Transcripts For BLOOMBERG Bloomberg Surveillance 20170405

Bloomberg that even members of his own party dont want to deal with the European Union. This is bloomberg surveillance. Weve just got to get to some breaking news for you. Weve got Eurozone Services pmi data and the composite coming through. Lets look at the services first. We coming in at 56. This is a miss. Was 56. 5. Ation it is a little weaker than the prior reading. At composite index coming in 56. 4, again a miss on the survey and a little weaker from the prior reading. 1. 0676, pretty much unchanged on that trade. Lets get to your markets. Speaking of things that are unchanged, quiet in equity markets. I wanted to show you the rand. , the randdollarrand strengthening, bestperforming currency against the greenback today. We did see it rebounding yesterday and weve had some news that the markets are reading as positive for president jacob zuma. The 10 year yield down to basis points. We saw the 10 year treasury yield within touching distance of the lower bound of that range it has been in since november. Were seeing it down to. 34 on the treasury yield. France, we are keeping a close eye on as well. Finally, just wanted to show you oil extending its gains. 51. 41, that is where we are on wti. Lets get the bloomberg first word news. Sebastian north korea has conducted another Ballistic Missile test just a day before the first meeting between chinese president xi jinping and u. S. President donald trump. The japanese Prime Minister has described it as a major provocation. Trump said the u. S. Could act unilaterally to address that mst the threat from ki regime if china wont. An apparent chemical weapons attack in syria killed at least 58 people. Western leaders have condemned the use of gas come on blaming forces loyal to damascus. Saidan state media have the gas came from a rebel weapons factory. Jacob zuma has won support from the anc. According to people familiar with the situation, the embattled president survived calls for his resignation. They say he fought back that he didnt act adequately on a Cabinet Reshuffle. The u. K. Chancellor says some members oppose reaching an agreement with the e. U. Philip hammond who is in india to promote British Business on bloomberg there are people on both sides who do not want a deal. Jpmorgans ceo says it is clear something is wrong with United States. , who sits on Donald Trumps business forum, says the u. S. Is paying the price for bad decisions and there is understandable disenchantment with trade, globalization, and Americas Free enterprise system. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Im Sebastian Salek and this is bloomberg. Nejra thanks. Marine le pen has been labeled soft on her plans to leave the euro during the second tv debate of frances president ial election. With all 11 candidates granted a hearing, the National Front leader was attacked from the right as well as the left with snap polls showing her coming in as the fourth most convincing performer on the night. We need an economic patriotism. We need for our business is to have an advantage. That is true for our businesses, for our industries. It is true for our agriculture. We need to put in place protectionism because we cannot accept that our production he put in competition with products that dont face the same norms. Front the elections runner, Emmanuel Macron, warned of the dangers of a le pen victory. What you are proposing is nationalism. I come from a region where conflicts between European Countries, and john lasalle reminded of this, you have to know where you come from and where the separation would take us. Nationalism is war. I come from a region filled with cemeteries. I dont want to go back to that side of the black line. Nejra lets bring in kit juckes, Global Fixed Income strategist at societe generale, and Michael Grady, economists and strategist at of eva investors. Great to have you. Michael, this could potentially be the last debate before the first round. Some candidates have said they might not show up. On those grounds, how can you assess the markets given what we pensst night, and le support slipping back a little bit . Michael she perhaps didnt perform as well. Macron performed better. I think, looking forward over the next month or so as we head into that first round in april, we are going to be very clearly focused on those opinion polls as they come out. I think the thing to remember is not just to be looking at that first round, but the second round voting intentions as well. We still see a very wide gap between macron and love and. Kit, if you look at the frenchgerman spread, we are tightening slightly on that. Not seeing a huge amount of movement in the euro. Was to win and a lot of people say this is of voterstwo thirds wanting to stay in the euro, so her win might not mean frexit anyway. Aes this mean we are seeing sanguine reaction in the markets or do you see areas of stress . , if we we were convinced had never done brexit, trump, we dont really know what to believe about polls, and we were just saying Emmanuel Macron has this in the bag, i think the euro would be higher and the yield spreads would be tighter. Weve got some things priced in. What we are is just uncertain. Do we believe polls . Can the turnout below enough to give her a chance . What about the large number of undecided voters according to those polls . What the market has done with those, because of the strength of Emmanuel Macron particularly in that second round, is its not taking eurodollar down close to parity. It is not ballooned the spreads out. It is kind of sitting here, not doing very much, just waiting. Michael, there is still a lot of uncertainty as kit was just saying. One of the things people are looking at is voter turnout and how that might impact the final decision. s voting base tends to be the most committed, but bloomberg has done some work showing that even a record low turnout might not play out the way we expect. Michael i think the reality is, its going to be challenging even on a low turnout. The numbers just dont seem to add up. I think that thats why, when you are looking at the markets, as kit just said, there is some evidence of a pricing of risk in here and that is fair enough. , while the reality is the probability is pretty low that le pen is going to win, the impact would be significant. Markets have to take that into account. Nejra kit, you mentioned the euro. Deutsche bank saying we could go to 1. 08 on a macron win. That is the average, which is the blue line. Do you see any opportunity to buy euro here . Kit i spent the back end of last year writing, saying i want to buy as close to parity as possible. I wish it would go down a bit. I think if macron wins, we could see 1. 18. We could get a move as we refocus on what the ecb is doing. Buy at this how you level ahead of the vote given the uncertainty. It is still such a binary outcome. What its worth, i think i would rather buy the euro against the pound at this particular juncture for the trade that id have to. If you had to do one or the other, i would be a buyer of the euro, but i suspect that patience is the way forward for a bit. Nejra something we all need right now. Thanks so much, kit juckes and Michael Grady. We got some live pictures from the European Parliament in strasburg, where they are talking about frexit. We got e. U. s juncker saying no deal, meaning no winners, that everybody will lose, and the u. K. Should respect its e. U. Commitment. We are also waiting for michelle bonnier to speak here. This after we had comments yesterday from chancellor philip hammond, saying there could be some difficulty within the conservative party in approaching these negotiations. Were going to keep a close eye on these for you. Weve got some headlines just crossing here, saying the Parliament Work has been constructive and defective. He of course is speaking at the European Parliament in strasburg. Lets get to the Bloomberg Business flash. Heres Sebastian Salek. Sebastian Deutsche Bank has seen several senior employees leave after paying out compensation for previous years. At least three executives have left in asia. Europes Largest Investment Bank scrapped bonuses for top executives and slashed variable pay for other employees. A spokesman declined to comment. Glass lewis emco is advising Credit Suisse shareholders to reject the proposal to pay in shortterm bonuses to its executive board. The adviser says the amount of peers inappropriate given the loss suffered by shareholders. The group also said the proposed compensation to the board of directors is excessive. Won u. S. Antitrust approval for its takeover of syngenta. The two companies have been told to divest in the United States as a commission for completing the deal. The European Union and chinese regulators are also reviewing the buyout. The ceo of lloyds of london has told bloomberg how global uncertainties are driving demand for insurance. Ita beall told us about growing area for the market. We have seen an increase in demand for all types of Political Risk insurance, particularly if businesses are doing trade with other countries. They want to protect the fact that they might not get paid if a government puts on a band of transferring money out of the country. We are seeing a great demand for that. Also things like terrorism insurance. We are seeing a demand for that. Sebastian that is the Bloomberg Business flash. Nejra thanks. North korea has conducted another Ballistic Missile test. It comes days after President Trump vowed to act unilaterally to address a threat from kims regime if china wont and a day before trump comes facetoface with xi jinping. Is in finland today. His stop there reflects a fundamental shift in commercial and limiting ties and signals that the u. S. Is not the only diplomatic focus for china. Juckes,th us are kit fixed income strategist at societe generale, and Michael Grady, senior economist at aviva investors. Michael, that me ask you, with this trip to finland, is china sending a signal that perhaps the u. S. Is not the only game in town . Chinas mainlready trading partner and china is the e. U. s second. Michael i dont think we can doubt that the meeting with President Trump is extremely important for china and the u. S. This is a critical relationship Going Forward. Clearly, during the campaign phase, trump was perhaps less than friendly towards china. Theres been a bit of a change in the rhetoric since hes actually become president. We wait to see the outcome. It is very important. Nejra kit, are you expecting any concrete outcomes from this meeting . A lot of people are saying its clear what china wants. What seems unclear is what the u. S. Wants to get out of the stocks. Kit i guess all the u. S. Wants is, i dont know, a smaller chinese trade surplus. Very hard to see what comes out that is concrete at all. Goodwill, i think, is the best. Weve had bombast and rhetoric going through the u. S. Election. It is a question about making friends and being seen to be on to find page of trying a solution. I think that is the body language and the mood music might be important. Onra in that case, michael, the issue of currency manipulation, if it is addressed at all, if it is, do you expect that to have any impact on the yuan or the pbocs approach to it . Its a tricky one for the u. S. To pursue this when we know in reality china have been supporting the currency recently. To argue that theyve been manipulating it, i think is a pretty big challenge for them to demonstrate at this point in time. I think its a stretch for them to come out and give the label of currency manipulator. Theres a formal process they need to go through in order to come up with that designates an that designation. We will wait to see on that. I think its fairly clear that the chinese authorities, pboc, one to keep the currency reasonably stable at the moment. Nejra one thing weve got to bear in mind is how many treasuries china holds, what a big holder it is of u. S. Treasuries. Here ive shown that. You can see the holdings have been falling off at the end here. Any conversation that we have on a potential trade war, any of those issues, would it be in the interest of china, in the , to accelerate or threaten the acceleration of unloading these u. S. Treasuries in any way . Could that come up in any way, shape, or form . Kit i would hope not. It would be silly. , if what we see is the chinese deciding that if they wanted a weaker u. N. , which i think is what they do one, it would be politic to stay in this range. Fall in thees will next six months. As their reserves fall gamma the lump of them invested in u. S. Treasuries will also fall. Chinese holdings of treasuries are going to go down with chinese foreignexchange reserves as they prevent the currency falling to keep oil on these troubled waters across the pacific. Using them as a bargaining chip, i think everybody loses. The impact on global asset prices would be negative if markets thought it was serious. I think its best, if they want to have it on the background, it is best left unsaid. So much, kityou juckes and Michael Grady. , the internal brexit battle. Philip hammond says a disagreement about signing an agreement with the e. U. Where do we go from here . This is bloomberg. Watching live pictures from the European Parliament in strasburg where they are talking about brexit. Just in the last few minutes, weve had some headlines on the bloomberg crossing from michel barnier, the e. U. Chief exit negotiator. That is not him talking there. Here are some of the things hes been saying. Its important to build trust in exit negotiations. The devil will be in the details. The e. U. Intends to negotiate in a transparent fashion. And also, a no deal scenario is not the one that e. U. Is looking for. That is a key one, of course. Theres some concerns that there might be no deal by the end of the two years of negotiations. The u. K. Chancellor says some members of britains governing party are opposed to reaching an agreement with they you on that point. Philip hammond, who is in india to promote British Business, told bloomberg there are people on both sides who do not want a deal. Foreign employees are asking to be moved back home. Thats according to people with knowledge of the request. They say staff at citigroup, Goldman Sachs, and hsbc have returned have volunteered to return home. Still with us are kit juckes, fixedincome strategist at societe generale, and Michael Grady, economist and strategist at aviva investors. Kit, whats your thinking on these developments . Kit ennui trundle. I dont think the u. K. Has a clear plan yet. The impression you get is we are still bickering within the conservative party about how to progress. Sillystill lobbying statements about small rocks in the mediterranean. Ownst know that the u. K. The moral high ground at this point in the discussions. On we go. On goes the uncertainty and the economic reality will come slowly at the same time. People will be moving businesses. People will be moving back to European Countries where they are from slowly and the u. K. Economy is going to go on slowing slowly. The danger to my mind is does it slow slowly or does it accelerate at some point . Michael, your reaction is to be fairly neutral on sterling. Michael as kid says, we are entering into more uncertain territory. Next six to 12he months is we probably are going to see growth slow in the u. K. It has been resilient since the referendum took place. I think we are going to see growth slow over the next six to 12 months. When it comes to thinking about a rangeency, there are of factors you need to take into account. Weve seen a significant depreciation in sterling since the referendum took place on valuation metrics. It looks very cheap. Conclusionforegone that we see it fall further from here. Nejra kit, wanted to look at the 10year gilt yields. Weve been seeing a rally, pushing the yield towards that 1 . Is that rally getting overstretched . Kit it looks overstretched in real terms given where inflation is in the u. K. Yields are appallingly low, providing no support for the currency, but i cant see Interest Rates going up anytime soon. It does reflect a backdrop elsewhere that we are at the lower range in treasuries. We are not alone in this. The absolute number of u. K. Gilt yields, more than 2 in real are astonishingly on offer. Ields im not investing any of my i dont it, thanks, but think they are going to push back up all on their own with a slowing economy. Nejra kit juckes and Michael Grady, stay with us. Polls suggest Marine Le Pen will get to the second round of frances president ial elections but could she make it to the elise a palace . We will speak to a National Front party advisor. This is bloomberg. Nejra youre watching bloomberg surveillance. Cehic. Ra lets get the bloomberg first word news. Sebastian north korea has conducted another Ballistic Missile test just a day before the first meeting between xi jinping and donald trump. The japanese Prime Minister has described it as a major provocation and in an interview published over the weekend trump said the u. S. Could act unilaterally to address the threat if china wont. Saysian Monitoring Group the number of People Killed in a suspected chemical attack yesterday has increased to 72. The Associated Press says that there have been renewed airstrikes on the town. The Un Security Council will hold an emergency session later. Russian and syrian state media say the gas came from a rebel weapon factory. At a zuma has won support key meeting of the anc. According to people familiar with the situation, the president survived calls for his resignation. They say he fought back against accusations that he didnt consult adequately on a Cabinet Reshuffle that included the firing of the finance minister. The u. K. Chancellor says some members of britains governing party opposed reaching agreements with the e. U. Told bloomberg there are people on both sides who do not want a deal. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Im Sebastian Salek and this is bloomberg. Nejra thanks so much. Weve got some breaking u. K. Data for you. The services pmi rising to 55 and beating the estimate here. We did have that weaker manufacturing and construction pmi earlier in the week. We saw weaker sterling yesterday in the runup up to and after that construction pmi. Cable spiking there. Up 0. 3 . We got the composite pmi coming in for the u. K. , 54. 9. Thats higher than the prior reading and a beat on the estimate. Stronger u. K. Data coming in today. With fewer than three weeks until the first round of voting in the president ial election, all 11 candidates took part in a tv debate last night. While Emmanuel Macron was favored by more than one in five voters, Marine Le Pen came forth in a post debate all with just 11 rating her as the best performer. Lets get the latest from paris where Caroline Connan has a guest for us. Caroline good morning. It was a little bit of a cacophony last night with 11 candidates. Im joined by the National Front regional advisor, aymeric merlaud. Good morning. 25 years old, youre going to be thendidate as well for parliamentary elections, representing the National Front. Do you think Marine Le Pen failed in this debate . Aymeric no i dont think so. I think she had the occasion to offer to the french people the new pact that she wants to give to france and to say that she wants to prevent the french people from the bad effects of globalization by amending this globalization. Caroline she was attacked, including by a small candidate, claimed to be the real candidate of frexit. He said that Marine Le Pen doesnt go far enough given that she wants to first organize a referendum. You think . How did she manage this attack . Aymeric we are leaving our campaign on the name of the people. It is normal to use the referendum. I dont think any french citizen will consider Marine Le Pen is not the candidate of the frexit because shes the one who is contesting the European Union for many years now. I think she has the biggest legitimacy on this subject. Caroline do you think she was considered as too soft given there was a majority of eurosceptics on this tv said last night . Aymeric this is more the same tone that in fact the european and manynot managing candidates are contesting the European Union and they want to reform it or leave it. They think the European Union is not offering france the best way to take advantage of globalization. Caroline we have a graphic showing that even if there is a record level, say 50 in this election, there still seems to be this Glass Ceiling in the runoff that would prevent a Marine Le Pen victory. How do you think shes going to find this 5 million votes at least that she needs to win in the runoff . Aymeric by talking to the people. I think shes convincing more and more people that her views are the ones that the french people should follow. Caroline we know that more than 70 of the french do not want to leave the e. U. Or the euro. Aymeric because they never had been a debate on this discussion. Especially on the question of the eurozone. Caroline one question is the consequences of frexit. Saying that french borrowing costs could rise as much as 60 billion euros. What is the danger of such an economy . Aymeric the euro, you think about the consequences of the euro. At the moment we are facing the highest level of unemployment in france. The euro is now the danger and it will follow this way if we dont stop it. We are the only country to say that. Theres many countries which are contesting the euro. Talking about greece obviously, but also italy and spain would have an interest to change their currency as well. Caroline what is your favorite contender in the runoff . Would you prefer to face Emmanuel Macron, who is currently the favorite, to face her in the runoff . Would she prefer to face another candidate . Aymeric this is the choice of the people. We will take whoever it is and we will fight so that we could actually win in the end. Caroline aymeric merlaud, thank you so much, advisor for the National Front, who like many french people, followed these debates last night on national television. Nejra Caroline Connan, thanks so much for joining us and with theus up to date french president ial election. I want to show you a great function, e u go. You can go to it on your terminal. Brex a similar concept to go in the time to the runup of the june vote. This collates all the stories you can read across the you the e. U. You can also see postbrexit forecast changes for gdp, for various countries, trade flows, and over here at the top right corner, all the charts that are put together by our very own hillary clark, global head of terminal. She makes all the beautiful charts that we show you on tv and she would love to hear from you. You can look at any of these charts. You can even click on trending charts and save them to your own. Stay with surveillance. 2, 3, or more . Investors look for clues on the timing of the next u. S. Rate hike in the fomc minutes. What do the fed futures hold . Is the reflation trade set to fade . Pimco and jeffrey gundlach, who predicted last years uptick in price growth, think u. S. Inflation may have already passed its peak. This is bloomberg. Nejra youre watching bloomberg surveillance. Im nejra cehic. If we look at what markets are doing today, overall looking at whats happening in equities, its a pretty quiet day. Pretty unchanged on the stoxx 600 that a lot of movement elsewhere. Lots to look forward to with the xitrump meeting later this week. Fed minutes also in mind. Sebastian salek has been following the action. Sebastian Energy Stocks and miners leaving any gains on stoxx 600 today. If you look at the oil price, this is brent crude, the decline there. It has crossed the upper bollinger band. It is the first time we have seen this. That is by technical standards a buy signal. The focus is going to u. S. Crude inventories. The data, the analysts are expecting that to fall. Anything other than that, analysts are saying we could see that buy indicator obliterated. Back to south africa. This is rand denominated South African Government Debt against its brazilian counterpart in the blue line. That is the narrowest weve ever been since bloomberg started compiling this data in 2009. Weve seen president zuma fighting for his presidency. The s p cutting south africa to junk yesterday. South africa joins brazil in that territory. This is one of the things driving this next move. This is the gilt yield, nearing 1 . 1. 072 as we stand. Weve had article 50. Weve had the terrorist attack in russia and not to mention the rally across u. S. And european bond yields. Can it lower . Mizuho says it should rebound. We are seeing inflation above targets in the u. K. That is looking to spike higher if you follow mizuhos addictions. Nejra thanks. Markets are indeed looking forward to the release of the minutes from the fomc. They are out at 7 00 p. M. U. K. Time. That is the meeting where we got that dovish hike. Investors will be keen to get more details on the fed bosch plan for unwinding its Balance Sheet. Jeffrey lacker yesterday resigned over his role in a 2012 leak of confidential information about the Central Banks policy options. Lacquer admitted he should have ended the call with an analyst who brought up an important detail and that he failed to inform the fomc that the analyst had the confidential information. He was already due to retire in october. Still with us, kit juckes, fixed income strategist at societe generale, and Michael Grady. Kit, just want to ask you does this tell, anything about the dot plots and where it might go from here . Kit im sure the markets are going to try to read something. He was perceived as a high dot, so does that mean we bring our level down . I think theres a sense all over the place as treasury yields test the lower end of their recent range, and as breakeven rates on inflationadjusted treasuries moved below 2 , they are losing touch with the feds target, but the markets overall sense is the inflation scare is fading, the fed is not going to unlesswards the 3 , and they work hard, were going to set off another period where investors are forced to get longduration. Fed to soundn the hawkish and the suspicion is there quite dovish. Nejra onus on the fed to sound hawkish. I want to show you this chart. , ise simply, what it shows volatility on the treasury etf coming down. Theeve been saying, 10year treasury yield staying within this range. It was testing the lower bound yesterday but then it bounced back up. Is there anything that could come out of these minutes that could move the needle on this sort of trade at all given what kit has just said as well . Michael not expecting a huge amount out of the new minutes. Weve had a lot of fed speakers since the press conference. There seems to be a pretty strong consensus on the committee forming around the idea of three hikes this year. Weve had one already in march. I think the minutes will broadly confirm that which weve heard over the last couple of weeks from the various fed speakers. Case, what do you think the dollar does from here . Yesterday we saw the bloomberg dollar index rising along with the yen, which was the only currency gaining against the dollar. Any potential for any interesting moves off the back of these minutes on the dollar . Kit hard to get excited about the minutes. Nejra try, please. Kit them on their own, if you think of that range, theres two steps. If we break below the bottom of that range, i think the first thing you get is nervousness. Breaking a range tends to push up volatility. The more we settle into the idea, even if we got a range 2. 5 , if we are in a low range of treasuries, reflecting a market that is increasingly confident that three rate hikes this year doesnt imply a terminal rate above 2. 5 , then money has to look for yield elsewhere. Today, what we see people picking up the South African rand, people going off and looking for look, oil prices are not falling anymore. Lets have some ruble. So i think we will get back if the fed doesnt do anything to push us otherwise into this hunt for yield. Nejra michael, any comments on the unwinding of the Balance Sheet . Michael i think that is the problem. Weve had dudley talking about it. Weve had other fomc members talking about the Balance Sheet. I thought dudleys comments were quite interesting. I thought the fact that he was talking about unwinding the Balance Sheet and rate hikes as potentially substitutes for one another. The median number of hikes in the dot plot for next year is three again. The fact that they are talking about normalizing the Balance Sheet and having those three hikes is an interesting set up. Nejra Michael Grady and kit juckes stay with us. Is the reflation trade set to fade . Pimco and jeffrey gundlach, who both predicted last years uptick in price growth, think u. S. Inflation may have already passed its peak. This is bloomberg. Nejra youre watching bloomberg surveillance. Lets get the Bloomberg Business flash. Heres Sebastian Salek. Sebastian Deutsche Bank has seen several senior employees leave after paying out compensation for previous years. At least three executives have left in asia. In january, europes Largest Investment Bank scrapped bonuses for top executives and slashed pay for other employees. A spokesman declined to comment. Advisings adco is shareholders not to pay bonuses to the board. The advisor says the amount of years wholly inappropriate given the loss suffered by shareholders in the last two years. The group also says the proposed compensation is excessive. The Trump Administration is so alarmed that chinese investors may try to buy westinghouses Nuclear Business that they are trying to find an american ally to buy instead. That is according to people familiar with the matter. Cabinet members including rick perry and Steve Mnuchin are said to have discussed stopping westinghouses purchase. Nejra thanks. If the reflation trade set to fade, pimco and jeffrey gundlach, who predicted last years uptick in price growth wrecking u. S. Inflation may have already passed its peak. Where does that leave the market position for higher growth and inflation . Lets get the thoughts of kit juckes and Michael Grady. This is interesting because both pimco and gundlach were recommending tips on inflation. One thing that ive been wondering for a lot of the first quarter, in terms of the reflation trade, we did see the dollar weaken quite a bit in the first quarter. Yes, equities have powered ahead, but it is not like weve been seeing bond yields rocketing higher. Is this even a helpful phrase to keep using . If the reflation trade in that sense is already losing momentum, its lost a lot of momentum. If we mess around with yields where they are, without any new news, and this fellow to lady comes off, then investors reach for duration naturally. Bond yields have been falling for all of my career let alone anybody elses around here. Once they dont push up to where you thought they should be going to, there is a tendency for people to get worried. It has faded dramatically through the first quarter. Forecasts havent happened. Betconsensus short duration hasnt worked already. All we havent done is break out of the ranks. Revived, and we are reaching that point of the year where there is a danger that is the base effects from Higher Energy prices start to fade out, we will see inflation cut off. The market needs to see something in terms of not just decent economic growth, but faster wage growth, or some reason to believe that underlying inflationary pressures are building as headline cpi comes off the top. Im worried because its completely out of line with our forecasts. Im worried that we break these yields lower. Nejra michael, you say that with above trend growth expected, Spare Capacity will continue to be eliminated, which should put upward pressure on inflation. Michael thats right. We published our quarterly view this week. We described the fact that we think this global reflationary environment, stronger growth and higher but still moderate inflation, is likely to persist. We think there is momentum there. When you look at the way in which the market has traded around that change in economic environment, we saw a big move in bond yields last year following the u. S. Election. Things have moderated since then. I guess that is partly to do with expectations around what the Trump Administration might want might not deliver on the fiscal side. Were still waiting to hear more on that. We think there will be a decent fiscal package towards the end of this year. Other look at some of the Major Economies around the world, places like the eurozone, growing well above trend at the moment. Nejra interesting conversation and one that will no doubt keep going for the rest of the year. We are seeing a slightly weaker dollar today and the 10year treasury yield steady at 2. 36 . Global fixed income strategist at societe generale, and Michael Grady, strategist at aviva investors, thank you for joining us. Bloomberg surveillance continues in the next hour with guy johnson and tom keene. This is bloomberg. This morning, markets are quiet. The reality of economic recovery. The american jobs report is friday. The european great distortion, in this hour, where do you find eu real yield. A ford factory worker, a son of farmer, a high school teacher, everyone debates in france, they all pile on madame le pen. This is bloomberg surveillance. I am tom keene and guy johnson is in for francine. Nobody had a red tie and a blue tie, not american appropriate, it was eclectic. Guy 11 people, an interesting mix. In terms of the political distribution, my big takeaway was that macron came away unscathed. Tom the opera in paris was there. I look at the who won and who lost, nothing really changed, did it . Guy yes, nothing really changed. What is clear and increasingly clear remains this split on the left. The fact that they are really dividing their forces. Chon came off well, a good debater, articulate. Them. And hammond between the left in france. The think about carefully. Tom completely different than what we see in an american debate. Lets get to the bloomberg first word news. Taylor north korea has conducted another Ballistic Missile test a couple of days before the meeting between President Trump and the chinese president. The missile was fired into the east sea, japan called it a major provocation and donald trump is likely to push chinas leader to push the North Koreans on their Nuclear Weapons program. In the middle east, the u. S. Appears to be ruling out regime change in syria after an apparent gas attack that killed at least 72 people. President trump blasted the syrian president but suggested the Obama Administration missed an opportunity to push harder for his removal. In south africa, resident zuma has surprised survived calls to be removed. He fought back against accusations that he did not consult adequately before firing his finance ministerz. Was publiclyma criticized by his partys Leadership Group appeared jamie dimon still optimistic about the country but ones that it is clear that something is wrong. He used the 45 page annual letter to stockholders to list ways america is stronger than ever but also concerned that the u. S. Has been trillions of dollars on war, piled huge debt onto students, and hobbled the Housing Market with too many rules. 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 quiet market, one data screen. We want to get a good guest and good conversation. Futures a little bit negative. What do you have, help me, i am bored . Nowhere, i600 going think it is interesting that the bloomberg Commodity Index and commodities more broadly are well bid. A slight outperformance of the ftse 100. Earlier stronger than expected services data. That sent the pound higher which generally sends the ftse lower. The cable rate up by 3 10 of 1 . Tom all the talk, lets stop the show and look at what james dimon of jpmorgan what he thinks is important in the economy. Bring up the chart. The Labor Participation rate for men. 2554, an ugly picture, 100 of employed americans, in the 1950s it was here, 96 , 97 . Own to a horrific 94 nothing towards what we would see after 1993. Down we go. By his calculation, this is 10 million jobs in america that are going nowhere. This is the global developed economy average. We are way down here. I johnson, this is the story of the trump election and the state of America Thanks to jamie dimon of jpmorgan for highlighting this in his annual report. Shout at zero hedge who brought it to my attention. Guy an incredible political letter. My chart is in some way related to what has happened with the reflation story and in the postdonald trump. Period about local bonds and the emerging markets which have been on such a tear. The Hedge Fund Community was beginning to wake up to the story and getting excited. You heard the chat. Then money piled in. Debt. Ners piling in to em this is indonesia. It has gone more political in the last couple of weeks. Money flying into the emerging markets. Es like indonesia and places like indonesia and brazil. Indonesia a standout story. I keep checking in on this chart , another leg to the upside. We were talking about the solid u. K. Pmi, services number. Euro area figures are elevated. A slight miss. Do not get overly excited on the downside, solid numbers that came out. Be a leada, it should indicator, hard data should follow on but some of the data is really strong. Do i believe the survey didi data coming out of europe . Yes, it should be strong, we are seeing a globalized synchronized in the data, one region usually is good and the other is lacking come in the past it was asia and now a synchronized recovery in the data. It is important and in europe, the question we should ask is does this validate the reflation trade in european equities . Does this tell us that, finally, we will get the elusive earnings in europe we have never had four years. Every year it is the same pattern. Midway through the year it is down to zero. This year, those earning estimates have not been brought down here in could this be the year when we see some elusive Earnings Growth . If we do, it validates the moves in the stocks index in europe. Guy a validation of ecb policy . It could well be a validation but it could also be sadly a reflection to the fact that austerity may not have been a successful policy. As you slow down austerity, which is what qe has allowed you to do, qe has been a smokescreen to allow countries not to see austerity. That is perhaps why the data is improving. Tom this is really important. The great distortion in europe, is that the same as the great distortion in america . If we has depressed domino nominal yields and real yields, if we are worried about a little bit of inflation, stealing that inflationadjusted yield, is it the same mathematics and dynamics in europe that it is in america . It is a different story. In america, the fed did not need to distort markets so much because they dealt with the bank nonperforming loans and the bank illiquidity problem early in the cycle. We have not done that in europe because of regulation and antirules. We are still dealing with the banks. Many politicians, many regulars look at the ecb and say, you have to keep going. The fed was not under that pressure to do qe forever. Tom tell me about eurosclerosis , one day we normalize in europe , i get that pmis are better and congratulations to everybody for making it go. The size of europe, underestimated by americans, with that said, is structural eurosclerosis still part of your catalyst, or have we moved on . Small window after the french elections to really look at ourselves internally in europe and say what do we want the eurozone to become . It is an unhappy truce at the moment of friends. Very little in europe in terms of pushing on with political integration. Fiscal transfers, etc. People are looking at mario draghi and say you have to be our only hope for a while. After the french election, a window for a real debate on how we move toward proper eurozone integration. If we do not get it, i fear we are to rely on mr. Draghi and he is suffering populism and now in the process of tapering his qb purchases which is not good. Tom i do not know why he wasnt the 12th person debating last night. Would have been great to see mario draghi with a ford factory worker and a southern former. Thanks to our paris office for great coverage on the debate last night, particularly greg for his help. We will come back with barnaby martin. All of this is play shouldnt inflation talk and dynamic stock. In the next hour, the market call of a generation, deflation and disinflation, one of our most popular guests, Gary Shilling will join us on your interfere of inflation. From london and new york, this is bloomberg. We are waiting for his arrival in florida. Before he gets there, he is in finland. A little stop off that is interesting for the chinese premier. He is talking about what next for relations in terms of Arctic Affairs and technology, a big part of this trip. The arctic relationship is interesting. Think about the geography of finland, from finland to florida, something to think about. Tom so glad our European Team could bring this to the show. Diplomacy. E grind of you get off the airplane 5200 miles from maralago, florida, west palm beach, you do not know who it is you are talking to next to you. He has notes saying to the finish leadership is. Even the chinese ambassador. Remarkable to see that. Lets move on. A great image. The president in the United States tomorrow, the chinese president in america tomorrow. There is taylor riggs. Taylor each of administrative the Trump Administration, according to people from ear with the matter, the government tried to find an american or allied buyer. Westinghouse filed for bankruptcy protection last month and its parent company, toshiba, has been looking for a buyer. Boeing and jetblue investing in a startup building an electric powered airplane. They say theyre building airplanes that can seat up to 50 people for trips up to 700 miles. Boeing Venture Capital arm looking at a partnership that will help the airplane maker accelerate innovation and market opportunity. The European Investment firm is in advanced talks to baikonur bread, according to people with People Knowledge of the matter, the deal could be announced this week. They would be adding to a food empire that includes Krispy Kreme Doughnuts and a coffee roaster. That is your Bloomberg Business flash. Guy Deutsche Bank has seen various senior employees fed to the exit after they bonuses for a second year. This comes as the ceo looks to steady the Largest Investment Bank and europe after a series of misconduct fines. We are dealing with a Balance Sheet. Interesting times for the bank. Our finance and mr. Joined us is still withrtin us. How serious is this . Some senior employees look at the lack of clarity of the months and years to come on compensation after the big cuts in the last year or two, particularly the last year. Looking at other places they are. A reflection of the constant pommel be bank has been under four years. With the strategy overhaul that was only less than two years old. A complete revisit with a completely different focus. Guy if i am a headhunter in the financial sector, will Deutsche Bank be one of my main stopoff points looking for candidates . That is where they are setting after they are getting calls from Deutsche Bank employees. I think it is a combination of difficulties of clarity on strategy and compensation that are leading them to think, maybe i can look elsewhere. There are more back in europe that have moved beyond the strategy phase and are more clear defined outlook and objective. Tom help me i find this comical, folks, and bonus season, coming out of bonus season and once again, money matters. An exclusive on surveillance. On trading side, can the European Banks compete with the american banks for the depth on the trading desk that you must have to not lose money . Or will that drift away in the next five years . I do not think we have since the trends we have seen for the last couple of years, the u. S. Funds gaining market share has really changed. I do not think there is plateauing of that trend. We have the likes of Credit Suisse, which is still mulching a view to being more competitive and Deutsche Bank in the midst of a Large Capital raising exercise at the moment to get that higher power to compete aggressively. Tom give us an update on that capital raise. Was there a delusion event of a couple of weeks ago, was it deemed a success . The share price says it is and we have reports that some of the key shareholders are looking to maintain the stakes, if not increase the stakes. They have the backing for that. From what we can tell on the markets. Guy british strong pmi data out of europe. Thanks should be a beneficiary of the recovery in the european economy. Banks should be a beneficiary of the recovery in the european economy. Where does that leave European Bank credit . Barnaby more than we are seeing the capital rates, the ecb approach to backs seems to have an air of regulatory some parents. The ecb set capital levels for the max. The levels the banks. The levels they need to set for this year are slightly lower. Are they giving banks room . The other fascinating thing when will we see a real world example of bailing . That has been the fear of the credit market for a while. Losses to senior back holders. We need to keep a close watch on the italian situation. Banks. Olution of a small there seems to be little appetite for mailing bailin. Visit the dog that nearly barks is it the dock tom an interesting time. Here in antinue moment. Thank you, greatly appreciated on the banks. Coming up, Goldman Sachs Asset Management asia ceo, this will be interesting, you wonder about the follow on top of the e. M. Markets that guy johnson showed a few moments ago. This is bloomberg. Guy i am guy johnson in london. Nd tom keene is in new york the average rent seeing selloff in the last few minutes. The South African rand is seeing selloff in the last few minutes. Ecb watches ticking messages from the council. Mario draghi speaking in private amid speculation the rate rises might come before qe comes to a halt. Sequencing with the fed. Barnaby martin, what do we need to hear from these guys tomorrow . Barnaby it is predictable. When there has been talk about the qb rates or in early, the ecb goes into panic mode and the doves say we will be slow at removing accommodation. They will make it clear to the market tomorrow that they will be very cautious about raising rates to early. The sequencing will be, and qe and then think about raising rates. They look about bund yields in the last week, it is de facto a tightening of financial conditions which makes it even tougher for the ecb to receive their 2 inflation mandate. Outcome the doves. Guy the gap in europe is colossal. It is being filled. Unemployment down to 8 . A big german constituency within that here they have a lot of road to work with. The inflation story starts to become an issue. Expect poordo not inflation to get about 1 . Mario draghi as a challenge to continue to commit the market they are on a path to their target, which is sustainable inflation. It seems challenging for us. You look at germany, you want to see wage bargaining, wages go up. The longer we do not see inflation materialized, the wage bargaining comes down. How that was too important, help me with who tells germany to be more irresponsible . Which institution tells them to lift up wages . I dont buy it for a minute. Barnaby nobody tells them directly but do they get forced into it by a reappearance of a small crisis in the periphery, something germany has to bear in mind. Btp bunt yields back to 200 basis points today, a high for the year. It all started to take place since the ecb in december talked about tapering. Does germany push a more hawkish mario draghi into a corner, or does it continue to say to him, you do what you want to do, we need this to keep fragmentation down in the eurozone. Guy whether he delivers that in his term in office, maybe we should think about who is next. We will be back with barnaby shortly and lets talk about the rand which is beginning to selloff following the fact president zuma has been backed by a group, i suspect they liquidity lack to the rand which is now reacting. We will talk about what is happening in south africa little a little later in the program. We will take you to johannesburg to give you a sense of what is happening. Continues toa survive as the balls in south africa. This is bloomberg. M bloomberg surveillance guy johnson in london and iguy johnson am tom keene in new york. Lets get to the first word news. An opening at the Federal Reserve and the u. S. , jeffrey lacher abruptly resigned over the unauthorized disclosure of information in 2012. His regulation will provide quick resignation will provide questions about the fed discretion. Senate Majority Leader Mitch Mcconnell says he has enough votes to invoke the socalled Nuclear Option to get the Supreme Court nominee neil gorsuch confirmed, he is willing to scrap the 60 vote threshold for advancing Supreme Court nominations, if there are not enough democrats to vote for courses but filibusters would still be permitted. For legislation. No brexit deal would mean everyone loses it was said. They agree on the big issues, the European Parliament votes today on terms of brexit negotiations. The u. K. Is looking for ways to scrap its clean energy target, according to a person with knowledge of the matter. Government officials want to abandon the National Goal of getting 15 Renewable Energy by 2020, raising the target will allow the u. K. To get out of eu fines that could reach millions of pounds, the kind of rule cherry picking that could disrupt brexit talks. And france, far right president ial candidate Marine Le Pen was ambushed in a fourhour televised debate involving all 11 candidate. Emmanuel macron attacked her proposal for leaving the euro. Her legal problems, and her father is history of racism. Polls rated her performance only for the best. She says, i am being unfairly targeted. In regards to cases where there is not the shadow of any suspicion of personal enrichment, and in the case whether our resistance are criticized for not working for europe, it is true, they did not work for europe, they work against europe and i am happy about that, they are doing the same as their members of parliament. Taylor 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. Uy thank you lets continue with that conversation in paris, lets talk to caroline. What was the take away from last night . Did it change anything . If you look at the exit poll from last nights debate, the far left candidate seems to have sustained his momentum over the past few weeks. He was the most convincing for a quarter of the people who watched the debate. Marine le pen did not fare well, liveperson of the people who watched the debate thought she was the most amazing. Tom the most convincing. Tom help me with a global audience, was his phrase to the viewers and france last night to see so many different candidates this close to the first election . Was that strange, or the normal weight you do french democracy . Not the normal way. The First Time Ever there was this kind of debate before the first round with 11 candidates, who each had 17 minutes only, very little. Including, six very small candidates that you may have never heard of in the majority of eurosceptics, these candidates only represent between zero present in 5 of voting intentions. Some of them may make a little difference, especially for candidates like fillon and melanchon who are in third and fourth positions. Guy thank you. Barnaby martin stay with us. Did last night change anything . I did not hear you . Guy did last nights debate 2018the file for the market . The small candidates had a Good Platform to express their more interesting views, either left or right. Marine le pen was very quiet. She struggled a little bit throughout the debate in the euro. This shows you there is a lot of interest, nationally, for these elections. Participation may be lower than usual, surprises possible. Guy lets think about what happened on the left in particular. Chon is doing well, are you factoring in a stronger left showing . Macron is the leading left candidate, but do things change because his power base lies to the left rather than the right . Melenchon see is that is the one with momentum, he is the representative of the hard left. The two candidates from the far left, they are anecdotal and terms of voting intentions. There is now a fundamental split. He could challenge fillon for thirdplace. The race is quite open. A lot of voters for macron have a low certainty of choice. It could still be that Marine Le Pen is assured of the second round with an undetermined candidate beside her. Tom we are seeing better Economic Data, i would assume that advantages mr. Macron. Is it like america, where the country is so polarized, a huge body of people really do not care about a fancy wall street guy and better Economic Data. The improvement in the data is too recent to mean very much to the average voter. The economic record of the president is viewed as being terrible. I am not sure that macron benefits to his problem is the proeuropean positioning he has, not popular with the prince electorate. French electorate. He is still on thin ground on these two things. Tom help me with the idea of a franc devaluation. If Marine Le Pen was to win and if france went alone with the french franc, have you calculated what the decline would be in the currency . That up to 20 decline would be reasonable, based on parity and competitive differentials with germany and other poor countries. Nobody can put a finger on it. Depends on how quickly it happened and how likely it is to happen. So many variables. It would be more likely more damaging than brexit. Guy thank you. The chief european economist for citigroup. How much time are you spending looking at collective action clauses . Barnaby we did a few months ago for a bit look at the french situation, nothing materialized in terms of french credit selling off. We got frustrated. Look at italy last year and the referendum, people do not cut short on a concerning macro story until three or four weeks before the event. It is too costly. That is what we did i realize with different story a month or so ago. I thought french credits went up which they did for a bit. We are at the three to four week time where history tells you that a sovereign complex will begin to underperform into a big unknown election. Tom when i look at the election. We move on to the next election. Will we be discussing politics this much a year from now or two years from now . Do we clear the political debate and move onto something rational, or is this the new new in europe . We moved to italy which is a bigger issue. We can say that, perhaps, with the french story, the risk of redenomination is not that big. Not quite minimal. The situation in italy. The populist in italy, according to the latest euro barometer surveys, the populace is not keen on the eurozone because they have seen stack and wealth generation over the last 2030 years and little benefit from the eurozone from trade, etc. If we get a populist government elected in italy, and somehow, through the constitution, they managed to get a referendum on euro membership, that will be more concerning because we can imply what the response from the populace will be. Which will be quite negative towards the euro. That is the big issue for me, italy and not france. Guy coming up later today, Erik Schatzker system with the argentinian president. Live on bloomberg, live out of womens rs. Bit buenos aires. This is bloomberg. Guy i am guy johnson in london and tom keene is in new york. In south africa, the rand starting to move, the dollar is up. President jacob zuma survives calls for his resignation. The party is circling the wagons. Maybe now is not the right time ,or the amc to split up following the sharp firing of the finance minister only a couple of days back with set the story in motion. Lets go to johannesburg. Our economy and government reporter. Why would the amc do this . They said that they will not be part of a campaign to unseat their own president. The Party Members are rally around jacob zuma, even of his Cabinet Reshuffle since the rand tumbling after it was the top currency in the world a week ago. Borrowing costs are soaring. They said there was a breakdown in the relationship between the former finance minister and the president. Theyis why he was fired are not enough of a reason, they said, to fire president jacob zuma or ask him to resign from office. Guy you need to see this in aggregate. The other potential issues around the president. Lets talk about what else is happening. , how powerful are they in south africa and what is the view of jacob zuma . The biggest federation, which c, has beenof the am weakened since a big union within its ranks left the union a couple of years ago. Within the alliance itself, as a federation, it does not have much power and no way to decide who potentially runs the country. The south African Communist Party calls for jacob zuma to resign. He and Party Officials will meet with the two Alliance Partners to work through some of the calls for jacob zuma to resign, saying they were uncalled for and condemning comments quite publicly today. Tom help us with the timeline. Is the goal to get to the weekend . To get to thursday and friday . Or will this go into april and may . That is the big question. Still a big question how jacob zuma survives the shock that goes to the countrys economy. Know is that the party will hold a conference in july, that will be a pressure point. We are in the runup to a conference later in the year and a president may be protected, because his presidency is only limited to about two more years which may be why the anc is not willing to risk a split in the party by and seating him as the president at this point. Tom is there a brightpoint on the currency . 1 mean to theto people of south africa on rand . A lot of analysts have said the currency has remained resilient, even amid Political Uncertainty and political turmoil. Not only are ratings agencies up, it seems as the currency has become resilient. Some may be because of the gains of the past couple of years. It was the top currency in the world just over one week ago, before this political turmoil. Even though it is at the 14 on the dollar mark, it remains resilient. Shock would be to move 20 rand to the dollar mark which at this point it has not reached. Guy thank you very much. Interesting times in south africa. Our South African economy and government reporter. We will be back with barnaby martin. Talking about what is happening stateside. And interesting things happening around tax and debt. Tv , a great function, a video stream, follow the radio stream and access some of the great charts tom pulls up and all the functionality we use. The team to can ib ask us questions and let us know whether we are doing a good job. This is bloomberg. Taylor amazon is getting into the Sports Broadcasting business, Carrington National Football League thursday night games live online this season. That is their latest move to boost the value of its prime membership. According to a person familiar with the matter, they will pay the nfl 15 million. The president has offered the coal industry fewer regulations and more land to mind but the biggest coproducer in the u. S. Is not thinking as big. Peabody energy ceo tells us that the company is no longer expecting to boost coal output significantly. He just wants to grow shareholder returns. They just emerged from a year under bankruptcy protection. Benas company used to compared with apple because of its smartphone and leadership but the start of wants to remake its image, their ceo wants to be compared with u. S. Warehouse retailer costco. Telling bloombergs company has the same body system. It wants users to enjoy their products at an affordable price. That is your Bloomberg Business flash. Guy lets get back with barnaby martin, bank of America Merrill lynch european credit strategist. You have been doing work surrounding the tax story in the United States. Last quarter, massive issue. Is that as good as it gets in terms of issuance . Once we see tax codes changed, will we see that being treated differently, when we see repatriation, does the story changing the feeling . For the u. S. Credit market, yes, do we get it by the august recess or by this year . If not, there is risk of disappointment and negative performance of u. S. Credit. Lets say we get it in the ryanbrady blueprint. The board adjustment in that blueprint is very contentious, what her a number of industries. Talk about it being replaced by the tax which would bring in the same amount of revenue and the less distorted for the dollar. Thats a we get the tax reform, two things bullish for the credit market, repatriation, u. S. Companies with Global Operations will be repatriating overseas retained earnings. When you are injected with cash my calling in the u. S. Is estimated that net Investment Grade supply in the u. S. Market should drop about 40 this year. Is dorterm picture we get the deduction of interest on debt this allowed Going Forward and replaced by shield, youthe tax issued debt because of the tax break which disappears. Then your debt Equity Equation as a company will change profoundly. Lessons a device to issue debt and buy back her shares. Less incentivized to issue debt and buy back your shares. Guy give me a sense of how supportive that will be, short medium, longterm . Barnaby shortterm, repatriation more supported. The average leverage of the u. S. Investment Grade Company is about 2. 5 times. If we get the full paul ryan proposals, we can look at u. S. Corporate leverage falling to about one point somewhere between 1. 5 and 2 . Tom do you see any evidence they will invest the money . Will be the United States do you see evidence they will invest it in america . Barnaby that is what donald trump is hoping to get. Tom i do not want to hope. Is there evidence that what they will do with a gazillionbillion dollars . Barnaby a lot of it we think will going to a push to prevent it for going tos further share buybacks or shareholder from the activity. It is difficult to police. 10 years ago, the latest repatriation went to share buybacks but we sent the republicans will try to claim down on the this time. There will be, the immediate expenses of is meant to incentivized companies to build plants and invest in america. If you plug companies with cash that they do not really need, they just issue a lot less. Tom i want to squeeze this in before the end of the hour. How does the how is the United Kingdom economy doing . All clear for worry about economic slowdown for the United Kingdom . Wenaby we cannot say that, are entering one of the most Uncertain Times in the uks history. We are beginning a very unknown at time of brexit negotiations. I fear, the markets are too relaxed about the sequencing of events. Suddenly there will be a free trade deal signed soon and a transitional deal. At the end, we will agree that the exit payment, we know the what the sequencing the other way around, payment first, maybe then talk about free trade and at the end there will be a transitional deal. We run the risk of, as the clock ticks, getting to the twoyear time, we have made very little progress. We have seen many a time in europe you run against the dline, it creates systemic we think longer term, we will have a free trade deal, just not as beneficial as what we have at the moment there it has lost gdp output for the u. K. Guy breaking news, china winning eu antitrust approval, this is in the ag chem space. Do not know if we have time for one quick question. Toerage loans back 20052006 . Ways we are,any not just in leverage loans, we were in the peripheral of we had low volatility, a feeling in the market, things would never widen and underperform and people took more risks. Todays leverages the Central Banks. You. Barnaby martin, thank coming up, one of our most popular guest on your fears of inflation. We speak with Gary Shilling. Also we speak on the fed. This is bloomberg. This morning, markets are quiet. They weigh guidance on the reality of an economic jobs report on friday. Gary shilling on lower for longer on your fear of inflation. It is the most unloved bull market ever. How should you acquire shares . The dow, 21 thousand. A factory worker, a southern farmer, a high school teacher. These candidates pile on madame le pen. This is bloomberg surveillance, live from our World Headquarters in new york. I am tom keene. With me, guy johnson. Did anything change last night in this debate . Guy the only thing i really took away from it was the fact tot mr. Melenchon continues perform. The real divisions lie on the left. It is going to be interesting to sees how itmacron is rolling in the second round. Tom we heard in the last hour the idea that maybe the good Economic Data is maybe a little late in the first round dynamics. Right now lets get to our first round of first word news with taylor riggs. Asia, north korea has conducted another Ballistic Missile test. Just a couple of days before the first meeting between President Trump and chinas president xi jinping. It was fired into the east and japan called it a major provocation. President trump is likely to push chinas leader to pressure the North Koreans on the Nuclear Weapons program. The u. S. Appears to be ruling out a regime change in syria after an apparent gas attack killed at least 72 people. President trumps last blasted president Bashar Alassad but he criticized the Obama Administration for not pushing harder for president assads removal. Calls to resign by members of the ruling party. Zuma fought back against accusations that he didnt consult adequately before firing finance minister gordon. Zuma was publicly criticized by members of his party. Isthe u. S. Jpmorgans ceo still optimistic about the country but he warned that it is clear something is wrong. He used his annual letter to stockholders to list ways america is stronger than ever but he is also concerned that the u. S. Has piled huge debt on its students and hobbled the Housing Market. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Tom what are we going to do . We are bought up by the europeans. A b, the ideal value is 7. 5 billion for a global audience. This is the European Holding company. They have been buying up food. Guy johnson, has he ever been in a panera . Guy i havent but i love the fact that the europeans are on the front foot. Sterling certainly makes us a target. ,om i remember the original the initial public property was sort of like bringing europe bread into america and here they are with takeout. It is a cult was business to say the least. We will have more through the day. How about data check . Equities on commodities, i just had one screen this morning because i want to get to a good bloomberg chart. We will talk to the euro, a little bit weaker. Die, what have you got . Guy throughout the day, look at the stoxx 600. The Commodity Index, that have helped in this is the story at the bottom to. It had helped the ftse outperformed earlier on but we saw solid data out of the u. K. On the Services Side which has lifted sterling. As sterling goes up the ftse goes down. Commodities are up but sterling is up as well. That means that is where the ftse is back. Tom we will rip up the script here and go to Kevin Cirilli quickly on it quiet a quiet trump day in washington. I want to come back to Gary Shilling and talk about this. Your er. Jamie dimons annual report. Labor participation in the 50s. It is 97 , 100 is up here somewhere. Then there is a little last and here thats a little less and then in the 70s and 80s, this is 94 which is nothing towards the decline we have seen in men 25 to 54 participation. Here is where the rest of the world is. The developed economies are up here at 93 . In america, to borrow a phrase from the president , it is failing in our Labor Participation. Is 10 million jobs not there. Guy i want to talk about what is happening in the emerging markets. One of the things we have seen over the last few weeks is the reflation trade. We are also seeing the dollar story being really important. Money in the fixed income space is just pouring in, thanks to emerging markets, local denominated bonds. We saw a decent life higher. In the last couple of weeks, we have seen a real acceleration in the flows into some of these emerging markets. Om great chart, guy lets go to washington quickly, in the first day since time began that i dont have much to talk about with Kevin Cirilli. Lets make it a little bit quicker today. Help our global audience with the socalled filibuster. Are we in filibuster right now on judge gorsuch . And there is a little percolation, plagiarism by the judge. Help here. Give me a quick update. First, filibuster nowadays is not what you would think of where someone is standing and reading the telephone book and trying to delay. This is a procedural tactic weary and is the second point i would make. Frankly, it doesnt really if on this republican her publicans decide to avert it by deploying the socalled political Nuclear Option. All that means is it is a quick rule change and it will leave the judge pick of neil gorsuch to the Supreme Court to a simple majority vote. Publicans have that majority by a 52 to 48 margin. Tom this will give us our washington picture of the day. There is a lot tomorrow from china and the jobs report. Jonathan bernstein on the Supreme Court. Dont call what Mitch Mcconnell is about to do nuclear, it is not going to change anything in the senate that didnt change four years ago. The appropriate metaphor is closer to a toy gun like a woody allen movie. Dont do anything lethal or momentous. When do we see a vote on the judge . I would agree that it is a bit dramatic to call it a Nuclear Option. But not all republicans want want this. R senator john mccain called it stupid. We will hear from the judge in the next week and a half. Guy can i ask you a different question . Jamie dimon. You and i were there on the day that he was in the white house, the same day as theresa may. We found him ambling out of the white house. His letter felt very political. Merged efinitely a emerged as someone in the zeitgeist of washington right now. In the sense that he has taken over the Business Roundtable which is one of the most the mostguides influential groups in washington that represents several prominent business communities. Lookingrged as someone to work with this white house on issues such as immigration as well as apprenticeships, which we did here yesterday at that ceo summit from the likes of former commerce secretary wilbur ross as well as gary cohn. Assistant to the president , if uncle trump. Ivanka trump. Tom it is quite a day since the inauguration. It is the single greatest economic crawl. Gary shilling said forget about inflation and we will see disinflation and elements of outright deflation. Without question, Gary Shilling writes a note, i am going to be blunt, we are not going to send the note out to you. We protect the copyright of our guests. Here is jamie dimons chart. We are just going to do this because of mr. Dimon. Here is the sadness of america. This is disability, it is drugs, it is lack of education, lack of ability to be in the military. Do you see any ability for President Trump to turn around the vector of james dimons chart . It may be because the other chart we have is the Women Participation and that is going the other way. In other words it looks like a lot of guys are staying home. Tom are you willing to say it is a mancession . You have this influx of women that allowed a lot of men to drop out of the labor force. Women, their Labor Participation rate has come down so maybe it is the point where men dont have to go to work or otherwise there isnt enough welfare to support them. Does america have the skills to deliver that . Jamie dimon pointed out apprenticeships. What is it that is missing to make that happen . What is missing to get more people back into Productive Work . It is probably incentive more than anything else. There are alternatives to not working. It can be welfare, it can be wives, it can be family inheritance, it can be a lot of things. But i dont think there is the incentive. If you have the incentive and people are encouraged to get educated and so on and so forth, a lot of people dropped out of the labor force since the Great Recession because they said they were discouraged and they couldnt find jobs that were suitable and younger people stayed in school. But other interesting things are going on. If you look at the Participation Rate of people over 65 it is going the other way while people are healthier and living longer. They would rather be active than sitting on the couch. But a lot of people dont have the money to retire. There is a lot of dynamics going on within these within the aggregate data. Guy can i and just one more word into this conversation . Automation. I read about what it is going to do to the truck industry. Walk me through automation. This has been decried since the Industrial Revolution started in the u. K. In the late 1700s, when the whole idea was that you were constantly going to put more people out of work. Interestingly, the word saboteur shoes,rom the word for wooden shoes. Early in the Industrial Revolution, workers would grind them themselves because they didnt want to put the hand weavers out of business. You always create more jobs than you destroyed but in the last 30 years with globalizations, transfer of manufacturing to china and other developing countries, there has been a huge gap and it has disrupted this process of normally creating more jobs than you destroyed. Globalization, you have pretty much transferred all of the jobs in manufacturing out of the west that you can. Tom bring up the chart. This is jpmorgan back 35 years. There is a new leg up on the left side. Is it a gilded age . Is what mr. Dimon talked about, the horrific participation, are just the elites making it all . I dont think so. We certainly have had income a contributingd factor is globalization. You simply eliminated a lot those high paid jobs in manufacturing. I dont think we are at the point where youve got two people, the high paid executive going up in a hotel room and the guy who is carrying his bag in between with nothing in between. Tom we are going to come back with Gary Shilling on deflation and disinflation. We could go three hours with mr. Schilling. A real treat coming up. Later today on bloomberg television, on bloomberg radio, the president is set to greet and speak with the president of jordan. Special coverage in a moment. This is bloomberg. This is bloomberg surveillance. I am taylor riggs. Lets get the Bloomberg Business flash. European regulators have joined their u. S. Counterparts in approving chinas 43 billion acquisition with send them top. Syngenta. Satisfy approving to antitrust objections. The deal will be chinas biggest foreign acquisition ever. Investment firm has agreed to buy panera there at panera bread. Je p is adding to a food empire that includes Krispy Kreme Doughnuts and some coffee centers. That is your Bloomberg Business flash. Tom greatly appreciate it. There are two schools of thought in the racket of taking stocks. You are a specialist in economics and fundamentals or technicals or you are one of the rare breed where you combine all three together. You read Gary Shilling, you look at charts and you also look at the underlying fundamentals of corporations. No one knows it better than Gina Martin Adams. We are thrilled to say bloombergs intelligence chief u. S. Equity strategist. She went to the food court six times and said i need to do this. What is it like going from a street . What is it like . It is fantastic. We have really an incredible Research Division within bloomberg intelligence. So many more analysts than i am used to being able to tap for information. Tom lets look at the world of fundamentals like john butler. Lets start with technicals. Where is the technical construction of the market . We are and shortterm consolidation. Longterm uptrends. Since march we have been treading water, trading sideways. But tom re we going to see nominal gdp with Revenue Growth and income states . A lot of the Revenue Growth is coming from the refugee sector the Energy Sector but we are seeing all of the major sectors relative to that. Tom we talked technicals and economics. Fundamentals. Have they done all they can do . Margins are going to drive the Earnings Growth this year. Sales are growing but margins are growing faster. Guy good morning from london. One of the big trade those late has been of late has been the short on the vix. Interestingly, it is very normal for volatility to remain very low. We look back at all of the major bull markets of the last century and you tend to have three legs of a bull market. We are in the third leg, most likely in the bull market. So you can have a pretty extraordinary Political Risk, a pretty extraordinary change in growth. And yet volatility remains very low. I wouldnt be surprised to see the vix remain extremely low because economic volatility is relatively low at this stage. Visit costcutting . It is a combination of cost cutting that occurred last year and now you get that incremental sales growth which increases the margin level. But you are seeing enhancements in innovation of technology. The best example is the banking sector, where even though the yield curve is relatively flat you are seeing margins accelerate because of technological use. Costcutting, at that has been in this whole expansion. Look at the proper share of the pie and then labor share, they are diametric opposites. You see that incremental sales growth adds to the bottom line when you are constantly finding ways to take cost out of the system. It has been persistent. Margins are almost Straight Line higher except for the blip of the energy crisis. Youve got to make that bottom line somehow. Tom is gary taking over the show . I thought i was supposed to participate. Tom there is a limit, gary. Gary shilling with Gina Martin Adams. We have a lot to talk about. Shilling, really looking at oil and inflation. We will do that as well. Coming up again, the president and the king of jordan. He has been king for 18 years. This is bloomberg. Tom good morning everyone. Bloomberg surveillance from london and new york. Guy johnson in new york, i am tom keene. Gina martin adams helping out here. You know the chart, gary. This is the divide between Service Sector and goods inflation. Here is what we feel. 3. 1 Service Sector inflation. Here is core. Down here is the Gary Shilling call of the decade. Goods deflation. Ans that reverse and give us impulse of inflation as we saw back in the last decade . It is going to be the other way. If you look at Service Inflation those areas are moving down. With financial services, the way it is being cut throughout the spectrum, if you look at medical services, that inflation rate has come down. Education, major areas, are coming down. This is important because as economies grow, more is spent on services and less proportionally on goods. There are so many cars you can put in the driveway when you can spend in fully infinitely on travel and education and so on. Those inflation rates are coming down. Guy if i was the president of the United States of the United States, how do i use the tax code to encourage companies to invest more in people and to pay them more . You could do an awful lot with the tax code. I think the government over rates it sells in what it can do. What you can encourage education and framing. One thing i am not sure the tax code would do it but we have really pulled back from apprenticeship programs. The germans are very good on that. They have brought to the southeast in this country, their apprenticeship programs in the manufacturing plants they set up. A lot of American Companies are emulating it where they have a combination of a College Degree with a printed ships and these guys are trained for real jobs, they have computer skills and there are Something Like 600,000 where those people dont have the skills. If there is anything they can encourage that that can encourage that it is moral persuasion but that is the one thing that is missing. Howt is interesting to see it works in those areas. Gary shilling, going to be sticking around. Later today, an interview with the argentine president. Live in when us areas in aires. This is bloomberg. Guy top off the ads, this is surveillance. I am guy johnson in london and tom keene joining us out of new york. Lets talk about what is happening with iran right now. Right now. Rand you can see when it comes to what is happening with the dollar that the dollar rand chart, this is the pickup we have been monitoring. This is what is circling the wagons. Actually it was going to stick with president zuma. About thatis nervous because that might be a harbinger of further downgrades, further problems for south africa. Lets get to bloomberg first word news. Europe, no brexit deal would mean that everyone loses. The eu institutions agree on the issues. The parliament votes today on terms of brexit negotiation. In france, far right candidate Marine Le Pen was ambushed in the four hour televised debate involving all 11 candidates. Front runner Emmanuel Macron accused her of risking war in europe with her attacks on the European Union. What you are proposing is nationalism. I come from a region where conflicts between European Countries, as we were reminded, you have to know where you come from and where the separation would take us. Nationalism is war. I come from a reason region filled with cemeteries and i dont want to go back to that sign of the black line. Polls after the debate rank her performance only fourth best. In the u. S. Senate Majority Leader Mitch Mcconnell says he has enough votes to invoke the socalled Nuclear Option. To get neil gorsuch confirmed. If there are not enough democrats to vote for gorsuch. But he said the filibuster would still be permitted for legislation. There is an opening at the Federal Reserve. Fed president jeffrey lacquer a broadly authorized Global Advisors and 2012. The resignation will likely provide questions in congress about the value of the fed transparency and its discretion. 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 this is not the conversation of days and weeks and months, it is the conversation of our careers. Acclaimeding, economist and michael mckee, warrior in talking to the fed. You and i know, we have done all sorts of events with them. We talked to them on the phone. Bring up the article. I saw this in the journal. I saw this in the new york times. I see it from tauris condon. Says lacquers attorney the analyst introduced into the theersation says one of policy options under consideration. Says he didnt decline to comment and he continued. His statement doesnt suggest he tipped the medley analyst initially. My reading of this is, mr. Lacker was in a call, some of the said something and he didnt respond. He let it hang. That is preposterous that he would be resigning because of that. Tell me what the guy did wrong in that phone call. We dont really know what was said, but we can intuit that somebody said, we have some nonpublic information, more, that he knew about this information and it had only come from inside the fed. Instead of saying, i cant comment, we dont know what he said. He said he had let it go. Does that mean he just nodded and winked . We dont know. Tom but the heart of the matter, this is how the sausage gets made. I take a phone call with vice chairman fisher before i speak to him. You take a phone call with president dudley before you speak to him in their pressure. Er. Pressr why would these people ever be to the media again after what we have seen . Lets not confuse these two. Medley is not a media arm. Whoe are market analysts sell their services to wall street. All the fed people talk to those people both to give information and get information. That is probably going to continue. Every, this has rarely happened. It never really happened like this in the past. So it is probably not going to change procedures other than, people will tighten up and say ive got to be more careful. Tom ive got to be more careful from now on. Every president and governor have to have witnesses on the phone call. We never speak to these people alone even if it is over a coffee. I am sure the fed will be interested in your advice. Tom lets go to Gina Martin Adams here, formally with wells fargo and now with bloomberg intelligence. Do you think this event changes the ballet between our Central Bank Investment houses and the media . Mike made a valid point that this was a discussion with an analyst and not a media representatives. The analysts approach analysis differently than reporters. Reporters are trained on sort of the rules of the game. Analysts are often times trying to get an edge, do something that might not be reporter like. There is a fine line but there is a difference between an analyst and the reporter. The fed probably needs to acknowledge that. They probably already have. From what we understand about did, he confirmed by omission something this person already knew. Somebody leak the information in the beginning and youve got to figure the fed has talked about this. Tom guy johnson, for all i know this is going to change the bank of england methodology as well. Is guiltyacker because he didnt open his mouth. Guy with regard to the deputy governor, exposure is important in a number of different arenas. The ecb has been changing its procedures and its rules to try and avoid any sense that actually information is being leagues in an untoward fashion. This is not the outcome that would have been hoped for but in some ways, the procedures are there and functioning in some shape or form. Not what we were looking for in terms of the outcome but nevertheless these are important procedures. Tom i just gave present lacker it for most of the chairman. [laughter] tom you wrote the book on this. You were around when he was in the fed and 9051, right . I would say this is a twoyear street a two way street. Ive had a conversation with many officials from the chairman down and there are times when i know they are giving me information that is confidential. I am not suicidal. I am a going to publicize that to my clients or everybody else because i want that access. And it is unethical. Tom gina, you made this distinction. You had a fabulous interview with Charles Evans which made global headlines with bill dudley. Are you changing your dialogue with Bank Officials . I dont think they are going to change the way they do business. They are not talking to me because they love me. I like to think that. They are trying to Say Something to global wall street through bloomberg and they are going to continue that messaging. They have changed their policies. They want to be more transparent. But they also know there is insider trading. You can disclose proprietary information. If you look at their forecasting record you would think they would really want to go back to the days of tom listen to you, you are going to pipe up now . You can put that genie back into the bottle. Tom michael mckee, thank you so much. Well continue to read the article on bloomberg news. Coming up on bloomberg daybreak, withcussion on investment Goldman Sachs Asset Management asia. The japanese stock market, in e. M. Buoyancy will come up. From london, from new york, this is bloomberg. This is bloomberg surveillance. I am taylor riggs. Lets get the business flash. Amazon is getting into the Sports Broadcasting business and well carry 10 National Football league thursday night games live online this season. That is the latest move to boost the value of its prime membership. Those familiar, amazon will pay the nfl 50 million. President trump has offered the coal industry fewer regulations and more plans to mine but the biggest coal producer isnt thinking as big. Peabody tells bloomberg the company is no longer expecting to boost coal output significant way. Instead he just wants to grow shareholder returns. And that is your Bloomberg Business flash. Guy thank you very much. , marinet National Lead le pen, was among 11 candidates on the stage yesterday. In the second president ial debate, the far right leader hit back against recent allegations. I am being persecuted politically. I am saying this clearly. In regards to cases where there isnt the shadow of any suspicion of personal enrichment. In the case where in reality our assistants are criticized for not having worked for europe. It is true, they worked against europe. I am very happy about it because they are doing the same thing that parliament is. Marine le pen speaking in the debate yesterday. The standout story to my mind was malice on. Why is he doing so well in these debates . Is this starting to have an impact in terms of the overall numbers . It is starting to have an impact. There are two reasons. He is very eloquent, so he is very good at this type of debate. He manages to interrupt all of the other candidates from pretty much every subject. He has also got this image of someone who is close to the people. In fact, a quarter of the people who watched the debate last might thought that melenchon was the winner to them. Struggling with their finances, he wants to increase the minimum ge by 15 , he wants to inject 100 billion euros in the French Economy to fight poverty. This is what appeals to those with the mainstream parties. Given his success thus far, who would he likely back in the second round. We also need to know who is in the second round but say it was mr. Macron. How would miller sean . Elenchon support him he is very antile pen. Verye i anti antiNational Front. Even though he wants to renegotiate some of the treaties in order for europe to fight better against austerity measures, he doesnt want to leave the eu or the euro. They had a very different approach on immigration policies. At the moment, for sure, melenchon would be against Marine Le Pen if he wasnt in the runup. Guy what does mr. Macron now have to do before the third before thech is just final vote . How does he position himself . He came out of this one unscathed. What is next . He came out as the second most convincing in the debate. Now, we also have to bear in mind that we have 11 candidates who debated, so we will have to see whether some of the smaller candidates who made a little bit of their voice heard last night, if they get some points from the major contenders, the five main contenders. Macron is fighting this fight as if he was already in the runup against le pen. Tom you got the upper house behind you, it was dedicated in 1875. Lets go up erratic now. Which one of these candidates is going to pour on the opera in the next three weeks . Which is the one that can wrap up the rhetoric and grab the marginal voter . This is the key question. 40 of undecided voters at the moment in this election. If you look at Marine Le Pens base is actually stronger than the other candidates. 80 to 90 of those who plan to vote for her are very sure. Their choice is very different, a different story for emmanuel has between 50 and 6 of those planning to vote for him completely sure of their choice. We could have some of the smaller candidates grabbing a few points here and there. One could grab from fillon, the republican candidate who failed last night. Tom they give so much from paris this morning. Gary shilling with us, Gina Martin Adams with us. Ian bremmer says that le pen is going to do a trump redux. Would that shocked the equity market . Over the last year we have learned one thing and that is that political events are difficult to protect. On stocks is equally difficult if not more difficult. With brexit and the trump election, it is pretty much the majority of forecasters suggesting it would be difficult , create difficult condition for the economy. So the truth is that stocks are absorbing these changes and the Political Landscape pretty well. I can tell you have economic ramifications occur. Stocks will generally perform well as long as the economy is improving. Stocks have actually rallied. So why dont we terre battue playbook and suggest a le pen win would be different . Dont fight the fed is a lot more important of a mantra for stocks than any other sort of fiscally oriented policy. Driver, i think stocks can absorb a lot of policy risk overtime. Stocks rose through wartime. Eriods and peace time periods what really matters is the level of real Interest Rates and the level of economic growth. Those two combined tend to drive stock prices more than anything else. Guy one thing about europe is europe is generating growth right now. Survey data points to decent growth. Yet u. S. Investors remain nervous about the politics of europe. Is that fear misplaced in your mind . French politics, italian politics, you can always find reasons not to buy european stocks. Some of this is just american investors tending to invest in american stocks and dipping their toes in the water outside of the u. S. Is more difficult. We dont have the capacity or the experience necessary. I think the american investor is not only concerned about the political environment in europe but they are Still Holding onto to this notion that European Growth is very slow. The improvement in the soft data so far in europe, will it show an improvement in the hard data . It is a big question but it is not all politics. Tom we will come back with Gary Shilling. Let me tell you about tv. You see it live, you bring it up on your bloomberg in your office to keep in touch globally, Gina Martin Adams there. Then you come over here and scroll through the past and find a killer chart like this killer chart and up you go and you can see the old blocks on jamie dimons chart. Bonus rounds, you can get the chart over to your terminal. How cool is that . You can have jamie dimons chart. Tv. Tom we do foreignexchange. 11086. Strong yen is 100. 11086 is where we are now. To abenomics. You see sterling churning today. Gina martin adams with us. Bloomberg intelligence. Ready to make you drop your coffee cup, here is a chart. Gary shilling is beginning to yen. About 1500 not 115, near consensus. Yen backation of weak to where it was in 1998. Here is the goal on abenomics a year ago. Gary shillings sculpt and scale is extraordinary. If we get a 140 or ¥150 we get a new plaza . Right now that is where the japanese are like to share. They tried Everything Else to get that economy out of the inflationary depression it has been in for 20 years. Trashing the currency to spur exports, that is a timetested approach. Think they would say mission accomplished. For ponce accord that was a dollar that was way overvalued. Boarded a simply Freight Train and took credit for getting it started. Tom jump iran 150. On 150. Here guy this would be mass monetization. If you look at the fx fc function on your terminal, people have got dollaryen at 112 or 113 as we work our way through. 221, 114 is the consensus. The president would go nuts, wouldnt he . Theyre in mind, a great forecaster would say you should forecast what or when but not both. Beidnt say it was going to within a year. I think that is a longerterm objective. The japanese would certainly like to see it. They have not been successful with Monetary Policy and reinvigorating the economy. Fiscal policy, they still onrease their sales tax and restructuring, theyve got nowhere on that. Here is a country with a declining population. There is no illegal immigration and still, they penalize women for going into the labor force. That is the lowest Participation Rate of any country in the seven. Tom what is the mechanism, the process, the reaction function that gets the politicians and the people to migrate to such a weak currency . Idea that it is the they dont have any other option. I think they will press for it. Tom are you going to flood the market . They will flood the tom are we all going to owned toyotas . May be. They will be cheaper. That shores up the trade situation. Tom we could go on forever. We will have dr. Schilling on to talk again at 1 50. Dow, point 2000 at the end of the month. Thank you. Thanks to all of you for watching. What an interesting day, particularly on the french debates as well. Coming up on bloomberg television, president of the United States. Greet King Abdullah from jordan from one of our key allies in the middle east. They did a check returning to the markets, in search of more data as well. Futures at negative one, a little bit green earlier. No oil in the biz, 5146 as well. All of ours across platforms. This is bloomberg. Before 4. 5 trillion elephant in the room. Investors look for guidance on how the central bank will wind down a monster Balance Sheet. A setback in france for Marine Le Pen. The frontrunner comes down on top in a crowded tv debate. Deutsche bank loses several Senior Executives after slashing the bonus call for a second straight year. From new york city, good morning. I am Jonathan Ferro alongside david westin. This wednesday morning, this is how the stage is set up. Futures here in the United States, just a little bit firmer on the dow, up by seven points, the s p 500 goes nowhere. War for ar trading solid pmi print that does not surprise. David and Goldman Sachs is having an Asset Management conference downtown today. That is where alix steel is. Lets bring you in now. What are you bringing to us . Alix all of this is about alternative