Transcripts For BLOOMBERG Bloomberg Surveillance 20170508

Is to forget their local election success. Leave no door unlocked. Ahead of next Months National vote. Good morning. This is bloomberg surveillance. I am guy johnson alongside tom keene in paris. Mark barton is in london. Quite a night. Quite a night. I was at the champselysees having a beverage of my choice. It was a champagne. It was fabulous and the excitement, it was not packed streets but there is busy streets with the usual celebration that you would expect in paris. It went well over 90 for mr. Macron. Guy it is going to be a fascinating story. It does not run out of momentum because people are already talking about kind of how he turns this victory and consolidated into the National Assembly. The challenge is by no means done. Timothy we will have much of that coverage tom we will have much of that coverage. He has to go to june 11 and the beginning of the monetary and elections to see if a macronled government, or if it is a coalition. Guy well see what the next five years will look like in france. In many ways, this has been better to travel than arrive when it comes to the markets. We saw a huge pop that was delivered after the first round. That is not being repeated up to the second round. Mark barton, back to you in london for what the markets look like. Come to theing to markets in a secondary breaking news out of russia. It says it supports extending beyond 2017. Deal breaking news out of russia comes after saudi arabias oil minister says he is confident that an agreement by producers to curb crude outputs and shrink the market glut will be extended into the second half and possibly beyond. That is getting a boost oil today. Those comments with saudi arabia and thing russia does support extending and the other countries, nonopec countries, later this month, meeting to decide whether to extend the output that. Let us have a look at what is happening to markets today in the wake of the macron victory in the front president ial election. As guy said, much better to travel than arrive. The stocks are little changed, and it is at its highest level. Cac 40 from the first round to the second round rose by over on friday, hitting its highest level in 90 years. Euro lower against the dollar. It was up by a quarter of a percent overnight, in the wake of the macron victory. To the fed now on friday, it rose to the highest level. Beyond 2017, the french 10 year yield, little changed by a a basis point. We have seen a narrowing of the spread in the wake of the first round of the french president ial elections two weeks ago. The big move seems to happen just after the result of the first round, which led to the results yesterday in france. Let us get the bloomberg first word news. Angela merkels party picking up she convincingly defeated the democrat in the northern state. The victory deals a blow to Martin Schulzs bid to replace se chancellor in september federal election. Chinas overseas shipments held up in april, edging down from a twoyear high march. Exports rose 14. 3 . Earlier,rom a year increasing 14. 86 , leaving a trade surplus of 38 billion. Chinas export outlook has improved on the covering Global Demand at the threat of a trade war with the u. S. Receding. Theresa mays government has accused countries of watching britain to fail. Is the most outspoken comments so far. The European Commission president , john claude juncker, Jeanclaude Juncker comments, as the conservative party pushes for votes it next months general election. Globalism and 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am mark barton. This is bloomberg three die and tom this is bloomberg. Guy and tom, back to you. Tom guy johnson and tom keene from maison blanche. We are in the fancy party town. The white house. It does not look trumpian. An acclaimede is restaurant in paris. Many of the elite meet to greet here and they have taken the fabulous news that you are enjoying. Last night, we were down at the river seine. I saw the trout guy flyfishing later tonight for tom keene. Tom his walkin was amazing. Ss, histhe surrealne long walk was extraordinary. Guy there was this incredible kind of stiff, summer tom yes guy speech that he delivered the first time around. Relaxed man as he appeared on the stage surrounded by the people that supported him and voted for him. Tom a nice guy gave the right wing [laughter] tom it reminded me of president obamass second inauguration. Obamas second inauguration. Guy it was late at night. If he had gone on for a long time, he may have lost the crowd a little bit. It was short and punchy. Now in london, to give us perspective as we look at equities, bonds, currencies, commodities, it is good to talk to james, the bank of America Merrill lynch, and as work in cross assets. European equities i know you had the Research Report premade friday to have the answer button or the go button on the bloomberg when you saw the election last night. Did this election change the overall strategy of Merrill Lynch in europe . A particularly. I think the key was not the much what happened yesterday, but what happened the first round, and that is when we saw markets react and we saw equity markets rally quite hard. We saw the euro rally and bond spreads come in. There is travel this morning. That is why we have seen a little bit of profit taking. One thing we have been saying all year is that we have to get past the French Elections for people to really start to get more confident about investing in europe, and we have started to see that in the last few weeks. We started to see him close into the see inflows into europe. More thats a computer when i have been in the u. S. Talking to investors, they do not own european equities. Historically, that has been a good thing because europe has underperformed the u. S. We have Earnings Growth which looks to be in the region of 50 percent and europe. You just lifted probably the biggest Political Uncertainty of the year. That opens the door to investors to come back into europe. A bit of profit taking today, but the trend is for markets to go higher. Tom right. And i remember a few weeks ago, james, i was in new york and our people were talking about auto sales in europe and they signaled a more buoyant economy then ill be a political angst. Than all the political angst. What is your call for the gdp in europe and how does that filter in the Market Expectations out one year and out two years . James our economists nudged up their numbers to 1. 7 percent for this year. There was risk to that on the upside, given where the surveys are at the moment. It is just that growth could be stronger than that. Are seeing is that it is not just European Growth but Global Growth coming through to actually help european earnings. Can you sustain the Earnings Growth that was beginning to secede . At the moment, the First Quarter earnings season looks the best that we have seen in at least 15 years, Earnings Growth of 15 this year. We think that momentum is likely to roll into next year as well. If that happens, then european equities can remain something that people can start to invest in again. Guy james, good morning. How fickle is that enthusiasm for europe . We await the national is simply votes. We have italy to deal with. If mr. Macron finds it hard to govern, people will quickly turned their attention to five years hence. Give us a sense of the set up. Is it solid, is it sustainable, or is it fragile . James talking about last night, can cron get him can macron get a majority in the family . Even if in the assembly . He has a big enough number of mps that he can do deals with other republicans, so i am not hugely worried about whether he or not. Ajority italy is something which everyone immediately points to as a straight after this. The italian elections will not happen until the First Quarter of next year. I have made the point that you look at the italian data, that has been improving quite significantly. Whythat is the key because is italy in the situation it is . It has not grown for the last six or seven years. People are going to want to have fact that having just got past the French Elections met somebody else is not going to come from left field to unsettle this. From where we sit, we think the german elections are pretty much a nonevent later this year because youre going to get a grand coalition. The composition of that grand coalition is to be determined, so for the rest of the year, we have a fairly clear run. Good to have you with us this morning. Thank you for your announcements invest far. Stay with us. Plenty more to come from james barty. Tom we will see a little bit more later. Stay with surveillance. Plenty coming up. Theresa may urging her mps to forget last weeks local election and leave no door un knocked on. We will look ahead to that, next, plus industrys message to macron. What do French Companies want from the new president . We will speak to the head of frances largest business lobby group. This is bloomberg. Anchor let us get the Bloomberg Business flash. Akzonobel rejecting ppgs third takeover bid, saying its own breakup strategy is superior through the Dutch Company says its chief executive and chairman met with counterparts from ppg on saturday to rebuff the 29. 5 billion offer. That comes in defiance of pressure from shareholders such as eliot management to start negotiations and raise the prospect of a hostile bid. Aboutave spoken at length the failure to pounce on opportunities in tech stock. Shares fell on friday after the billionaire cut a third of the state after being what he described as too optimistic about the Company Possible that. Speaking at Berkshire Hathaways meeting, the billionaire chairman said he blew it by not investing early in google. Is close tot group buying Tribune Media according to people familiar with the talks. Sinclair would pare back 45 per share for 4 billion from the chicagobased broadcasting company. They said an agreement may be announced as early as today. A spokesman for Tribune Media declined to comment. Emails were not returned. That is the latest Bloomberg Business flash. In the u k, theresa mays government has accused some e. U. Companies of wanting britain to fail. The most outspoken comments over of the secretary. European Commission President Jeanclaude Juncker was claimed to have hostile briefings against the Prime Minister to deliberately influence voters. Meanwhile, Prime Minister theresa may will today order her conservatives to forget last weeks triumph in local elections and renew their efforts to work flat out for every vote in Britains National campaign. Speaking to toward candidates standing for parliament in london and south east england, may will warn that complacency is a risk to their chances of being elected on june 8, and urging to leave no door un knocked on in the search for votes are still with us, james barty, head of global cross assets and the strategy at bank of America Merrill lynch. James, and he read through from the local Election Results last week to the general election on june the eighth . Best conservative local Election Results in decades . Is there a link between the two or is a dangerous . The trends were clear. If you look at what happened at the local elections last week, the consensus took lots of votes. They lost one of their counselors in the u k and that is what the opinion polls are telling us as well, that there is a collapse in the u k vote going to the conservatives, and it looks like the conservatives will win in areas they have not won in a long period of time, so as far as markets are concerned, the only thing we are looking at is what is the size of theresa mays majority. It is clearly going to be bigger than it is currently. Is it going to be 50 seats, 100 seats . What does that do to her ability to undertake the brexit negotiations . That is why you thought sterling bounce immediately after the election announcements, because it was right. It is going to have a bigger majority, shes going to have longer to do the negotiations. Anchor does it give her bigger leverage are not . James im not sure necessarily gives her bigger leverage with the europeans other than more time to play with because the previous elections would be called by 2020, and that is 2022. In terms of her own ability to marshal her own party, it does give her more leverage because she would be able to ignore that. The factions from either side, the ardent remainders or levers, and she would have got her own mainers or ardente levers, she would not have got her own mandate. She should be able to strike a middle path. Tom so maybe a less hard brexit than some were fearing . James that is what the markets initially target ads. The chances of a very hard wto style brexit has become less of a risk, less of a possibility, and it is more likely that we are going to get something along the lines of her white paper. What would basically say is that it has not really changed the centrist narrative, a hard brexit. Probably outside the customs union, having to try and negotiate some free trade agreement. Those negotiations are going to be in credibly difficult. Tom what does it mean for sterling, the lightning rod during this process . On friday, highest level against the doctors in september, 129. 79. How far to the upside consuming go in the short and medium term . James we have largely gutted i suspect. The market has taken away that tail risk. We have had a nice bounce. The negotiations are going to be terribly difficult. Tom do we read too much into the to and fro that happened next week between the u. K. And the e. U. . Should we read too much into that . Is that just part of the negotiating process . James it is not helpful. I dont think either side covered themselves in glory last week. Some of the stuff that got said last week is going to be difficult to step back from. Once the election is over and done with, that is what we got to. What it does demonstrate, certainly this is what we had from the european, they believe the u. K. Has not really faced up questions the tough and tough decisions they are going to have to take, so negotiations i think are not going to be very difficult. There remain significant risks around those negotiations, and the market tail risk has gone. We can basically say that it is more of a soft brexit. I think that is probably on the optimistic side. Tom thats you and a second. James barty will be with us. Up next, crude control. Oil pushes out. We will discuss that, next. This is bloomberg. Supportsia says it extending opec beyond 2017 after the Oil Ministers signaled out put kurds to extend into next could output curves extend into next year. He will go along with whatever decision opec makes at its meeting better this month. James barty still here, head of global trust asset that bank of America Merrill lynch. Opec on one side, and maybe russia as well on the other side , and writing u. S. Production. Who wins in the near term . Until now, it looks like the rage in production has dominated opec cuts. We are still of the view that as we go through this year, we are going to get rebalancing in the to see and we will start excess inventories come down. What i think we saw last week was more of a technical washout. People have been betting on higher oil prices. People gave up on the bets last week. What we sent from opec over the weekend was renewed line,ination to hold the and that is going to stabilize the market. I dont think we are anywhere near a repeat of last year when the oil price elapsed because Global Growth is much collapsed because Global Growth is much better. The level at which extra production starts to come on board is lower than we thought. We have seen the gulf of mexico production come on. We have seen the shale gas recount go up, but much lower levels. Tom if the price will not go down to the levels we saw last year because of the improving backdrop, maybe the heights are not so good, as one might have seen before . Give me rough figures. Here . Possibly the top we are below 60, 46 today. James it is not possible over the course of the summer, but it does look like we are in a band now, and that the bottom end of the band, you start to run into opec production cuts and probably also some of the shale or death going offline, but perhaps about 60 per barrel, you see too much. Tom there was a selloff in other commodities, iron ore, copper. How do you account for that . James some of that was a bit of a washout, but i also think that you start to see some concerns come through on china. The chinese authorities are starting to tighten policy. I think it is very different from last year because growth is so much stronger. Even if china slows down a bit, i think rose in the rest of the world can support overall Global Growth, and that will help commodity prices. We had a rally on expectations of much stronger growth, and we have now started to wash some of that out, and we are trying to find a new equilibrium. Tom james barty stays with us. , industrys message to macron. We will speak to the head of frances largest is miss group. This is bloomberg. Largest business group. This is bloomberg. Guiding you are watching bloomberg surveillance. Im alongside tom keene. Mark has the bloomberg first word news update. Mark Emmanuel Macron has pledged to unite the nation after defeating Marine Le Pen in the race to the palace. He said he will work to address duringcerns overexposed one of the most divisive campaigns in recent history. Voten received 66 of the in a commanding victory. In germany, Angela Merkels parties kicked up the momentum in a german state election. The cdu convincingly defeated the social democrats in the northern state. The victory deals a blow to Martin Schulzs bid to replace the chancellor in the september election. Oil trading higher today amid signals that output cuts could be extended into next year. Saudi arabias oil minister said hes confident an agreement can be reached to continue cuts into the second half of this year and possibly beyond. Russia said it support extending opec cuts and iran said its country will go along with whatever decision the cartel makes later this month. Chinas overseas shipments held up. In yuan terms4. 3 from a year earlier as imports increased 80. 6 . That left a trade surplus of 38 billion. Chinas export output has improved on recovering Global Demand. The governor of the bank of japan has joked that his previous job was more exciting than his current role. Led the bojodas for more than four years, struggling to kickstart the japanese economy and trigger inflation. I can say like this. Certainly more governorship of the bank of japan. Centralbanking is sometimes more complicated and difficult then maybe development finance. Mark global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Mark barton, thank you so much. Guy johnson and i hear. I noticed the swiss 20year was a little higher yield. Some safe haven indicators released today. Guy it feels different to that firstround victory that macron managed to achieve. That 5 in the cac, we certainly didnt see that today. Tom we are here in a fancy part of london. Over time i right side excuse me, harris. Paris, london, if you are american, they are all the same. It is a good time to talk about what really matters for the republic of france. That is the relationship of manufacturing and business with labor. , thee gattaz is with medef organization that tries to link together labor with business. Tois profoundly important have this conversation with you this morning. Greg writes about it in the wall street journal today. Everybody talks about the importance of those first negotiations with labor. How will they occur . That hesbelieve explained his program for weeks and for months, so he has to make the reforms. I believe the french are already for the reforms. As he explained the program, he explained that we have to get more security in the labor reforms. I believe he has to go quickly now. Even if he has to debate with the labor unions, i believe we have to make it and we have to do it quickly. Roof,f we blow off this you catch me or i will catch you. It is a little windy here in paris today. Jeffrey immelt brings General Electric into france with the awesome acquisition a few years ago. Of the laborotype business relationship act in 1968 and before that, what is the state of labor in france . Unions,we have five five social partners. Two of them are reverent difficult. Three of them, which are the majority, are more reformist. They understand that we have to reform the label laws of france. I believe theres a good window of opportunities in 2017 right now with the Emmanuel Macron. Tom within this conversation is that francogerman relationship. They are very different. Guy and the currency comes into that. 10. 6 Million People voted for Marine Le Pen. How do they get included on this ride that mr. Macron is about to take . How do you as a business lobby organization, as french business, nature of these people are included . Otherwise the result in 2022 could be different. Pierre the major problem we have to solve is make sure theres no discrepancy between paris on one side and the territories, the regions am aware theres no jobs, no hope things like that. The reforms will have to take that into account. I know he knows. That means we have to put industry, manufacturing power, entrepreneur, in all regions of france. This is one most important thing that is linked to competitiveness. Guy can this happen fast enough . Destruction. Ive economies cant stand still. The problem is that with the political timeline and the business and economic timeline may be a little different, that Creative Destruction needs to ensure that those people get back into employment, the people that have been left behind are no longer left behind. Five years is not very long. Pierre we have to start. I think macron can push this renewal of the French Economy and france. A visit have to make from the country, entrepreneur the number of young entrepreneurs want to create companies. This can be put in place. I think macron can incarnate the hope of the people to get jobs and you get more purchase power. Tom when you were in george washington, you studied relative productivity nation to nation. We have capital dynamic and france is a labor dynamic. Greater productivity is required. Is that the simple macron bandaid or is that too simplistic . Pierre i think he wants to put the power of negotiations within each company, which is very interesting. That means every company, like mine, will be able to negotiate with my employees. I love the long walk of mr. Macron. Is this just moving towards an angloamerican construct . Pierre i think we have to build a French Economy. That means agility. That means going into the future. I dont think we can do it without copying what happened in the rest of the world, but just by giving trust and hope to the people, especially entrepreneurs, this will be the key. The key to success will be that he gets the Business People with him. [indiscernible] france willmodel of be a kind of liberal social economy for growth for people with education and training. Regions,ple in the they need education and training. Indeed,nk you very much Pierre Gattaz joining us from medef, where he is the president. It is frances biggest business lobby group. Moodys saying that macrons policy platform is credit positive. Tom credit positive, the news keeps coming. When is the honeymoon . Guy i think that is the critical question. The honeymoon is going to be short. Tom the National Assembly vote is june 11 in june 18. We should do this again. Guy can we be warmer then . Tom i dont know. Have you ever sailed across the channel . That is what this feels like. It by thell do harbor. Mark, back to you. Mark coming, we take a look back at the earnings season so far. Our next guest says theres more potential upside in store. This is bloomberg. Mark you are watching bloomberg surveillance. Check out whats happening to european markets. They are down today. The big move of course came after the first round of the French Election a couple of mondays ago. In the interim, we saw the biggest leap in french stocks between the first and second round in history, 7 rise in the cac 40. Stoxx 600 is lower today. Has risen in the last two weeks. Up 9 this year. It didnt rise as much as the cac 40. Brent crude trading higher today. Weve had some interesting comments in the last 24 hours or so. Russia supporting this suggestion from saudi that opec extend their output talks into next year, doubling down on this effort to eliminate the supply surplus. Euro lower against the dollar, has been up by as much as two point 5 since the first round of the French Election. Lets go back to james barty. He says the european earnings momentum is strong and indicators suggest more upside to estimates. James, bestlier, firstquarter earnings season for europe in 15 years . James best quarter of earnings. Mark 15 years, gosh. Is that a mirage or is that going to stay . James lets be clear about this. This is a really impressive earnings season. It is not just beating on the bottom line, it is beating on the top line as well. Expectations were already pretty high. The big difference this year is that normally every year we start with analyst earnings up here. In the last six months, weve been revising earnings up. That is my point, expectations were high and weve beaten those expectations. Youve got not just a recovery in europe, but a recovery globally. Companies are seeing better conditions for their companies. You are seeing that kick through into earnings. That is important for europe. We looked at why the u. S. Has outperformed europe so much since the Global Crisis and it was all down to earnings. U. S. Earnings recovered. European earnings havent. Mark pictures of Emmanuel Macron, the president elect in france. To thes the ecb respond events of the last 24 hours . Can it take its full off the gas . Ebola saying june, tweak people are saying, june, tweak the forward guidance. Is that the diary . James i dont think yesterday changes much for the ecb. The economy is now starting to improve. Hawk, you say, weve had this very unconventional monetary policy. Now we need less stimulus. The argument will be about how quickly we start to take that stimulus away. Already the ecb is starting to taper. We expect them to further taper into next year. The real debate comes on, when do they move the deeper rate . We have a deeper rate hike by the end of next year in our forecast. Do we change the sequencing . Can we have a deeper rate hike while doing qe . All of that is open for debate in june or september. I suspect the debate will start in june. For the hawks, i think they would point to the growth numbers. The doves will point to the inflation number. We need to continue to support the recovery. Mark which industries . We are up 9 on the stoxx 600. Financial services, tech, best basic resources, oil, worst of the year. We seem pretty good gains for 2017. James we still like the banks. We think the banks are the most geared sector into european recovery. If we get those deeper rate hikes, our analysts say from 40 up to zero, that adds 20 of bank profits. Bottom of thethe table. We upgraded several weeks ago. We think some of the concerns are overdone. If you look at the top end, it is mostly the cyclical sectors that have outperformed. You need to pick your spots. The overall trend is for the markets to continue to grind higher. Mark james, good to see you. , at bank of America Merrill lynch. Up next, we speak about the satellite companys tie up with spacex. This is bloomberg. Mark you are watching bloomberg surveillance. Inmarsat launching a new satellite with elon musks spacex later this month. It is the first of four satellites for the companys highspeed broadband services, first of its kind to be owned and operated by a single company. Joining us, rupert pearce, ceo of inmarsat. Tell us more about this launch. A week on monday, 7 20 p. M. , on one of the most storied launch pads, the launchpad that took a rocket to the moon. We will be launching with spacex, their new falcon for thrust, which is a very cuttingedge rocket for us. It is the first time weve launched with spacex. Mark why is this significant . Were talking about providing broadband globally. You talk about the mobility. It is going to upgrade the resilience of the services you already offer. Rupert weve got three satellites of this type already. Provide a seamless global network. It will become 300 megabits per second. It is the worlds most exciting satellite mobile broadband capability. Ass fourth satellite redundancy. For a lot of our customers who are deploying these services for missioncritical services, whether government or aviation or maritime or energy customers, they get a lot of security from knowing theres a fourth satellite. We will also deploy that for special services as well. Mark what are the unique attributes . Rupert we cover the entire planet. You could take our device anywhere in the world and get the same service at the same price. That is pretty unique for satellites. Also, very high levels of resilience and reliability. We are not weatherdependent. We dont blow over in a high wind. You cant steal us on the ground. For next Generation Networks where connectivity is a key enabler to a global society, the digital economy, satellite is becoming one of the key things you need to deploy a Reliable Network that can run things like machine to machine applications, everything from the connected car all the way through to the smart city. Mark lets talk about the company. Last week, 51 of shareholders voted to approve your remuneration report for the year. How are you reviewing your approach to executive pay . Rupert i think the approach is solid. 90 , more than 90 of shareholders approved our remuneration policy. The policy is right. We scraped through on the remuneration report, which means the way the policy is being implemented needs a careful look. The way the board is delivering on the policy. I think it is something that is critically important. 61 rejecting their pay report as well. Are we in another shareholder spring . What does this tell us right now . Rupert i think it tells us that remuneration policy is becoming increasingly complex to get right. I dont set my own pay, but i watch whats going on very carefully indeed. It seems were at a point where theres almost no approach that is absolutely right or absolutely wrong. It has become a very complex thing to get right. Mark a couple of downgrades in the last week, one from baron berg and the one from barclays. Baron berg says the easy wins such as the boeing contracts, are now in the past. Coming quarters could highlight an underlying trajectory of slower growth. Rupert i say they are fundamentally wrong. I preferred the five analysts, six analysts, that wrote positive things about us. I think the bar in berg v was that merrin time is a tougher story. I think the results last year and this year show a very strong maritime story. Isshows that our new service being accepted as the new Gold Standard for the industry. It will be the Foundation Stone for the era of the connected ship. Im strongly positive about maritime. Barclays says the technological obsolescence is a question mark with satellites around the corner. Expect the injury to go picking winners and losers. Rupert i certainly agree with the view that theres a lot of technological disruption in our industry, but that usually benefits and incumbent, particularly when Technology Takes five or six years to gestate and arrive in space. I think our position today is a very strong one. In four or five years, if we do nothing, people will overbuild us, but weve laid out a clear story about how we are upgrading our networks. I think we will be difficult to dislodge. Mark you said you would be for sale at the right price. Youve been touted as a potential consolidation target. What is going on . Rupert every Public Company is for sale. That is what i meant by that remark. We would be happy to be a consolidator or a consolidatee in the right situation. You could argue that our market is ripe for consolidation but we are a strong player. For the nextplans few years are fully funded. We feel we are on the front foot with plenty of growth ahead. Mark thanks for joining us, inmarsat chairman rupert pearce. Tom keene and guy johnson in paris today. This is bloomberg. Tom the republic of france is forever changed as Emmanuel Macron stuns the establishment and is elected president. All of europe and apps. They adjust to the defeat of nationalism. Markets like the view from the louvre. It is risk on. Populism is languished in austria, the netherlands, and france. And it is an american in paris. Janet yellen and the strength of the u. S. Dollar. Good morning. This is bloomberg surveillance. Im tom keene paris with guy johnson. For me, it is about dollar dynamics. For france, it is those first steps to parliamentary elections. Guy it doesnt stop here. People are assuming this is a ,ind of victory for mr. Macron but it is just one step in a process that he needs to deliver that will take him not only through the president ial elections, but the National Assembly vote. He needs both pieces of the puzzle. Tom he was at the louvre last night, with the celebration of the election. It almost had a religious experience. I think it was raining first thing this morning. It is brightening up. Maybe that is the symbolism. Tom we will be with you from paris for the next hour, on Bloomberg Television and Bloomberg Radio. Right now, from new york city, heres taylor riggs. Emmanuel macron is promising to unite the country after one of its most divisive campaigns in modern history. Winner,as the landslide beating Marine Le Pen with 66 of the vote. Strength, the energy, and the will, because thats what carried us to this position, and thats what made us, and that strength will ensure our future. We wont give in to fear, division, and lies. Is an independent who had never run for office before. Hes 39, the youngest ever to be elected frances head of state. Convincing victory for Angela Merkels party in the state election. The Christian Democratic Union defeated social democrats. The social democrats are trying to oust merkel in national elections. Russia says it supports extending opec oil cuts. The deal is scheduled to expire next month. Russias Energy Minister says extending cuts will help market rebalancing. Saudi arabia said the agreement could extend past the end of 2017. In the u. S. , Senate Republicans are planning a Health Care Bill that keeps some of obamacare that would be radically different from the one passed last week by the house. It likely means President Trump and House Republicans will have to face a bill that doesnt completely repeal obamacare. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Im taylor riggs. This is bloomberg. Tom, guy . Guy thank you very much. It is the eday in paris. They are celebrating. They are thinking of history but thinking forward as well following what happened last night with macrons victory. Lets bring in adam cole, head of global fx at rbc. Europe, lets think about it. What is the u. S. Anticipating on the back of what we saw last night . Adam i think the result was largely in the price and that we priced out most of the Political Risk in the eurozone on the first round of the election and the dutch election earlier in the year. We think the risk premium in the euro carries pretty much at the years low now and i dont think the euro will see a great deal more upside on the back of the Election Results. Our advice is towards something of a rebuild going forward. Adam, in some conversations im having at the moment, im being told by u. S. Investors that they are underweight europe. They feel the Investment Case surrounding europe has changed. The riskalf of premiums around europe and the discount factor relates to what is happening with politics. A big piece of that political puzzle got sold last night. Do you see that underway position in assets across the spectrum changing . Adam in asset markets, maybe. In the currency, less so. To the extent that International Investors reallocate to european assets, theres every chance of that. Equally, i would say that theres plenty of scope for further political stumbling blocks going forward. France may be off our agenda for the moment, but we have german elections later in the year and the greater Political Risk has been italy rather than france. We have an italian election to look forward to. Going forward, theres every chance the risk premium carries out rather than narrows further from here. We are at the years lows already. Tom weve seen oneway bets in Foreign Exchange and boy have some of them been wrong. Alldo you reframe the rbc on euro . Is it a directional call or is there ambivalence about where we will be on eurodollar a year out . Adam i think it is as much dollar as it is euro. Our view is the uncertainty of u. S. Policy probably dominates going forward. The uncertainty is much more a dollar versus europe story than a dollar versus yen story, which is what the postelection moves have been dominated by so far. We have a view that the euro goes lower but it is as much Dollar Strength as euro weakness. Guy we need to think about whats happening with the fed, crucial to all of this, what they do with that Balance Sheet and the story on the hikes. Thank you for joining the debate. Adam cole joining us from rbc. Lets bring in Bruno Cautres. Good morning. Thank you for coming in joining us. It is warming up here on the platform. Your timing is impeccable. Last night, clearly a big step forward for mr. Macron. Many steps need to follow, particularly the step towards the National Assembly. What is your sense of what the next step is going to bring . The pieces need to fit together. The pieces need to fit together reasonably well for him to have any hope of delivering for france. Bruno that is true. In particular, in the way the french president can initiate you needve reforms a majority in the parliament to do what Emmanuel Macron wants to do. We have two Big Questions. Who is going to be nominated Prime Minister . It is going to be a very soon in the next few days. Going to givehes and the political profile of the french Prime Minister guy hold that thought. We have mr. Macron Standing Shoulder to shoulder with Francois Hollande him of the outgoing president. Celebrations are taking place here in france. When you think about how that Prime Minister is going to be positioned, hes Standing Shoulder to shoulder with the former socialist president. Does he need to tack in the other direction . Bruno i think yes. Emmanuel macron got already the support of the centerleft. The centerleft electorate went to Emmanuel Macron. Part of the socialist party is probably going to join the Political Movement of macron. To really say to the french, i am left and right, exactly what he said during the last weeks, he needs probably to nominate a centerright Prime Minister. It is not going to be easy because the french right is in a difficult position. They have been extremely disappointed. Party,the centerright plenty of divisions. Why not move in the direction of Emmanuel Macron . Tom as i drove here today, there was the statue of churchill striding to the sean syriza. It is victory in europe day. Polling, is it a generational shift for france . Is it a generational shift to a younger nation that really will not know the resonance of victory in europe . Bruno part of the story of yesterday is, yes, Emmanuel Macron, which is quite young for french politics, 39, yes, it is a big symbol that france is not only the france of a global also the path of france is to move with Emmanuel Macron, but Emmanuel Macron is going to have a big challenge, which is to reunify france. Is duty of Emmanuel Macron to say, im the french president of everyone. It is not going to be easy. Symbolically speaking, yes, [indiscernible] said macron [indiscernible] tom each nation has a cadence. Guy johnson knows the cadence of the house of lords, the fractious house of commons, where the discourse will be far better than the senate. I know where an executive maybe proposes and a legislature disposes. Tell me about the national do simply National Assembly here. What will be their power on june 19 . Bruno when the executive that the majority at the parliament, it means that the president can really do what he wants. What could happen with that legislature would be that we have a majority for Emmanuel Macron. If that would be the case, it means that Emmanuel Macron will need to compromise with other political groups inside the assembly. The other scenario could be that finally the rightwing managed to win the legislative election. I dont think its going to happen. If that will be the case, then we will turn back to cohabitation, and the rightwing majority i dont think this is going to happen. I think the likely scenario is a relative majority. Tom interesting. Thank you so much for bringing the sun with you. Bruno cautres, one of frances leading constructors and adapters of polling. Guy johnson and tom keene in paris. In our next hour, a most interesting voice in the republic of france. Maybee levy will join us, the longestserving ceo in modern corporate history, with publicis. From paris and london, this is bloomberg. Taylor this is bloomberg surveillance. Im taylor riggs. It would be the first big acquisition since regulators eased the limit on tv shenzhen ownership in the u. S. According to people familiar with the talks, sinclair would pay about 4 billion. Tribune would get sinclair stations in big media markets. That would give it leverage in talks with paytv distributors and the broadcast network. Akzonobel has rejected a third takeover offer from ppg industries. 29. 5mpany says ppgs billion offer undervalues the company. Akzo is defying pressure from shareholders to engage in talks with pbg. Is largest economy in europe picking up speed. German factory orders expanded for a second month in a row. They were up 1 in march. Orders were bolstered by demand from the euro area. That is your Bloomberg Business flash. Tom, guy . Guy thank you very much indeed. We getting some understanding how the timeline is going to work with the appointment of the administration. We are learning from an advisor that were going to see a new Prime Minister, a critical appointment, announced on the 15th. Mr. Macron has indicated that he already knows who that person is. Hes just not going to tell anybody yet. We will find out on the 15th. We will also have his first Cabinet Meeting on the 17th as well. Lets bring some more voices into the conversation. Pascale auclair is head of investment at left front saves little asset management, and Bruno Cautres, political analyst. Good morning. Was this priced in by investors . Pascale of course it has been the case for the last two weeks. Inhad a magnificent rally europe equities, french equities also. We saw a decrease in the , mainly thereads french spreads, which decreased from 65 to 45. Guy is too much priced in . The puzzle is not complete. We still need to see whether or not mr. Macron can govern france in the way that he wants. Have the markets gone a little too far . We priced in the optimism of macron. What about the reality of politics in france . Pascale you are right. There are still Many Political steps to be achieved, of course. But it is definitely good news. It is back to democracy, back to social liberalist after a lot of fear within europe to be back to populism and protectionism. It is definitely good news. 60 of french macronwho dont want mr. To get an absolute majority at the National Assembly in june. It will be a tough discussion between now and the end of june. Markets,robably why after this magnificent rally, went into a consolidation period. Tom when i look at the relative value of european investment, i think of the acclaimed american investor david arrow, whos exceptionally long french banking. Can france be a dominant corporate presence within europe . Can they reaffirm a new corporatism where they do better over the next five and 10 years . Pascale if you look at general european microeconomic fundamentals, you definitely have very good news. It was specifically the case for the First Quarter earnings season. Have in mind that for this quarter, you have more than 80 of positive surprises on the safe side. Earningso the case on where you have 60 of very trendve surprises and the is close to 25 , so it is very positive. It is also the case for big french leaders. When you look at the expected earnings, it is very high. Tom this is absolutely critical. The idea here of na Anglo American an Anglo American tone, will we see a more Anglo American business aesthetic in france with mr. Macron . Pascale it would be easier than in the other case, im sure of it. I think so. What Emmanuel Macron wants is to make france more flexible, more mobile, with views that the future should be the direction. Im frequently comparing Emmanuel Macron to [indiscernible] tom i want to come back and talk about this idea with mr. Macron. We are here with Pascale Auclair and Bruno Cautres joining us as well. A smart conversation on the shifts in europe. In our next hour, he is french. Sebastian will join us from deutsche bank. Guy johnson and tom keene in paris. We welcome all of you worldwide. This is bloomberg. 8 and in europe it is victory in europe day. Whether it was Winston Churchill , the celebration in france, it was a day of huge commotion in 1945. Guy in some ways very meaningful in the way the language has been used, talking about europe and the restart of the european project. Tom we will touch more on this. We welcome all of you worldwide. For a quickly, final thoughts of Pascale Auclair. What will you be buying tomorrow morning . I believe you are closed today. Where is your enthusiasm for the markets . Pascale markets are open today. It is probably not the exact good market timing to be very bullish on what has rallied so much in the recent days, but on the longterm view, our Asset Allocation is really focused on european equities, equities in general, european equities mainly, with diversification on emergingmarket equities. Bonds very cautious on generally. Guy people talking about europe now talk about the Political Risk being removed. Do you buy france or do you buy elsewhere in europe . Is the momentum better elsewhere . The data is good, but is it as good as it is in other parts of the continent . The spanish numbers are smashing at the moment. Pascale we buy the eurozone in general. France is a little bit lagging in that very positive environment. Q1. Gdp for euro was 0. 5 in it was only 0. 3 for france. It is lagging the global bonds in europe, but we think the reforms by mr. Macron will be a positive driver for france in the near future. With us. T to have you thank you for stopping by to join us on the roof. Pascale auclair joining us from la francaise. Bruno cautres is sticking around. We are going to carry on the conversation here on Bloomberg Radio and Bloomberg Television. This is bloomberg. You are looking at live pictures coming to you from paris. In keene and i are here paris as we deal with the outcome of the french president ial election last night. These guys are there to make sure the president is safe. Tom it is an exciting moment here today. All this symbolism was back to Napoleon Bonaparte with the hats, and a big deal overall. You mentioned the Prime Minister selection of the middle of this made. Guy this is just part of the process. We are halfway through this. We are going to have to come back. Tom we have been lobbying for this. June 11 through june 18. Guy we are pretty sure the weather is going to be better. Well wait the announcement of the Prime Minister on the 15th. Lets go to first word news. President elect Emmanuel Macron is vowing to fight against the divisions in his country. He easily defeated Marine Le Pen in the runoff election, winning 66 of the vote. Tonight you won. France won. What we have been doing is unprecedented. There is no such thing in history. Everybody said it was impossible. That was misjudging france. On ar macron campaigned platform of freemarket policies. He is 39 years old and have never run for office. Chinese demand is rising. Exports to the u. S. Rose almost 12 . The threat of global trade war between the us and china appear to have fizzled. Leader says medeiros Constitutional Assembly is fraudulent. He is trying to consolidate his hold on venezuela in the wake of widespread demonstrations. In washington, President Trumps budget chief says it is ok with the white house if it takes shutting down the government to fix the budget process. President trump said the country needs a shutdown in september. The next budget must be approved by october 1. 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. You very much. We need to talk to our guests to get them moving a little bit, otherwise they are going to freeze. Laurence boone joins us, and we also have Bruno Cautres from cevipof. Thank you for taking the time to join us. The markets have already largely priced in the fact that mr. Macron was going to win. This is just one piece in the puzzle. To govern france he also needs a working majority or absolute majority in the national symbol. Have the markets been too eager to price in this story . Laurence your question is very interesting. Marketst one is has the overpriced what is happening . What we have in terms of Price Movement has been quiet during the first run. Round is remarkably subdued even though french markets are closed today. Looking ahead, the gaps between the manual macron and marine le , was larger than thought. If he doesnt get that majority, that gives him enough momentum to be a leader of the coalition if there is one. I think the markets have been pricing and the fact that the risk to french economics, to europe has been removed. Guy are the french people pragmatic . They look at who they have voted for in the president ial elections, and they say we need to give him a chance. Bruno normally that. I say normally because normally the french president comes from runrty that he had already previously. It is a new moment. We just dont know how this is going to go on the battlefield. I am saying battlefield because legislative election, it is 577 seats, which is 577 different elections. We dont know how much incumbents, deputies will join him. With the two wonderful guests we have, i want to switch to the discussion of new capitalism. He is the one who brought aggressively back the Republican Guard. His macron capitalism going to be anything like this . Think you will discover that the dominant factor is to francew opportunities to to increase entrepreneurship in france and price against blockages. Now with new social equalities, macron would like the new generation to really handle this. Be a new there capitalism in france . Will there be a new tone of making profit . Laurence there are two things with macron, he is really an entrepreneur. Tom why is he in the socialist party if he is an entrepreneur . Theence he was never in socialist party. You can be an advisor without being in the party. If you look at what he plans to do, it is much in line with what you wanted to do as an economy minister. He was barred by the traditional socialist from moving ahead. It is a continuation of all the work he has done. It belongs to a generation of french people who are not franco french. Risk. Re aware of the he is open to the world. Guy that is great. ,he people that have succeeded and were cheering him last night, have been the winners of globalization. There are plenty of people in france that are not part of that process. 10. 6 Million People voted yesterday for Marine Le Pen. How does france create jobs . How does this translate into creating employment . It is one of the pivotal things he has to sell. If this momentum is to be maintained, jobs has to be part of the puzzle. Laurence there are two things that are, large firms extremely regulated and confined. There is a world of very small, creative firms. France creates as many new firms as the u. S. Firms get stuck at 50 employees. They hit the wall of regulation. Tom i think of the idea of frenchness. Was that defeated last night . True it is absolutely that a manual macrons vision of france is one that is saying to the rest of the world that france is back as a leading country in the european union. In his speech last night he said, we are still france in a way. He will compromise between making france more open and a gible and also to be ainer, we still have a big segment of the working force that is in the private sector. Tom let me go back to the polling data. Talk to us about the idea of how parents is attached to marseille. How far apart is that geography . Bruno it is one of the Big Questions of the election. The municipals voted quite a lot for macron. If you take the big cities, they gave a majority to melenchon in the first round. Differenta mosaic of geographies. ,t is true that this election it showed major divisions inside the country. Saw five ornsion we 10 days ago. Guy that exists at the moment. It will be interesting to see how this interacts with unions and the governments and employers. Victory may have been the easy part for Emmanuel Macron. Governing is going to turn out to be quite a challenge. We will return shortly. Were going to carry on this fantastic conversation. Coming up in the next hour, we will speak to an advisor with macron. That conversation is coming up later. This is bloomberg. Guy guy johnson, tom keene, we are in paris. This is the night after the election of the manual macron for the presidency. Outcome of the french president ial election having no immediate effect on the rating of france. Lets switch gears and talk about what is happening elsewhere. Saudi arabia and russia signaling they could extend production cuts into 2018, doubling down on an effort to eliminate a supply surplus that has existed and seems to be growing. This is ahead of the opec meeting later this month. Lets bring in bloombergs chief energy correspondent. He joins us from london. Is this just delaying the inevitable . Opec is to extend these cuts even further, and the u. S. Shale producers are they going to simply take advantage of that . They have really taken advantage of opec. The plan is not working as moscow has described it only a few months ago. Months, but they never thought it was going to be needed. Today they are saying that only that sixmonth extension is going to be needed in the second half of this year, but now they see production cuts need to be extended into 2018. Certainly the price between opec and u. S. Shale producers is intensifying, and so far america is winning. Guy how significant is it that iran seems to be saying that it is happy to go along with what opec is doing. There was tension there. That seems to be fading. Javier i think iran is playing along because they dont need to cut production. They only need to freeze production. We see little sign that iranians are able to increase production from their current level. For tehran this is a winning situation. They freeze production to what they can produce. Saudi arabia is doing the heavy lifting in cutting production. Tom you are wonderful at mixing in the fundamental analysis with where price is right now. Within the research you are 46ing, do you see 45 or is a new level, or could we breakdown from here . How many people are talking about a real breakdown it hydrocarbons worldwide . Javier very few people are talking about prices moving lower than where we are today. In the last few weeks, there is an increasing sense that 2018 could be a very critical year for opec. Increasingly you see people like Goldman Sachs that maybe the market is rebalancing and prices could rise. The call for the market rising is getting lower and lower. That is a big problem for opec. Downproducers are bringing the anger price. Shale producers are bringing down the anchor price. Idea is there an that the plans we have seen is over, or is everyone on watch this monday for a further seven drop if someone clears out of the market . Javier i think we are not over. It is not finished. Are struggling to see positive gain today despite interventions from saudi arabia and russia saying production cuts could be extended into 2018. There is a clear indication to me that the selloff is not over. There is a lot of pain builds up in hedge funds around the world that were bullish going into last week. I expect the markets will take a few more days to clear. Guy it will be interesting to see how that curve develops from here. Present inry ever terms of what we are watching on bloomberg. We will be back with laurence boone. All this week Bloomberg Technology is live from boston. Anoline hyde is taking indepth look at regional innovations. You can find that live on Bloomberg Television and radio. This is bloomberg surveillance. Lets get to bloombergs. Private equity firm kkr is in talks to make a bid for toshibas memory chip business. Up discussions would speed completion of the sale. Kkr said it would pay at least 16 billion. The two largest Cable Operators in the u. S. Have agreed to explore ways to Work Together in the wireless business. Comcast and charter want to better compete with the giants in the mobile phone industry such as verizon and at t. They plan to negotiate better rates or reselling wireless data. Cutting out companies that dont spend heavily on research. The pharmaceutical research and manufacturers of america would raise the research threshold to 200 million a year. That would be a high bar for these that focus on buying older drugs and raising prices. Prescription drug prices have recently come under increased scrutiny. That is your Bloomberg Business flash. Tom thank you so much. Guy johnson and tom keene in paris. It is victory in europe today. It is also victory in macron d ay. With us now is someone that knows president olland, laurence boone. To work forlike president hollande . He is staggered in the polls. What is the message you would attempt to give him . Laurence you are right. It is extremely interesting to work with him. As we were discussing earlier, it is a very franco french environment. You were the odd one in the room. Exactly. There were a lot of things you could bring with the u. S. , the germans, how it is working for an International Firm for financial markets. Wasink most interesting g20 and greece rising. Tom you are as qualified as anyone i know to discuss the euro start. Recently it has been a migration of smart people from france to london. They stay there permanently. Change that to an intellectually vibrant paris that can compete with london and new york . Laurence i think he has already shown this when he was in economic minister. He has been promoting the french technology, going to las vegas every year, making a point of showing how the entrepreneurial the new firms here is growing. He has been working on this with the germans as well. Tom i know youre watching Prime Minister may speaking today on this idea of movement. Guy lets join these thoughts together. About the idea that there will be no Free Movement of people. Immigration has been a big part of why britain voted for brexit. Back to tom point, the fact that london has been the center of gravity for the entrepreneurs of europe over the last two years, is this a virtuous circle for france . Can france have that moment in time where you have a charismatic leader who draws people to them and draws people way from london and elsewhere in europe . Laurence i think it can be a key moment, also because it is coincident with the brexit negotiation. With macron winning, yesterday with the symbolism of him stepping into the louvre, he will work with the germans. He has had a strong relationship with germany. He is very proeuropean. At a time when the u. K. Seems to be drifting away on its own, if the eurozone can transcend itself all over the eu, then the eu will at long last have a chance. Tom thank you so much. Laurence boone. We will continue our discussion today with maurice levy publicist. This is bloomberg. Tom the fifth republic of france is forever changed as a manual macron stands the a step study the establishment elected president. I love your adapts. They just to the defeat of nationalism, the reformation of his new globalization. Will they like the review we saw last night . It is a risk on as isulation populism vanquished. Oh, yes, i am the american in paris. I consider and we consider janet yellen and the u. S. Dollar. Good morning, this is bloomberg surveillance. Alongside guy johnson in for francine lacqua. It was that quiet moment to see the french around us moved by the Republican Guard in the horseback going by in front of the tower. Of the is the changing guard, quite literally, as we witnessed a transfer of power to a party that a year ago did not exist. I think people talk about the fact that there is change in europe. There is no greater place that changes taking place a party that came from nowhere. Tom we will talk to maurice levy in a moment. He needed coaching from him last time. That first speech he gave was a little stilted, i think the word you used. Then he was much more relaxed. Was amongst his supporters at the louvre. You talk about the fact this has been a short journey. He is a political rookie in so many ways. He has to step on the stage and deliver the performance that is really going to take his party into the national a similar election. Tom sworn in the sunday and then on to the naming of the pragmatist are. Our first world news in new york, here is taylor riggs. Taylor in france, president elect macron join with the president france while lond highland. This money was his first public event since winning sundays runoff election. Macron was a landslide winner beating Marine Le Pen with 66 of the vote. The strength, the energy, and the will because that is what has carried us to this position. And that is what has made us. And that strength will ensure our future. We wont give in to fear, division, and lies. And has never run for office before. He is 39 and the youngest ever to be elected frances head of state. Merkelsy, angela party. Holstein from the social democrats are trying to oust merkel in september. In russia, says it supports extending opec oil cuts beyond the end of the year. The six month deal is set to expire next month. The Energy Minister says extending production cuts will speed up like a rebalancing. Earlier, saudi arabia has of the agreement could extend past the end of 2017. In the u. S. , said republicans are planning a Health Care Bill that keeps some of obamacare. It would be radically different than the one pass last week by the house. It likely means President Trump and House Republicans will eventually have to face a bill that does not completely repeal obamacare, despite their promises to do so. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Tom thank you. We welcome all of you on Bloomberg Television and radio worldwide as we are here in paris looking at this moment for the people of france and indeed the people of europe and for business all over this world. There is no one with a better perspective on this in france than maurice levy, outgoing german diminishes what he is saying is the outgoing chairman diminishes what he is. How many years . Which napoleon was it . I have been with the company for 46 years. As the ceo for 30 years. Tom one of your many slogans that you people have centered around is the power of one. Where this mr. Macron find his power of one . He has been very lucky. He came atat the the right time. He is been able to make a real breakthrough in the mind of the people. Breaking many rules walls. Breaking the walls of the socialist party, he has felt the socialist party was about to collapse. Oppose the able to president who really hired him as an advisor and put them in the position of being minister of economy. On top of that, he has been able to speak the truth to a large crowd of people who started to believe in him with the youth and progressively, with many people who said this man is probably should not have said that. Tom but he said it with a french accent. Im sorry. He is not lying to us. Dreamnot taking this to a that not becomes true. He is telling the truth. And that is the most important thing. The youth, and the fact he has opposed the most rivera went lit i rivera this has led to more than empathy. People were accepting the idea that it could become the president of france. Guy france has taken a huge risk, elected a president that was the head of a party that did not exist three years ago. Do tooes he need to justify that risk and how big of a risk is france taking . The risk is enormous. I think you are right. He has no party. Movementde the kind of from patching together many parts. Tost, he asked to he has have the majority. This is something which is very difficult to do. There is a lot of people who are already in their subscription, as we say, and they are established for many others many years. People know them. They know how to relate to them. Putront of that, will different parties and nowhere. This will be by the challenge. Guy 10. 6 Million People voted for Marine Le Pen. That is the worst thing we could have expected. I never believed she could win. Never, ever. I sent it on kluber i said it on bloomberg, by the way. I did not believe she had the slightest chance to win. But 10 Million People enormous 35 of the people who voted, also enormous. So is this a big risk . She can become the real opposition. Tom lets talk about this. This is a sensitive matter. You have been one of the greatest supporters of israel in the republic of france. We have the idea of the translation of rothschild banker. That means something in your france than in the United States. I would even suggest then in the united kingdom. Where does the xenophobia of Marine Le Pen go from this election . Was it she defeated or is there 34 continued ascent of people against jews and other groups . I think the vast majority of her voters, which represent probably 20 and not 34 , so we could count on 6 million to 7 million which is already enormous people who are in total agreement with le pen, which is the xenophobia against refugees, against europe, against the euro, against the jews which is racist. All of this is something which ,s probably limited to a number which is very big because it does represent between 6 million tom but you dont think it will grow to majority. No, i dont believe that. I may be wrong. I never believed she could reach more than 35 . I think 35 is already too big a number. Softieve we have been too regarding le pen and have accepted easily the idea she could be in the second run. Consensusas been a from all of the political parties. They have been witnessing the fact she was coming and growing and getting more voters supporting her. They have accepted that state the situation, which is absolutely wrong. They have not tried to fight against her. They have fought against each other. Guy we will carry on the conversation. It was fascinating to see last that the french flag being waved and so many european flags being waved decided as well at the events. Murrays levy will be sticking around. The conversation continues of them coming up on bloomberg surveillance. Aboutl be talking entrepreneurs in the new environment. We will be talked to the chair of public race to get a sense of where the business goes and where other businesses go in this macronled france. This is bloomberg. Taylor lets get to the Bloomberg Business flash. It would be the first acquisition since regulators eased the limit on tv station ownership in the u. S. Sinclair is close to buying Tribune Media. According to people familiar with the talks, they would pay about 4 billion. It would give stations in big media markets like new york, chicago, in miami. That would give it leverage in talks with paytv distributors and the broadcast networks. Rejecting a third takeover offer from its u. S. Rivals, ppg industries. Pbgstch company says offer undervalues the company. Sk oh is akzo is largest economy in europe picking up speed. German factory orders expanded for a second month in a row. They were up 1 in march following a 3. 5 gain in april. Byers for were bolstered demand from the euro area. That is your Bloomberg Business flash. You, taylor. An advisor to mr. Macron joins us. Still with us, murrays leaving. Murrays leaving. Maurice levy. What needs to be on the menu for mr. Macron as he looks for the Business Community and delivers what they need to improve the Employment Situation in france, to improve france is a productive machine . I apologize first, because my english is awful. Fr it is better than my ench. A historical moment. Now we have to do everything because france is a country and made many, many things to do because we have to change the minds of many, many people. It is a fulltime job for several years, i think i hope. I hope for success. Guy what specific . Think of the recipe we will be creating. What needs to go into the mix . In taxation,e Employment Law . Give me some ideas of how you see of course we have to change that sort of thing. The main thing for me is change the minds. Change the political war between people now living in france because many people are out ofhappy when you go paris, it would you go out of the big city, when you go to the country where there is nowhere to be good. Industries are closed. No work. Nothing to do. We have to change all of that. We have to make all of the people now more happy with work and believing in the country. Tom when you look at the entrepreneur in oral entrepreneurial spirit, france why has a bakery outside the trump hotel. Downreviews in washington by trump hotel. Within that is the idea of an object near real spirit. Entrepreneurial spirit. Where did france lose it . It wasnt charles de gaulle. When do you point to the moment you knew france had lost the marginal spirit . 1977, 1978. D in election,n back the 1981, had to move toward the socialist. This is how it started. Obviously, it has moved to a level which became where we are today. Tom mr. Macron. Two years which were pretty good, 1986, 1987. 1988,ter the election of it went into the opposition and it started to become what we call a radical socialist and more leaning toward tom with that great history lesson, what is the radical macron we need to see . Radical rattles thing that mr. Macron needs to do . A revolution in the work world. Because peopleon in france believe to work. They believe that holidays and have good lives. Everything is necessary before working. If i may elaborate, i think francoise is correct. With 35 hours, we killed the idea that people have to work to deserve a good life. And we came with this idea that good life is what matters most and you dont need to work to get it. It should be given to you. Era of the socialist 1990s and no one guy france abandon the 35 hour week . Yes. Either you make it you have rules that make 35 hours a week irrelevant, or you banish them. Tom what is brilliant, our staff thinks it is a 35 hour day. Guy especially, the last couple of days. Tom were trying to get up to eight hours a day. Guy thank you for joining us. Maurice is going to stick around, maurice levy joining us. Coming up on daybreak americas for its chairman france arman joins us to give us view of where he sees france next. This is bloomberg. Guy live pictures from washington, d. C. Tom, does it make you feel homesick . Homesick, but it is probably a little bit warm there. They conversation with our chief washington correspondent. Guy lets talk to kevin about what is going on. Kevin, we are obsessed with what is happening with the french Political Developments which in so many ways are a transformation of a political culture that we have also been replicated. First of all, i am fascinated the president of the United States effectively backs Marine Le Pen. I want your take of how washingtons all that and whether or not it is perceived as a mistake this morning to have gone so far and waded so for in and the way the president of with the brexit vote as well . Kevin that is the comparison being made. I think President Trump tweeting of the congratulations yesterday really did send a signal theyre going to try to work with the incoming administration. Again, this is also the president who had been embraced le pen so warmly. Clearly, i think this president has tried to draw parallels to , but clearly, that came to an end yesterday. Guy in some ways, it is a different world the president now faces, much more united europe. A europe that has a center of gravity both in germany and in france. How does that change the relationship do you think now between the United States and europe . Europe it has been on the back foot. The president has been over here and said, paper nato, make sure you are are doing your best. Do you expect a different tone in that transatlantic conversation now . Kevin no. I think the model were watching between President Trump and Angela Merkel is the model we will also see with france. I think in the case of chancellor merkel, you have the situation where the president has been incredibly critical both on the campaign trail and in office of germany, but also has been somewhat more warm in terms of trying to find common ground. Case in point on National Security. In angela with russia. I think several folks in washington on both sides of the aisle have been surprised at how critical this administration grew against russia, especially following syria. So i think i would anticipate that you,. Expect that to come. You, kevin. We talk about National Security in the relationship between europe and the United States the date of france is celebrating victory in europe. This is bloomberg. Guy i am guy johnson in paris. Lets get an update. Taylor starting in france, president elect Emmanuel Macron with his energy against the deepening divisions in the country. He easily defeated far right candidate Marine Le Pen in the runoff election. Winning 66 of the vote. Tonight you won. France won. Doing in thebeen past few months is unprecedented. There is no such thing in history. Everyone said it is impossible. But that was misjudging france. Taylor he campaigned on a platform of freemarket policies. He is 39 years old and had never run for office before. U. K. , Prime Minister theresa may has committed her conservative party to cut and immigration. She told a Campaign Event in london today she believes the gratian should be migration should be in the tens of thousands. The British Elections are june 8. In china, rising Global Demand is boosting exports. Overseas shipments were up 8 in april from year ago and exports to the u. S. Rose almost 12 . The threat of a global war between the u. S. And china appears to have fizzled. The Opposition Coalition Wont Take Part in the rewrite of the constitution by president nicolas maduro. Opposition leader capr says the assembly is absolutelyiles fraudulent. Murder of is trying to keep his hold on venezuela in the midst inflation, food shortages, and widespread demonstration. In washington, President Trumps budget chief says it is ok with the white house event takes shutting down the government to fix the budget process. He says the president is willing to do things differently in order to change the capital. President trump says the country needed a shut down in september. The budget was approved by october 1. The budget must be approved by global news 24 hours a day october 1. Powered by more than 2600 journalists and analysts in more than 120 countries. Guys . Guy thank you very much, taylor. Happening in france and the political momentum that now still with us, maurice levy. Lets talk about where france goes from here. Eric, what do we learn last night . What did this to macron signal that france now has the did not have before . He is a young president. We have never seen this before in france. What does he bring to the table that was not there before this election started . Liberal,he is a social or a christian liberal, he has a reformist platform. The new thing is the way he wants to implement the reforms. I was really struck by the fact he ended his speech with the word love before saying long live. That was a message to everybody in the country where people love fighting against each other. Now you will have to Work Together. When you tell that to unions, to employers, and to your former comrades of the rightwing, it is a very short message which is, ok, guys, now we sit around a table and we solve problems. That is a new thing. , you understand brand. I think so. Guy probably more so than anyone else on earth. He is not just of the ability to create something from nothing, the bread he has brought together lets put that together with the thought that eric has. He wants to unite people. He wants to draw lines rather than rubbing them out. How important is that momentum that he has with that brand going to be . He is mr. Macron. He is on the move. How does he take that it translated into real politics . First, regarding uniting everyone after the election. You have had that kind of speech , maybe not with the word love from our president s. I am here, im now the president of all of the french people. Guy but they came with history of their parties that went before them. He doesnt have a legacy. I just want to put limits on that. Everyone has always done that. The difference, and i agree, is the fact he himself is very different and he puts some love in it. This can make a difference. And ng the brand macro macron. He created that the date was put in the position of being the minister of the company. And disrupted a lot of the classic moves when he went to las vegas himself, for the cs when he pushed for the startups, when he opposed the president and the Prime Minister in order to go a little bit further when it came to working on sunday, etc. When you oppose the opposition very strongly, all of this he anddone with determination this baby face. He is young. He is young. This is something we have not seen in any top 10 countries in the world since ever. It is not only france, you look at all of the top 10 countries of the world. You have not gotten a president of 39 years old. He is willing to make a change. He is determined to make a change. He will not think about the legacy like many have thought of. He would inc. About action. And they believe that is the most important aspect. Now the biggest issue, will he get the majority or not . If he is getting the majority, will be in the position to win what he wants to do. If he is not in the position to get the majority am a then majority, then he will have to negotiate for a coalition. This will not be very easy. It will not help him to achieve 100 of what he wants to achieve. Guy to pick up on that point, the momentum that exists, eric, behind the party, it has gone hourzero to 100 miles per what hundredters, 30 on good days. He is gone incredibly quickly. Does that momentum continue . Point, he needs it at least into the assembly vote. Do theat happen or republican start to get the momentum back . How do you see the modeling progressing . The first thing, the moment is a strong. It is stronger than what we thought before yesterday. Of the express vote. There is a strong momentum, which i think gives macron a decent possibility on getting the majority. Thing, some people say he was very lucky, but he decided to pick his time to enter into the race. With a little bit of hindsight, everyone says, this is the right time. He is a good intuition in politics. Not just a good platform, he has some sense of the relationship between the man, the president , and the people. So i would be relatively a big chunk ofn the vote last night, but if you think about it, france remains politically divided ineffectively four quadrants. Is the political system capable of handling those moving parts . It is a multipolitical system france now has in a system that previously only really dealt with two centers of gravity. It is a good question. Nevertheless, given the constitution that friend france has, the president has a lot of power. That is very different from, for with the previous Prime Minister coming at a president from the same party, but wanted to disrupt his Prime Minister. Now macron is president. Ps the powers given by the constitution. I think it is the good framework to have this reform of the political system itself. Precisely because of the momentum. Guy we will leave it there and carry on a conversation. Were not quite done. Eric chaney and maurice levy. They will carry on. We also going to carry on talking about the markets. This is an economic story as much as a political one. Sebastian galli will be joining us at 6 30 a. M. In new york, 11 30 a. M. In london. That means 12 30 here in paris. This is bloomberg. Taylor this is bloomberg surveillance. In the philippines, there will be a new head of the Central Bank Deputy governor will succeed the Current Governor who leaves in july. The philippines has record low Interest Rate and growth may be as high as 7. 5 this year. The private equity firm kkr in talks to make a preemptive bid for toshibas memory chip business. The discussions would speed up the completion of a sale and and negotiations with other potential bidders. Would paydicated it at least 16 billion. The two largest Cable Operators in the u. S. Have agreed to explore ways to Work Together in the wireless business. Comcast and Charter Communications what you better give you in the mobilephone industry such as verizon and at t. They plan to use the combined size to negotiate better rates for reselling wireless data. That is your Bloomberg Business flash. Guys . Tom thank you. Guy johnson in paris with me as we look at a most historic of the republic of france and some of that means all of global wall street dressing up their forecast. They have to adjust and adapt. Guy i suspect there were a lot of trading floors last night that had their bloombergs prewritten go. Is theirstien galy currency strategist. The adaptation, so much is about eurodollar. Is it about a dollar dynamic or a euro dynamic . It is neither about the euro nor is it about the dollar, it is really about credit going back into france, but mostly going into italy. Basically, the end of a populism. That is positive news for the periphery of europe, jealous extent, france. The ecb is probably going to look at what happened, look at made Marine Le Pen significant gains, which of the Old Industrial parts of france. Probably decided a weak euro is where we need for a significant amount of time. Tom when we look at france and we look at the urgency of getting the macron message out there, what will you be looking for . What would be the messaging as you go to the Parliament Elections that will matter to Sebastien Galy . It is going to be the general june election, the parliamentary style. And the difficulty. A strong message is copying a obama bit of what has done. It is much more difficult to carry at the level of the parliamentary elections because a lot of the people have been there in the seats he is trying to replace are trying are very well known. It will be difficult battle for him to reach there. Talking about labor reform is not going to get you very far. Talking about pension reform is not going to get you very far. Nonetheless, it is a wave of optimism. Think about 2022, in many ways, it is really not that far away. If mr. Macron does not carry the momentum into the national and theretions are so many around the country and some an individual constituencies we need to think about how quickly will the market price him out . How quickly will the market extracted late forward extrapolate forward . The market is probably presuming what he will be able to do with collaboration, which is standard in france. You basically have one government in a direction or the president in one direction and the government and a slightly different direction. It will probably look more like a germanstyle government. I think that is what the market is looking for. His party in alliance may be with somebody else. Since some extent, that does not matter because he will stability affect the type of reforms expected. You will probably align with either center or that does not make his reform changed by any way, shape, or form. From markets, it is not relevant. It is better to get a majority in june, but it does not change the outlook for the french bonds or the euro or for that matter, italy. Tom right. Thank you so much, Sebastien Galy, with a briefing this morning. We continue here with maurice levy. Withecades of work advertising. I want to get a bigger and broader view, murrays, of the , of the momentce we see within france. There is a change here. It is a fifth republic, a generational change as well. Is it going to be a six republic . Do we really move on . I dont believe so. Of sixalready in a kind republic when you compare to the de gaulle era. Tom the lesson you gave us earlier. Does it changes the dynamic. We moved it changes the dynamic. We have a lot of hope. People are hoping to see a change. To maked support macron that happen. The key question is, will he have the right Prime Minister to run for election . Because he will not be able to run himself. The only thing he will be able to do is to deliver one or two speeches on tv to tell the people to give him the majority. Will be Prime Minister domestically focused. Lets talk about what he is going to do. To in some was restart the european project, which has stalled over the last two years with france and germany once again forming the axis. Does that happen now . Do we start to see that relationship rebalancing . Is that something that is desirable from a french point of you . I dont think this will happen before we know what will happen in september, when therell be be german election which will be the final big election in europe. Has six things to do. Fix the problem of theployment, to make sure securities is wellestablished will to change this probably be the critical point where people will judge if macron is true to his word or restructure or reorganize the administration in order to reduce the level of the weight of the administration in debt, and tox the fix education. Guy wow. Quite a list. A big list. But these are the six priorities. Tom thank you so much for your time,ous maurice levy. City a new york transaction. It is wonderful. It is a manhattan transaction. Buy gig space. Buy kate spade. Guy johnson and tom keene in paris. Stay with us. This is bloomberg. Taylor this is bloomberg surveillance. Weaker across the board after a stronger tone about 12 hours ago immediately following the election of Emmanuel Macron. Euro lower against majors. All eyes turning to the ecb in worries that mario draghi will contain new his weakening stimulus. Continue his weakening stimulus. Riggs, thank you. Coming up in new york, bloomberg daybreak. Mr. Weston joins us with the commodity guest of the morning. David, it is always good to have him on, isnt it . Especially on a morning like today where we had this big battle royale. He will take us through what it means. Not just the shortterm, but also the longer term. What it means for europe. Even what it means to the United States. We will also talk about the New York Times hes the said we should have immigration hes where he said we should have immigration. Tom thank you, david westin. Chart andsingle best a chart that like the polls really show the tone of this French Election. The francegermany spread did what it was supposed to do. It was up, up, up, then came in very nicely anticipating a macron victory. Guy the question is, where does it go from here . The ecb will play a pivotal role. Eric chaney with us this morning. We mentioned the ecb. I have been guilty of this. Mr. Draghi is a little pivotal to mr. Macron, isnt the . First of all, good morning. It is good to see you in paris. I hope we have more elections. I dont think the ecb was so important before the election. Now we know that the ecb has helped to buy some french bonds, but that was very limited. That was in the framework of buying bonds of other countries. What is essential is what the ecb is going to do now regarding the reform of the Banking System in europe. France is not a big problem in this regard. Italy is the biggest problem. Crron enterse ma into the equation. Hes going to bring something new between the eurozone countries. Right now, the main issue in the banking is the italian system. This is where were going to learn news. There will be elections in germany, and then in italy. But my guess is that if nothing is done in the meantime, we will get some bad news from italy that will again raise countries against each other. Mainly germany versus italy. Tom eric chaney them a thank you so much. Us inhaney will join radio in a moment. This has been a fabulous visit by guy johnson and i to this history in france. We will continue on Bloomberg Radio as well. From paris, guy johnson and tom keene, this is bloomberg. The pollsters get it right. Buy the rumor, sell the news in the market, the euro drops from six month high against the dollar. Verbal intervention index stability into crude. Saudi arabia and russia signal the good extend production cuts. Goodnew york city, morning, good morning. Im Jonathan Ferro alongside david westin and alix steel. This is what it buys you, not a lot if you bring up the i can ws for you. Equities are pretty firm in fact nowhere, 46 going and . 19. We are softer by half of 1 . A few deals to tell you about here. 18. 50 a share. Deal addingo