Sterling at 139. Having the best performing currency against the dollar. David i want to turn to guy johnson who is on the spot in london. We just got these headlines. Surprises here . Guy that is not a surprise. That was anticipated. Surroundingnguage the next rate hike that is pushing the markets to do what it is doing. You can see what is happening with the cable rate. The pound is pushing higher at this point. The market has been pricing in the possibility of an earlier rate hike in anticipated from a. From may. We are starting to see that may be returning and talking about the fact that maybe that rate hike will come through. It is not a surprise we got a 9nil vote. It tilts on the hawkish and. Hawkish end. David the time in question. Help me through this. As i read this, its his three hikes over three years. When those hikes calm is that the deal . The rocket needs to price in a little more. The market needs a little withdrawal. That is what is priced in but it is shifting it a little further forward. That is what the market is pushing sterling higher. Alix take a look at what the market is expecting. December 2018, come inside the bloomberg. The yellow line, would be looking at two rate hikes this year. We really have seen the twoyear hike forecast really move up. It feels like it is a hike more now, maybe a pause later scenario. Guy part of that is down to the fact that sterling has been appreciating. Thought that would take you thought that would take the impetus out of the shortterm. They are raising the gdp forecast. The forecast of 2018 rising to 1. 8 versus 1. 6 in 2019. Got act that weve stronger sterling has been counteracted by the fact that we got a more positive outlook when it comes to the growth story. Hose two are balancing out it is interesting the short sterling script strip in the red, what you are seeing is the short sterling strip pushing low. That implies some that hundred minus. That is pretty much the straw across the strip. The current month and the future month long forward. Maybe a little higher in terms of the rate hike story. David looking forward to five minutes from right now when we hear from mark carney. How do they know . They are making a threeyear projection. Two of those years are going to be a set of the European Union. How can he make these projections on gdp growth . Making anare assumption that brexit will be smooth. The governor has made it clear that the bank can only work on an assumption that has been given by the British Government and that is we are going to see is with brexit. That idea is frayed around the edges a little bit. Nevertheless, the sister Case Scenario is we are going to see the central Case Scenario is we are going to see a smooth brexit. Alix guy, thank you very much. To recap, the boe says rates may need to rise earlier and faster. They are upgrading their growth forecast. They are also seeing inflation above target. They lowered the neutral rate for unemployment to 4. 25 . The economy will need some ongoing withdrawal of stimulus. That is moving the market. For thoughts, we welcome art hogan. He comes from boston. What do you do if you are a currency or trader in the market over in u. K. . Bankwhen you look at the of england, and you want to look at global Central Banks on a spectrum. The fed is at the leading edge of that. The bank of england has been in the middle. They telegraphed a lot better than they need to start removing accommodation. The statement came out hawkish, putting a bit and there a bid in their currency. Probably it puts may back on the table. Timeframe wes the are going to see rate rise. It is probably long overdue. The ecb talking about removing some of the Quantitative Easing Program in september. It is the right thing to do. How do we know how smoothly brexit is going to go . To forecast three years out is aggressive. What they need to do is remove enough accommodation so if brexit is not a smooth process, they have something to get back. David the basis on an assumption, brexit is going to go really smoothly given the news, that seems a little fictional to me. What are the dangers . Also for banks just all Central Banks are 20 get back to a level more normal. If things dont go well. If brexit is not smooth. If the u. S. Were to slip into recession, you need to have some dry powder. Mark carney has been a good job of communicating and being a gradualist. That he is fact signaling lets get the first one under our belt. That means that may timeframe. Does it mean he is going to go it doesnt mean he is going to go three or four times this year. Alix aggressively sell the short end of the curve in the u. K. And so the backend and by sterling . Art that is what the playbook will tell you to do right now. It is interesting that the currency markets dont get as much as the conversation as the markets have. Thats as the equity markets have. As the equity markets have. We will see how that plays out. The bank of england is in the spotlight right now in terms of moving currency markets. Part, art, stay with us. We got twitter earnings out. Maybe on revenue. ,ou can see, they have shot up 732 million. We are going to bring in dan ives. He has a neutral rating on twitter. Youre very brief chance to take a look at these numbers. How do you react to them . Dan definitely a step in the right direction. It is advertising growth for twitter. They had some steps back, this is in full recovery mode in terms of at growth, platform changes, organic and programmatic things they have done. You look at daily average uses, that is something that is positive. If you look at overall user growth, little disappointing but they haveels like strong talents going into the 2018. David really average users have gone up because more engagement. How much of that is because of the video content . Dan a lot of it is about content. Content video has been a big focus of twitter. It is all about engagement. You have to look at since trumps inauguration, stock is up 50 . Part of it is the twitter platform starting to have resurging. Much better targeting an ad was the key. The big issue has been the lack of monetization. They are taking major steps in the right direction. Theres questions, does the Facebook Newsfeed benefit twitter . Nearterm, that twitter gets from that. Alix monthly active Users Falling short, that is flat sequentially. Is that enough . They are using more daily to attract advertisers. Dan they still have to prove more. You call that a small victory that they have to get that user growth up. Everynt to see that quarter growth, three to 4 million is what you would like to see. Given the issues you they have had, it is all about new growth. , strong andsnap eyepopping. Twitter, the same thing. Facebook continues to be the bms. To be the team if. Alix what about a buyout . Dan maybe you look. We think m a is going to step up in 2018. If you look at m a targets, have to look at twitter. Theyre been rumors they are out there in terms of potentially looking for sell. Organically, can they do it themselves . If they can, i dont think m a could be on the table. Given the platform, it does look like potential m a candidate. It is baked into the name. Alix dan ives, really appreciate it. The bloomberg lt operates the global breaking news called ticktock. I want to take a broader look at tech. Come inside the bloomberg and you can look at tech earnings forecast rising slower than the broader market. It is to form of benefits will help tech less. What will prevent tech from keeping up this momentum that we have seen . They held up well in the selloff. Art they surely did. When you look at technology at large, in 2017, the bestperforming sector in the s p 500 by a large margin. When you look at effective tax rate and how they are not being benefited by texan form, that is something you can look through benefited by tax reform, that is something you can look through. To the extent theyve got a lot more cash to work with, they are going to put that to use. Acquisition, i just think the runway for technology is as solid. I am not concerned that they are not getting that tax benefit that we have seen in some the midcycle industry companies. David art hogan, think he so much. He will stay with us. Twitter be on both revenue and revenue share. Nicely inis up premarket. Alix recapping what is happening with the boe, here is where everything first rolled out. A more hawkish rhetoric. Targeton staying above and due to that they see the rate may need to rise earlier and faster than they thought in november. They think they are going to return to targeting inflation at a twoyear horizon. The markets seem to be rising that end sooner. A reaction is that follows is as follows, yields popping. We are on the front end and backend. We will be assessing that. Mark carney will give his press conference. Coming up, what is the trade after the market shakeout . We will break it down next. This is bloomberg. This is bloomberg daybreak. 2. 5 hours until the cash open in the u. S. Relative calm coming to the markets after a lot of volatility. Eurosterling, fascinating. Dropping 1 , the bigss drop we have seen so far since 2017, september all because of the it hawkish boe because of the hawkish boe. Take a look at yields here in the u. S. , up slightly. We end up looking at potentially more supply coming on if we get a larger budget deficit from a budget deal. Nymex seeing its biggest daily loss in more than two months. Japans softbank made by as much as one third of the Worlds Largest reshore. Swiss re. The deal could be valued at more than 10 billion. Softbanks ceo has been looking to diversify his empire. Blackrock wants to raise more than 10 billion to buy stakes in companies. The Worlds Largest money manager was would make investments on things like the growing middle class. Blackrock is seeking capital from other big investors. Congress votes on a twoyear spending plan that would avert a Government Shutdown at midnight. The Senate Proposal would provide over 300 billion in additional funding. That gives members of both parties something they wanted. That is your Bloomberg Business flash. Alix markets fluctuating following that budget news. Treasury yields slightly higher today. The dollar fluctuating got a nice boost yesterday after that potential budget deal. Still with us, art hogan. The worry, lots of supply,. The treasury markets, the yields are going to pop. Do you agree . Art we think we are in the right environment. I dont think the pace we have seen is going to keep up. Global yields are rising. We are seeing that on the screen. It helps the u. S. Yield. We have been anchored to global sovereign. As a country, we are going to need to issue one trillion this year. That is going to be true for the next two years. Our need to issue more is when to put upward pressure on yields. The argument around what happens when the yield on the 10 year gets a 2. 5, what happens to equity markets has been blown out of proportion. That hasnt been the magic level that has drawn investors out of equity markets. It has changed what people are willing to pay. David is the bond market try to send a message to congress that it matters . They said they are going to borrow a lot for the tax cut. The difference now is of they are going to buy borrow some for domestic. Art that is a good point. The message is the market is saying what else are you going to borrow for . That is more spending for the federal government. Yes indeed, the market has been telling us, your issuance has gone up significantly on a year on year basis. Where does it stop . T is why you get somewhat it so much pushback. In general, this is something the market is probably going to celebrate, not having to watch this budget process for two years and getting beyond this so we can focus on things that were supposed to be doing. This highlights the backdrop of the markets shifting to more inflationary world. We caught up with mike wilson of Morgan Stanley on what he thinks happen the last few days. He was what he had to say. Mike there is a regime shift going on right now, we call it reflation to inflation. That is not the end of the world but it is a different environment. The markets are trying to adjust. Get some retest on some of these levels we traded at a monday night. We will get a opportunity to add to that acquisition. That is not rushing back in. Alix little bit of time. What is on sale . Art he brings up a good point. Especially the point about the lows. When people look at the damage we did in a short the oh of time short period of time. To the extent you talk about it reflation to intervention to inflation trade, that was well for commodities that bodes well for commodities. That is an area of great opportunity. The demand picture has picked up with a sick a ninth Global Economics growth. I dont think that is being reflected in the equities. David coming up, bank of England Governor Mark carney is due to speak about eight minutes from now. We will bring you his comments live. This is bloomberg. Alix we are moments away from mark carneys press conference. Here is what markets are looking at. S p futures pretty much flat. It is a modestly stronger dollar story. Unless it comes to sterling. We had billions of dollars worth of 30 year treasurys coming online in option. What will the demand be . Crude continues to roll over. The boe sees seems much more hawkish than we thought. Eurosterling dropping like a stone seeing its worst slide since 2017. 10year gilt yield above since april 2016. Little biting a ahead of our skis if you look at brexit. David it is all going to be fine. There is a lot of news this morning. It is about european banks. Big european banks announced earnings this morning. They all beat expectations and all three are trading up on the news. Societe generale told the burke that is bank look forward to brighter prospects this year. Convictionty, more and more flows. Yes, i am positive overall. [indiscernible] prospects,d growth in particular in europe. Yes, we see signs of monetary the bankingell to activity. That could us now is jonathan tice. Just welcome instructors that we have three banks all beating but theyll have different stories. The reason they seem to be different, is there any overall story we can take away . Jonathan from these three banks, if you look at socgen, it was one of the big underperformers last year. Revenue is the problem. In delivered on equity. It delivered on equity. It is a question about capital. Commerzbank, capital is the good news. For those banks, there is a really a theme. There isnt really a theme the go what happened with unicredit . David what happened with [indiscernible] the first thing she commented on. We are waiting for the call. Well have a better idea. That is a bright spot. An externally strong bright spot. David is this a rough day for deutsche bank, because it seems like it is getting left behind after it had a disappointing earnings reports and these other banks are going out of it. Wasthan for them, trading the biggest appointment. The biggest disappointment was cost. Banks that have been disappointing, ing, abm where we are expected more good news about the capital rules now. What payouts are you going to give us. They are still shirking on that. Commerzbank is making noises again that they will restart their dividend in 2019. I suspect is part of the reason for the positivity. David jonathan, thank you so much. Alix talking about positivity, that is with the boe is feeling about brexit. Here is how markets are looking. You are seeing selling all across the curve. Sterling popping. The boe coming in much hawkish than the markets were anticipating. Upgrading their growth forecast to seize inflation. They might need to raise rates faster than they thought in november. We are moments away from the boe conference where the where mark carney will be getting more of an assessment. Nejra, what is going to be the question we are going to be looking for . Nejra i think there is going to be a lot of questions put to mark carney today. You outlined it perfectly there. It is not that the decision was hawkish. It was a unanimous vote to keep rates on hold. Some people were expecting the vote to be split. It was more the language that came out of the decision. The boe morning markets that it might have to hike rates faster and earlier. It also raised its growth projections and inflation is to stay above target. A couple of key things they came out as the reasoning. They talked about limiting slack in the economy so they lowered the equilibrium Unemployment Rate to 4. 25 . Also, in terms of the rates at which the economy could grow without fueling inflation, that was also lowered to 1. 5 . They said demand is going to start come through at that point. They got a low tolerance for that inflation as well. They said they want to bring it back target in two years. You got 30 seconds. If you are in the room, what is the question youre asking mark carney . Is if ratesus thing keep going up, and brexit negotiations fail, they need to a conclusion which involves crashing out of the eu, then the higher rates go, the bigger the error looks. This is the risks. , promise of a real slowdown in u. K. Growth, and the banks will have to backtrack. Alix definitely dont want to backtrack, we are waiting for mark carney, he will be walking in the room now. Questions about their base case for brexit, how can they have confidence of a 2. 8 inflation 42020. No doubt the press will be asking those questions as a more hawkish boe comes forth and sterling continues to get a pop. Lets listen in to mark carney. Good afternoon and welcome to the february 2018 forecast conference. To my far right is the deputy for Monetary Policy. To my immediate right is the governor mark carney. Thank you, gareth barry good afternoon, everyone. Its been a notable week for anniversaries. Monday we celebrated the centenary of women getting the right to vote. Today marks a quarter century since the first Inflation Report. The style of the report has changed over the years but our commitment to explaining Monetary Policy independently and transparency has not. I wanted to spend a minute or two to go to the future that is painted through this report. I will start with the World Economy. One university to acknowledge the strength of the World Economy, Global Growth is stronger, broader, and healthier than its bee