A warm welcome to daybreak. It is 7 00 in europe. If you are in the United States, happy president s day. Balance herece with the cash markets closed and you have the equity futures trading lighter than normal with the best run in equities within pushing awayd against volatility and rising yields. Survey with the market drop to reenter and it is all about the United States this week and the fed minutes and what you get on wednesday. Andill begin to understand builds to the testimony with the actual power of powell. We have some numbers coming across your bloomberg terminal. We have breaking news on a dividend coming back and platinum declares a dividend. It is an interesting time in the market with donald trump raising and theter of tariffs dollar has trade tensions and the possibility of tariffs in the United States and the dollar manages to eat out this. I mentioned to you that the paperates are opening and will come over the next few days. Who keeps purchasing it . The chinese cannot get enough of this. They have increased their Treasury Holdings and we see their story and if they would ed with thefocus chinese holding the most amount of paper in the United States since 2010 and the japanese are dropping for the fifth straight month in december. This is the highest since 2008. Line, way, a lovely there is no such thing as a bad bond, just a bad bond price. And yourinto the rates news comes from the middle east. Good morning. Storys kick off with the of donald trump criticizing the mueller,crats, robert and his National Security advisor. Times within 24 hours and offended the validity of his victory and insisted there was no collusion. Rick gates has agreed to plead guilty and cooperate with robert mueller. Theresa may and her ministers are together for a brexit away day. It is becoming clear that the United Kingdom wants to stay and this is due on thursday. We will watch for what they mean for the path of Interest Rates this year. Japanese exports and imports. Ahead of forecast with the forecast of increased in eight months. Finance ministers vote to replace the ecb vice president. Meanwhile, the head of the Latvian Central Bank has been detained by the anticorruption aside with calls to step and his lawyer says that he considers this move against him to be illegal. A Global Security conferences to focus on the encroachment in the middle east and described the aggression as the greatest threats to the world. A minister said that iran news to pay a price for the aggressive behavior. Global news car by journalists and analysts in 120 countries since you can find more on bloomberg. Auctions willnd come to the market in the shape of Government Debt and it will how the clear guidance on they will meet the rallys. At theent selloff threshold hits the high and managed 20. 6 billion pounds. And we can take this. Thes will easily go to banks there is a history of it is comingd and in that area in 10 years. Dealing with the global trade wars, do you think on this value model and the debate was if the u. S. Can this. N there is stimulus to come andrly on the fiscal side we would lean a bit more. The yield curve is still steep it is the indicator of trouble to come. There is a bit of a return we revert to flattening and all the warnings that come with that . This is a little of that of volatilityng and uph space and the yield is more with a key of whether it would invert and it has been a great indicator. They dont necessarily make the ford flattening be expensive to make money from now. A chart for you here with the twoyear bond Inflation Expectations that actually encroach for the first time on and there is the correlation between inflation sustainedns and how are we in the United States of america . This is where the movement has. Een the most aggressive i have a quick look at this graph here. This ties up the correlation. We can deal with the dollar in the second and are they becoming more entrenched . And, for us iny the United States, it is a mini there is the breakeven ith the fed tightening and one house of bond trader and we saw the basis points with a proper tightening. It is coming. Question never knew that it was coming and you had to work it out. And there isl you and i am wrongds and the inflation spikes. That is just me being south Korean Leader urges actions against trade restrictions. Government to handle all steps in the process. Wilbur ross with nearly 25 on , by the way, a wonderful piece written by Jonathan Stearns and this could be trump turning to a sledgehammer piece of and he might invoke this to levy the trade tariffs. How much is in this. 1 of theoduces theatricald it is and creates not much bang for your buck. This andintroduced japaneseiffs protected motorcycles and reagan did it. The market can deal with tariffs, but not a trade war. The beginning of the tariffs do not equate to a trade war to you. It is encouraging that we saw range offs come for a products and it was very encouraging, i thought. China, in terms of the imports, it was barack obama who oduced the chinese exports drop and that is why they use the word theater. Risk now . E big inwill talk about our man russia. Equities have the best run since the ubs survey adds into the momentum. Equity, did you see and the advantage . Equities andbal everybody says they want to buy the dip and there is a scare danger. Latility and so, it is good for you on that one. We chose the u. K. Equities because they had underperformed bought thed have would putquities and. Ore into equities hold those thoughts and we will talk more about that shortly. A quick check on the equities futures. Added to thee run Global Portfolio with equities continuing the march and walmart will deliver the numbers. Will they go further in the narrative . Equities futures are trading this is the. Ossibility who will that be . This is bloomberg. Live shots of the Emperors Palace in tokyo. Aether you are taking pounding or not taking a pounding on the dollar, we have to talk about that. Good day to you. oh. Initiallk about the Public Offering of a Health Care Division as early as today, according to people familiar with the matter. They say they will use the money generated to acquire companies in these businesses and pay down the debt. Raise between 6 billion euros and 10 billion euros. The equity market has moved out of the boom phase and a new report from the website says that asset prices were down. London was they were sent from performing Housing Market and there was little to suggest the upturned is in store. Right. Handing it back to you. Thanks. The trade about recovery powering ahead and the exports and imports registered strong rates with imports resulting in the monthly deficit. This morning. O i am ahead of the curve and telling you what this was before we got. Deficit. He first my eyeser that drew were the exports to china, the largest trading partner from a year earlier. This is really firing on all cylinders, to grab that phrase from bob lovely. Dudley. And there the growth is no surprise with the japanese and japan is well strong in robotics. Markets you look is technologyt and one of the sugar markets around. I want to drill in that a thele bit more and who owns. Arket the Retail Investing in japan adds to the position and they have 17 of the market. It is moderately underowned, in a relative sense. Comingee global managers ignored. Nd it is often global managers can ignore and underweight it. We are going down the road of reappointment and they are trying to weaken the yen. The equity markets are traditionally hedges and we take neutral read on this and hedge and it hasexposure more to do with the risk when i arrive. We dont know what to do with that and i would not put too with the trade numbers. Because we have a bit of a dip going on there grew byrts exports 12 . What happened next in the dollar dictated by the equity week. Up next on daybreak, the secondhighest post going headtohead. They dashed on the runners to take the seat of mario draghi. Lineup in brussels. This is bloomberg. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. It has just become 5 30 in the afternoon in sydney. The equities are rising and the aussie dollar is sandwiched with the10 year yield rates and softer dollar has been supported. Here is what you should watch for this week. The finance ministers vote for the central bank. To vote ontimeframe the Coalition Pact with mark will. The Federal Reserve will release minutes of the january meeting with janet yellen at the home. Guy johnson is standing by and year andll chinese new liquidity might not be as it is. We are not going to get any trade and that is going to be a factor with the nikkei being the real threat. The japanese story is on the front and the japanese yen is down. Andcan see the yen move this aggressive yen move has taken it down and it has started to run out. We will watch that indicator. Trading and friend is probably a more useful indicator and brente inflation trading in the mid60s. Copper is trading a little softer this morning and that has something to do with asia and the lack of liquidity there. The valuesa look at for you and they are positive. We have the fair value for you and it indicates up. As manus said, it was reasonably high for the markets and the story. Be quiet. Who knows what happens. The year is on inflation with the finance ministers voting on phil flynn will become the central bankers next vice president. Good morning to you. Who do you think will win the vice presidency . Good morning. Economist,regarded philip lang, he has a background in politics and we know that some people dont like that transition from politics to the central bank, but he is a front runner right now and we could where he drops out before the vote takes place. It is political and it looks like he will win. There is no purchase in the side of the table. The markets want to know if he is more hawkish and if he will grab on the coattails of the yen environment. Yes. And we dontdovish references and he wants to be presented as someone andis a little bit hawkish it is interesting to see what happens if he gets this. To strike ae way what it means for the presidency. Thank you very much. The battle was important and laid a greater piece of positioning. For us, will someone come in and get rid of the ridiculous stimulus . The negative rates with the ongoing qe and the strong economy. You said ridiculous stimulus and we were saving the euro a few years ago and there was fingernails on the chalkboards. Has it become ridiculous . Away a fruitful, the punch full. A different type of party. And it isis ruined theirhe u. S. Is doing and our chances to cut rates in the future. We get the rates up in the eurozone to come down in the next crisis. Everything you just said, we are going to stay past the end. Does that language need to change . They set dates and times and we think the record will change. While we get towards the end of this year, maybe the rates will come to an end. Has a new paper and they see the original target. How do we break 1 . We had to start with the and it willket probably be fine. How quickly is quickly . It can be pretty quick. A couple the turmoil of weeks ago. It could happen in a couple of months come but the rhetoric needs to step up. A movement in rates could be repriced. The rhetoric needs to change in taking away some of the stimulus and the rates are weually negative here and need to step back and say how low this is. You added to Global Equity you can seend and they talking for valueyears ahead to struggle with the argument that the euro is holding back the valuations. It is taking a couple of theents of earnings with possession. Setting this to buy u. S. Is obviously taxcut related and underlined the corporate sector of performance. The u. S. Is roaring ahead in terms of earnings expectations and it looks like a giant pair when,and that wasnt sure because of the huge selling. It may have been over this time. Disclosuresows the and he was ripping out the fx by thees driven mainly exposure to china. A lot of the shorts were in banks. There is almost a value play to it. So, for us, it looks targeted sure that there were not the you are still giving everything. We have not done this for a have bank equity. Will come back with that in just a second. Mueller unveiled the details of a widespread and core new campaign by the russians to influence the 2016 election. President trump took to twitter to defend the validity of his victory and insisted that the other he nor his campaign colluded with the russians. Thank you. Good to see you this morning. How has russia reacted to this . Well, with a certain amount of bravado. The minister in munich over the was asked about this and dismissed this issue, but i spoke to a senior lawmaker who said that he expects this situation to escalate and that this could become a more toxic political issue in the united pressure forcrease further action against russia. Moscowquestion is how expects to react and what they think the consequences will be . Laughingans must be s off atoverbial america. The russians are expecting sanctions and they released a list of senior russian officials nottop businessmen who are subject to sanctions, but could potentially become so. There were other areas where russia could suffer economically and told outside of moscow control. Reverberationse on both sides of the atlantic. Daybreak, is this a make or break week . Latest withe very carney speaking later on today and, a little bit later, trade and growth and what risk in these surging yen poses to recovery. It is 6 47 here. We are at the dollar index and be the intentions of the Federal Reserve and move the dollar . Twin warnings with benjamin iranianu describing aggression as the cursor to our world. Iran has been said they need to pay a price. Israel has no diplomatic relations. Of informalare kind alliance. The munich security there was relief that no major war broke out under trump and anxiety about emerging risks and hotspots around the situation with north paid and israel has some of the damage coming off of the back of that. So far, they have not torn up the deal, but the rhetoric is heating up and it is something to look at. Is where they want to go. Can they look at the policy . Basically, you have saudi it is becomingnd a bit of a hardliner and the minister says, if we have to overbalance the market a little, so be it. That is what he told reporters arabia story from saudi is you need expenditures and buffers with a need to move the goal post and rebalance a little bit. There are other metrics to measure success and it looks like we are in for an interesting few months to match the opec threat. Absolutely. Bloomberg. To we have International Petroleum week and i will speak to bob to theand we will talk uae. The pound is never far from my attention and has a bit of volatility this week. That could determine whether the bank of england raises Interest Rates with a pick up in earnings pushing sterling higher. The Bloomberg Service is the with alanl be up still with me. The story is that this is a make or break week and there is a probability of a rate hike. From the bankoric of england and the market is expecting this. Andou look at the rhetoric the u. K. Wants to take away stimulus and there is pressure there. There has been a transition do sterling will be a results of the transition do. Business confidence is on the cautious and they are about investing because of brexit. Outave the time to work it the sterling Dennis Muilen lets get into the conversation you have. Are they looking at other alternatives with capital and moving investment of the u. K. . Is that part of the conversation . Yes. There are the wellknown plants and manufacturing is less so. Ist is crucially important goodsstoms union and travel between the u. S. And the u. K. And it is more of a andache with manufacturing that is why there is more of a the government says they would like to do Something Like a customers union. Merkelnderstand dealated the tailormade door toel open the something in between. Day, theyend of the are probusiness. For all not enough time of this and there needs to be a transition do. You need to put a parameter on it for me. See a weakness in they say they achieve by june and reassess it. Of a risk of Inflation Expectations and what the prospects are of that. Gethe ecb struggles to inflation and we have this idea pushing inflation world inflation and the inflation situation in the u. K. Is sterling weakness. It seems unlikely, with and put moneyt into the markets. Job andbly the harder we may get that drop in sterling at some stage. Thank you for being with me this morning and sharing your views. Tomorrow, we will speak to the finance minister and get his views of the day. Ands europes largest bank the huge exposure. How did they see the world . Reassessment look for them . Story veryk up the shortly and talk about the fed and global equities. And global equities. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Show me the olympic winter games leaving ev