surveillance." this is what the markets are doing stoxx 600 a little bit directionless. , but onlyns in asia flattened out at the end of the session as traders across the to assess exactly what is happening. big move on the renminbi. the dollar is higher, one extending gains, and you see the dollar slumping. we are getting eurozone february manufacturing pmi. a little bit below estimates. services pmi actually rising more than forecast that. today, we'll certainly be speaking to the heathrow airport chief executive. we talk brexit, the third runway, and earnings. let's get straight to first word news in new york city. >> the fantasies 2019 as the end of the balance sheet runoff, but not necessarily the rate hikes. the january meeting shows almost all policymakers agreed to hold that halted roelofs. there are divided over what it would take to raise rates again, no suggestion of a cut. robert mueller's report into russian interference may be finalized as soon as next week. is according to cnn, who says the department of justice is set to announce the new attorney general has received a root or it. the decision to release the findings are entirely up to william barr. the u.s. and eu are still far from a deal. the two reportedly argued over trade and energy policy. the austrian chancellor says quote our relationship has seen better times. theresa may is facing a new threat to her authority, learning that up to 15 ministers are considering voting against the strategy. fitch puts u.k. on a formal downgrade warning, pointing to increasing risks. samsung launching a. from -- foldable smartphone. it can be unfolded into a tablet and will cost $2000. it is not the first of its kind, brand, andeach, technological prowess make it the most advanced foldable phone available. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine. francine: think he so much. -- thank you so much. had a banner year, welcoming 80 million passengers. it doubled chinese connections and increased domestic offering, only 36 days until the uk's divorce, how is britain's biggest air hub prepared? for more on this, we're joined by the heathrow airport chief executive. are you prefer for a no deal brexit? have you put any plans in place? john: if you have. -- yes we have. it is the prudent thing to do. passengers can be confident they can still fly and still look ahead, even with a no deal. the plans are in place to achieve that? . -- that. opportunity for britain to have a world-class airport that will be the best connected airport in the world. also, a 14 billion pound privately funded investment in british infrastructure at exactly the time the economy needs it. is why the heathrow expansion is such a vital part of the uk's plan for the next few years and decades. much.ne: thank you so airport officer giving us a little bit of his busy schedule. that conversation is just after 9:30 a.m. london time. we will talk trade and his business and how he is expecting to grow schneider electric. this is bloomberg. ♪ ♪ francine: economics, finance, politics, this is "bloomberg surveillance." let's have a look at maersk. this company is down quite significantly. down almost 10% after reviewing it expected to earn less money in 2019 than analysts had predicted. let's get straight to the bloomberg business flash. >> barclays traders outperforming most of their peers. arrivinging shares after the ceo promised more dividends and buybacks. he says he feels quote great about barclays corporate and investment bank. >> our goal is to increase the return of capital to our shareholders in 2019. let's see how the buyback program unfolds over the course of the year. bloomberg has learned can file for an ipo. 20-20 $5targeting billion. compensation and would put lift ahead of its rival over -- lyft ahead of uber. francine: back to brexit, theresa may is facing a new threat to her authority. up to 50 ministers are considering voting against her strategy, challenging her plan. this comes as of the u.k. has been put on a formal downgrade warning, pointing to increased risks. joining us now for more is the chief economist at ing dubai. what kind of shape does it take from here? $5 trillion, you'd be a billionaire. >> two options, either made runs down the clock and we will see her deals getting approved, or the risk is still there and we will end up with a no deal brexit. this is still not priced incorrectly in financial markets. when we look at what is happening, there are no moves at all towards may, so a no deal brexit is still an increasing probability. francine: are we ready for it? who would suffer the most? extend tou naturally try to get a better deal? what are the options? you can think of a technical delay. there could be a no deal and about the eu and u.k. agree to put the clock on hold. we will not negotiate any further, but we will get his misses, administrations, more time to prepare. no one can be ready for such a situation, because we have never had it, it is unprecedented. european governments are preparing. there are all of these emergency and contingency plans in place, but we know from the past's plans will never be enough to capture such an unprecedented situation. francine: this is our question for the day. london, its financial sector recover its pre-brexit vibrancy? will it ever? we really get a fully fledged brexit, no soft brexit, then the city and london will never be the same. we will see banks and other financial institutions have moved away or continental europe , or for other places around the world for good when you look at the industry and the real economy, like the automotive sector, we do see that industries are moving away from the u.k.. i don't see that this will easily be reversed. francine: what does it mean for germany? if we do have a no deal brexit and germany is cost in the auto exports, does this economy underperformed to the point of recession? the german economy on the domestic side is still strong, therefore, you would think why do we had talks about recessions? on the other hand, we have an external risk becoming more uncertain. mostexit would come at the inconvenient times ever and could create a sentiment loop to push germany even closer to the brink of a recession. francine: what does this mean for the ecb? they can't do anything, can they? but they will probably try to avoid any normalization for as long as possible. they will try to keep their cards to their chest as long as possible and that's more liquidity measures, probably do something for the probability of banks. if we really get into this brexit uncertainty, no clear rebound of the eurozone economy, they would also start playing around with rates. francine: thank you so much. , we run youe through some of the biggest corporate stories in europe. barclays is seeing a boost on share buybacks while shares at maersk plunged. more on that next, this is bloomberg. ♪ francine: this is "bloomberg surveillance." -- fedest admission minutes show they are unlikely to hike again. build on last month's a dovish message when the fed said they would be flexible on shrinking the balance sheet. as important as patients on the rate hike is flexibility on the balance sheet. those are two things the markets will focus on like a laser. our guest is still with us. at the fedd you look and the ecb, is that it for normalizing? carsten: it certainly is the big buzzword. it looks like this was it in terms of normalization. also, for the fed and the next six months, at least until the summer, there's so much uncertainty. they're all of these external risks. we might see in the second half of the year another move and might see another attempt by the ecb to normalize. today,rently, judging by the probability that all of these risks will have a benign outcome is low. francine: is it a recession risk? is the of curve inverts, is that a sign of a recession to come? or is it different this time around? carsten: it is different this time around. there is the idea of a business side. slowdown,ather be a which means we don't necessarily have to see an easing of central bank policies. but we will see that central banks will simply move on and a very horizontal direction. francine: what is your biggest concern? what are we misjudging? carsten: probably the u.s.. the biggest risk is that the tax release and tax cuts would not work. reaganomics, we will see actually an adverse effect on the economy and see a spiraling of government debt in the u.s.. in europe, the biggest risk is fully fledged trade wars. they were ready to start imposing tariffs on cars and other tariffs, this could bring the entire euro zone towards the .rink of a recession francine: if we get a moratorium or a deal, does that automatically benefit the economy? carsten: it probably wouldn't change landscape a little bit. it will not be enough to really have the fed starts hiking again. we also have the brexit story with probably some impact on the global economy, plus the u.s.-eu trade. retaliate on any imposed tariffs, then clearly the u.s. would suffer. u.s. consumers would suffer, because prices would go up. this would that mean the fed would remain on hold. francine: what does that mean for the ecb? does that make their life easier? carsten: not all. question is if they could do a technical correction of the deposit rate in the course of this year, but see the policy rates really being hiked. impossible, because once the fed is really done and over, room for the ecb to do anything is much more limited, because otherwise will see a stronger euro, not in the interest of the economy. francine: thank you so much. so nice to see you in person, usually in brussels on route. not the same as having a face-to-face conversation. theng up, we speak to standard electric chief officer. will focus on the opportunities and challenges that he sees. this is bloomberg. ♪ francine: economics, finance, politics. this is "blooomberg surveillance." let's get straight to the bloomberg first word news in new york city. viviana: theresa may is facing a new threat to her authority. up to 15 government ministers are considering voting against the prime minister's brexit saturda -- strategy. venezuela is working to bypass u.s. sanctions and asset freezes. nicolas maduro's government told executives to open bank accounts in countries like russia and turkey. since the political crisis escalated, venezuela is finding it difficult to operate in the global financial system. aceto saying the global economic outlook is looking bleaker than last year. who said he was assaulted in apparent hate crime one-off face charges of filing a false report. jussie smollett said he was attacked by two men shouting anti-black and anti-gay emphasis. there are reports that he paid two brothers to orchestrate the attack. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. francine: thank you so much. the aussie dollar fell. it is conferred the move will escalate tensions between the two countries, both which are key economic partners. more is thenow for chief asia economics correspondent for bloomberg news. what is it signal for the china-australia relations? say, if this is confirmed by authorities, it would suggest something other like lowering relation between the two governments. there have been low-lying tensions in recent years over hu awei, the banister has implemented, interference by chinese entities in australia. china has used trade as a weapon against other countries during previous geopolitical spats. they have used it against japan and south korea over a dispute there.s. or missiles it could mean a stronger is in for something of a long haul before it is resolved. what does this actually signal for the trade talks between china and the u.s.? : that things to be going somewhat positively. five or six months ago, neither side were at the negotiating table. without our colleagues in washington saying there are several memorandums being worked on on the key critical areas that need resolution. at the very least, the indications are that tariffs will not go up in march. don't think too many people are suggesting that the underlying u.s. and china tensions are going to disappear anytime overnight. theselikely that structural problems will continue to be with us for some time. francine: thank you so much. in the chief executive of schneider electric, a global manufacturer of electrical power products with a market cap of 40 billion euros. thank you so much for speaking to us exclusively today. when you look at day in and day out we talk about the economy slowed down, these trade tensions but to the u.s. and china, possible auto tariffs on europe, how difficult is it to have a good picture about where the world economy is going? certainly, the world isn't it complicated, but at the end of the day, everything is orchestrated to the way you manage your own company. look where we come from. as you look forward and as we of ourward the future business is reported by two strong transitions happening today. industry 4.0 because every industry in the world is getting more automated in merging the road of operation together with the world of i.t. those are the two transitions which are reporting our guidance for growth, which we declare this week to be 3.5% for next year. or this year. francine: do you have to look your supply chains? have he felt in any way shape or form the fact that trade is going down and that some nations are more inward looking? jean-pascal: we are a global company. we do as much business -- asia is our first region, and then we do a lot and the rest of the world. from the beginning, our markets, the needs are different from one place to the other. we benefit from global technologies. the way we do business in the product we develop are completely different from one geography to the other. francine: if you had to change the supply chain, could you and how quickly could that happen? jean-pascal: yes 200 factories in the world where we could we route things. the reality today is that everything is very local because our customers what the product for yesterday according to the specifications. you have to be very fast in your delivery. francine: every day we talk with academics and experts on trade, but you see it first on the ground. is there a slow down? are we going to see a possible recession? are you worried about the slowdown in china being much more than the markets are saying? jean-pascal: it all depends on where you come from.we grew 15% last year in china . the days of comparison is really high. when you come from that level, you can't be completely pessimistic or crying or whining. what we see is this comparison, still the dynamics in transition to more electricity, more automation of industry and software, which we do from here in the u.k. are really strong. people are looking for more efficiency. francine: that is through new technology. how much of that is in-house or are you in the market for acquiring any? jean-pascal: when we think about fastization, it is a very ramp up. we have tripled in size. the exit rate of growth has been technology. the second has been globalization in asia. while we are trickling in size, where multiplying by six in asia. it mean you have to spend more on cybersecurity? how do you do the fault lines on the? jean-pascal: as soon as you go , there is a growing number of attacks on any system in the world. we spend more and more money on that and resources on the. we don't do it alone. we do it with other companies on which we rely. it is important to have enough resources and have clear platforms on which you can magnify your defense. francine: i will ask you also whether it is difficult to pinpoint where these attacks are coming from? barclays rises after it announces cost cuts and the promise of more buybacks. we will also hear from the bank's chief executive. that is coming up next. this is bloomberg. ♪ francine: this is "blooomberg surveillance." let's get straight to the bloomberg business flash in new york city. gam's manager has now been suspended. it is the latest develop meant -- development in a situation that has rocked the swiss lender in recent months. the drop for the full year was its worst in a decade. standard chartered is taking a $900 million charge tied to regulatory probes in the u.s. and u.k. the penalties relate to sanctions. the bank is bracing for a u.s. fine related to its past dealings with iran. deutsche bank reportedly lost $1.6 billion on municipal bonds over the last decade. it faced internal questions over why the false accounts were recognized quick enough. francine: let's keep the conversation on banking. barclays h-shares rising after announcing buybacks and cost cuts.that follows a mixed quarter. the ceo talks to bloomberg. mcfarland, in his chairman's letter announced this morning that the board unanimously is going to recommend that shareholders did branson get onr. the board. we want to listen to all of our shareholders and their thoughts, but to have that engagement between shareholders and management and the board, we don't believe a board seat is necessary to do that. >> let's talk about brexit. you say you are very well prepared for it. yet taken a charge in this. hsbc are worried about corporate credit. are you seeing any concerns, anything at issue for us that we should note? are you concerned about a recession in the case on a hard brexit? whetheresting enough, it is consumer or small business or break, we are actually -- corporate, we are actually not seeing any signs of stress in terms of credit quality. we did take an additional provision of $150 million in the fourth order just to be cautious and prudent. what we are seeing right now are increases in cash levels. growing morease is than one might expect. right now, the economy itself is not correcting for problems in the brexit market, they were getting a sense of cash levels that people are being increasingly cautious as we come to the final weeks, and hopefully not much longer of uncertainty around brexit. right now, the economy and credit is reasonably in good shape, but i think it is wise for the banking industry to be prudent in terms of extending credit and how we manage credit, given the uncertainty of brexit. one of the uncertainties markets are grappling with, not least trade war and also the fed minutes yesterday. we are seeing equities rally today. questions coming out of whether that rally has further to run. what is your view? i think clearly we are seeing growth slow in the global economy. very much in europe, we have a possible recession in italy. clear signs of weakness in germany. issues in asia as well. i think the challenge that the market is wrestling with is still very low interest rates. on one level, those rates support asset violations that are higher. the flipside is if we go into a recession, the bullets that central banks around the world have to use to try to support a stronger economy are very limited. that was the barclays chief executive. we just getting breaking news out of danske. this is a story that continues going on. danske bank is now saying that the sec is now investigating its laundering case. danske bank putting out a press release saying that first they have received inquiries from the sec, this is the u.s. securities and exchange commission. reporters on the ground were trying to figure out exactly what went on. we understand now that the sec is also investigating this laundering case. you can see the share price is down some 4%. if we have a longer-term share it's for danske bank, really quite amazing to look at the downfall. you can see it was at 250 only 12 months ago, currently at 121. let's bring back the schneider electric chief executive officer. companyso linked to the , that i'm calling you mr. schneider. when you look at some of the investments you have in the u.k., you are one of the company's most bullish. was it cheap, good value, do you expect it to come back? jean-pascal: we did it because there is a lot of technology core value. we have today 5000 people in the u.k. it is one of our major european countries. the last two large investments billion.re in 2014, $3 ant year, we associated with industry software to form one of the largest technology companies listed in the u.k. is a unique company that digitizes the largest plant the world from 3-d design into the world of operations. we speak about industry, 4.0. why did we do it in the u.k.? because it is based and can bridge, fantastic talent -- cambridge, fantastic talent. francine: if we have a no don't brexit, is it going to be difficult to have these talented researchers coming to the u.k. and what does that mean for your investments? jean-pascal: at the end of the day, i'm not voting. we have to look at the future. we are ready in case there is a hard brexit. we are prepared for it. we are ready and we are merging local. we have eight industry sites here. francine: thank you so much. i do also have to bring you some headlines. up next this year, buyers are making political statements for their purchases. how can brands connect to their consumers and raise profits? this is bloomberg. ♪ francine: economics, finance, politics. this is "blooomberg surveillance." is being meaningful good for business? ad featuredial colin kaepernick. gillette don't with praise and criticism following the campaign featuring masculinity. what makes a brand meaningful and how can businesses benefit? joining us now is the chief insight and analytics officer in this matter electric chief executive. thank you so much for sticking around. what is new in the survey? consumers often say, i believe instability -- sustainability. is that shifting? do people really want their values to be shared? maria: we defined meaningful against three different colors -- pillars. the personal benefits and what is the brand doing for the collective benefit of society. the rational is the most important. functional is the key entry point to be meaningful. we know that over time, meaningful does drive business. we see a shift that collective benefits are starting to take a more important role, and it isn't just millennials. it is every generation. mers want brands to contribute to better society. francine: the top 10 meaningful brands -- u2 has been mired in controversy and a lot of youtube has been mired in controversy and a lot of advertisers are pulling out. maria: tech brands are doing very well. the biggest reason for that is because they go beyond their sector. if we look at that functional collective and personal benefits, on functional they deliver, but on personal people learn new things, teach new things and connect with each other. we still see them delivering generally well. francine: does that translate into your world? your marketing is not as important as some of the tech or other industries. brandascal: i think a that can be fully running on purpose is the most important thing we do as ceos. if i look at energy, our purpose has been on efficiency. it is the most fundamental right. it is driven the community of schneider. it depends on if you are very clear about the way you do it. then he train the right people to the company. francine: how do you translate that dna? how do you give it to your employees and the people directly below you all the way to the interim? jean-pascal: uss everything to your mission and values on the assessdoing it -- you everything to your mission and values on the way of doing it. networks. social have an incredible chance of operating companies because we are project managers, competencies, technologies. 5000 people here and 30,000 on the continent, we can bring value on efficiency, cleaning. francine: thank you both. we have to get you both back on. always too short on time. thank you so much. we continue in the next hour. tom keene joins me out of new york. will be speaking to the deutsche telecom executive. we will consolidation. this is bloomberg. ♪ comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. francine: brexit gridlock. theresa may is racing. the latest fed minutes shows 2019 is the end of their balance sheet runoff, but not necessarily rate hikes. barclays rises after announcing capital returns. the ceo speaks to bloomberg. >> our goal is to increase the return of capital to our shareholders in 2019 in a progressive dividend. let's see how the buyback program progresses through the course of the year. francine: this is "blooomberg surveillance." we have another busy day. we had danske bank in the news for the last couple of months. we just found out that the sec the united states is also looking into it. we had disappointing figures out of europe. brexit continues with that amazing headline saying he has brexit fatigue. tom: i must admit, every headline seems to matter and seems to move sterling just a little bit up or down. francine: you are absolutely right. we will have a full roundup about brexit.let's get straight to the bloomberg first word news in new york city. viviana: there is growing evidence theresa may could be closing in on a brexit deal. today, two of her ministers will be in brussels. they come with proposed changes. that follows a meeting between may and european commission president jean-claude juncker. it was described as constructive. i u.s. coast guard officer has been accused of a terror plot aimed at high-profile democrats and journalists. officials say he stockpiled weapons in a washington suburb. they also accuse him of plotting to kill house speaker nancy pelosi and a handful of other democratic senators. tv news anchors were also on the list. federal reserve policymakers see 2019 is marking the end of the balance sheet runoff, but they haven't ruled out more interest rate increases. that comes from the minutes of last month's meeting. there was no talk of an interest rate cut. the u.s. and china edging closer to a trade deal. bloomberg learning negotiators are working on multiple memos of understanding. they would form the basis of a final agreement. they would also cover the major areas of dispute including agriculture, intellectual property. dover break it is expected this week during talks in washington. today, the world's largest shipping line lost the 10th of its value. it is being hurt by the global manufacturing slowdown in trade this. -- dispute. >> we see a lot of trade tensions, negotiations ongoing between the u.s. and china. seems like they are positive momentum right now, but we don't believe that is the last of trade tensions, even if a deal is made because the u.s. also wants to have a discussion with europe. oil of course we see an price that is creeping up which affects our input costs. viviana: global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. bloomberg. tom: thank you so much. screen -- iay the almost did one data screen. on to the next screen. showing in bull market vix. the dow right near 26,000. as our colleague says, it is in built up grind, to say the least. i'm watching sterling. sterling dollar and euro sterling. my13065 on cable gets attention. i wonder what it takes to break away from that range. european stocks edging lower. if you look at some of the gains we saw earlier, they are being paired because there's a bit of a mixed bag in terms of headlines in global trade. the aussie dollar slumping on the back of the dispute with china. i'm also looking at renminbi after that big move yesterday. tom: very good. let me show you a chart. this really interesting take on the american economy. here is a december high, the november high, the ugliness of october. abovee made it back now this december peak. moveis a 31% round-trip down and back up. it is extraordinary. think we can say i have never seen it before, but we have elevated above where we were the first days of december. francine: i like that chart a lot. this is what i'm looking at. you can see aussie dollar following -- falling more than three deviations to the downside. look at me. i found my tom keene. this is after a reuters report. you can see this is a longer-term aussie downward slide chart. tom: what we have been trying to do is deliver in february really smart asset conversation. we continue today. blackrock's global chief investment strategist with us right now. you're getting ready to write the weekend note. give me the theme. what is the theme going into monday? richard: thank you for having me back. look at the drivers of markets. what are the themes driving this d line? the markets now increasingly confident the fed will hold at least through the middle of this year, but also other central banks have become more dovish as well. we have seen that from the ecb, bank of england and bank of japan, and people's bank of china. monetary policy, confidence around central policy on hold our remaining in easy territory. there's been a second important theme as well which has been som e of the heightened concern about geopolitical risk, particularly u.s.-china tensions. market perceptions have turned around very quick the. increasing confidence that a deal can be done. tom: you know i'm in the blackrock triple leverage all caps fund. on december 23, you advised me to go into the four leverage. 11%, s&pgits, dow up up 11%, nasdaq all in, composite at 13% in six weeks. is it too late to get on board? what do i do to reallocate right now after i asked this historic move? richard: last year, we saw an extraordinary sequence of. -- sequence of events. he saw negative returns for global equities, global bonds, global credit. the only place you could hide was in cash. as short rates rose in the u.s., we saw many investors choosing to seek protection in cash at a time when interest rates were rising and offering positive returns for the first time in several years. this year, what you're seeing is a reversal in that trend. you are seeing material flows into longersets duration bonds as confidence increases, but also into areas of equities. if you look at this in a portfolio context, it's not too late to be invested. you see fixed income now offering attractive returns. in equities, are message is don't buy everything, but there are areas in equities that are still unloved. emerging markets we still .2. they have done well in the last few weeks, but coming up significant declines last year. we see positive returns from u.s. markets, but don't extrapolate them. we see those positive returns being driven much more by earnings growth, dividends. we have had a huge re-rating. our message would be don't expect that re-rating. we're still at the point where equities can offer in aggregate returns, but there are risks. francine: as we have the u.s.-china trade being dealt with, this that mean more positive earnings in the forecast? seeing: we are downgrades right now in gdp and earnings expectations. with the potential for further downgrades. what we believe is the risk of recession this year is still very low. we're in a period of late cycle slow down. those periods have historically been associated with maybe surprisingly positive returns. think about the late 1990's or 2007, the late cycle period was slower growth but also higher volatility. rescued want to have our portfolio, but you want to balance that with areas like physics -- fixed income. tom: richard with us from blackrock. look forward to the rest of the hour on the. conversationour, a .ith anaheim and -- ed please stay with us, this is bloomberg. ♪ ♪ viviana: this is "blooomberg surveillance." bank.roblems for danske the danish lenders at the center of a huge money laundering case. it now says the u.s. securities and exchange commission is conducting its own investigation. the bank is accused of letting a estonia flownd funds to the west. the perp covers u.s. sanctions violations, currency trading issues and financial control. that is the bloomberg business flash. francine: thank you so much. barclaysn banks, traders outperforms most of their wall street peers. the chief executive promised more dividends and buybacks. >> what i do think barclays needs is consistent the. i think we need to have a stable strategy that people can get behind and drive revenue growth. the board unanimously is going to recommend that shareholders do not vote that mr. branson get on the board. we also want to be engaged with all of our shareholders. we want to listen to their ideas and thoughts, but do have that engagement between shareholders and management and the board, we don't believe a board seat is necessary to do that. we have brexit with us right now. we talk special reserve in the fourth quarter of 150 million pounds for that. our goal is to increase the return of capital to our shareholders in 2019. let's see how the by that program unfolds to the course of the year. francine: that was the barclays chief executive. joining us now is jonathan tyce and richard of blackrock. jonathan just got out of a call with analysts and leadership at barclays. jonathan: the q&a just started but the first question was about buybacks. you have him on the call saying disappointing share price, we want to return capital. to look at the slide in the presentation any sense we will do buybacks, and then he says we are being prudent. we don't know what brexit will bring. they are not in a position yet where visibility on the top line and strength of capital to do buybacks. francine: they also have shareholder activists on their back. jonathan: women of david, we sent not out of the woods yet. decent result, but they can't stop buybacks. tom: where is barclays on tangible book value? i understand some of the european banks are truly at rock on valuations. is barclays in the group? jonathan: what they are trading at represents that there at 2% or 3%. deutsche bank is at .3%. they are not massively over capitalized. the fact that he canceled a buyback program despite talking about repeatedly for four quarters tells me all i need to know. tom: we have got to turn to deutsche bank. yesterday, we had the bloomberg article, and then the wall street journal turned out with a bombshell on the many bonds trade. i read every word of both articles. what a lousy day for deutsche bank. how do you respond to two grim articles? if they: it is not as are making a lot of mistakes losing money and trading as a surprise. there is a reason it is trading where it is, and it has had numerous capital increases. nothing really changes. at least they are pulling out of the u.s. francine: how should i read the nowst news on danske, under sec investigation? sec, i don't know if it is systemic, but how they could it be? jonathan: look at the share price, nobody can put a number on it. this analysts called. they can't give any help either. clearly, we're going to end up with big fines. it is difficult to believe that went to be has against the amount of market cap that has been lost. tom: richard with us from blackrock. david haro was on yesterday, the great bank investor. he is loading the vote on value in eu banking. do you agree with him? richard: we are more cautious than that. what is clear is that valuations of the bank have gone down. we heard earlier the main driver of the share in -- decline in share price is moving forward. block of growth in europe, lack of credit demand, significant regulatory challenges, the banks have taken less progress, made less progress than their u.s. peers in appearing the balance sheets. has in interest-rate environment which looks like it is going to be low for a long time. a lot of headwind. i will add to that uncertainty around geopolitics. we see that across europe. the european banking system is very vulnerable to increasing concerns about european fragmentation. yes, there is some value view is it is our not the right time. francine: are we going to see any kind of normalization from central banks and with that really help with european banks or is it more of a model problem? richard: i think any normalization and policy would certainly help. the problem is, it looks like it is in the very distant future. the ecb has confirmed no change in interest rate at least until the end of this year. our own economic growth signals point to ongoing and very weak european growth, close to 1%. we see no signs of a material recovery in inflation within europe. even on a 12 month horizon, we still see inflation well below the ecb's target. for those looking for higher interest rates, i think you need to look elsewhere. francine: thank you both. coming up on bloomberg markets, the open, the chief investment officer of global credit. we will ask them a thing or two about credit. this is bloomberg. ♪ tom: "blooomberg surveillance." we like to tell you about the people that are more than suits and ties. that would be the gentleman from germany that studied at the university of paris. he did an internship at the bank of france. i tell you, he is a different person, isn't he? francine: so far, he is pretty held to some of what germany has always held belief in. saying in an interview in trend magazine that he would like to see by admin following mario draghi. richard does not want to be drawn into speculation on who can succeed mario draghi, but if --were to be a jordan german, what policy dramatically change? i think any change in perception that we are going to get a more hawkish stance, many others central banks i think would concern markets, particularly given the weak economic data we are seeing out of europe and the very low rates of inflation. markets are looking for continuity. any change in expectations around the continuity could lead to a rise. francine: with you represent continuity? richard: i think there would be concerns for many investors that a shift in the ecb president would lead to a more hawkish stance, which might be mark lippert for germany, but would create greater concerns for the rest of europe. tom: is there a difference in bank theory? a lot of people talk about the history, but are there really different theoretical constructs to european banks by nation? i think central bankers around europe are still focusing on financial stability, inflation, sustained growth. i don't think that is when to change, but i think there are different approaches to have they get there. francine: thank you so much. richard stays with us.coming up , credit rating agency fitch has put the u.k. on a formal downgrade warning. we talk brexit next. we also have a full roundup on the major markets you are looking at. tom had a great chart at the start of the hour. i had a great chart when it came to pound. one of the main stories is what is happening to aussie dollar. if you look at what markets are looking at, it is again that possible trade deal, possible breakthrough or not between the u.s. and china and tariffs here in europe. this is bloomberg. ♪ ♪ tom: good morning, everyone. sterling, 1.3067, a little strength as we get ready for a brexit chat. with yourk city brexit free news, here is viviana hurtado. viviana: pope francis has a warning for bishops attending a summit. the catholic faithful around the world want more than condemnation, they want concrete action to put an end to the scandal. reportshere are many special counsel robert mueller is about to wrap up his investigation into possible collusion. the report may be finalized next week. a confidential report could be issued in the coming days. shiftg leading a dramatic in the market for phones, unveiling a smartphone with a foldable screen. .t will cost almost $2000 especially unfolded into a tablet with a 7.3 inch screen. samsung will sell it in april. shares of christian l -- christian ronaldo's team is losing. it is a longer shot to make it to the quarterfinals. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. tom: and email just coming in from john from coventry. he says he should have gone to a seen the lawn. -- ac milan. francine: we did speak to the a couple of ac milan of days ago. some big players going into the italian market. i cannot really chat more on the football. i do support the event. tom: i would not know where the event was if it was on a map. i am not a world cup kind of person. francine: let's turn to the latest on brexit, prime minister theresa may is facing a threat to her authority. up to 15 government ministers are considering voting against her brexit plan. nagin andned by lucy richard turnhill is with us. investmenthange the opportunities for the u.k. or does it with the territory? lucy: it goes with the territory. all of the rating agencies came out after brexit and said this is not great for ratings. we had some immediate cuts then. people really have been concerned about it all along. they have always said no deal, those of the problems. we have a ton of political risk of noload of deal. francine: the cheek of heathrow said -- chief of heathrow said no matter what, a plan is in place. lucy: people are getting ready, but how ready can they be? what about small businesses? does your local shop have a plan if they cannot get milk? to the u.k.ot more economy than getting things in and out. tom: are the liberal democrats getting ready and all the political upper, will there be a melding in the middle of liberal democrats in this new independent group? lucy: it will be interesting to see. it is very early days and everybody is waiting and seeing what we will find out. a few defectors does not mean we will get a major political party. rome was not built in a day and we have to watch this one. tom: richard turnhill with us, we have been talking about value in continental banks. i continue to look at the ftse as a statement in the great british multinationals. it seems like the opportunity of a lifetime. richard: when you look at the u.k. market in aggregate, it trades at a low valuation and that is justified because of the uncertainty that brexit faces and also because of the weak growth in gdp and earnings out of the u.k. economy. within the u.k. market, we absolutely agree that we see attractive opportunities in the multinationals. people often forget that 70% of the earnings of ftse 100 companies come from outside the u.k. economy which is growing more rapidly, so overall we continue to be cautious on u.k. and aggregate. the overhang of brexit uncertainty will persist for some time. we see the most likely outcome is a delay in a decision, which means the uncertainty will not be lifted. investors focusing on multinationals. francine: that is like the immediate almost fire reaction. richard: we have seen that rally a little bit as investors have become more optimistic that no deal could be avoided. if we get a deferral and avoid a no deal scenario, i would expect the pound to rise more. a huge degree of uncertainty about what we will face over the deal not aeks, a no zero percent outcome. francine: when does euro-cable move? it is range bound and it is crazy that it is range bound for so long. richard: that represents the uncertainty. we still do not know what is going to happen. we look at four potential scenarios and we can say we seem to be moving towards two, either some form of a theresa may deal which looksoved unlikely in the short term because she does not appear to have the numbers, or a no deal brexit. those are binary outcomes with binary implications for the pound. as an investor, it is difficult to face when you are facing a binary outcome. hedging the risk is the right thing to do. richard turnhill stays with us. coming up, we speak with tim hottges with deutsche telekom who says he is confident the t-mobile and sprint merger will be approved. this is bloomberg. ♪ ♪ francine: this is bloomberg "surveillance," tom and francine from london and new york. trade negotiators are working on --tiple packs -- packed china escalated tensions with australia by blocking its imports, according to reuters. joining us is miranda carr and richard turn hell is still with us. when you look at china and the trade tensions. it seems there is an overwhelming feeling they want to get something done. then you see australia and that feeds into the u.s.-china trade deal. miranda: china is positive about getting a deal done. it has gone over with special envoy status which gives them extra credibility. some deal from the china side seems positive, but the devil is in the details. there is beginning to be some pushback on some of the demands from the u.s. in the chinese media. francine: we were hearing the u.s. was asking china for a stable yuan, but i thought the renminbi was stable. miranda: they are keeping the renminbi stable. part of that is because of the weaker dollar. that has eased some of the tensions. it is kind of -- there is long-term depreciation questions for the renminbi. if they do the trade deal, that will shrink even further. lower inflows into china not supporting the currency, so the idea that the u.s. is saying to keep it stable, they are asking china to manipulate its own currency, which is a bit of a turn off for folks and not entirely what they want. work on do wonderful the fabric of the political economics of china. as theirhe backstory trade representatives deal with the trump administration? what are the incentives between the government in beijing and the business in china to do anything with the trump administration? miranda: i think the trump administration, there has been quite a bit of commentary the past few weeks over how they see the u.s., even if we get it could -- a trade agreement, the relationship is fundamentally changed. the u.s. is a competitor and basically they will have to change the way that china deals with the world and the u.s. going forward. is in ap administration defining moment and i think it will be more difficult to get cooperation in the future on some of the key issues. tom: you say it beautifully. what is the defining moment for president xi? ? i do not see one. is there one? miranda: in terms of its allegiance with the u.s.? tom: yes. miranda: if they get the trade deal done, you will have lots of other issues that become key like the huawei. even if we get a trade deal, the huawei issue is rumbling in the background. the defining moment may never happen. we just get an ongoing series of trade tensions or technology or ip or national security issues, and this becomes a more antagonistic relationship over the long-term. there is not one clear agreement. francine: what is priced in the markets right now? richard: there's been a significant change over the past few weeks. optimism around a deal, going through the first of march with the change of tariffs being implemented, we said that in our desks see that in our geopolitical risk indicators. we are pushing to the point where we worry about complacency. inagreed the risk of a hike the first of march is low. two major hurdles going forward. it is hard to define what a deal would look like. there is motivation on both sides to reach a deal. it is about, avoiding a repeat of the market volatility. it is hard to find what a deal would look like to satisfy both sides. as we get closer to that point, the risk is markets start to worry again. long-termtantly, the issue about strategic confrontation over technology has not gone away. we have to separate those issues, so we have a focus on trade. the tensions over technology will resurface. we caution the overly optimistic around the substantive deal which will lead to a sustained truce. francine: what chemchina offer the u.s. at this point? is ip on the margins? implement some reforms they have promised? miranda: a lot of reforms they are wanting to do in terms of opening up the financial market and auto market is something they would do anyway. the key issue is some of the structural fundamental, the state subsidies and ownership and other nitty-gritty details which the u.s. has been pushing china on, that is where china is pushing back and saying, we do not want to do structural reforms. if they keep demanding it, we will not get an agreement. tom: what is your date calendar? what do we see today, next week? miranda: the first deadline has already indicated that will slide. then if we get some mo use -- mou's, we have seen a lot of them flying around. and that canmou turn into a long-term agreement, that would be your most optimistic scenario. it will be difficult to get that detail for final agreement in place and the timeline that markets are pricing in. tom: this is interesting, and ed hyman leading his note on the .ays with the price of copper as richard turnhill says, there is a pickup in enthusiasm and you see it in the left of copper prices. -- lift of copper prices. francine: well renminbi reach seven? richard: the fed signaling it is on hold through the first half of the year has alleviated pressure on the dollar more broadly, allowing the central bank to start the ease policy and credit creation. some concerns about the renminbi have eased and that is creating a positive cycle right now with china able to ease policy more effectively, increasing confidence around a recovery in reducing concerns around trade. tom: richard turnhill and miranda carr, thank you so much. much more coming up, not only with ed hyman, but with the former ambassador of the united states to saudi arabia. david westin on the politics of america at noon. this is bloomberg. ♪ ♪ this is bloomberg "surveillance." lyft could file for an ipo as soon as next week. target any will valuation of $20 billion to $25 billion. that could start shares in a roadshow on march 18. angle american is the only giant miner not buying back shares. now they are reconsidering it. we spoke with the ceo. >> we discussed the options with the board. the net debt range we targeted six, anden three and we are at 2.8. we had the mitsubishi payment of $600 million for the 14%, so on a pro forma basis we are at 3.4. we think there is another step required in the process but it is obviously a very active conversation. viviana: in u.s. college basketball, a bad night for one of the best layers and for nike. zion williams sprains his right knee after his nike sneaker blowout. williamson -- williams leaving .he game and duke losing nike says they are trying to identify the problem. ouch. that is their bloomberg business flash. i think he should probably shut it down for the rest of the season and go straight to the nba. tom: that is the first thing i thought of. collegethe star of basketball, a child of 18 ready to go. as he was falling down, you have to believe there was a whole shift of 1, 2, 3, 4 years of college ball, maybe right to the nba. a huge deal. for the mail that has come in, -- we are onsays sure -- unsure if he will be at work. let me show you a chart which nails your insight at blackhawk -- blackrock. it is brazilian riel. middle of summer 2018, stronger riel, not stronger dollar. discuss. richard: what is driving markets right now is often got the carry trade coming back. investors are choosing higher-yielding assets and fund them through lower yielding currencies such as the yen. unusualds to the circumstance where the dollar is rallying against developed market countries. the dollar is the high-yielding currency, not something we are used to. u.s. dollar, the euro, and the yen that is the highest it has been. the dollar is rallying against the yen, rallying against the euro, but against emerging markets you show the brazilian riel, you are starting to see the carry trade come back. back into riskng and part because emerging markets took a huge hit last year. there was a number of idiosyncratic events that hit the markets, the persisting -- persistently rising levels of u.s. interest rates affected the market. investors are starting to take the first steps back into the yen. tom: can blackrock call the bottom end of the new commodity market and call a super cycle? richard: there is still structural headwinds going forward. we are much more confident in the potential for emerging-market equities. they have much more potential going forward. francine: it is not overcrowded? richard: i and smiling because we have seen them do very well for about eight weeks. our view is that you have seen investors start to come back out. 18 consecutive weeks of inflows into emerging markets, is that overcrowded? no. many investors feel under exposed to emerging-market equities. you have seen 10 years of low returns and high volatility, not a great combination, so many investors have given up. many investors are structurally underexposed. the extreme valuation and currencies and equities that existed last year are no longer extreme, but valuations are still attractive. some of the headwinds which have hurt emerging markets in the high u.s.icularly interest rates and the slowdown in earnings growth. tom: your perspective on investment and how it links into everything, richard turnhill of blackrock, thank you so much. we will drive forward the conversation with ed hyman. ed hyman for a large part of the hour. we will begin the hour in the next five minutes, ed hyman on the state of your disinflation. this is bloomberg. ♪ ♪ tom: this morning, the state of our economics and politics and will to invest. after december and the 2019 melt up, there is little inflation. ed hyman on the fed's great challenge. on the future of global wall street, look through consolidation, through combination. the future of wall street. this is bloomberg "surveillance," live from our world headquarters in new york, i am tom keene, francine lacqua in london. ncker's comments were interesting. francine: he said brexit was a mistake and he has fatigue. it is just not helpful. whatever they think, they are there to negotiate, and it gives fire to a lot of people who voted for brexit. i do not know what they are thinking. the other thing we heard from the chancellor, the chancellor is saying the commons could vote on the deal next week. tom: no deal in the air with fitch looking at a negative rating. with our first word news in new york city. viviana: there is growing evidence theresa may could be closing in on a brexit deal. two ministers will be in brussels today. that follows a meeting between may and jean claude juncker that was described as constructive. a u.s. coast guard officer has been accused in a terror plot. he stockpiled weapons in a accusedon suburb and is of plotting to kill nancy pelosi and a handful of democratic senators. list.smakers were on the seeral reserve policymakers 2019 marking the end of their balance sheet runoff but they have not rolled out interest rate increases. despite growing risk in the economy there was no talk of an interest rate cut. the u.s. and china are edging closer to a trade deal. negotiators are working on multiple memos of understanding to form the basis of a final the main, covering areas of dispute including agriculture, technology, and intellectual property transfer. the world's largest shipping line lost 1/10 of its value. it expects to earn less money this year than analysts predicted. maersk is being hurt by the slowdown in trade disputes. >> we see a lot of trade tensions. negotiations ongoing between the u.s. and china. seems like they have positive momentum by now, but we do not believe that is the last of trade tensions even if a deal is made because the u.s. wants to have a discussion with europe. we see in oil price that is creeping up which affects our import cost. viviana: global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana her tonto. -- viviana hurtado. tom: equities, bonds, currencies, commodities, i'll most did one screen but i threw in two. euro churning. with the great all market, the melt off. 26,000 on futures now. sterling, 1.3069 bos well for prime minister may. francine: looking at european stocks edging lower. we have a mixed bag of headlines for global trade. dollar is slightly higher. aussie dollar slumped on the back of this china report of banning imports from australia. i am looking at vix because no matter what happens with brexit is something we should keep an i on at 14.11. tom: he has been a wonderful support to bloomberg, ed hyman invented modern market economics. he joins us today at evercore isi and needs no introduction. this is the acclaimed ed hyman was thet before emails most scalable thing on wall street. relationships were damaged by theft of people's desks. i have translated this into bloomberg-ese and ed hyman has been a great supporter. here is the chart i have showed you but i have taken it back to paul volcker. what is so important is to percent is the yellow line and for 25 years, the regression has been below that 2% mark. would you suggest that chairman powell and others will bring down that 2% benchmark? ed: you and francine do not just report the news. tom: we make it up as we go. [laughter] ed: you create what is happening. there are three major vectors and this is one of them. the general topic on this vector is the fed. our view is that the fed is going to present a new platform where they will say they are going to allow inflation to run over 2% because as your chart shows, it really never is above 2%. why would they tighten immediately if it gets to 2%? 1.8%, moment, it is about so they are not even close. they might not get to 2% in the foreseeable future, so this is a critical issue. every day, there are examples of headwinds to inflation. tom: i want to show a tone of the hour, and you will be with us, what i had a my opening, a will to invest. you -- in my opening, a will to invest. for evercorewrite isi december 23 and 24th? ed: nothing insightful, to be honest. the main thing i presented in this topic is that we have had six corrections and expansions, not corrections and recessions, corrections and expansions since 1984. i was saying this is not that unusual if we are in an expansion, which i thought we were. if you are in an expansion and have a correction come of stock market comes back 25% in the next six months. that is what we are in right now. francine: good morning from london. do you still think we are an expansion? does it go back to u.s.-china trade? as soon as that is taken off the , there willad news be an expansion? ed: there are three topics. one is the fed and it relates to inflation. the second one is the trade talks. , your job and my job, is to look ahead a little bit. it is likely the trade talks will be a little better over the next six months than they are right now. , that it willss not be perfect, but i think there will be progress on trade. there could be progress soon. tom: we have a great copper chart to show. about, much more to talk ed hyman on the fed. we also want to talk about how he folds politics in washington into his american and global view, ed hyman with us for the entire hour. from london and new york, this is bloomberg. ♪ they are at the center of a money laundering case and say the u.s. sec is conducting an investigation. ae bank is accused of letting tiny bank in estonia become a hub through which funds from the soviet union flowed to the west. probe covers u.s. sanction violations and financial prime -- crime controls. that will erode earnings as the ceo plans to unveil a turnaround. gamma holding has dismissed tim hayward. shares down 70%. assets fell by more than expected over the full-year and defended its financial targets. tom: this has been extraordinary, everyone's in a while -- everyone's in a while it is good to sit back and look at perspective -- every once in a while it is good to sit back and look at perspective. end of the anglosphere? it was not until 2007 that the anglosphere fell to pieces, first england and brexit and now the anglosphere is led by a man who dislikes globalization, wants to quit ready much every global institution, and yearns to protect his border with a wall. he shuns the language of liberty. the anglosphere is no longer very popular with anglos. history does not wait for dysfunctional countries to sort themselves out. i do not believe ed hyman that's up gloomy on the anglosphere and the united states of america, but what are the steps forward when you let politics in? ed: the political picture is so uncertain that it is a negative for investors. 2020 andhe election in i worried there is a move to the left, socialists, we get higher taxes. it could be a regime change that is quite different from now. there is no way to know today if that will happen. just focus have to on the economic fundamentals at the moment, which are generally just sort of struggle with the political picture. fills 20 and 30 pages each and every day with the granular nature of america. you are the ceos telling about the confidence to invest? the is the granularity in mood to invest by large corporations? ed: the story i get over and over as they do not like trump is a person but they like his policies. they feel better about business than in the past. that leaves an uncertain picture. at the moment, the economy is slowing pretty significantly, growth tofrom 3.5% 1.5% or 2%. heart of that is because capital growth -- spending is decreasing. the underlying economy is still pretty solid, but the rate of increase is slowing significantly and will slow another three to six months. francine: if you look at all the debate in the u.s. regarding taxes and taxing the rich and the fact that there is almost two democratic parties and two republican parties, will the u.s. change significantly as we get to 2020? .d: i don't know i did not predict the trump election so i'm tentative about trying to predict the 2020 election. i think you have to invest on the assumption that you don't know which party is going to be in power in 2020. francine: what does that mean for a changing world? we were told when president trump came into power that he wanted less globalization. when will we see less globalization? ed: i do not think that is a dominant factor in investing right now. the u.s. economy is doing ok. the epicenter of global growth is china and china is slowing. i think it will pick up in the second half of the year, but that will be the issue, whether it does pick up. narrative created the and is about a 1% economy, very slow. it does not look like it is falling off the cliff but is not giving the world economy upward pressure. as tom pointed out, there is no inflation because of the global slowdown. i also say that i think this expansion is going to last for years to come, but not for quarters to come, because we keep having this slow expansion without inflation. the things you are pointing out just keep the economy slow and keep the expansion longer in my opinion. you so much, ed hyman of evercore isi stays with us. pimco up, mark easel of -- mark easel of pimco. this is bloomberg. ♪ ♪ i have something like a brexit fatigue. i can understand you are tired. >> this is a disaster. francine: that was the commission, president jean claude juncker speaking in brussels. they race to break the breath -- brexit impasse as parliament prepares to vote. we thought there was evidence that the two sides were coming together. our comments like that from mr. juncker helpful? maria: they probably are not, but that is in many ways his role and he thinks he needs to publicly stick to that script. he says brexit feels like a waste of time, this is not the future, this is a deconstruction of the future. behind the scenes, both sides are working on this text. delegationw the u.k. has been flying in and out of brussels the entire week, so clearly things are moving. the attorney general be in brussels today, all eyes on him. anything he can say on the backstop to make sure the deal gets through, we will keep a close eye on. tom: what kind -- francine: what kind of a deal could they come up with? this would make going to parliament easier. would it be smoke and mirrors or something concrete? maria: we know, and this is very key, 95% of this deal has been agreed. it is about the irish backstop. the europeans may be happy to tweak that language. one of the ideas they have floated as before the final deal gets put to a vote, they would like to see if the u.k. parliament what except the tweaks. one thing the e.u. hates and wants to avoid is where macron and merkel a gram language and it gets rid -- agree on language and it gets rejected in parliament. tom: thank you so much from brussels, as the soap opera continues. edward hyman is watching the ballet in brussels and london. see him atmetimes the grill at the dorchester hotel, one block away from the evercore isi shop in london. beliefrious about your in london. michael bloomberg has made a commitment. what does ed hyman feel about the future of london? does it maintain strength and focus? ed: i think so. i have not seen anything as messy as brexit in my career and it seems like a self-inflicted wound. there is such uncertainty. everybody in london says it is a mistake to move forward. let the parliament insist on moving forward. until we get a break in that, it creates uncertainty. i was talking to one of our vendors last week, and they cannot get anybody to do anything, do any software development until they figure out what will happen with brexit. tom: this goes back to your original work at cj lawrence. the headlines were a little different out of europe, the putin headlines, very assertive about military and poseidon and drones. have we moved the on the memory of world war ii in europe and the united kingdom? ed: probably not. as putin's remarks indicate. russia in my view is a small economy and really does not have that much ability to project itself. jobn does a fabulous looking like he is the size of china, but i think that whole thing yesterday was for domestic consumption more than anything else. thank you so much, ed hyman of evercore isi staying with us. andill get back to populism the parallels between u.s. politics and brexit. coming up next, we will speak with tim hottges, the deutsche telekom chief executive. , it time we spoke with him was an interesting conversation on consolidation and what role he wants deutsche telekom to play in that. another stock i am watching is danske bank. an sec is conducting investigation into their money laundering case, that is important. we went through jonathan tyce and we will get back. this is bloomberg. ♪ comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. 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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. ♪ this is bloomberg "surveillance," tom and francine from london and new york. we have a good conversation on telecoms come -- consolidation. here is viviana hurtado. theana: pope francis says catholic faithful want more than just condemnation, they want concrete action to put an end to sex abuse. it was a warning for those attending a landmark summit on theabuse, the pope calling summit. special counsel robert mueller is about to wrap up his investigation into collusion between russia and the trump campaign. the report may be finalized next week. a confidential report could be issued in the coming days. samsung is leading a dramatic shift in the mass market about smartphones, unveiling a foldable phone. unfolded into a tablet. samsung will start selling it in april. lost in the market. share of christian rinaldo steam falling as much as 14% after losing to madrid. it is a longer shot to make it to the quarterfinals. last year, rinaldo was signed from madrid, a sign of their ambition. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. francine: thank you so much. u.k.,ng news at of the the brexit story is ongoing. we are hearing from a u.k. official that getting a brexit deal next week is unlikely. we know theresa may spoke to jean claude juncker about softening their stance on the backstop to make sure her brexit deal goes through parliament. we thought they were making progress but this u.k. official as saying they are a long way from getting what needs to be gotten on the backstop. you can see the pound reversing some of the gains after those comments. tom: not the gains off of february 19 so it is still safely above the 1.28, 1.29 level. you have been a dollar watcher for years. it is a goofy dollar, that is a scientific term. versus the majors, how does ed hyman interpret dollar dynamics? ed: dollar is not part of my mosaic i am watching. on the big market correction we had in the fourth quarter last year, there were three factors that caused it. the dollar had almost a 10% move up, so i am watching the dollar to see if it has a repeat of that. it is still fairly high but has only moved up 3% to 4%. it has been sideways for almost six months, so it is not moving up or down. if it were to make a significant move up, that would make me worry about a repeat of another market drop like in the fourth quarter. tom: does it signify to you -- does it matter to you, rather, the consensus is weak dollar? do you follow the zeitgeist and say that is not going to happen? ed: i am a contrarian at heart. i would think it is going to be stronger. i do not get enough of a consensus on the dollar to make me think it will go up because most people think it will go down. you have to admit, it is unusual to think it will go down when the u.s. economy is the strongest and the fed is potentially the most aggressive central bank out there relative to the other guys. francine: relative to the other guys, but if we do not have a resolution, going back to our not see a, could we significant downturn in the u.s. because of the tax cuts coming because of the global perspective elsewhere impacting inflation and job wages? is the u.s.ption economy currently is slowing significantly. 3.5%, now it is 2%. slowdown significant and i worry that s&p earnings could decline. my best guess is they increase slightly, but the u.s. economy has slowed down. as you go through this year, it is more likely to improve and to get weaker, that right now you are in that weak spot and that will feed along with the other things we have discussed like brexit and populism and the elections, that will feed the fed being a little more dovish than they might otherwise be. they will lead other central banks like the ecb to be more dovish. tom: can reduce single best chart now? best charto single now? we have gone further on the bloomberg, it is not only copper back 25 years but it is copper adjusted for inflation. there is a long-term disinflation of copper over a decade, the china boom, up we go. a financial crisis getting in the way, and we revert back to disinflation. we have broken through elegantly , that yellow resistance line. is it a copper breakout? viewerss make sure our see the suspect in 1990. this is a beautiful -- see this is back to 1990. this is a beautiful chart. is making an upside breakout in the next move will be inflation up. it is too early for me to see that. i look at it every hour. tom: francine does that too. ed: i got up this morning, and you show the chart on copper, it is down slightly so i relaxed a little. hyman, did you ever one morning wake up and say go to cash? ed: have i ever. let's talk about gold, is now a good time to pile into gold given the uncertain see? -- uncertainty? ed: i do not do gold or crypto. tom: why not? why du and john templeton not do gold? ed: i can always find things i would rather do instead of gold. i can always find some investment, whether it is a stock i like or real estate i would prefer over gold. i do not dislike gold but i find other things more attractive. tom: we got an email from rachel from indiana who suggested ed hyman is in london, you need to take him the grill of the dorchester. francine: perfect. we will talk gold as well. ed hyman stays with us. we will speak with tim hottges of deutsche telekom. weaker earnings growth in 2019. we will ask him about consolidation in the sector. this is bloomberg. ♪ ♪ this is bloomberg "surveillance," tom and francine from london and new york. let's talk about telecom and consolidation. now facing rising regional competition, the phone care -- company is willing to invest billions on 5g. tim hottges joins us from their headquarters in germany. welcome to "surveillance" and thank you for giving us your time. you say the merger will go through. you were in the u.s. in the last few weeks. who did use be too and what makes you think it will be approved? tim: i was in the u.s. last week. we have one year of an approval process. customers andince politicians about the 5g network we want to build in the u.s., thinking about the competitiveness we want to strengthen with a merger. in the first half of the year, we are waiting to get an approval for this transaction. we got the approval from the services on this transaction and now we are looking to the doj and fcc. francine: give me your impression. you met with regulators. did they say anything? what did it feel like being there? tim: look, i am not speculating at all. we have provided tons of material and our conviction about how we want to drive the market and change the competitive landscape in the giants,inst the big two at&t and verizon, has been said. and wethis gets digested are optimistic on this transaction going forward because we know what we are doing. it is good for creating a leading 5g infrastructure. we need countrywide coverage. tom: you and the guy in the pink shirt have the greatest success in the smartphone expansion, absolutely extraordinarily -- extraordinary what they did. you have got a problem. deutsche telekom uses huawei equipment. t-mobile says they do not use huawei equipment. isn't the quickest way for you to solve this to lose huawei? tim: the first thing, it is not pink, it is magenta. it is not only the u.s. that is growing, it is all of our markets. we had 3% revenue growth and ebitdait. growth -- growth. we are not using china's equipment so we do not have this discussion at all in the u.s. in europe, we have built a vendor strategy over the year. tom: this is critical. can you tell you regulators watching this interview right now that huawei is ok in europe if it is not ok in the united states? decision, the security of the infrastructure is the most important component and different layers of the network. i'm just somewhere you do not have any security issues and others which are critical. the political leaders and services, they have started a process to elevate the insight and will come up with a conclusion. it is not on us to decide. it will be decided from the political leaders and we are supporting this process. we have to make sure all vendors which deal in communications are using the services that are secure. francine: i understand and respect that, but if there is a security breach because of the way 5g does not have a central nervous system, it will not be the regulators or politicians blamed that the ceos of private companies -- public companies. tim: it is nothing new for us that security is the most important value we have. we have to build trust. ms. discussion is nothing new. we have looked into the source court and looked into what vendors are providing to huawei in the past. it -- if there are new requirements from the political side that we have to focus, we will do so. we are not deciding whether we take this vendor and not that vendor. it is a question of the technical benchmarks we have to deal with. francine: what will you do with your investment and like of --xit, increase or get out in light of brexit, increase or get out? tim: the bt has done a lot to improve performance. we were disappointed over the last years as the biggest investor in this company. looking forward, i see a lot of good traction from the operations side, from the build out, from the infrastructure on the mobile side and the open reach. when the markets are bearish, it is almost too bearish and when they are bullish, it is almost too bullish. i see a lot of momentum going forward, so we stay where we are will participate in the turnaround. francine: thank you so much, mr. tim hottges. teaching what a magenta color is. coming up, barclays rises after announcing capital returns. the ceo jes staley speaks to bloomberg. barclays needs consistency and a stable strategy people can get behind to drive revenue growth. francine: we continue our conversation on banks and the future of wall street next. this is bloomberg. ♪ ♪ what i do think barclays needs his consistency. we need to have a stable strategy that people can get behind and drive revenue growth. unanimously will recommend the shareholders do not phone mr. branson get on the board. we want to be engaged with our shareholders and we want to listen to their ideas and have thatbut do engagement between shareholders and management and the board, we do not believe it is necessary to do that. we have brexit in front of us and we took a special reserve of .40 million pounds for that our goal is to increase capital to our shareholders in 2019 in a progressive dividend, and let's see how the buyback program unfolds. barclays,taley of spirited on the positioning of barclays over the next five years. isi, weyman of evercore finish up strong. i want to show a chart, normalized banks back to the lehman low. american banking and the proxy is juggernaut jpmorgan, bnp paribas, and the complete failing of e.u. banking. in davos this year, the backstory was a you banking has to get cleared. we see deutsche bank with two major stories in the last 48 hours. how do you fix e.u. banking? ed: it does not get fixed. i do not see anything that is going to make europe get better. point,re it will at some but sitting here with you today, there is no inflation. the ecb will have to stay on hold, so i do not see any particular catalyst for the banks in europe. in the united states, bank loans have improved significantly in the past three or four months. in europe, they just continue to muddlelong at a lopez -- along at a low pace. tom: moynahan, dimon, the rest of the bankers hang on your each and every word. are they constrained because of andrew jackson, because we are afraid to let our thanks -- banks get bigger? ed: they do not hang on my every word. i think for the u.s. economy, it will keep growing. one of the things that will happen in the next year or two is bank loans will improve, and that will be the next step for the u.s. banks to get better. francine: how much disruption will we see on wall street for loans? have 4, 5, 6e small challenger banks who want to lend to small and medium-sized enterprises. do we see that in the u.s.? ed: i do not see it as a major factor. the payments business around the world and in the u.s., that is doing great. i think the problem for the u.s. banks, the big banks is that loan growth has been weak in people takingf market share from the big banks. i think it is loan growth in the next three to four years will pick up because it has picked up significantly in the past three to four months. francine: what is one thing we misunderstand about banks? has the financial crisis changed them forever? has, but i amy not sure that is misunderstood. the banks have not been terrific performers and their business has been challenging. i do not think it is a misunderstood factor. tom: you have got your little stand up table on fifth avenue as you stand with your black marker and you are ready to go to mimeograph on the ed hyman outlook. what is your theme for friday into monday? ed: three factors -- the fed, china, and the inflation staying low and the expansion staying long. up, serviceon sector up, they have been getting it wrong. ed: part of what i do is try to figure out, like i was talking about, whether people understand it or not. people get that inflation is not there. the university of michigan does the measure of inflation, record low in february. people see there is not a lot of inflation. tom: this has been wonderful. ed: so nice to see you. tom: ed hyman with us today. much to talk about. we need to do and you update. update.d -- and e.u. i noticed the dublin airport closed. what is the brexit news flow today into tomorrow? francine: i would say it is confusing like most days. we woke up thinking there could be a compromise between the u.k. and e.u. on back stops and we heard the pretty terse words has brexitjuncker fatigue, and they are far apart on the backstop. stay tuned. tom: jonathan ferro and i will drive forward "surveillance" on radio. this is bloomberg. ♪ this isn't just any moving day. this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. alix: the doves versus that of plus. u.s. and china inched toward specifics of the trade deal. barclays promises buybacks. giving ammunition for the ceo to edwardctivist investor, bramson. david: we will get right to markets. alix: an interesting headline day. still, markets continue to be quite. s&p futures flat. despite theup .1% fact that euro area pmi rose barely over that 50 level. it's about selling anywhere on the curve.

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