Transcripts For BLOOMBERG Bloomberg Surveillance 20170425

Coffers were looking at politics in the u. S. Firmly. This is what the data is telling us, you can see stocks in Europe Holding high. A global rally pretty much saying the same as yesterday. It did pick up speed a little bit. Concernedares were about what is happening in north korea with the artillery drills but that also did little to ruffle financial feathers. Gold down a touch as well. Riskonn the mood mood. Donald trump calling for tax cuts to individuals and lowering the corporate rate 15 . From plans to make public the broader lines of what he plans to change in the tax code with details left until late in the negotiations among officials from the treasury. Stepping downis as head of the National Front party in order to be the candidate for all of the french people. Facesve comes as she centrist Emmanuel Macron on may 7 in a battle between nationalism and globalism. Norons candidate says he is clear policies, he would be here for you are good for europe. In other of unsold london homes rose to a record of 27,000. That is the highest level since the Research Began compiling data in 2009. Rise comes as affordability issues and Economic Uncertainty thousands demand for the expensive properties. Turkey summit is turkeys Prime Minister tired of the eus treating it like a student. He said turkey will not tolerate being talked down to. We see fingerpointing at turkey with instructions to do its and not to do that and as if they are the teachers and turkey is their students. That kind of thing will not be accepted by this nation. Chinas nonperforming loans have stabilized and the economic recovery takes hold. That is according to the deputy second banker who was speaking at the International Finance and Infrastructure Forum of bloomberg orders in new york. Try to maintain Economic Growth and also we try to work and making sure moneyur lending and broad supply has been growing consistently consistent with reform aspects. Global news 24 hours a day powered by more than 2600 journalists and analysts in more , im120 countries sebastian starlet and this is bloomberg. Marine le pen is stepping down as head of frances National Front party. To wants to campaign represent the french people. Emmanuel maccallum has been accused of complacency for getting a speech that some observers said it would have been more suited to a full election win. Editor for International Government also with us on our special show on sunday. He has been overseeing all of our paris coverage, he joins us now from paris. What do you make of the fact that she is stepping down . She is trying to run her appeal but will it work . I would not read it in some ways. To broaden her appeal, she wants to present herself as a unity candidate for all french. Given the history of the National Front, that is going to be difficult for her. This is are symbolic effort to recognize the fact that there is baggage as it goes with the party. Certainly looking at the polls, the field we have seen since the firstround results she will have her work cutting out for her. There is nothing to suggest so margint the 6040 predicted vote for the first round, nothing to suggest that they have been that they are going to change anytime soon. If something happens and Emmanuel Macron becomes president , what does that mean . Can she influence policy. Himt is very important for to win by a decisive majority. It is important to bear in mind vilified in are segments of the country. He needs to be able to stand up after the election and say i beat Marine Le Pen by 6570 . I think he margin of victory is very important. That gives a momentum going into provisional government in the runup to the elections. Also to form a broad base in the National Assembly after the junior in the election so he can get a base through that will allow him to push his agenda through. Favorite to beat le pen but it is important for him to fit conclusively and copper sensibly beat her more than the margin holes are currently suggesting. What can you do . We know Marine Le Pen has gone on the offensive. Does he need to rally . Does he needed to not attack her . Does he need to be more subdued . The key, the most interesting part of the second round debate that is going to be there debate, it is wednesday of next week. She is going to throw everything at him there and that will be quite a tv spectacle. She is extremely good at tv. So far he is quiet. He gets the is trying to stay above the fray. Are throwingfront anything they havent him right now. He is due to give a rally tomorrow. His first big rally of the second round. If you want to present your self to unite the electorate, melenchon has not yet endorsed macron. It is a question given he has campaign so hard against the capitalist elite that he says macron represents. If mccrone can get something out of melenchon, that could be very important. If he does not get anything from melenchon or even if melenchon urgess earners not voters not to vote one way or another. A very interesting subplots to watch in the second round. That he so much. Thank you so much. He has some great infographics telling us exactly how france voted. Our other guests, head of ethics thunder from london. Chief economist with us for the hour. Thank you both. That marine certain le pen does not become question president . Nothing is certain. That is the one lesson over the last 12 month when it comes to politics. The polls are pretty decisive. There pretty accurate as well for the first round. I am inclined to trust them. Macroninly think that will win by 20 points. I think victory will do. I think youll find difficulties in putting together a coalition for the national simply. Hasnt think our candidate a willful economic plan. But see what happens after. Thatgo along with the idea macron will win. Election, the powers were pretty and the polls were pretty accurate. Obviously macron as significant room to play with. We also spoke to the finance minister of italy. He weighed on the french elections in the future of europe. This is the ecb meeting and an exclusive interview. The first round of course, very good news. Lets wait until the second round. This is good news for france, europe, and the global economy. France is set to embrace european targets and renew the european agenda. Do you think this could mean a reforming European Union . Could this mean a more integrated eurozone that we have seen before . Or europe is needed not just for monetary union, a pillar of european integration. Also to reassure european citizens that europe is about growth and jobs. Do you think the problem is to do with pushing the integration together what you have always been a champion of . Those will be easier with macron and it would have been with one on hollande. Your needs to exploit much more of the single market. Im convinced mccrone will use his Political Leadership to deliver on those areas in an integrated fashion. What do you think the prospects are from this point of view . How will you imagine he is different . I imagine that negotiation will be on very clear terms. Easily reach of common negotiating visavis brexit. Peter dixon still with us. Lets assume that president mccrone will happen. What will the focus on . Does he believe europe will be stronger because we can form an alliance with Angela Merkel . Better chances obviously as opposed to Marine Le Pen. About how the eurozone is developing, the euro for instance in particular. Uptrends inal political terms. Also the dutch elections this year. Maybe even sort of cyclical turns in terms of policy as well. Moving in that direction. In thelical up trend number of areas. Those could increase confidence in the eurozone. There are and they will continue to be. Euro stronger . Probably. I think what will hold between a number of different issues here. At some point you wouldve thought this would be bring a stronger dollar. Qe,have the ecb active and weaken the currency. Obviously is going get away. A lot of things are going to come out here. Ultimately i am not convinced that the euro will go significant somber stronger. Peter from commerzbank and stephen. Coming up trumps 100 day countdown. What the u. S. President has on his plate before this weekends milestone. An exclusive interview with the top Sporting Goods brand. This is bloomberg. Saturday march president Donald Trumps 100th day. He will call for cutting taxes for individuals, lowering the corporate rate to 15 . Backing down from a fight over the Mexican Border wall. He could delay acts of congress from the project until september. This shift could make it possible for lawmakers to pass a spending bill and vote a Government Shutdown. Sayn the trumps make and panel about female Economic Empowerment as the input the invitation of Angela Merkel. Standard advisor london, and a, joining us for the hour. Great to have your on the program as always. Partiala sense as this shutdown will actually happen. Wantuch does the president it . 100 days is a mark a marquee thing for him. He has been talking about tax reform throughout his campaign. Avoiding a shutdown on this marquee day is going to be pretty important. I know we dont want to get into the psyche of d. C. But does it hurt him . Does it mean if he does not prove something to his base in 100 days that he will be less likely to do something . \ for sure. Blow if you see this government going weo shutdown on saturday, did not manage to repeal and replace which has been the plan. He wants to have something to show for his first 100 days. What do you know about his tax plans . Today, sence discussions today, lots of meetings tomorrow on the broad outlines of a Corporate Tax plan. He is going to see in theory the to 15 fromdown 35 . S is something that he can he has been, again, talking about this threat his campaign. To come out and say ive managed to get a corporate cut tax rate. 35 is one of the highest rates in the developed world. This is going to be really important for him. If he can manage to get it through without again blowing up the deficit which is really important for the gop, they do not want to raise the deficit. That will be something he can say, i did that. Does this make a difference . Does it mean he has more Political Capital to spend on things that are actually important to the economy . Taxation seems to be the one big thing. U. S. Corporate tax rate is by far and away the highest. Some movement seems to be necessary. Whether or not he can get it to 15 , questionable. He will get some form of amnesty announcement which allows capital to be taxed at a much lower rate. He can talk thereafter about the Corporate Tax rate the u. S. Wants. You get that through distant mean he is less likely to be protectionist because he is definitely wanted . Theres a strong sense that is true because what he wants is to make America Great again. Corporate taxes to keep the property in the u. S. , good job done. If he does get what he wants or at least the tax reform through it makes us less likely for them to the protectionist and talk about the border tax . Know, reason being he wants a level Playing Field. He knows everyone elses taxes much lower. Kickoff eightly race to the bottom in terms of Corporate Tax rates. The u. K. Is part of that for instance as well. He was fairness everywhere. Trade view, fairness and for instance with the decision about canadian lumber and exports to the u. S. Look around at other places where he thinks there is unfairness. The Playing Field is not balanced. That means goods are actually much more expensive to make. That is unfair as well. You actually believe that he is saying putting border taxes up our something that would make it more fair . Yes. Obviously prices in the u. S. May increase and the result of that may have a not on terms on how the Federal Reserve has its policy. We are not sure exactly what donald trump thinks about that because in the past rates were too low and recently suggested he would like to keep yellen on because he believes she is more interested in keeping things low. The issue of fairness is really a balance. Through donaldes mp and we are sitting sitting trade as well as inflation. Peter dixon now. Coming up, more about border tax. We look to some of the executive decisions. This is bloomberg. Coming up on bloomberg veillance, we speak to the who must ceo, a controversy of one of the players. Something for nike. , is demandn ceo going up or can he get it up . This is bloomberg. All those coming up. Francine this is bloomberg surveillance. I am Francine Lacqua in london. Here is sebastian salek. Trump has donald vowed to cut the tax rate for individuals and cut the Corporate Tax rate. He plans to make public a broad outline of what he wants to change in the tax code but details will be left for later. , Marine Le Pen is stepping down as part of the National Front party to be the candidate for all the french party, as she sets twophase Emmanuel Macron in the election, in a battle scene as protectionism versus globalism. Reporters argue macron will be good for europe. A number of unsold london homes in europe rose to a record 27,000, the highest since Research Began compiling data in 2009 as affordability issues and Economic Funds certainty dampened demand. Day,l news 24 hours a powered by more than 2600 journalists and analysts in more than 120 countries. I am sebastian salek. Francine lets go to mark barton appeared mark european stocks are riding the postelection wave we saw yesterday, which set risk assets higher, stocks gaining. A wonderful chart showing the cat 40 breaking it 17 year trend line. 4. 1 rday we saw it rise by , the highest since april 15 april 2015. It reached a nineyear high and today it has crossed that threshold. Reaching its highest level since 2008 on optimism that macron will be the door in the election. Victor in the election. It is above 70 since the first time in march. Eurodollar little changed after the first rise biggest rise since june. Quarter, 108cond third. They are saying below parity in the fourth quarter, including rbc and Morgan Stanley. The bloomberg dollar spot index near the fivemonth low reached yesterday. White house Officials Say trump will call for cutting tax for individuals and lowering the Corporate Tax rate to 15 . The blue line is the 200 day moving average. Lets spread the difference in yield between the german and french 10 yield, narrowed to 19 basis points yesterday. Just remember where we were back in february. The heightened concerns le pen could win the election, it still could happen. 79 basis points was the spread in february. That was a fouryear high. Today we are down to 48 basis points, the narrowest since january. Oil rebounding from its stay 7 slide before Government Data tomorrow showing crude stockpiles fell. Francine turkeys prime isister says his country tired of the e. U. Trading it like students. E. U. H hammadi says the needs to be more honest about future turkish membership of the bloc and will not accept being talked down to. The plans to provide Financial Support are over 3 million refugees in turkey and a visa waiver, these have been left in limbo. There was supposed to be a support of 3 billion euros so far and the amount that has been sent is 790 million. It has been a year. Where is the 3 billion euros . The visa waiver was supposed to be implemented last june, that is also gone. , weddition to all of this see fingerpointing in turkey with instructions to do this and not do that, as if they are the teachers and turkey are their students. That kind of thing will not be accepted by this nation. These will not increase but the reduce but reduce the interest. They cannot really say they do not want us in the union. They are trying to distance us from this action these actions. Are you interested in continuing to push for membership or are you changing your mind, do you want to go a different path . What is your ideal solution . We invite the European Union to honesty on the issue of membership, first of all. They shall determine their vision for future first, will they continue to work with turkey or not . We shall see their decision and we can determine our own path. There are elections in some members of the e. U. Now and the rhetoric is different. We will see if that continues after the election or not. It is clear what some members of the e. U. Did before the referendum, therefore the e. U. Should determine a future version vision for itself before things can proceed on a healthy path. What kind of path it wants to work walk on with turkey or not. This nation needs to find out what goes on in their head. Europe say europe see as a union of religion, they need to put it forward earnestly. Otherwise, there is no point in both sides wasting time. That was of course the Prime Minister of turkey speaking to our very own riyadh hammadi. Still with us are Stephen Barrett Stephen Barrow and peter dixon. I do not know if we should look at it from an e. U. Point of view or if this is a domestic story for investors. Steven the sentiment expressed by the Prime Minister, you could say almost welcome to the e. U. Because if he thinks the e. U. Is h withvery teacherisg turkey, you would probably find similar criticisms among countries in the past to join the e. U. That is probably just how it is and that will not change. I suspect investors are well aware of that and are not particularly concerned. Not necessarily implying that turkey will wait. Francine peter . Peter i think the problem is this blurred relationship with the e. U. And turkey. The turks want clarity. Francine with the pound . Peter and they are not going to get it because there are certain nations within the e. U. Do not want turkey is a member. Turkey is moving further and further away but as he said, i do not think investors care much and they except that turkey will not be a member of the e. U. Any time soon. Its domestic fundamentals are frankly not that great. Francine peter dixon from commerzbank and Stephen Barrow from standard advisory both stay with us. This is what you are looking at, live pictures at a france, a Memorial Ceremony for the Police Officer killed at the shaws police a in paris cha mpselisee in paris. On sunday, we had the president ial first round which is seeing Marine Le Pen against Emmanuel Macron, they are both attending the ceremony and will face off in the second round to see who will become this the french president. We will leave you with live pictures of the ceremony. Francine this is bloomberg surveillance, i am Francine Lacqua in london. And his family have offered to buy 15 of Christian Dior that it does not own. They will offer a mix of cash and Hermes International cast stock. 15 of where the stock closed yesterday. This will see much of Christian Dior folded into the lvmh empire. Voting against a Restructuring Plan, seen as the last chance. According to results of a ballot, the airline which employs 12,500 voted against a rescue plan approved by management and union leaders, including Salary Reductions and job cuts. Has agreed to buy a a corn200 billion 200 billion. Biggest publicly traded Health Care Provider made a ll purchase to gain mark that is the Bloomberg Business flash. Francine shares in volvo have jumped to a 10 year high after reporting firstquarter earnings of 58 following cost cuts and growing equipment sales. We speak to that president and ceo, martin lundstedt. Congratulations on a very Strong Quarter, partly in do of the benefits of the restructuring over the last couple of years. What comes next . President trump once america to grow 3 . Will that benefit volvo . Martin thank you, and yes indeed, we saw a very Strong Quarter one. A focuse on the back of restructuring activity over a number of years and taking that activity opportunity to leverage. Trackside, and recovering mark truck side, and recovering market. In north america, that is an important market for us in terms of the restructuring. Sense, i give me a know you were just on the analyst call saying you want to remain flexible in terms of production and it is important for you to be able to react to sudden market fluctuations. How do you rate Political Uncertainty . Martin what we have seen is anything in north america is actually a more positive outlook during the last quarter, several quarters. , ithe truck side primarily came after a pretty big correction in the market in 2016, mainly on highway segment, and stock reduction. That is coming down to normal levels and we have seen orders improving, with more than 20 , which is positive, and Construction Equipment we have seen. We are following that closely and have the flexibility to meet the demand. Francine talk to me a little bit about the european market. How does the outlook look . Guiding for 2017 on a stable, heavyduty market for trucks with 300,000 units, the same as 2016. Those levels are high, good levels and we have only seen two years historically high, 2006 and 2007. If we continue on at that level it will be a good year. We also started the year with strong market shares with trucks and for Renault Trucks in our portfolio. Francine martin lundstedt, great to speak with you, the president and ceo over volvo with a very good set of results. Lets get more with Stephen Darrow from Standard Advisory London and peter dixon at commerce bank. Give me a sense, we were just begin to the volvo truck ceo. He is confident about the future and wants to remain nimble to face any eventuality. Does that mean ceos will not invest . We are expecting a surge in cap x. Will it ever come . Peter it will, over time if it comes at all. I think there is a sense overall economy isropean beginning to get a bit of traction. The Global Sentiment sounds a little bit more positive, and to the extent that a company like volvo, which is heavily involved in construction and infrastructure is reporting good results, tells you that investments are beginning to turn up. As a consequence, it is a positive sign for the wider economy over the longer term. Francine stephen . Steven i would feel more concerned about the u. S. Because there was again, following trumps election and preelection, promises of 1 trillion in Infrastructure Spending which should it go ahead, would be a significant benefit to a company like volvo. I see suspect that is a policy that will fall by the wayside. Maybe some of the optimism reflected in the survey data with respective respect to that data will peel away. Peters point, maybe a refocused on europe might be actually a better interest because it looks more positive. Francine peter barrow from Standard Advisory London Stephen Barrow from Standard Advisory London and peter dixon. This is bloomberg. Francine bloomberg surveillance, Francine Lacqua in london. Puma reported profits that almost doubled in the First Quarter. I spoke to the ceo, bjorn gulden, on the phone from germany. Great to have you here. It is going pretty well. What are you most afraid of. Do you believe prices will go up and is that a bad thing . Bjoern we are small so we have opportunity to grow everywhere. I am not afraid of anything. We just have to great more product and do more branding and we will be fine. Countries and what product categories are you doing better than expected . Bjoern from a consumer point of view we have a great momentum in women. We have a great product and have done interesting marketing towards that market. , china almost everywhere probably being the market that grows the fastest but also the u. S. And europe, high doubledigit growth. As i said, coming from pretty small numbers, so that is why the opportunity for us is big everywhere. Francine i know it seems the Brand Momentum is on your side. You have stronger Brand Momentum than last year, and are adding celebrities not in the sports world. Will you continue to do that, and how will that help your momentum . Bjoern lifestyle and fashion and sports are merging. Goodlooking product, fashionable product that has Performance Technology is in. We at puma being a little more edgy, probably have a greater role to play. In general we see that both streetwear and sports is merging more and more. You know that most people who buy sports use are not necessarily using them for sport, but for the street, and that is why we see great growth in that segment, actually everywhere. We think the industry has a great future and of course puma has a great future within it. Francine i want to talk you about, there has been a little bit of a soccer saga for our viewers. Dortmund but there were a couple of incidents where he came on the pitch, on the football field with nike logos. Bjoern i mean, he is a great player and i respect him for that. Team and is a great that has been taken care of. Dartmouth is playing munich tomorrow in the semi finals of the cup and we hope he will play well and that dortmund will win. Francine i will also tune in and im not a sports fan, but have you spoken to nike about it . Bjoern no, i have not. Francine you have also said he wanted to add, or go back to, for example, sponsor some u. S. Team sports for puma. Do you have any idea whether that is basketball, american football, or baseball . Bjoern it is fair to say the American Market has American Sports that are extremely important. We did play a role in basketball and american football in the past. When we think the time is ready we will look at it again, and with way have something to talk about we will. At this point in time there is nothing to tell. Francine do you think it is time to review sponsorship rules . Bjoern in what context. Francine i was going back to dortmund. Would you think about putting new contracts out firmer rules . Bjoern no, i think the sponsor market is ok the where it is the way it is. When someone breaks the rules, they will be corrected. This is not a big deal. Things happen and then you correct them, and the relationship is great. For me, this is a nonissue. Francine bjorn gulden, thank you so much for a great interview, ceo of puma joining us for that exclusive interview. We are here with peter dixon. Consumer Overall Holding up . Peter overall, yes. Consumer sentiment is finding a decent race. I do not think it will be stellar but it will give us a decent year or two of european growth. Francine as surveillance continues, i will be joined by tom keene in new york. This is bloomberg. Francine holding ground. European shares see gains after surging to a 20 month high. Looking for momentum. The dollar in positive territory as trump is said to plan to slash the Corporate Tax rate. And Marine Le Pen steps down as leader of the National Front ahead of the president ial election second round pressure mounts on front runner Emmanuel Macron. This is bloomberg surveillance. I am Francine Lacqua with tom keene in new york. I would have a word of caution on the second round of the french election. And we look to the ecb thursday. Tom the f. T. With a great chart showing what Marine Le Pen needs to do. This is while there is real emotion in paris this morning. Francine Emmanuel Macron and Marine Le Pen attending the Memorial Service in paris. This is after the Police Officer lost thursday and was killed while guarding the champs elysee. I do not know how that played out. Certainly something that we are keeping an ion. You can see the current president there. He is frank flanked by previous Prime Ministers. We expect the two candidates for their runoffs to become the next president of france in the crowd. Lets get to bloomberg first word news with taylor riggs. Taylor trump is setting up a potential battle over taxes with House Speaker paul ryan. He will call for slashing the Corporate Tax rate to 15 . It lessned that cutting than 20 would add to the deficit and he would oppose it. And he said he would hold off on demands for money to build a wall along the border with ico or that could avert along the border with mexico. That could avert a Government Shutdown. The u. S. And north korea are flexing their military muscles today. The submarine the uss michigan has been ordered to depart for south korea for what is called a routine patrol. North korea reportedly celebrated the 85th anniversary of the founding of its army with its largest ever live fire exercise. Distancingen is herself from the far right National Front party her father founded. Temporarily is stepping down as head of the party. It is a move to widen her appeal before the may 7 runoff. Emmanuel macron leads le pen by more than 20 points. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Tom lets look at the data. Equities, bonds, currencies, commodities. Quiekable we essence scence. Futures up. Not near 21,000 in the dow, but we get there. Is a wild statistic. I know francine will feature the 10. 67. 108. 33 with a weaker swiss and a stronger euro. Putting in the turkish lira in honor of my great panel of the world bank. Francine this is what i am looking at. Inhad quite a movement poland, so i am picking myself for not including that. Chinese shares settling after a selloff. European shares surging in all papers is in the wake of the french election. Gold a touch lower. Tom here is the french barometer. Bloomberg analysis by and others about where we are going out to may 7. Here we were before the election. This is when francine was freezing on the river seine. Francine had the critically, this little gap shows the improvement to the spread this morning. Francine i quite like that. I was freezing. I am looking out. A simple chart looking at the s p 500 in lieu blue. On the left, this is the president ial election in the u. S. Second we have a first round, where the candidates for the second round are in front. Then it goes way down because there is less of a risk for the euro to break up, and in the polls we trust. That brings back volatility in check. A white house official says donald trump will call for lowering of the Corporate Tax to 15 in a bid to fill his Campaign Promise. Tomorrow, the president plans to make public the broad outlines he wants to change in the tax code, though for details are not expected until a meeting with congressional leaders and officials from the treasury. Joining us now is stephanie head and Morgan Stanleys of fx strategy. There is 100 days. The anniversary of that false saturday. At the same time, we have a partial u. S. Government shutdown. Will the president do everything he can to avoid that . Stephanie i think he will pay the tax plan is an attempt by him to fulfill a Campaign Promise and introduce country as of tax reform in the first 100 days. Why he has decided to do it so late when he has so many other things in the mix coming eating a possible Government Shutdown, is unclear to me. He faces a real uphill struggle on this one, and opposition within his own party. Worried that this will blow up the deficit. Indicated theymp think Economic Growth will pay for it, but i think that will be a hard sell in congress. Francine lets say congress does not finish work on the spending legislation. What happens . Shutdown. It is a but i think there is broad consensus that they do not want that to happen. He has already indicated that he will step back on his demand that funding for the border wall be included and that he would be happy if just increased for Border Security was included in that bill. There seems to be democratic support for that. I think that is an unlikely proposition. What you said about the process. I do not think there is enough written about the process. Does the president of the United States understand how the senate fits into all of these many debates . That is the one thing i was remarking on. If you look at the Trump Administration, he is surrounded by advisers who largely do not have a lot of experience dealing with congress, which is why i think he has such a hard time getting the repeal of obamacare through and a number of other initiatives. Have a little reality check as to what is possible and the uphill struggle he faces. Tom the uphill struggle comes to heating democratic votes who may see the republicans as a minoritymajority. Are they a minoritymajority party, from where you sit . Whichnie they are split, is a problem. He is an outsider to the republican party. He does not have the links he can call on to get legislation through. What is remarkable is with his tax plan, assuming he goes ahead with a cut of the Corporate Tax ise to 15 , as reported, he going up against paul ryan. Why do that . Why not propose a cut in the Corporate Tax rate to 20 to try to garner support amongst ryan and his supporters on the hill . He made his life more difficult. Francine what do you make of the dollar from here . Because we are waiting for shutdown, no shutdown, tax, no tax reform. They therey, may be an impact on the markets, but you have to look inside the treasury. You look at the treasurys cash balance. The cash balance came down from Something Like 400 billion dollars to slightly less than 30 billion. Risku believe there is the of a Government Shutdown, the risk that the debt ceiling may not be erased. What is not happening is the past week, the cash balance within the treasury has been increasing. That means that within the treasury, there is a strong the debt ceiling issue is a nonissue. I think the suggestion that the democrats would undermine the president look at what happened in 2011 and there was a Government Shutdown. Did it fall back on the president or fall back into the Opposition Party . It fell back on the Opposition Party. I think the Democratic Party is going to be careful in this issue. We have a lot of other concerns in the world, but for me, this is a minor issue. Francine what happens if we have tax reform . Does that boost into animal spirits . Hans the animal spirit situation is down to the stock for u. S. Capital economy is at a low level. Looking at the imf stability report, they look at how much of cap expending do they see relative to corporate spending. Have the monetization of u. S. Capital stock, which cannot go on forever. We are now getting into a situation where the output is closing, which means will come which means cap x will come back. But it is not a key thing. Tom i want to get back to the foundation call. This is synthetic euro worth inverted Deutsche Mark on the left. The circle is where the euro picks up in early 1999. Strong euro trend. We collapsed near the parity line, the blue line. Hans redeker, what is the Morgan Stanley call on euro and what is the why . Hans i think there is shortterm Downside Risk. That has to do with what you find in italy. When you talk to investors, they the italian bond market is a fairly unstable place. Youre getting caught up by the credit risk. , where yourronment may be in front of a potential spread, it does not mean the European Central bank is completely free from market turns to leave the quantitative easing process. That is what i doubt. I want to make one thing clear. When you look into longerterm trends, it is different when you called eurodollar weakness at 1. 30. I think the Downside Risk is limited. Tom hans redeker with Morgan Stanley. Stephanie baker, thank you for your briefing. We will do more on the u. S. Legislative battle in the next hour. In the next hour as well, we are honored to bring you as well fsar, lord turner, the global chairman. This is bloomberg. This is a Memorial Service going on in paris, where we expect the french president ial candidates to attend. It is an emotional Memorial Service for the Police Officer killed last week while he was guarding the champselysees in paris. Insee Francois Hollande front of the troops. Extra only emotional extremely emotional. If you are watching this from france, i imagine what you think ofut after the two years terrorist attacks. It is also significant and timing. We had the runoff election. Faceow Marine Le Pen will off against Emmanuel Macron, the centrist, but she is calling out the terrorist attacks as part of far right. We also found out that Marine Le Pen is stepping down as head of the National Front party. Lets get more from bloombergs Government Team in europe. I know the french press are not doing much with it, but she has two weeks. About 40 of the popular vote. Is there anything she can do to broaden her appeal, or is two weeks not enough . Greg what she is basically doing is trying to hit macron on economic issues. I think she feels if she can portray him as the out of touch elitist, the candidate of big the e. U. , that is where she can peel off voters who voted for leftist candidates. Economic issue. Hit away at the idea that macron is a bit elitist. Francine she said that he was a president for the oligarchs, but she would have a more fair society. Know she is by ditching the name, do you think people will think she is more moderate than four days ago . Greg there are two them sides of the National Front. Side,is the economic which is antifree trade. That has a fairly large appeal across left and right. Then there is the antiimmigrant, the antie you the antie. U. That appeals to people on the far right. She seems right now to be playing on issues she think will be of rot or appeal. It is not a question of moderating or not moderating. More issues where there is consensus across the divide. Tom the f. T. Has the great chart that shows how people will vote based on polling. The socialist worker, explain to me how a socialist worker will vote for a child anchor. Is that what is going to happen . Greg no, it will not happen. If you look at where workingclass votes go, they almost all go to the National Front. That is not where macron will be picking up support. He has moret upmarket support. It is more middleclass, people who work in small companies, whitecollar workers, Service Workers as opposed to industrial workers. But that is the majority of people now. It seems he has the coalition put together to win. It is a question of whether he can hold onto it. Tom fascinating. Greg viscusi, thank you. Greatly appreciated from paris. Jon fenby will join us later. A great volume on where sis france is right now. I read his book cover to cover. Onis a great primer on this election and its impact on europe and america. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua in london. Tom keene is in new york. Well most forgot we are in full election mode in the u. K. Because of the french elections. The labour party in full force today, trying to grab viewers. They say they would unilaterally guarantee that rights of e. U. Citizens. They are attacking theresa mays hypothetical trade deal postbrexit. Of course, it would be difficult for them to get a lot of base support, given that Jeremy Corbyn was not really on the agenda. Tom we have brexit in the upper left corner here with sterling. The zeitgeist down at 1. 10. But that has turned and reversed higher. Francine hans, what you make of this . Is it now a done deal with theresa may or could we be in for a surprise . Not that she will be elected Prime Minister but she will have to enter a coalition. Hans the upcoming election is very important because it turns toaway from brexit overcoming the cliff edge. When you remember why the sterling traded significantly you can get to a situation where u. K. Exports will be far less competitive because he would have a bad deal. Badecause you would have a deal. This cliff edges to be considered. Our concern was the cliff edge was overemphasized. So we put out a bullish sterling recommendation. We continue to suggest sterling will rally from here. There used to be a deficit of 6 . The last gdp report came in sharply, though, because the income balance of the u. K. Is improving significantly because you are seeing dividends outpaced the commodities that her. Secondly, outpace the commodities sector. So you have less of a cliff edge. Francine thanks so much hans redeker. Coming up, we speak to Shahab Jalinoos of Credit Suisse. We continue sourcing on fx. This is bloomberg. Tom bloomberg surveillance. Thank you for being with us. Francine lacqua, from washington to paris and she is back in london. Paris was great sunday, then onto yesterdays festivities. Great conversation with where we are going with france in europe. Lets get first word news with taylor riggs. Taylor trump also just slashing the Corporate Tax rate to 15 . He is likely to run into opposition from Republican Leaders who say you cannot balance the budget with a tax cut that break big. Has saidury secretary previously that the admission nation is more concerned about Economic Growth. Prime minister theresa will do something her party has not done in a century try to win in wales. She is campaigning in the Traditional Labour Party stronghold today. The election is june 8. In turkey, the Prime Minister warns the country is tired of the way it is being treated by the European Union. With fingerpointing at turkey, instructions to do this and not to do that, as if they are the teachers and turkey is the student. That kind of thing will not be accepted by this nation. Taylor he says that e. U. Needs the e. U. Needs to determine if not christian countries will be welcome in the pack. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Francine Marine Le Pen has stepped down as head of the ational front to campaign as free candidate. That comes as criticism on a manual macron intensifies, with some accusing him of complacency. Joining us now is jonathan fenby, author of france a modern history from the revolution to the war with terror. And we are with hans redeker. We saw quite an upswing from the moment we had the two candidates. I feel uneasy that there is euphoria that macron will become president. I know the polls are huge, but lets wait until the vote. Jonathan the polls are huge and i think they were proven right in the first round. The danger for macron is he is seen as complacent, a little bit too cocky. His speech sunday night was a most if he had won the whole election. Then the strange episode later ienday night he went a brasser with his staff, just to thank them, he said. If you journalists that do not understand the thinking people, you do not understand anything. It turns out at the party, there were a lot of old school from the political establishment. Antiestablishment candidate, but he is the most establishment figure. That causes him a problem. Francine tom keene knows that brasserie well. People are concerned, because it reminds them of sarkozy. But at the end of the day, he is not a politician. Do we need to give him the benefit of the doubt and will people understand that . Jonathan i think so. The important thing in this, as with her father in 2002, is the strength of the antile pen votes. All evidence remains that is as strong as ever. From thoseconcern leftist voters who cannot bring themselves to vote for a banker, but i think the le pen reflects will be strong, particularly since she has been talking to her base. She is going back to the old rhetoric of not and not broadening her support. Tom you read your wonderful book with a chapter on the weight of history. How disciples of lee on bloom, the socialist from world war ii, how they will vote for a banker . Jonathan well, they will vote against le pen. The social democratic wing of the socialist party, which has really split from that party, they are looking for a home. Macron is really their home, except that when they were in government together, they could not stand each other. Tom what prescription does le pen need to do to close the 18 to 20 cap gap . What is her to do list . Jonathan she has to make the voters, or at least potential voters for her, even more afraid of macron than they are of the front nationale. She was doing this on Television Last night, saying there was a rough, cruel streak in macron that he has kept hidden, but once you realize what he will do two jobs and the welfare system and society as a whole, people would wake up and he is the one to be scared of. Francine does the year ago stronger on this . The initial strength sunday, was it because of macron and le pen or because we seem to believe the polls again . You have better currencies to trade on. Comes tohat when it whatrench election really matters in the case of france is do we get a president and does this president have a government able to work with them . Need to look into may june midjune. It be a lame duck french president . Which will add a different quality to the current outlook. Situation, weh have to look into the italian situation. Spring. Eds a vote by in italy, populism is deeper rooted. That means something was wrong of the parliamentarian election in france. You need to wonder about italy and its impact on the euro. Francine we have to look at the the polish zloty. Hans people look for currencies which have very good polities inside euro but also outside the euro zone. That is the reason why yesterday, the Swedish Krona was outperforming, the polish zloty outperforming. I cannot see a situation where that will change or we know how strong the new french president will become. Francine thank you so much. We will be back with hans redeker and jonathan fenby. Quarterp, after first sales that missed estimates, we speak with the head of ericsson. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua in london. Tom keene is in new york. We need to talk about ericsson. Shares are following after the group shares are falling after the Group Reported bigger than expected losses. We are joined by the ceo, borje ekholm, in stockholm. Today, you basically said you are not satisfied with the cost structure, so you need to deepen those. What does that mean . More job cuts, accelerated job cuts . How much more do you need to cut jobs to be competitive . Of all, thank you, it is great to be with you. We had a tough First Quarter, highlighting the need for a more focused strategy. What we saw during the First Quarter is it is still a mixed picture. We see our networks, three quarters of our business, doing fine, having a stable development. But losses in i. T. Have accelerated. We need to take focused structural actions, which we do with our new strategy in order to get the costs to be competitive. On howe give me a sense you actually cut costs, but you 5go need to invest in technology. Two concern that you have invest enough to be at the forefront of that technology . Borje you are absolutely right. What we need to do is we need to keep one foot on the gas pedal and one foot on the brakes, in a way. We need to make sure we invest be Technology Leaders in 5g but also in helping our customers transform their business and digitalized their digitalize their business. In the report, what you see we temporarily see somewhat higher cost in order to make sure we stay in front of the technology forefront. Tom give us the guidance on your revenue feature. Future. I would like to know if you would like to sustain revenue, with mergers and acquisitions evenrevenue, or are you positioning for sale of the firm . Borje what we have said is our strategic forecast for the Equipment Market is it is going to fall between 2 and 6 during 2017, and then flatten out 2018. That is a forecast we keep. We also say we will manage our sales out of some unprofitable contracts. In no way, you are seeing us focus more on prospect ability profitability to make sure we have enough profits to invest for the future and the longterm future of ericsson. From that perspective, focusing more on profitability. Francine that is extremely important. Helpsetwork business also in a corridor. This is your new radio platform. Do you expect that to continue . Borje yes, we do. Oureve we have business in networks is stable, and we see we are competitive with our radio platform introduced about a year ago. 50 aid we targeted penetration for this year, and we are well on track to do that. Francine thank you so much. Ericsson ceo borriello, portugal borje ekholm. I am sure you have plenty of questions. Bloomberg, ask the question, and then tom and i will have the rate pleasure of asking your questions to our guests. This is bloomberg. Taylor this is bloomberg surveillance. Hitachital partners and made a deal to buy land us in landerson gear. O preempt landis gyr from arnault and his family will fold the Fashion Company into their fashion empire. The brands include Louis Vuitton and tag heuer. Voted against a Restructuring Plan two aboard the airline to be placed in to bankruptcy. An italian newspaper reports once the cell to lufthansa. Chinas regulatory crackdown continues to hit its financial sector. 1. 7e . 7 trillion a has her first. Lets get to jonathan fenby, the director of european political resource at trusted sources. An expert on europe and china. And hans redeker, Morgan Stanleys head of affect strategy. What you make of renminbi goes from here and the you think that china currency manipulator label by the u. S. Is now gone . Hans it is off the table for now, but it will stay a threat. The i find fascinating is u. S. Administration and the chinese have one common interest. That is u. S. Dollar weakness. The u. S. Dollar is weak, then the renminbi can be weak as well. You see that when you overlay the dollar performance with renminbi trade. U. S. Ee at the moment the dollar is weakening, you see as well that the renminbi is weakening in trade terms pay that is in favor of china, in the past, make huge investments in its manufacturing sector. It needs help of the exchange rate. This tells me it works pretty much in favor of china. And because the u. S. Dollar is relative weaker, it works in favor of donald trump. Good tradebring up with renminbi. Moving up is a stronger chinese yuan. , a managed they flow flow. This is the great strength we see in the renminbi over the last 12 years, maybe 11 years or so. You have a fabulous book on the 21st century and china. Mr. Are not a bloomster like navarro about why china will not get us. Why will they not get us . Jonathan they will not because they do not want to get us. They have every interest in global trade. About thegoing on year in that would lead to the biggest property crash we have seen in the world as people move money out of real estate in china to other assets. The basic reason why china will not dominate the 21st century is because of the internal politics of china. The maintenance of the communist party in power prevents the kind of liberal easing liberalizing of the economy which would be needed to push economy in china to the next stage of development. China will not collapse. I do not think there will be a serious trade war, at least for a little while. We have trump and xi jinping trying to sort things out. I think we are moving into, dare i say it, it, period. Managed is the management of the renminbi right now . Hans it is all about to make sure that you keep capital in china itself. What you have at the moment is a nice balance between domestic assets and liabilities. We have seen in the past 20 ofrs that over monetization the chinese economy. So deposits relative to gdp is 160 . , youu want to liberalize would see assets leave you have less assets to cover the liability side, which means the yield assets has to go up in order to cover the liability side, which would cause china to need leverage. Nobody has any interest in that. Therefore, that will be avoided. Francine what about the rest of the currencies in the region. We have been talking a little bit about this. The philippines peso. It is linked to economies and geopolitical risk in the region. Hans you have the difference of what is low yield and highyield. Some of the best trade recommendations in the area, like indonesia and india, but on the other hand, you have low yielding currencies, and you have to ask the question where there is low yield and overcapacity in terms of leverage, are we going to see a situation where those environments will create an excess of savings, therefore will have to export capital, and therefore are becoming funding currencies . I think that will happen to those reaching for the chinese for the taiwanese dollar into the korean won. But that is a longterm development. I think the korean won has a lot the year in with 2011 and 2012 in terms of the adjustments it has to do in the respect of balance sheets, and that creates outflows. Francine what do you make of the relationship between trump and xi . Is it closer than in the past, is it enigmatic . Jonathan they are feeling each other out heat it is closer than in the past. Trump has act off the currency manipulation, the 45 tariffs, and all that are the chinese think they are in a sweet spot at the moment. They have moved into various vacuums in the region, which being the tpp obvious example. They are looking for a longterm relationship where they can it is a transactional relationship with trump, which will give them a good deal of certainty for the future, in particular over trade and investments there. They do not want quick shocks, they want a longterm relationship. Tom jon fenby, does china think zero some . Does china wake up every morning and think it is a mercantile world . It quite likes the mercantile world. Mercantilism may have gotten a bad name in other parts of the world, but china likes it to the think the size of the economy and the increasing political weight of china enables them to play a bigger global role. Is northanger of this korea, which i think is probably still underrated as literally a potential explosive force in Global Politics and affecting this very important economic region. Tom and you have the military exercises announcement of the u. S. And japan. Look for that at the end of april. Jonathan fenby, thank you, particularly with perspective of france, and hans redeker, the euro. Ly with Stan Collender was supposed to be with us next week. We bagged for him to see clean francine. Stan collender next. Begged ford we him to see queen francine. This is bloomberg. Tom this morning, focus on midnight saturday. Will the government of the United States turn into a pumpkin . Congress had and wall. Stan collender on raf child to the rescue. Turner, onlord headcount in london. This is bloomberg surveillance. I am tom keene. Paris, backgton and at home, Francine Lacqua. What was it like to calm back home after a week on the road . The markets really latched onto that results sunday in france. They latched on and are not giving up the gains. They are saying maybe actually, we trust the polls back on. Polls were not wrong, we just read them wrong. But they believe in the polls, and they are saying there is less likelihood of a euro breakup. Leon at bloomberg gadfly mentioning how far macron is ahead of le pen. Here is taylor riggs with first word news. Up ar trump is setting potential battle of taxes against speaker paul ryan. The president will call for slashing the Corporate Tax rate to 15 . Has warned cutting Corporate Tax rates less than 20 would add to the deficit, and he is opposed. Trump is enabling signaling he may hold off on plans to force money to a border wall with mexico, which could hold off a shutdown. Thewhite house has demanded wall be included in a spending bill needed this week to keep the government running. The u. S. And north korea are flexing their military muscles today. The submarine uss michigan has arrived at a port in south korea for what the u. S. Called as part of a routine patrol. South korea says there are no plans for drills with this naval force, and of the same time, north korea celebrated the anniversary of the founding of its army with its largest ever live fire exercise. Marine le pen is distancing herself from the far right party her father founded. She is stepping down temporarily , seen as a move to widen her appeal. Emmanuel macron leads le pen by more than 20 points. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Tom ok, thanks. We will do dupont earnings, because it is in english. Every company has a different press release. I really laud dupont for putting their earnings statements in the kings english. And there is the banner, and the idea revenue is up. This is about leverage. This is the modern corporation. I will turn over here to my bloomberg and look at their great, clear press release. They increased sales by 5 on a volume and unit list. They went up, and that is what you want to see. They turned 5 into a 9 operating leverage. Revenuek ittybitty growth and turned it to better profit down the road, at least in cash flow. A very good Earnings Report from dupont. 50 a barrel. Lets get to the vix. Well under 11. 10. 68 on the vix. Again. R swissie thank you, mr. Macron. Francine it is all due to mr. Macron, or maybe thank you to enchon for notmel increasing risks in the market. Markets holding onto their appetite for riskier assets. Stocks in europe seeing their 20 month high. The yen walling. Treasury down. Old also down as demand gold also down. Tom we talked cinderella at the top of the show. He is the guy in the back of the carriage. Kevin cirilli joins us, our chief washington correspondent. Will he turn into a pumpkin saturday at midnight . Does the administration not want to. I can tell you they are looking assignal that the wall security for the border will not be part of the budget. They can spin this all they want. Ofthis another failure trump . Out an idea, the wall or nothing, then adults sit him down and they no, you cant do that, sir. Is this another came in by trump . If the Government Shutdown and there is a Republicancontrolled Congress and white house, that would be devastating to the administration as well as the republicans as a whole. Clearly, your point is right in that this is a calculation, of sorts, by the white house and the Republicanled Congress that they want keep the government open as opposed to risking a shutdown, which would be devastating to their approval ratings. Francine how far can they go to make sure there is no shutdown . Kevin they can have a vote on ride and have no political hijinks, in which case the government stays open. Immigration will be something they return to. But lets not forget later today Steven Mnuchin will meet with top or publicans in leadership to go talk about a tax plan. The elite and the Freedom Caucus healthng to meet about care. There are a host of issues on the back burner that they are trying to get some major breakthrough on before trumps 100th day in office. Francine talk to me about the tax cuts. Are they coming . Kevin tomorrow, there will be a skeleton outline of the tax plan released. This caught a lot of folks off guard, not only with the admission asian but also on capitol hill as well as the tax committee, because they were not anticipating there to be a situation where this type of plan would be released. Apparently, we will get something tomorrow. Tom one more question help me here with the senate. My basic idea is do no harm. The senate is quiet, quiet, quiet area does the president understand he has to do legislation to get it through the senate . Kevin yes and no. I can tell you later this week, all of the senators have been invited to the white house, which means all lawmakers are going to the white house to have a meeting on north korea. He has shown, behind the scenes, is the senate is where he would like to negotiate. It was the house that handed him a bad deal regarding health care. Tom kevin cirilli, thank you. , from jalinoos is with us Credit Suisse. Lets get you over to the u. S. Dollar. Dxy is the bloomberg dollar. And the a surprise upper right, the idea of the weaker dollar. Help me with the dollar chart. Where will he be in six months . Shahab we have had a weaker dollar deal since the Health Care Vote did not come to pass. The idea of a strong dollar linked to the trump residency came from this concept that youre going to get a lot of Corporate Tax reform, Infrastructure Spending. And so far, little has happened. Hasarea where something happened seems to be on the trade front, where yesterday, we heard news there may be a tariff on canadian lumber, so the Canadian Dollar is selling off on that rock. When it comes to the euro, we are bullish with a 1. 12 call. Tom does that presume the weaker dollar that trump desires . Shahab you see dispersion in the dollar because the Canadian Dollar represents another trading dollar. Trading partner. You have to look carefully at the individual components right now. Francine how much are you look for that ceiling, what trump does next . Or do you look through the noise onto more of a sustained trend . Shahab i do not think you can look through the noise that easily. Isyou can see, politics driving the price action with respect to canada and even in europe for reasons that have nothing to do with trump. We need to keep focus on the politics. Also, the economics will come through as a function of clinical decisions. Underlying all of this is a good economic cycle. You are seeing good pmi numbers out of europe, seeing europes Economy Holding fairly resilient. Is not bad,ng story but politics is more of a key driver of divergence at this point in time. Francine shahab, lets say there is something uglier in geopolitics. I know there were navy jewels between the u. S. And japan today. For the moment, it seems the fx market has largely discounted any kind of large clinical risk away from trouble policies. Has a the fx market short Attention Span when it comes to geopolitical risks like north korea. Alwaysre risks that have been present in one form or another, but it never really comes through with anything that meaningful in the long term. This is a new variation on that team. Until we see something more tangible materialized, i think the fx market will put north korea to one side and focus on more immediate issues, of which there are many, ranging from the u. K. Election. Tom oh yeah, there is a u. K. Election. Mon dieu. By britishon the set parachute, adair lord turner. We will talk to lord turner about their future. This is bloomberg. Taylor this is bloomberg surveillance. Lets get the Bloomberg Business flash. French billionaire Bernard Arnault wants to consolidate dior. They want the rest of the fashion house they do not own and fully into the luxury empire. Includes Louis Vuitton. The verge ofbe on collapse. Workers voted against a Restructuring Plan that would be seen as the last chance of the airline to avoid bankruptcy. The plan calls for Salary Reductions and hundreds of job cuts. An italian newspaper reports that al he dodd airplanes once to sell its remaining stake in alitalia to lufthansa. Francine Marine Le Pen has stepped down as the leader of the National Front in order to campaign for president as a free candidate. She says the move would allow her to represent all french people. That comes as him against Emmanuel Macron intensifies his, some accusing him of complacency. Joining us now is bloombergs international editor. He oversaw all of our paris coverage and was with us on air well into the evening sunday night. We also have Shahab Jalinoos, head of fx at Credit Suisse. Do a now say it is a given that macron will do we need now say it is a given that macron will win with 60 . That is one of the big unknowns. For macron, he would want to win by a much bigger margin. 6040 against le pen would be ok, but if you wants to unite the entire country behind him and get an agenda through parliament, it will be important for him to win by a bigger margin. Francine how much does a manual macron need to campaign to get support for the june 11 in june 18 vote . He needs to be able to govern. John that is right. We have heard little from him in the last four hours. There is slight risk with macron in that plays into a narrative that he is already taking his narrative for granted. He took his entourage to a restaurant in paris, and then we have not heard from him. The key for him now was for him to get as many of the left wing voters as melenchon got behind him. Tom help me with the idea of the margin voters. Are they the far left, the communists, the people to the right of le pen . John lets look at it from le pens perspective. If she is going to win, she needs to pick up pockets of support across the typical spectrum. She might attract some fillon voters. Is a communist, but his support comes from disaffected people in areas of high on up women in the northeast. It is conceivable le pen gets those as well. It is a very fragmented electorate. There are different parts of the electorate that we are looking to pull in for their support. Tom john freire john fraher, thank you very much. Shahab jalinoos with us from Credit Suisse. Italy, germany, what is the Credit Suisse plan to make money out of all of this . Shahab i think for now the idea that the euro can keep going up is going to be a team in the market. The euroswiss cross rate has only just closed above once 2000. Day since it is a very important gauge of intraeuropean sentiment pay the higher that goes, the better the mood is. That story is not going away anytime soon. The u. K. Election has mixed signals to fx volatility. In principle, it should be a potential source. In practice, it means negotiations around brexit are delayed. I think the proud will not be as interesting. Us Shahab Jalinoos with from Credit Suisse. Next, in london, he was in Buckingham Palace and said i need to see queen francine. Stan collender in london. This is bloomberg. Tom bloomberg surveillance. Francine lacqua in london. I am tom keene in new york. Lets get to the u. S. Government shut down. Guru forender, forbes magazine. Will the government shut down . Stan probably not. At least not this week. They will probably give themselves a neck show one to two weeks to try to work this out. But the president is already backing down some of his biggest demands. One of the things about the Trump Administration is whatever they say today cannot be taken as gospel, because it will change tomorrow. Tom i have one key question. Who is the adult in the room . This is debt to gdp. Reagan, bush, sr. , the clinton surplus, bush, jr. , obama, out to trump. It is not the same america as reagans. Has anyone told the president yet . Not clear he it is would listen if someone told him that anyway. There are a lot of things he does not to remember or maybe did not know for the first time. What has come before is not indicative of what will go in the future. On the shut down, it is important for everyone to understand rationality is not what will drive this. It is basically irrational. How do i, donald trump, get a win out of the situation. Is speaker ryan able to control the troops . Big that is the other question. Whether the house Freedom Caucus, the conservatives the uberconservatives in the house will go along with this . Try tos is they will fight this as part of the 2018 budget rather than the 2017 budget, so we will get through this. But it will not be easy and not be something we will know about until the very last minute. Francine what can the president actually do to make sure this does not happen . What does he give back . Stan it is not so much what does he give back but what is he willing to give up . He has asked for money for the border wall that will not have been. He asked for the ability to not Fund Obamacare that will not happen. Does notion is if you get anything he wants, will he still sign the bill or veto it . He could call shutting down the government a win or not shutting down the government a winter that is why it is so conservative. Francine thank you, Stan Collender of msl gruop. You are lucky you are in london. Up, we are getting adjusted earnings for shares. We will speak with the eli lilly ceo out 7 00. 8 00 a. M. In new york. 1 00 p. M. In london. His is bloomberg we really need to look at the markets, because they tell us the story. We have had some pretty compounds of coverage from paris and markets holding on to their appetite for risk year ri skier assets after the first round of the election. This is bloomberg. [ beep ] show me top new artist. [ applause ] [ laughing ] show me top male artist. My whole belieber fan group. Its not a competition, but if it was i won. Xfinity x1 lets you access the greatest library of Billboard Music awards moments simply by using your voice. And thank you so much. The Billboard Music awards. Sunday, may 21st. 8, 7 central. Only on abc. Francine this is bloomberg surveillance. Tom keene is in new york. Lets get to the Bloomberg Business flash. Taylor President Trump will propose flashing the Corporate Tax rate to 15 . He is likely to run into opposition from republican. Ongressional leaders treasury secretary Steve Mnuchin has signaled previously that the administration is more concerned about spurring Economic Growth than about the impact on the budget deficit. In the u. K. , Prime Minister theresa may will try to do something the conservative party has not done in a century, win in wales. A new poll shows conservatives could take me one of the 40 welsh seats in british parliament. In turkey, the Prime Minister warns the country is tired of the way it is being treated by the European Union. They spoke to bloomberg in an exclusive interview. Fingerpointing in turkey. We have instructions to do this and not to do that as if they are the teachers and turkey is there student. I kind of thing will not be accepted by this nation. Taylor he says that you needs to decide whether it is open to nonchristian countries as members. Global news 24 hours a day, powered by more 2600 journalists and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Tom thank you so much. This is an immense pleasure. After 13 years combat duty, lord turner decided to choose what turner. He has been with the United Kingdom Financial Services authority. He joins us now. We will speak energy in a bit, which is why you are in new york. Give us an update on brexit. About thened are you past, not so much a year out, four years out, i just have to get to the june 8 election. Give us perspective on that . Theresa may is going to win the election. Tom theres got to be another story. She has done this essentially because she doesnt want to be completing a negotiation in 2019 with an election one year ahead of her. It may turn out a little bit turbulent. It may turn out difficult to get a good agreement or any agreement at all and if that occurs, she doesnt want to be up against election. I think we will have a relatively hard brexit and a follows from the fact the referendum was on immigration. Determined to have tight control on immigration and then you are out of the single market. Tom i hear about american exceptionalism and french exceptionalism. The fine british exceptionalism right now. Britain has always had a different role in europe than other countries. We have never shared the sort of political motivation of the integration of europe which has been a motivating force. Than more among elite ordinary people and that lack of an emotional commitment to europe rather than transactional the negotiation commitment was fundamental of why we decided to leave the European Union. Tom brief lord turner and our sterling. N i made this chart when Prime Minister blair was on at one point. There is a longterm Dollar Strength carrying sterling weakness. Is Credit Suisse in a defeatist tone about this bellwether of the British Empire or can you be more optimistic . Probably know more optimistic since the vote actually happened. We felt to that once you got down to 103 for example on the exchange rate, you have priced in the hard brexit that was discussed. The question is are we going to have a benign or disruptive hard brexit . That is something that is still open to debate. What we are seeing at this point in time is the market reacting positively to these developments we have seen recently. Maybe the main problem now is actually the data in the u. K. Itself which are turning south after having surprised the upside most of last year after the brook after the vote. Id do not think the pound will waste away, but there is no real reason in the near term for it to go as low as your chart shows. Francine lord turner, what do you think brexit will mean for fellow conservatives . We have a bloomberg story saying e. U. Governments have hardened their position in the wake of the french result on sunday so that Financial Services and the rest cannot be carved out. Lord turner i think it will be specialt to gather treatment of Financial Services and being outside the European Union will eventually have some negative impact on the city of london. My own feeling is that it is a relatively marginal impact in the shortterm and if you actually go through the bits of activity in the city of london which are vitally dependent on system ind the which you cannot achieve by simply setting up subsidiaries in other countries, they are relatively small. I think the danger is once we are out, theres a group of countries that have incentive to try to find ways to create barriers against london. Over time, that will be a disadvantage. Going against a that is the fact that when you have a dominant Financial Services sector, there is a very strong circular process, reinforcing process. That centermake dominant. The balance between that is if we are going out in the European Union, i think that will have some negative effect on the city of london. I have never thought that it is a really big effect and that is not the reason i was a remainder in the referendum tear. Last year. Francine what is a need for regulation and Financial Services . Can u. K. Banks and regulators do for tat . R cap tat lord turner there will have to be a high degree of concordance of regulation. Lets take the approach to bank capital, that is agreed at a global level. It is enacted into european law through European Union directives and i would expect no shortterm change at all in the body of law that relates to the capital regulation of u. K. Banks. And il stay the same think probably what will have to happen is that in order to have europeanccess to the market, even when we are out, the u. K. Will broadly accept, as a given, most of the features of european prudential regulation of banks and Insurance Companies. I dont anticipate there will be a major change in the way that u. K. Banks or Insurance Companies are regulated through for potential services when we are outside the European Union. Tom i want to talk about the state of wall street. Rollanot surprised that weinberg is the lead banker on a whation this weekend is the state on the food jerk future of boutique firms . How are all of these boutique firms prunella weinberg. Been around for several decades and i think they have a very sustainable role. The argument used to be that you need the great bank trading houses to deal tom and they strapped on with citigroup. To do wasey managed create Business Systems that are survivable and they exist in the u. K. As well as the u. S. It is a good business. Tom i do not want you to get in trouble with your counsel, but who needs Credit Suisses trading desk . Of the day,d even a private bank needs to conduct trades, particularly in Foreign Exchange. I think we have a future in this space going forward. I dont worry about the general counsel too much and at the end of the day, its a large market out there. Tom competition as a thing, the you see more brutal competition in the new regime we are headed toward . lord turner not particularly. I think the degree of competition will be relatively stable. I do not think there is a new fundamental regime in Financial Services at the moment. We will have to see what happens in the u. S. , whether is there there is a real the regulation of doddfrank. My suspicion is it will be slight. Tom do you realize you are the only one with anyone to do with this show who remembers mayday . I was forever ago. Lord turner which one . Tom the one where they deregulated commissions. Lord turner big bang 1986 . Tom people have no idea what turmoil can be. Inncine, it was tumultuous the late 80s, to say the least. Francine it was tumultuous. We talk about it a lot because we like looking at history. We will be back. This is who will also be talking to later, david from honeywell at 8 00 a. M. In new york. This is bloomberg. Taylor this is bloomberg surveillance. Capital partners and hitachi made a joint offer to buy the Swiss Company landis and fleet year. The is an attempt to auction of landis in gear and reach an improvement agreement. The company could set 2 billion. The thirdlargest wireless carrier in the u. S. , tmobile forecasting they will gain more subscribers than expected. The Company Maintains a profit outlook. That suggests the cost to get the new customers will offset the earnings they generate. Exxon mobil is expected to maintain the decadelong tradition of boosting the dividend every april. The question is by how much. Exxon has slowed growth the past two years. Bloomberg Dividend Forecast they will announce a 4 increase tomorrow. Francine thank you so much. We are getting breaking news over the last couple of minutes about five minutes or so about this indie. Vivendi. This is a Universal Music Group and we are now hearing from one of their top executives that vivendi received interest that would value you the unit at 14. 5 euros. They actually took control couple years ago and since, the Parent Company has been trying to create a deal they created deals with spotify and buying the Italian Telecom operators. Importance because of the share price getting 7 on the back of that news. It comes from internally, vivendi saying they have interest from umg. Is with us. Urner lord turner, when i look at mergers and acquisitions, this is all about the search for revenue. There are a lot of mergers happening in most environments. Lord turner theres a lot of mergers and a lot of people searching for ways to boost value. I think the concern is the mac at the macroeconomic level is are they doing that by investing in his this is rather than doing Financial Operations . We have seen startlingly low figures. So far, despite a lot of talk, we are not getting this search of surge of Business Investment to drive the economy forward. I think there are fundamental issues about the nature of our economy. Withjudy marks is with us a terrific background with International Business machines. Do you see investment out there . Do you see investment merging other companies right now . Judy two weeks ago we close the deal where we acquired metro graphics here in portland, oregon. Tom will there be the new investment that lord turner is questioning . Judy we are seeing that investment. I have the honor of serving as part of the department of commerce and we are here to drive mork investment. More investment. Tom lets get back to paris and all the tones in the administration. Lord turner, are we going to have a city driven regional theen, Energy Policy as paris conference spoke about . Think, globally, there is a lot of support for the paris conference agreements and what i am doing here, today, later at the Bloomberg Energy finance summit is producing a report which has been produced by a remarkable combination of people that includes shell and bhp billiton and rocky Mount Institute and blackrock and and and an amazingly group of people. I think that belief among business, economists, and governments throughout the world, that is surviving the change in the u. S. Administration. I think there is a very strong determination will we will need the pairs commitment and it is doable. The collapsing price of renewables, wind and solar, this is a revolution that will not be stopped by anybody. Francine even if you dont have support of the government this can go through . I have been involved in some of these conferences. They are great, you have the backing of businesses, but if you dont force people to be transparent in how much commissions they have, especially in the u. S. , what good is it . Lord turner the issue of having transparency of emissions is an important issue and there was a bloomberg a Michael Bloomberg task force on this issue of disclosure. The fact is that quite separate from the issue of disclosure, we are seeing remarkable progress across the world in an area where there is big investment. This is one area that goes back weather was big investment into wind, solar, batteries, which enables us to build a low Carbon Energy system at a good price. Tom the energy of a thousand lords flies at 60,000 feet. How are we going to do this, not lose money, and make real money on this . What is the tactical outcome of the paris climate talks and the movement beyond that . Two tactics. As an enterprise ourselves, we have committed to be Carbon Neutral by 2030 across the whole corporation. Tom how are you going to make money out of that scene . Judy we will provide efficient, low emission turbines. What i am talking about at the Conference Today is power. If you assume 17 of the world does not have electricity, we lng industryn here. Tom i have an agreement and i cannot talk about thermodynamics on the show. Can you, within a capitalistic structure, make money on the thermodynamic realities of new energy . Shes pulling out charts over here. Siemens and can others like you make money in the new technology . Judy we must certainly can. Tom judy marks, thank you so much. Lord turner will stay with us and we will migrate forward on the many issues that we tom this is the backdrop for wall street and the city and investment sell side and by side, this is the vix back 20 years and the red line is the decline in volatility in the classes we have seen since 2012. Adairderek Turner Turner and his great work with fsa and the wall street right now. The great debate is active, passive flows on the part of regulators. Where is this going to be in five years . How do you perceive the activepassive debate we are about . Lord turner there has been a major shift to passive and that will pressure on active to the they are adding value. What we probably see is a move away from people paying fees for active, which is just short of tracking indices in any case, but focusing on those categories of active where you can actually say you are adding value. I think what we have clearly seen with passive and various cost runs is a very low alternative, which provided a benchmark against which the active guys have to justify the fees on top of that. That pressure will go on. I dont think we will necessarily see a major further shift, but i think it will keep pressure to keep illustrating value added on the active side. Francine does that mean that we are going to see a lot more m a . Lord turner i am not sure. That is really a separate thing from the Asset Management approach. We would talk about m a earlier. Sorry, i meant in Asset Management. Lord turner i was just getting confused. I dont necessarily think so. I dont think the changing balance and the changing composition of active versus passive necessarily leads to a launch of m a from one to the other. I dont the necessarily has that implication. Francine talk to me a little bit about what the Trump Administration is trying to do with wall street banks. If they the regulate too much, could this be the seat of the next financial crisis . Lord turner i dont think we really know what they want to do in the situation is, whenever you have whatever regulation you have, you will always look at it again and see whether there are particular things you over did or got wrong. The crucial thing will be not to weaken the absolute core bits of the Global Regulator agreement, which was higher capital against banks, better control on the big systemically important banks, and higher capital in particular against risky trading activities. Those of the absolute core of what we agreed within the ssb and the Basil Committee after the crisis of 2008. It is vitally important there are no pullbacks from those elements of the regulation. Tom thank you so much for being with us. How about a Foreign Exchange report . Lets see if adair turner 10 afford to give active United Kingdom can afford to get back to the United Kingdom 108 37 108. 27 is really interesting. We will have much more on daybreak. Jonathan ferro has all these numbers memorized. This is bloomberg. Jonathan 24 hours away from announcing the big tax plan, President Trump set to announce 15 . Intensifying the dispute with canada. The market might be pricing le pen 10 pricing out s president ial dreams. This is bloomberg daybreak. Yesterday was a big squeeze, this morning, the calm. Futures up about four points higher. Andold on to 108 treasuries, this time last week we posted a 2017 low. Alix you got the price index coming in and 10 00 a. M. You get a bunch of data. April Consumer Confidence and the richmond fed manufacturing