass, you have great valuations and earlier cycle recovery, supportive to grow bank does centralbank could be good. The downside is substantial, too. It will not just be the French Election. You have the a tiein election that is likely to be italian election, likely to be in 2019. Tom steve wieting, thank you. Too much to talk about this morning. Let me do a quick foreignexchange report this morning. Her nimby has been weaker. The has been weaker. In the next hour, a conversation from paris, Francine Lacqua with jamie dimon of jpmorgan. Much going on today. Lets keep in mind, oil through 50 a barrel. That bears close watching. It is jamie dimons new york. This is bloomberg. Jonathan it is ecb decision day. President draghi set to the policy unchanged. 2017bond yields climb to high amid optimism in the u. S. Economy. Opec cuts not enough to stop the glut. From new york city, good morning. Good morning to our viewers worldwide. I am jonathan ferro. President draghi and jamie dimon. Shy. jamie dimon is not he will express his views. Alix it was interesting that j. P. Morgan closed slightly lower yesterday despite the entire yield curve backing up. Jonathan looking forward to that conversation. Latest break the ecbs Rate Decision at 7 45 a. M. Eastern time and bring you live coverage of Mario Draghis News Coverage at 8 30 a. M. Eastern time. 8 day losing streak for treasuries. When we make