Business. Fruitome is bearing the of changes. We have digitalized and created Venture Capital markets to help people. We brought investors together. Breaking news from you from the banks. 1. 5 8ying pretax profit billion, slightly lighter than the market had estimated at 1. 6 billion. This is a bank that is investing heavily in terms of compliance, no compliance, these are the key issues around the bank. You are seeing a First Quarter Net Interest Income of 3. 4 8 billion. The market had penciled in 3. 4 seven. Better than estimated gain for the bank. That is the set of numbers, we will dig deeper. There is a beautiful set of stories around ing. Are they or arent they talking to commerzbank about a deal . We will speak to the cfo shortly. Joining me very shortly. Futurenumbers and on the of the bank. Lets talk about bnp paribas. Bouncing back with a bid in fixed income. Comesxed income business out of the doldrums. Youre seeing fixed income business rise by 29 in terms of the numbers, let me break this down for you. We have seen a couple of lines come through. Equities revenue still slid more than the analysts had expected. Youre seeing the Global Markets of 250 2pretax profit million euros. That is above the estimate from the market. We spoke with the banks cfo in paris, she began with asking him about the surprise beat in fixed income. As you are looking, it is bearing the fruit of the changes we have applied. We have digitalized and joined as created joint venture markets to help people needing to [indiscernible] we brought investors together. When we look at equity, equity was impacted by what we saw in the market at the end of 2018. Customers took some time to come back into the market and there was a gradual pickup in the First Quarter. When you compare the First Quarter with a pickup toward a strong First Quarter a year ago, that is what you get. Revenue is in line with the estimate of 0. 1 . Pretax profit is a beat. How do you feel the continued low rate Going Forward . If you look at the french [inaudible]ou look should look at the gdp in france, there above the overall european. We have guided through that. We anticipate the strength to continue. You believe that Business Confidence and france that is suffering a little. Impact frencht recovery. The french retail activities are slightly impacted by the social environment. However, if you look at the st quarter, revenues have that is basically what we see. Have someng this, we of the banking costs. Anticipate gdp will continue to grow. Manus speaking with the bnp paribas cfo. This is ing. Other than on the net income, the beat had come in higher than the market had expected. Billion below their markets estimate of 1. 6. Net Interest Income 3. 48. A little that ahead and 675, that is a bit lighter on its feet in the market had estimated. Net income is a mess at 1. 1 2 billion. The market had tensile than 1. 15. Lets ask a man who knows about the numbers and the performance. Cfo of ing. Great to have you with us. Welcome to daybreak. We will make a religion out of this for you. Talk me through the numbers. My first take is where lighter on some of the estimates, Net Interest Income is a beat. Your feet and net income is lighter than the market estimated. How would you describe this quarter . Thank you. Very nice to be on your show. We are pleased with results of the challenging environment we operate in. What we are pleased about is our commercial momentum in the First Quarter. 150 thousandher primary customers. We have robust loan growth of almost 9 billion euros in loan growth, 5 billion of deposit growth and as you mentioned, the risk off reminds remains benign. Having said that, we still operate today at about 11 r. O. E. So that is pleasing fresh as well. The last point that we wanted to make, you follow ing quite some time, we have a Digital Strategy and you see that in the First Quarter of this year. One billion Digital Transactions with our Customer Base which is 25 higher in the same time last year. Big movements by our customer to becoming digital. Manus that is the directionality for everybody. It is also spending on compliance. Where are you with that in terms of hiring Additional Resources on the ky ct, are you struggling, is it a big cost we should expect to rise substantially . Guest on ky see we have a Global Program in terms of looking at enhancement and processes and we announced we this isng over rising of cost from reviews quarters. In terms of cost we are taking action to make sure we spend the right amount of money to make sure these issues are enhanced. At the same time, it is also income conceded by other Cost Reduction programs in other parts of the bank, particularly in this quarter. He can see a reasonable Cost Reduction happening. Have to have a word with [indiscernible] willse youre the one who take the questions. We have rumors and sources and speculation. Lets clear some of them up. Is or has ing had any discussion formal orrzbank on a informal basis about doing a deal together . Guest i was expecting that question and as you know, we do not comment on market rumors. What i would like to say is that we have an organic Growth Strategy as a mentioned at the beginning of your show. We look at acquiring new customers organically. We see that even in markets that you mentioned in germany. We are quite successful in terms of a Community Primary customers and we are doing well in the market. Our principal strategy is very much an organic Growth Strategy. Is that no, we are not looking to do m a in germany . Mentioned, again, we really do not have any comments on any arc it rumors and i think it is a question of sticking with our organic strategy. Were looking at transactions as they are presented to us. About a guest talked marketplace in banking that needs consolidation. The remains and necessity. The your perspective, landscape of european banking, do you expect there is not you, do you expect consolidation to be a big theme of 2019, 2020 . Institution, we believe in Banking Union and Banking Union legislation. There are three legs to that Banking Union whether we can have common Regulatory Framework that is already in place. Common resolution of banks if they get into trouble. That is in place. The missing piece today is having a paneuropean deposit guarantee that will make sure that capital liquidity can move across borders. We are quite encouraging. The regulators to move in that direction. Crossborder transaction is a challenge. It certainly is tried to pull them together and trying to integrate businesses is the great challenge. Great to have you with me this morning. Make sure you come back, cs early, cs first. The cfo at ing. Good morning. Juliette saly is standing by in singapore. Lets get a look at markets. Juliette a little bit of a mixed picture coming through from the key asian indices. Those that are open. China remains closed today. Japan also out of action as golden week keeps on. We should be looking at these markets. The hang seng is up i. 7 of 1 , spi and taiwans markets doing well. Where you are seeing weakness is in the Australian Market down by. 6 of 1 due to some weaker earnings coming through from the banks. Lets have a look at the stocks in particular. We were warned the banking reporting season and austria would be quite messy. Flashing its dividend to the lowest level, all of this in the wake of the big having occurred into the financial industry. Also watching this stock in hong kong, it is asias best performer and rising sharply after its earnings beat even the estimates coming through from goldman sachs. It is up by 9 in hong kong trade. This bank in jakarta is the worst performer when you look at the mrr function my down over a most 20 . This document cut indexes from may 6. Were thinking that a lot of the funds that track the gauge have started to sell out. That is weighing heavily as you would expect on the indonesian market. Manus thank you very much, a great round up in singapore. Coming up, being patient. Something a must learn area that is the feds current position. We take a look at the Market Reaction to the latest fomc meeting here on bloomberg. Manus welcome back. I am manus cranny in our middle east headquarters in dubai. With oliviard news in the london studio. Theresa may and Jeremy Corbyn are thinking they may be edging closer to a brexit deal. For talked up the prospects a come to mys plan. The talks started last month in an attempt to find a consensus agreement. The two sides are hoping to conclude negotiations next week. Bmp paradox posted a surprising jump in the key business. This is a really for the chief executive who had been trying to improve performance. Putting up pretax profit of over 250 million euros. We spoke to the cfo. Fixed income is bearing the fruit of the changes we have applied so we have digitalized, we have created the joint Venture Capital markets to help issuance,ding to do investors, we brought them thether and we have borne fruit of them. U. S. Attorney general william barr said he will not shout for a hearing about the moller report, this after the Justice Department objected to the testimony. He may issue a subpoena to the attorney general. The standoff all is a 2 a contentious hearing. Central banking is on the way out. That is according to the billionaire investor. He says that is inevitable that Something Like monetary theory will replace it. Current governments should manage their economy through spending and taxes, not by relying on Interest Rates. The concept has been criticized but he says policymakers will have to embrace it. 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. This is bloomberg. Manus thank you. That great debate between evolution and revolution and monetary policy. One man who knows a thing or two about it is jay powell. Downplayed the recent weakness and gave from indications that fomc is weighing on rate cut despite pressure from the white house and wall street area and the weak firstquarter performance was not expected and id dont think it was related to anything we did in terms of raising rates. , we dont to be more know this but you never know until with hindsight. Some of it does appear to be [inaudible] of macro guest is head rates and strategy. Good to see you. As i read the various stories that come through, it struck me that perhaps this is powell trying to quell our thirst for a rate cut in the u. S. He wanted to try to regrasp the nettles. What did you make of it . I think that was part of it. If you look at front end rates in the u. S. From november last year, they have come down significantly. Expectations have gone full circle. There was expectation back then there would be more hikes along the way. Most 50 sterday probability that they cut as soon as september. There was a need for the fed chairman to regain the narrative and point out that even though inflation has been sluggish, theres plenty of reasons why rates are where they are and may have to go higher still. Curve,if you look at the there was a little bit of a repricing. The twoyear paper, there was almost a vertical move. As far as twoyear, 10 year, we have seen this, do you think ais press conference stymies more aggressive move to the upside . Guest yes, we do. We would say consistent with what i just mentioned about policy being on hold. It is not on any sort of easing bias. Relativelyhould be stable. If anything, we think frontend should be higher. The probability of easing looks too high in the context of all of the data. If anything, the curve should reflecting. We think frontend rates should be higher even after that selloff during the press conference yesterday. Manus we are trying to make sense of the data that comes in. With some talk about the consumer side. One thing which our Economics Team are focusing on is the idea of the cost index which is, we into a chart. It eased at the end of the poster session peek at the end of last year. Do you think that ultimately, Employment Costs will transfer into higher inflation in the u. S. , is it only a matter of time he the squeeze hits . Guest you certainly think so. That is a good illustration of why the fed is saying on an underlying basis for all the in q1,h outcome underlying price pressures are reasonably robust. There is a measure they look at called the trimmed mean where from the out outliers inflation basket. That is still close to the target. What they are saying is this is down to temporary factors. With unemployment at 3. 8 , demand is strong and as Employment Costs go up, companies should be able to pass on the consequences of those costs to consumers. They would expect when you look at the dichotomy between robust growth, low unemployment, slightly weak inflation, they would expect it to be inflation that picks up toward their target. Are not intending to hike or easily time soon and that was the message yesterday. Do you think are the consequences, this was supposed to be a driveby. I know drama. A no drama. This was supposed to be a no drama meeting. What are the consequences . Powell, perhaps with the other central banks. We are triggerhappy for lower rates. Banks. Er standard what are the consequences of the fed for the rest of the world . Guest there is lots of differences between these economies. In the u. S. Context, it was a reminder that in the opinion of policymakers, the concerns about what was going on at the end of last year and early this year are overdone. , theret there was some was a repricing of a lot of assets. The recovery in the u. S. Remains on track. This is regaining the narrative. The market had taken it upon itself to decide the next move was a cut and it was coming sooner rather than later and this was the fed chair saying that is not our opinion. We have policy at the right setting and markets can continue to move in a direction we want to see them go without us moving policy one way or the other. The data will determine whether that analysis sticks and therefore we get this rising yield we are expecting or whether at some point over the andng press conferences meetings, the fed has to soften its stance. We think it will be the former and time will tell. , all this fed theoric, he sees it back to 2019 lows. You would suggest it is not that narrative and we think the weights are going to rise. Need toare down 2. 9 , i double check my low for the year. What where do you think we could pop to on the twoyear side first of all . Guest about that distance the other way. At as the market unwinds, there is expectation of cuts. We dont think they are coming. That is the message the fed gave us and if they are right, yields should be moving higher, not lower in our opinion. Manus in terms of the latest thinking from canada, trying to say our job is over on that side of the world. You are a little bit surprised by the bias that canada tipped its hand for recently and last week. Guest it is along the same sort of narrative. We are a little bit more confident about the outlook for the Global Economy whether it be in north america or elsewhere. We think some of that pessimism in q1 was overdone. Whether that indicates the fed is saying you should not be looking for them to ease or whether and other economies, it is saying youre looking for too. Uch policies policy easing we do think the narrative is shifting. We are reassured by some of the underlying data that suggests the weakness in early q1 was not the start of a new trend. What we are going to see is a ofumption of the sorts growth profiles we saw in the second half of last year and in that context, people should not be so concerned and expecting such dovish action from central banks. Manus of growth profiles we saw in the second half of last year and sta lot more to get to. It is bank of england day and that takes us into the heart of your domain expertise. John wraith is the head of macro rates and strategy and economics at ubs. He stays with the daybreak team. We had earnings from the banks. You heard that cfo of ing saying that they look for transactions as they are presented. Would not be moved on whether they had had talks with commerzbank. Told it make sense for them do that deal question mark in terms of crust border deals, are there challenges without deposit guarantees, is that ahead a hint of what it might take . There is almost a potential secondary. It is not what will drive the narrative on ing. A little bit lighter on some of the numbers but that Interest Income. Paribas. Re about interest up 29 . We think our policy stance is appropriate. We do not see a strong case for moving any other direction. First quarter performance i think is not related to anything we did in terms of raising rates. The Financial System is quite resilient to shocks of various kinds. If we need to, we will use our developmentp somewhere in the target range. We dont expect to do it again, but we dont know. We think our stance is in a good place. We do not feel like the data is pushing us either direction. We will not hesitate if we do need a move in either direction. Just hitlkswagen has the tape as we enter earnings season. Think of the family in this volkswagen. Youve got challenges. Youve got Chinese Market contracting for the 10th month in a row. Volkswagen sells 40 of its stock there. In legal risks weighed on the First Quarter profit. The adjusted operating profit, 4. 8 billion, way ahead of estimates of 3. 9. On the margin they are saying 8. 1 , up from a year ago. They are confirming this years target. The challenges are immense. Theare looking at challenges in italy, spain, deeper contraction there. Italy has just come out of a recession. Registration spell in europe for seven straight months. Those are the challenges, but they seem to have blocked the trend. The cfo will join matt miller. That conversation just after 7 00 a. M. Stay tuned for that. Lets talk about the markets. 2year notes reappraised. This is a spike higher when mr. Powell spoke. Transitory inflation is more hawkish. The fed regrasping the narrative. John, he saysss rates could spike higher, 20 basis points higher than that. Scott meiners says you are going to be back to 2. 1 . We are going to have a look at the dollar and the s p 500. Regaining the narrative there. Is tipping toex the upside. Rates could move higher in the near term. Lets get to Annmarie Hordern. The team are standing by. Far fromhordern never a pound and brexit. Lets start there. Good morning. I want to start with what is going on macro and look at how asia is reacting to the s p falling from that record high yesterday. Biasg really there is no to cut or raise rates. Mixed picture on asian equities. Australias to the downside 0. 7 . We do see hong kong stocks higher. 0. 6 . Japan and china are shut. The exchange, some japanese yen is weaker today. Close to the pound, im looking at risk reversal today. One risk reversal is a gauge of sentiment and market positioning. This is a level we have not seen since a year ago. That is when the pound was trading closer to 1. 40. Reversalse in risk above par, could that signal momentum to the upside . We talk about whether or not signals can be triggers for investors pricing out a chaotic brexit. I dont want to say that. Maybe this is signaling we are going to expand that trading band for the pound. We could see a trading higher for the 140 level. Round up Annmarie Hordern in london. We have our bloomberg partner in mumbai. Good day to you. The markets are back online after a week spring. What is the sentiment . Good day. We are seeing recovery in indian equity markets after benchmarks , but for now we are seeing trends higher by as much as 0. 25 . The banking industry, specifically the recovery from the private sector banks, which were also trending in the red. As far as the Broader Market is concerned, moving in tandem with the benchmarks, there is however one sector bearing down on the indices. That is the auto sector. We have had news from the month of april common. A lot of these have missed estimates. Will be under pressure, specifically one Motor Company trading down by 3. 5 as well as one which is losing out around 1. 5 . We are going to keep an eye on these companies. Thank you very much. Now lets get first word news from the london studio. Federal reserve chairman jay powell has pushed back on president trumps calls for Interest Rate cuts. He says inflation will rebound and the economy will stay healthy without help from the central bank. He said the economy and Financial Markets do not appear to be boiling over. Our policy stance is appropriate. We do not see a strong case for moving either direction. The u. K. Prime minister has fired the defense secretary for revealing huaweis role in britain. He denies he was responsible for the leak. Countriess warning not to use the companys technology. While way denies its equipment is vulnerable to espionage. U. S. Attorney general barr said he will not show up for a hearing about the Mueller Report after the Justice Department objected to the format of the testimony. The chairman of the House Committee says he may issue a subpoena. This follows a contentious hearing at the senate. Clashes have continued in venezuela. Failedllow juan guaidos attempt to oust Nicolas Maduro from power. Guaido has the backing of the u. S. And international allies. 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. This is bloomberg. Lets focus again on the u. K. And her current political live her political rival Jeremy Corbyn have indicated they are closer to a deal. May is aiming to wrap up talks next week, either within agreement or without. Meanwhile it is super thursday for the bank of england with a decision and updated Economic Forecasts. Here to explain his Annmarie Hordern. As you say, today will be the first time the boe will actually take stock of that new brexit deadline, the end of october. Thats going to be very critical for today as well as the Bloomberg Economics now expecting a hawkish hold to signal the possibility of preparing the markets for potentially a 2019 hike as well as jp morgan, citigroup, and td bank. They are foreseeing a hawkish tilt. Watch out for any kind of raised revision for the boes Economic Forecast for 2019 and 2020. First quarter gdp proving stronger than forecast. 0. 4 chance for growth. , it is mostly dependent on the Brexit Impact at westminster. Bloomberg economics are made skeptical the boe will pull the trigger for a hike well brexit solution remains elusive. Lets break down the vote. I love this. Split eight to one in favor of holding rates. Michael sanders will probably vote for a hike and potentially we also have andy if there was to be another one on the hawkish side. It could be him. That decision, the votes, the forecast, all coming up at 12 00 p. M. London time. You have repriced the spectrometer in a magnificent way. John brings life to the debate on u. K. Rates. Emery,ust listening to annmarie, a hawkish tilt. We think not necessarily q1 growth forecasts will be revised higher, but if you look at the february Inflation Report forecasts, the bank of england was optimistic about the u. S. , the euro zone, china, and financial conditions have been a lot higher than they were. Chancek there is a good of a more upbeat message. That will be in contrast with what is priced in to the race market. Moveould see yields higher. Manus this is about mark carney trying to grasp the narrative as well. If there is a deal between labor and tories, that would, or could , change the pricing of rates. That is our starting point, isnt it . They have the difficult task of trying to focus the market on the economics. Clearly the political situation, when it is as uncertain as the current one and with the potential outcomes around brexit being so significant a different , butis not the only factor the labor market is extremely tight in the u. K. Not just headline unemployment, but all these underlying gauges are overheating. The bank of england may think they need rates higher just to keep domestic demand in line measureir inflationary in terms of domestically generated pressures. This is a manifestation, i will put it into the gtv library, economic surprises for the u. K. Outpacing of the United States of america. Coiled springly in regards to economic surprises. It the juxtaposition between economic surprises and brexit that caps sterling . Yes, in a word. In terms of that brexit outlook, you have been discussing the mood music around negotiations between tories and labor, ill be at with a lot of risks around that. I think overall, it is fair to say the balance of probabilities around brexit have moved in a softer direction because parliament is so determined to avoid the more disorderly outcomes. In the background, they will be reassured whatever goes on with those worstCase Scenarios are less likely to play out and therefore edging rates higher, addressing this underlying domestic demand is not necessarily going to be something which is going to be exacerbated by political fallout. A bit more relaxed than frontend pricing currently suggests. In terms of sterling, we need to see more constructive news on what is actually going to happen and when in terms of brexit negotiations to see more material upside unfold for the pound, which we do expect in due course. Manus i was just looking through my library of charts. The risk reversals are back at neutral. This is on the shorts and the shorts are almost back to zero, john. If you think about the trifecta of issues that could drive union,g, one, eu customs more aggressive mpc than we think or that we are pricing at the moment. Is the bar very low to a rate hike and therefore an adjustment in the pricing . I think the bar is lower than the market seems to think. Soon. Maybe too if we get some political genuine progress between now and august and if the data stays on track i mean, if you look at retail sales, the consumer in the u. K. Is spending money. They are anxious. Confidence is subdued. But look at retail levels accelerating rapidly. Veryank of england has a strict remit around cpi. If it see is there are risks of an overshooting on its inflation forecast, the oil price has gone up a lot, they will feel it incumbent on them to act. They also see incidentally that should brexit go wrong and things politically start to unravel, if they have raised rates again in the interim, it gives them more ammunition to fight severe Downside Risks to the economy. The debate is not as complicated for them as some people are expect. We think later on today they will lay that out in no uncertain terms. There is upside for those frontend yields. August is not priced with a high enough probability. You can almost hear the ringing of rags if they do raise rates. Perhaps a little more pressing and then we think is this is a policy make policy mistake. In your view it is compliant with their mandate, but hard to sell to the British Public if there is a brexit storm. I certainly do not envy the mpc their job in terms of communicating in this context of extreme Political Uncertainty and serious risks. That is their job. There issaying certainty of a hike in november or august. They want a more balanced outlook. They want the ability, should they think it appropriate, to say in august or later this year or beyond, we are raising rates. We have warned you this is what we do. This is the data, these are our forecasts. They did it in 2010. The market did not listen. Ultimately, when they did act, they were absolutely within their rights to say we have been telling you all along this is what we do. John, great discussion around u. K. Rates. Head of u. K. Macro rates and strategy and economics at ubs. Our guest host this morning. Do you drive a porsche . Do you just one volkswagen brand . It has been a supple time. Billion euro in legal charges Quarterly Earnings drop after porsche deliveries fall. 12 . E down by i am not in the market. My producer is. 6 . These are the big beasts of revenue at vw. The vw brand itself, by the way, accounts for 50 of its global deliveries. The bulwark brand delivered in uplift of 7 . Sales of the vw brand up by 7 versus porsche. The consequence of this is there is a drop. If we take ourselves back to last year, First Quarter profits fell by 7 . Profit came in at 3. 9 billion euros. Excluding special items relating to legal costs of one billion euros. That is the story there. The challenges in china. The man that is going to be able to discuss it in more context is the cfo of ew. He joins the team on daybreak at 7 00 a. M. London time. That is a special one to stay tuned for. This is bloomberg. Manus this is bloomberg daybreak europe. Oil is extending its losses. It is below 64 a barrel after a bigger than expected drop in u. S. Stockpiles. The market prepares for less iranian crude. This after the end of u. S. Waivers that allowed some countries to keep buying. For more, our intrepid Annmarie Hordern from brexit to oil, there is nothing stopping you today. Lets talk about the u. S. Pushing the exports to zero. Do you think thats going to happen . We have gone from hero to zero again in terms of Market Reaction. Annmarie they are going to try to squeeze exports, but no analysts are thinking they are going to get to zero. Many are thinking behind between zero to 500,000 barrels export. An is able to the question is who is going to skirt the rules to continue importing. It is not going to happen today, which is why you need the price softer. This is what the buying situation was in march. You can see it is important for asia and china is the one to watch. They are going to continue to buy even with sanctions in place. Wants to play hooky from the waivers, i personally think this could become a facet of the trade negotiations, but that is my left field thinking. They are the largest buyer. Does trade outweigh the supply . Question. Good does xi jinping want to annoy the United States by continuing to buy crude from iran the same time they are trying to get this trade deal done and dusted with washington . The one thing china could do was Purchase Iranian Oil in the yuan. That is one thing we potentially see. The question is the trade situation. The u. S. Could be using that as leverage with china knowing they want to buy from iran. The other thing is how much one could the iranians use or need . Is going to be tricky. China is the one to watch. They are the ones that will likely continuously by and they will likely be paying in you one. In yuan. Manus nymex crude down 6. 7 . Brent lower as well. Great roundup, annmarie. Lets focus on the economic picture in europe. The confluence is all the way around the world, but the pmi data which we just had from eurozone countries including france, spain, and italy is going to give us somewhat more of a perspective on whats going on. John is with me from ubs. I think we have built a narrative here, having weight . The United States of america, gdp better than expected. Theyre going to have to review that in the u. K. Everyone is coalescing around the view that maybe it just is not so bad in europe with that gdp of 0. 4 . In terms of policy implications . We see thatight, euro zone in that context where growth has been confirmed better in q1 then consensus. Consensus had come up over weeks previous. Significantly better than what was expected to couple months ago. The euro zone is far from out of the woods. Things are not as bad as people were thinking at the beginning of the year. With inflation where it is, there is certainly no rush for the ecb to do anything on policy. We think by the beginning of next year they will feel confident enough to start the slow process of rate normalization. For us, the next move in rates in the euro zone would be an increase in policy rates, maybe slightly next less like slightly less negative. Q1 was ultimately more reassuring than people were thinking. We expected some stabilization in pmi that reflects that as well. Manus the consequence of courses for the core european bond market. Today begins repricing as we go into the second half of the year. That is a slightly earlier call then some other institutions talking about the back end of 2020. In terms of the bond market, what is the Common Thread . Normalization is a stretching, but we have seen yields move higher in markets for a variety of regions. Year bund yields got down into negative territory briefly. Worries about the economy are alleviated. Suddenly the front end anchor in terms of shortened official policy rate expectations holding the yield curve down should also start to ease. There will be a pickup in sentiment. We do think sovereign yields edge higher. Manus you are right to correct me. I get far too excited about rates moving from negative. Thank you. John continues on radio. This is bloomberg. Manus good morning from bloombergs middle east headquarters. Powell says the fomc has no bias toward a hike or a cut as the fed leaves rates unchanged. Theresa may and Jeremy Corbyn may be edging closer to a plan. The bank of england is expected to hold later amid ongoing uncertainty. Volkswagen says legal risk weight on the First Quarter. Thisfo joins the team hour. Ings ceo gave his take on potential dealmaking. A question of sticking with our organic strategy. We are looking at transactions as they are prevented presented. Manus big oil, big numbers. Big beat for shell. First quarter adjusted profit. A dividend ofd . 47 per share. Big oil, exxon had a hard quarter. A shocker as rockefeller puts it. Chevron stronger performance than estimated. Bp was building cash. It is a big beat for big oil this morning. Billion dollars in terms 8. 63 billion dollars in terms of cash flow. This beats the highest estimates in the market ice. Marketplace. One ms. Compared to the estimate. They are saying underlying profit is a beat. Pretax profit at the top level is a miss. You have the underlying profit of 201 7 million, that is a big beat. Theunderlying profit is number the market will look at. The market has been talking up of a billion pounds available. One line caught my eye. Poundsrt of 100 million in this quarter. We certainly keep an eye on that. Theres a couple of lines coming through their. Costs, less than a billion in 2018. Those are your reports, lets get to another company. It is Lundin Petroleum. First quarter, 406 million. The Company Plans a total of 17 exploration wells this year. Nick, good to have you with us this morning. Big plans for 2019. What is it going to mean for the bottom line . We have had a strong First Quarter. Production ahead of forecasts and also operating costs ahead of guidance. Leading to cash flow generation for the business. Overall, First Quarter good. In terms of the projects coming online, each quarter we talked to you about it. It is due to start in november. What is the update on that . Well. Is going extremely the accommodation in the process platform. It is all about conditioning of those facilities. We are firmly on track to see first oil in november. It is going very well. Get a change in production values for the Company Volumes for the company. Manus what kind of rampup can we expect . You say its going to be good news. You get the first oil out in november. What is the rampup injection . Projection . Nick 40,000 barrels of oil per day. We will have eight wells when we start. We need another two to four wells to be drilled post startup. Is going to take to sometime in the summer of summer the summer of 2020 before we reach 440,000 barrels a day. Withck rampup to start and a couple wells later on. I think it will move fairly quickly when we get going. I just need to ask everybody about dividends, so lets ask you. You and i have to do a few more telephone conversations about production before you up the dividend guidance. Is it on hold until 2020 . We upped the guidance this year. 500 million of dividends 2019. We have set guidance on the basis of sustainable in the long webut we have also want to balance being able to maintainbusiness and and grow the dividends over time. The business is able to generate a billion dollars of Free Cash Flow per year. You can see we have quite a lot of headroom there. We also take a conservative approach and we would like to be able to maintain this. We have the capacity to do everything, actually. Hopefully over time we can do it again, but that is where we have set it for now. Manus the norwegian sovereign divest, hown to does that manifest in terms of risk to the business . Put that in the context of Lundin Petroleum from a risk point of view or consequence point of view. Nick that decision is driven around diversifying away from oil given most of their revenue comes from oil. Their holdings in us are very limited. It is not going to have a big impact. We do not see it as having a Material Impact on our business. Dudley saw the bandwidth for oil as being 60 to 75. Some would say mind the gap. When you see strength on the supply side versus the american production, how do you see 2019 playing out for bandwidth on oil . It has clearly been very volatile over the last six months. I think we see that Going Forward. Libya, venezuela, all have impacts. Shale has been able to respond over time. I think we see strengthening oil prices. We dont plan on that. We have a highquality portfolio. We are able to manage. It is clearly a process good for our business. Manus does it take up much of your conversation . We dont. We plan our business conservatively. Things it if things turn out better, thats great. Nothing we can do to influence the option on those sort of things. Manus good to speak with you. Come back and update us on the rampup. Thank you for being my guest this morning. The coo of Lundin Petroleum. We just had ing and b. N. P. Paribas, the regions Major Players on the banking side. From london, the Bloomberg European stocks reporter. Lets talk about b. N. P. Paribas factors. The uplift in trading has a major consequence for rerating if you look at that versus socgen news and perhaps others. What does that mean for the market this morning . This is great news for the market. All eyes have been on european banks. Analysts have been negative because rates remain flat. That is a negative environment for european banks. Earnings so far have been beating u. S. Banks and wall street. Great results from credit suisse, barclays surprised with the best fixed income trading results. Better than wall street. Considering they are implementing cost cuts, they are on the right track. Obviously, ing and commerzbank, Deutsche Bank, has that bid unfolded, matt spoke to Deutsche Bank what are the reverberations of the moment . The assumption there will be another creditor on commerzbank . Ksenia right. That has been the drag on the banking sector. On e positive results Deutsche Bank has been dragging the index down because of all the issues and the failed merger talks. What i am hearing from my sources, what investors are speculating about is a possible merger between commerzbank and ing. This is pure speculation. There is no inside information. There is this desire among investors for consolidation among weaker european banks. Manus lets see if there is a crossborder activity. Some of the ecb has suggested there is a need. Thank you very much. Our Bloomberg European stocks reporter with the latest round up. The cfo of the Worlds Largest carmaker, you dont want to miss the vws interview with matt miller. He joins the team next. What is going on at porsche versus volkswagens homespun brands. What is the outlook for china . Thats next on bloomberg. Manus manus it is just on 7 14 am in london, we are just under 45 minutes away from there you go. Under 45 minutes from the start of european trading day. I am manus cranny and i am in dubai. That is official. Olivia is in the london time zone with your first word news. Jay powell has pushed back on president trumps call for Interest Rate cuts. He says inflation will rebound and the economy will stay healthy without fresh help from central banks. He added the Financial Markets do not appear to be boiling over. We think our policy stance is appropriate. We do not see a strong case for moving either direction. Central banking is on the way out according to ray dalio. He says it is inevitable monetary three will replace it. He said the government should manage their economy through spending and taxes, not Interest Rates. The concept has been criticized, but dalio says policymakers will have to embrace it. 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. This is bloomberg. Manus thank you very much. It is the interview have been waiting for. The Worlds Largest farm market carmaker reported profit down led by the decline in porsche and audi. The cost rose as vw spent on developing a range of new electric and connected cars. Who better to have the conversation than our very own matt miller in berlin . Matt thank you very much. Frank witter joins us now, cfo of volkswagen after this earnings release. Let me first ask about china. How important is this market for you and what do you expect it to pick up . Good morning. Thank you for having me again. China is i would call it our second home market. Markets down substantially beginning in the middle of last year. In the First Quarter 2019 has been a copy of what we have seen in 2018. I think everybody including ourselves is more optimistic for the second half. Very best Case Scenario is probably to be on par with volume for 2018. I think we all will learn in the next two or three months what it akes what affects reduction will have. We are currently outperforming a declining market that speaks of the strength of our brand. Product in thev marketplace, which is going to help in china. Matt what about the possibility of a trade agreement between the u. S. And china . How important is that to you . You do not produce a ton of cars in the u. S. I am expecting any trade agreement would help you sell more in china nonetheless. Frank i think we are not exporting as a company from the United States to china, but overall, for the business climate, it is important to have very stable and protectable trade conditions, whether it pertains between the United States and china or to the United States and europe. Welcome being made is even though we are not directly impacted. Bet do you expect to producing more cars in the u. S. . Are you going to enlarge your footprint in north america . Clearly arenk we determined to invest in the United States. We have capacity in chattanooga. We are going to produce electric vehicles in the United States. The market is important to us. Weularly as we address are currently a nich player and we are ambitious to grow in an orderly manner. This is a target at the very latest of 2020. Audi and porsche are doing very well even though the market certainly is very competitive. What about giving yourself a bigger footprint in china . Now would seem like the time to up your stakes in joint ventures there. Do you see that on the horizon . I think obviously conditions have changed. Strategically, we are discussing different options. At this point of time, or focuses focus is on our footprint in china. We have established relationships with fa w and saic. We are going to build more cars with jac. We are having strategically considered it, but this is not an immediate concern. The very moment focuses on operations, increasing our last nine for the months, the strength in particular of audi and porsche, we have the opportunity to gain market share. What about the drop in sales at audi and porsche . These are such profitable parts of the business you do. Why did you see the drop and when will we see that oz back . Bounceback . We knew that the first half of those would be impacted by wi tp in particular, but also the cycle of new models and facelifts. That is no surprise. For the full year, we will be ok on both brands. Particularly porsche. Audi has some incremental work in terms of boosting profitability and efficiency. Overall the first half would tend to to be weaker the way both band both brands predicted it. Matt one of the ways of boosting profitability and efficiency was you combined with moving to electric cars is reduce the headcount needed to make these products. How much headcount reduction to uc for volkswagen do you see for volkswagen . You have the future tech was determined a 23,000 reduction in headcount. Drop in futureo fields of business. The transition to more electric vehicles would put pressure on the total number of people we need. Sense. Not make any we need to bring respective products to market. We will learn how much progress is to be made for the time being. They have a plan and are executing it. Everything else is speculation. Will impactof the entire business we are doing. I think we altogether share the view that we need to get our act together in terms of efficiency and productivity. That is what we are committed to. Ont in terms of executing planes, investors have been waiting for you to unlock value from the truck vision. When are we going to see that go forward . Frank the earlier the better. The Market Conditions have deteriorated the past couple weeks and months. The market did a little better. After the unfortunate decision we had to make, we are assessing the situation continually. But there is no date, no concrete date i could talk about. What we said is absolutely true. The ipo is still a desired outcome. We continue to execute the strategy of the trade group. This is what we are sticking to. Matt analysts have long said you can unlock a lot more value. Ut of your sports car in orderestructuring to be able to do that . I think our ceo gave a clear indication that unlocking value is a top priority for this administration. We have a number of ideas. It is very obvious that we altogether share the view. It is our job as management to come up with the right conclusions. On the other hand, when we talk this, it is important we are able to share to the greatest extent possible. We have room to improve, but for the time being, stay tuned. We are working on ideas. Matt i will stay tuned. Thank you very much for your time. Frank witter, cfo of a volkswagen. Manus, back to you in dubai. Thank. Manus great interview. We have got to do better, that is the message. Dont buy anymore porsche. Leave something for me. Maybe i can have a volkswagen. We spiked by 10 basis points because apparently inflation is transitory in the United States of america according to the German Federal reserve the chairman of the federal reserve. Pips. Another 20 euro stoxx futures, what a bland opening. It will be down to shell. That move some of these markets. Shell and ing are both up there in terms of performance for the market to digest. A quick recap, ing underline profit miss. The cfo told me, we will look at deals as they get presented. He would not answer whether he was talking to commerzbank. That would be a shocking red headline if he did. Shell, you are looking at 6 . When hes percent gear. We have all the editors taking you through the shell numbers. At and anna edwards take you through daybreak. The European Market open is up next. It is a Beautiful Day in berlin. Anna welcome to Bloomberg Markets the european open. We are live from london. I am anna edwards alongside matt miller in berlin. Matt today, markets say no bias. The dollar gains after less dovish than expected comments from jay powell. European futures, struggling for direction with the cash trade less than 30 minutes away. Anna shows stellar results