daybreak: europe." doin manus: there was a feast of central banks this week. all eyes will be on the house of parliament. will theresa may's in these backer on the article 50 bill? , itterling is a benchmark is under a little bit of pressure and bank of america says we reject the notion that article 50 is priced in. it is having the largest losing streak since july of last year. the political risk is rising. this is the euro against sterling and it is under pressure. anna: an interesting thing to watch in terms of political risk to the week. let's look at the risk radar. report andhe jobs other factors, japanese stocks extending the biggest rally in a month. south korean stocks are up. record highs on global stocks. we have a very busy week as you point out with all the central bank meetings and a busy political calendar. manus: keep an eye on the dollar. just a little bit soft for two days in a row, giving back some of its original gains. those are good numbers. the animal is essentially obsolete. we are down for the six-day in a row. almost 6%, a substantial moves in the oil price cleaning up in the market. how marketsge of will respond on day to after that jobs report. we are going to get that rate hike, but how fast will it tighten after that? manus: keep an eye on this beautiful piece on bloomberg first word, goldman sachs is essentially saying even though of thead this crushing commodity conference, they say it creates value. that is the mood in the market. that is the discussion. that is a whole other subject. in the u.s., republican and democratic lawmakers have enid they still have not se evidence that obama tapped donald trump's phones. senators have asked him to prove the allegations. it is been suggested that no evidence exists. stock futures and currency forex have jumped after the prime .inister's win this is up from 47 in 2012. the results of the race in india's largest state is an indicator of popularity of reform. the markets reopen tomorrow after a public holiday. president of south korea remains defiant. she returned her private home yesterday after leaving the presidential palace to be greeted by hundreds of supporters. in her first public statement since the ruling, she said she was confident the truth come out. she is facing criminal charges for abusing presidential powers for personal gain. iceland is back eight years after its banking crash. and a hasty news conference yesterday, the government announced that as of tuesday, it will lift almost all of its remaining capital controls. the move will allow citizens, corporations and engine funds to regain full access to the global capital market. the country's financial crisis triggered its worst recession in more than six decades. the australian treasurer has said his biggest worry about the economy is low-wage growth. scott morrison spoke exclusively to bloomberg television earlier. >> the biggest challenge we have is to ensure that what australians are earning is increasing. forave had flat wage prices some period of time and increasing what australians earn is what i think is the big challenge now. the bank of england's newly appointed deputy governor remains under pressure this week as she awaits a report on her conduct. the treasury committee is reviewing her position after she admitted she did not disclose that her brother works of barclays, which the central bank regulates. is thele, one of the boj centers is moving on. he will move to m.i.t.. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg. it is the start of this week. it has been a pretty good session across asia. goldman coming through with a bullish call on chinese equities. you can see the hang seng do quite well. a little bit of weakness coming through in australia, dividends are being paid out. $22 billion with will flood the market between now and july. you seeing the continued rally following the court's decision on present pack on friday. 2015-it hsbc may in hong kong our focus today, we had the management change. have a new chairman. he will also lead the search for a replacement for stuart gulliver. aia has fallen in home -- hong kong. to shiva is dismissing -- toshi ba is dismissing reports is selling part of its business. prices, they's have been green over the past two quarters. this is leading the way to potential stronger consumer inflation, as well. anna: thank you very much. today, let's look at what is happening in the u.k.. theresa may will attempt to quell a rebellion in her party and she tries to win the power to trigger brexit. manus: the house of commons is set to debate and vote over whether to accept commitments and by the house of lords last week. overturnnment wants to the additions and if theresa may prevails, she will likely be able to travel -- trigger article 50. have someone from asset management with this. the morning. how important is this that she gets this single bill? >> very important. if this becomes a complicated , it willis attached have to deal with a lot of people. keep it simple. anna: do you think u.k. assets are moving not between hard and soft but certainty and uncertainty? is it more important that it is process as it can be? >> i think so. at the end of it, theresa may is very good at this, a very steady approach. she has talked about everything before she doesn't internally and then she sticks to it. that is what i want to see this year. it will be a transition year toward brexit. we are not going to get that much meat on the bone, but let's get negotiations started, let's see what happens about the bill and if we can negotiate trade at the same time. those are the big sticking points for the market. when can we start to trade negotiations? when can we look forward to the structure of the economy post-brexit. are some things people say will unnerve u.k. assets in one of those is any discussion of passporting or equivalent or a maneuver one way or the other. we started the day looking at sterling and there is a nice piece on what to expect on the triggering of article 50. this is the chart. euro-sterling. contingent by most analysts is that article 50, and at the beginning of a messy divorce is not effective of the price. agree? luke: i think the whole process is reflective of the price that is pure uncertainty. unless you get a sense of the impact on the economy, i think it is very difficult the price that in. the risks are rising and volatility has been low, so that is certainly not priced in. typically high volatility means weekend assets. from our perspective, not priced in. otherare whole bunch of stuff around here not just about article 50. it is having that's happening in a slow week. there are many other protagonists in that argument. luke: if you are short sterling-euro, it is a tough thing to do. anna: there is a lot going on, even in the u.k. there other things going on this week. a great profile of kristin forbes, she will be leaving. bloomberg has been profiling her and she is a rebel voice against the exit. brexit. some people are asking when we will see a rate hike on the bank of england? how on hold to think they will be? luke: there is a lot of uncertainty. there was a great paper on why uncertainty doesn't matter from an economic spectrum. she is leaving, that is one voice on. we could travel back in time, we would not see the cut. the alphabet soup we live in -- i think that will slightly tighten conditions anyway. i will be quite glad to see that. he thinks this is a temporary inflation boost rather than a rise in inflation seen around the world, which is more of a concern. if we get it right come i think we get it next year and it next year and it's the course of point emergency cut taken back. it doesn't feel like he will do it this year. was on aris johnson show yesterday they were talking about hard brexit and you have referred this a number of times, anna. his position was, i don't think the consequences of no deal are by any means as apocalyptic as some people might pretend you'd it is not for me to discuss whether that is a sane or insane statement, but this is data and the propensity of the recession in the u.k. in the event after two years it isat hard brexit, certainly inconceivable to me that we would not get a vote on the outcome, the closer you get to a hard brexit or uncertainty, these risks do rise. luke: they do. it is not about the traits. that industrial manufacturing is not a huge portion of the economy, it is about financial services in the city of london and what kind of deal gets done. it also is things like insurance contracts come at you have to deliver a euro asset for someone who has bought with sterling. these things will be key for the next couple of years. as we get closer to 2019, the risks of a recession are rising, but it will depend on what else is going on. anna: the financial services industry in the u.k. is fearful what could happen in europe and united states, and they are right to do so. they want to forward that relationship. luke: donald trump seems keen cut red tape pete is not the best thing to reduce regulation dramatic, but less would be quite nice. the u.k. would appreciate it. anna: thank you. yourare look of some of week ahead. it is busy. the decision to trigger brexit returns to lower house. fed policydnesday, a decision and the dutch election. -- anna: and we round up the week with the d 20 meeting in germany. manus: coming up, europe's biggest bank gets a new chairman. and vodafone thousand to the u.k. job market and ledges to take up more workers in the coming years. manus: a diplomatic standoff with turkey and the netherlands overshadow the elections this week. this is bloomberg. ♪ ♪ anna: welcome back. cloudy skies and hong kong. hang seng is up. >> hsbc has named mark tucker to succeed douglas flint as chairman. is a former head of provincial and will take the post in october. his first major task will be to find a successor to stuart gulliver who is been at the bank for more than six years. it will have more than two dozen new jobs in the u.k. the gumby says the positions will be sold over the next two years in the midlands and north of england as well as scotland and wales. the move is expected to support 2 billion pounds of investment in britain. a trader at brandon howard asset management has left after three years at the hedge fund firm. he was a partner in the new york offers -- office with a global macro strategy. they had a peak of $40 billion investment. attempts to reach the company were not -- to reach the men were not successful. manus: europe -- the netherlands will go to the polls soon. there was a diplomatic standoff this week with turkey. anna: the turkish family affairs minister was denied entry into her consulate and exported -- escorted to the german border. trying toed her of sneak into the netherlands. manus: the turkish president called the dutch fascists. the freedom party leader waiting offense -- weighed in on events. only rightit was the decision the prime minister could make. [indiscernible] for more on the stigmatic situation and what it means for the dutch election, let's bring barden.ew great happy. we are scratching our heads. does this benefit the right? some people are suggesting that it could benefit the other side? who stands to benefit? andrew: in the short term, we have elections, a referendum in turkey about a month away on april 16 where the president will seek more powers to add to his ceremonial powers and try to get more teeth on that role. in the short-term, it is a -- the for them, oregon turkish president gets to look strong and energize his base and the netherlands, the prime minister has decided to attack right. , butuld have ignored this he decided to take a harsh stance and they escorted one minister out and refused landing rights to another minister. it has played well for him. a poll is showing that 90% of people agree with him. momentum was sliding in the final days for a political opponent. i think you also get a bump for this. short-term, everybody winds but longer-term not so sure. manus: let's talk about the longer-term consequences. you're talking about attacks on the right, but the truth of the matter is that the dutch elections have forced the a move, -- immigration, in rhetoric to the right over this campaign. dow on theifted the debate in the netherlands and beyond. andrew: also in france and ofmany, and i think in all these elections, we have seen the dialogue forced to the right. regardless of who winds, we have seen the dialogue shift to the right. that is a long-term consequence. the other is that a lot of very undiplomatic language was used, id the turkish president, assume after the election, assuming he gets what he wants, he will try to reset those relations. a lot of work needs to be done to unwind that. box,you open pandora's there are a lot of consequences and businesses will suffer and it will take some work to repair all of this. with a i am not seen any sign of the climbdown and i suspect we will see more of the right referendum on april 16 in turkey. anna: thank you very much, andrew. so when you look at the dutch election, there was a lot of uncertainty on the political calendar in europe and the kind of rhetoric increasing the uncertainty. what matters do you about the dutch election? is it whether they can be a firewall in the spread of populism we've been talking about? is that the significance for an investor? luke: i think there is a past dependency problem. if he does very well, that has an effect on marine le pen, it could change things for her. it is on investors mind. along with other people as far as i can see, people are waiting for volatility in the opportunity to fight risk assets, especially in bonds. people have been cashing in gains over the less six months and are waiting for something to happen to make things little cheaper. manus: when you look at the volatility on the aex, it is going on in the election. when you look at the wider context in europe, my question to you is simple must have you seen the peak in volatility or could it really go on? --y really can push the file dial. luke: a lot of things could still happen. state open all day on election day. they can campaign all day long on election day. a large group of people is undecided. it could go either way. these metrics are telling you that politics is a bigger risk this year than it was two years ago. we could still get to wednesday with one party doing well. that could be a shock. euro when you look at assets more broadly, you see the euro against the dollar and the ecb. it was suggested that there was a conversation of the government counsel on whether there could be a movement before the qad comes to an end. that is another headline. declining amount of qe we will see this month. ies are very strong. it is all relative. europe,n is back in gross is starting to come through in many places around europe. thing hectually the has to get his head around, is this headline inflation going to come through to the core? if it does, we get the right rice. rise. toa: up next, from the fed the bank of england, it is a big week for the central banks. how many hikes will he get this year? this is bloomberg. ♪ live-stream your favorite sport at the airport. binge dvr'd shows while painting your toes. on demand laughs during long bubble baths. tv everywhere is awesome. the all-new xfinity stream app. xfinity. the future of awesome. manus: it's just gone 6:30 a.m. in london, the dollar is down a little bit, yen is rising. dollar-yen 114.66. can't get above 150. nejra cehic is with us to get the results of our market wrap. good morning. nejra: good morning. andg week for central banks ahead of that we have global equities trading near record high. the msci is up for a second day. you can see a lot of the indices in the green, south korea hitting its highest. japanese stocks extending the biggest rally in a month. a little bit of a softer dollar today. a lot of the asian currencies, crude extending its decline below $50 per barrel. speaking of the dollar, if we look at the bloomberg dollar index, weaker for a second day. that jobs data better than expected, 235,000 was the number. although the payrolls data was a beat, it was a little less than the most optimistic forecasts. attention is turning to the pace of rate hikes owith wednesday fully priced in. is three hikes the confirmation, needed to push the dollar higher? bulls backtracking as traders are waiting for the policy cues. then i've got to show you oil and what is happening with the oil price. oil dropping about 10% in the past six sessions. wti fell from grace, below $50 per barrel. it started with hedge funds when investors cut bullish wages to a one-month low. the question is will he get worse from here. anna: thank you. let's talk about what is in today's edition of daybreak. edition is available on the bloomberg. here are some of the stories that have made it in. crunch time. theresa may needs to quell a rebellion in her own party if she wants to trigger brexit. the house of commons is voting today to begin talks and some tories are pushing for parliament to have a say if no deal is reached. i thought it was interesting how those possible rebellious tories have said it depends on what david davis and what the government says during the debate today. manus: and that's necessarily holding the prime minister and her team to account -- inconceivable to me that there went to be a vote on the outcome. a lot of things were inconceivable. let's talk about the secondary of contention, turkey's dispute with nato allies, steepening ministers were barred from campaigning in the netherlands for a referendum, but with the president erdogan, the turkish leaders said holland would pay the price for its actions. anna: europe's biggest bank has a new chairman. mark talkamed aia ceo kka will take over on october 3. he will among other things be tasked with finding a successor to the previous. manus: for more, let's get to our bloomberg news reporter who joins us. so, we have a new german. what does he bring in terms of breadth of experience? >> hi, there, manus. speaking to analysts today, the trackrds we hear a lot is record. if you look at the shares of aia since it was listed, mark tucker was appointed ceo just before it listed if he took it through shares rising more than threefold. shares are obviously very respectful of this man, who has been able to quadruple aia's value of new business. that's a projection of profit that the company is expected to earn from its policies. that figure stood at $2.8 billion usd at the end of last year. the fact that he is leading is not so great for aia shares but ares, inod for hsbc sh hong kong up the most since december. anna: i'll pick up. what is on his list? we mentioned finding a replacement ceo -- what else will he have on his agenda? >> well, obviously, finding a replacement will be topmost on his list. said he would like to maybe step down or move on to something else within the next year or so, by the end of 2018. that is roughly the timeline we will be looking at as far as mr. tucker, the timeline he is looking to find a replacement. these moves have been well telegraphed, obviously they have been well telegraphed to the market. they were already looking for a new person to replace him. the new chairman will also have to contend with a lot of the other challenges that have also been well-publicized -- he will have to deal with continuing fallout from all the various misconduct fines that hsbc has faced, the rising compliance costs, and of course he will have to sell to the public its pullback from emerging markets. fromhas withdrawn something like 80 different businesses over the past couple years, and mr. tucker will obviously continue to oversee that. manus: he will, indeed. great roundup. asia.nance editor in we touched on the subject with your boss, martin gilbert. it gets look at hsbc, 74% of profits from asia, up from 65% last year. you can understand why they have got in asia focus. what do you think tucker brings? collecting savings and investing it in the west, which has been hsb off story for you -- hsbc's story for years. he has run some very big groups the regulatory changes, and these banks are going through an awful lot of regulatory change. as we split retail and institutional banking, he will be able to help steer stuart gulliver and find a person with a lot of experience. i think he is a good choice, and we will often say that when we know who it is, but i think for hsbc this is a particular set of skills. he has large experience their financials and he is a good choice. anna: so that works, and this is something that has been revamped already, changing some of the makeup of the board, because shareholders were unhappy about declining profitability. bringing somebody in from the outside, it is seen as positive. >> it is. and we will always try to improve governance in big banks, and bringing in the external people into these important roles is absolutely crucial. --on't think manus: thank you very much. we will continue the conversation with the u.s. economy. it added more jobs than estimated in february, ensuring a rate increase by the federal reserve this week. now the question is how many will we get in 2017? anna: a survey conducted last week suggests three quarter points hike. we're expected to move in march, june, and december. that now matches the median number of increases that the policymakers forecasted. that is all very boring, on the same page. we had this underlying tension for a long time, but now on the same page, will spread out. does the year pen out that way? >> it is all very neat, isn't it? i think fomc members made it clear quickly to get the market, to where they are. the fed was behind the curve already, and they will be at the end of the year. inflation will be with us for a long time. we'll see what trump does and i think they will. anna: the argument that inflation is not running away with itself, the expectations of the spread in the u.s., treasuries, inflation, not suggesting that the fed is behind the curve. but you see inflation differently. >> it has to stay where it is and then reassess what the natural rate should be. if you look at the taylor rule -- manus: that's a 3% gap. rate,e, but the neutral the neutral rate shouldn't be zero plus inflation. it feels like it should come up a little bit. the markets of president significantly. manus: representing what anna said, the market is getting a little bit more punchy. 45 economists in a survey say three hikes, but the interesting thing for me is the probability of three or more hikes this year that have gone above 50% for the first time on march 5. so what is the possibility of three or more, and what would that do to markets? could markets handle three or more? >> i think, if we get a soft rate rise, justify stopping the range and going to a spot raise, i think that is fine. if you've got a full 25 basis point rate hike, in that started getting back to treasuries, we'd be much higher. it adjusts where people's terminal rates are. next year comes into play quick quickly. how many rate rises do we get rext year, two, three, o four? anna: you mentioned that we could get this move, where we move from a range to a point -- you think markets will take that in stride. what significance do they have and why would they do it? >> it gives them a chance to fine-tune quite a boring policy. if we get a big fiscal boost from donald trumps the ministration, a less than respond to that without moving the top end of the range any higher. we could get the rate rise this month -- we don't get a four-way in june, but it is a reaction to the fiscal stimulus. then we get the next rate rises in september and december. it just means there is this constant move to reflecting the view on growth in employment so they need to tighten conditions. but actually they have gotten looser. manus: the debate is how much slack there is in the system, and this is a debate between the trump campaign manager additional lists. u6 levels we5 and have going through. look,mnuchin saying, these are falling. u6 suggest there is more slack for the u.s. labor market than the traditional monitors of the unemployment rate say. does that hold for you, or should we look at alternative benchmarks? >> there have been some recent studies that show employment makes very little difference. are we going back to the phillips curve environment, or are we in a different environment? with things like the gig economy, people changing their work habits, let alone automation, we aren't sure a lot of these numbers make a big difference. inflation tends to be a global phenomenon. do?s: what do wages really >> if wages actually start rising, i would love to see it. if we just start rising -- [laughter] >> if inflation picks up, no doubt. but it's the risk at the moment, isn't it? it's china, it's exporting inflation, which is the big story. rather than this continuing grind lower. anna: many developed markets trying to deal with the new economy, employed versus self-employed. luke pic stays with us. remember, coming up on the program, we are going to talk about what's going on with the oil price. manus: wti dips below $50 per barrel. why investors are staying so bearish on crude. anna: plus, prime minister may in the house of lords. could she pull the trigger as early as tomorrow? manus: and populist power. how will an escalating diplomatic spat between turkey and the netherlands impact the dutch election? this is bloomberg. ♪ anna: welcome back. 2:47 in the morning in new york. the clock has changed. be aware of that if you are making transatlantic travels. let's get the bloomberg business flash was juliette saly. juliette: anna, thank you. hsbc has named insurance executive mark tucker to succeed douglas flint as chairman. tucker was ceo of aia and former head of prudential. he will take the post in october. his first major task will be to find a successor to the ceo, stuart gulliver, who has led the bank for more than six years. -- will add more than 2000 jobs in the u.k. they say the positions will be filled over the next two years across the midlands in north of england, as well as scotland and wales. the move is expected to support 2 billion pounds of investment in britain. a trader at brisbane asset management has left after three years at the hedge fund firm, according to a person with knowledge of the matter. he was a partner in the new york office, focusing on fixed income trading with a global macro strategy. brennan howard plunged at the end of last year from a steep $40 billion high. a spokesman declined to comment, and attempts to reach him when successful. that your bloomberg business flash. manus: thank you very much. let's talk about oil, trading lower through the day. wti extending its first decline below $50 per barrel after investors cut their net long positions t. anna: our executive editor for markets, tracy alloway, joins us with a chart of the hour. great to see you. is this a minor blip or the start of something new? the moves of the last few days have been substantial. tracy: yeah, that's exactly right. i think it's useful if you go back in history. take a look at the longer-term chart of investor positioning on wti specifically. the bullish bets, the net longs, are the ones you see in the white line. right around the time we actually had opec announcing the production cut agreement, there was a big, big jump. a lot of investors were caught on the wrong side of that announcement and they rushed to take on long positions on crude. since then we have seen them build up. what was interesting last week is we started to get a decline. it seems like the oil market has sunk. what was the catalyst? we had concerns about a pickup in u.s. production, specifically shale, but you could say that those habits have been going on for quite some time. we did have a houston energy conference that seemed to to bring those concerns to the fore. the question i am seeing posed by lots of analysts is whether or not what we are seeing in the chart is a reversion to the mean. atwood boat badly for -- that would bode badly. manus: it certainly would. what are the options? we have caught up with the qataris, none of them are saying they are ready to extend this deal as they have done between opec and non-opec. is that the real price driver? is that the real mover of the dial in this story? tracy: well, answers on a postcard to opec, i think. i am sure they are keen for ideas. it is clear that they want to push the oil price higher while maintaining their own market share. that's a pretty difficult task, and i think it is one that is becoming increasingly difficult, as you can see from the list production figures. we have oil rigs that keep rising. we have stockpiles that show no signs of diminishing, and that is exactly what opec wants. of course, they could extend the production agreement, but is that really going to do anything to halt u.s. shale? that seems doubtful. what they might want to do is hold oil prices within a fairly narrow range, say $50 to $60 per barrel, $50 usually considered breakeven for u.s. shale. even then, you kind of head toward a war of attrition with u.s. producers. you don't get that swift knock on u.s. production that a lot of people in opec had been hoping for. anna: tracy thank you very much,. tracy alloway joining us from dubai. our guest is still with us to talk about oil. it seems that the combined efforts of opec in one direction in the u.s. shale producers and the other have for some time been keeping the oil price down, but now we see the break to the downside. does that continue? >> it's back to the rate where they said they would reduce production. we could see oil in balance, and they have to lower the sulfur content, so it changes which oil is the right oil to use. at the same time, you are going to get a tall day of inventories later in the year. this could just be a blip. i think oil is well spotted in the mid 50's. we could see it spike next year. short-term i think it is just noise. this is a reaction to the increasing rip current in the u.s., but that takes a while. it will take even longer to hit the international market. by the time it does, the drawdown will have started. they have plenty of domestic to sell, and they are going to continue -- this is volatility of oil. it is four times more volatile. looking at the stoxx 600, the worst performer this year to date, down 4.48%. the market is voicing a little bit more doubt, i think, than you have at the moment. do you still want huge exposure to oil? down 10%? the market is doubtful. >> we have had a very nervous market for the last couple years in terms of equity and bond markets. what people forget is the reset during that period. is kind of producers are taken fractures take out the premium at lower cost. we can have a bigger range for oil without making so much of a difference to these companies. this noise, if i am right in this goes away and we get back to more normalized $50 or $60 a barrel, these companies are making an awful lot of money. anna: where does this leave the emerging markets story? this is something many investors are still looking to tap into, despite higher interest rates in the united states. the oil imports story for some of those markets is crucial. some stability in the oil price creates, all other things being equal, investing in emerging markets. >> instability in the dark it -- in the dollar, there would be a lot of things like that we would like to see, stability makes investing easier. emerging markets are being very weilient post trump, and sold for our u.k. clients a lot of emerging market exposure last year stop a lot of those things have just recovered to back to where they were before. onthink there is more going here. if the consumer has been recovering in the emerging market for the past year, and i think that has been one of the things driving a reflation trade , yes oil will make a difference in the margin, but i think that's what it is -- it is more of a marginal trade, it is more about the currency and the growth of the consumer. you have a long list of demands. [laughter] manus: he got up early, he is going to set it up. how about this -- this is the msci in europe. versus the rate hikes. 2003 through 2007, it didn't end all that badly. i know the economics are different in people will probably harangue me for this. that badly't end all for emerging markets during the last rate hike cycle, did it? >> no, they didn't, and during that period, you had a really strong period for equity markets as well. manus: yes. >> they were lifted through that. and the globalization story was still going on during that period. you learn lessons, but it is never like that again. this time i think it is about the growth of the consumer. that is a really interesting story. we have been banging on about india for a long time, and i would say that's a great country to look at in terms of how things can change at how quickly they can change. anna: the political news overnight -- thank you very much. the senior investment manager at aberdeen asset management. manus: the brexit rebellion. the u.k. prime minister fights for the right, within her own party, to trigger article 50. the details to come. this is bloomberg. ♪ manus: quelling the rebellion. theresa may prepares for a potential backlash in her own party as u.k. lawmakers vote on the brexit bill. anna: war of words. turkey's diplomatic spat with the netherlands intensifies with 48 hours to go until election day. could it's the race like to the right? mark: and hsbc names aia's tucker as the new chairman. shares jumped the most since december. welcome to "bloomberg daybreak: europe," our flagship morning show in london. anna: a warm welcome to the program. breaking news coming through in the u.k. housing sector. friday and over the weekend, plenty of news flow surrounding players within the housing space, and we are getting a statement coming through from regards toponding in speculation about a possible offer. they announce a possible combination of redrow and bovis. theow continues to believe combination could create a combined business is compelling. there are other bidders in the fray, so whether they will come back with something higher is the key question. manus: certainly going to be one of the stocks in play, along with hsbc. they have a new chairman. let's talk about the markets -- a slightly better opening, carrying through from the latter part of the asian session, a which higher in london. oil is still weighing on the markets. to that end, we have the smb, the bank of england, and the bank of japan. volatility is at a record low as we go to that moment of potentially triggering article 50, volatility in the u.k. is hitting a record low. anna: let's show you where we are in the trading environment overnight in the asian session. we talked at the top of the show about the pound against the euro, weaker over the last few days, certainly some weakness coming through. this is the msci asia-pacific, up over in the asian session. japanese stocks extending their biggest rally in a month. new record highs in the last week or so, being touched by global equities despite this hike cycle that we are in. hickmore says he saw the propensity for three but maybe we are just giving to excited. -- too excited. very lightning up with the market ahead of the federal reserve, and we see that carry through as well into nymex crude, wti down to the sixth day. we just had a conversation with tracy alloway, we see more and more come back online. rig count is the highest since 2016, and net long positions are bailing quicker. entirely unchanged in s&p futures, we might go to the start of the u.s. trading day. york, 7:03 in london . don't let that out of sync time difference for the week throw you. saly withto juliette the first word news. juliette: anna, thank you. u.s., republican and democratic lawmakers say they still haven't seen evidence to support donald trump's unverified claims that his predecessor taxes phones. senator john mccain called on the president to provide proof or admit he was wrong. meanwhile, alan shift says he didn't expect to see any evidence and suggested that none existed. india's is a stock futures and currency forwards have jumped after prime minister narendra modi's bigger than expected win increased expectations for a continued agenda. in then 312 seats assembly, up from 47. the results of the race in india's largest state was seen as an indication of popularity and reform. presidentuth korean office by removed from the highest court. she left the presidential palace to be greeted by hundreds of supporters. in her first public statement since the ruling, she said she was confident the truth would come out. she is facing criminal charges for using presidential powers for personal gain. iceland is back, eight years after its banking crash. and a hasty news conference yesterday, the government announced that as of tuesday, it will list almost all of its remaining capital controls. it will allow citizens, corporations, and pension funds to regain full access to the global capital market. the company's 2000 eight financial crisis triggered its worst recession in more than six decades. the australian treasurer has said he is worried about the economy's low wage growth. he spoke exclusively to bloomberg earlier. havee biggest challenge we is to ensure that what australians are earning every week is increasing. we have had flat wage pricing indexes for some period of time now, and increasing what australians earn, whether it is wage earners or small businesses, is what is the big challenge now. juliette: bank of england's newly appointed deputy governor remains under pressure as she awaits her report on conduct. parliament's treasury committee is reviewing her position after she admitted she didn't disclose that her brother works at barclays, which the central bank regulates. one dissenter is moving on, leaving at the end of june to return to m.i.t. as brexit challenges maker alternative use more valuable. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . rounding out the session in china, up .9%. we had a bullish call from goldman sachs, the hang seng also looking good in late trade, topics nikkei stronger, holding onto the highs from december. 1%.bsolute tear, up in terms of individual stocks, hsbc is at the top of the program and mark tucker from aia will replace him as the hsbc chairman. hsbc in london is out in the most since december and then to sheila is another stock to watch of the japanese session, up over 3%, disputing reports that it is trying to its stake. 1% gainfrom japan, and year on year for february in terms of ppi. we are also seeing a pick up on factory floors in china, the first time in two years both japan and china are seeing a lift, suggesting that we could see consumer inflation. manus: juliette, thank you. a little more news flow coming redrow,, this time from preparing cash transaction. , they haveto that concluded that neither is them reflect the underlying value for the bid, and both should be rejected. that the offer was not of interest. of the business they say they are making good progress on their plans to recover and improve profitability. bovis did say that talks with say that both of the bids undervalued the company, and they are continuing to talk. anna: apparently they told redrow, it did not merit further discussion. we will watch the share prices. today, u.k. prime minister theresa may will try to quell a rebellion in her party as she tries to win the power to trigger brexit. house of commons is set to debate and vote on whether to accept the amendment made by the house of lords last week. manus: the government wants the lower house to overturn the provision and if theresa may prevails she would likely be able to trigger article 50 as soon as tomorrow. we have patrick armstrong with us. good morning, welcome to the show. a lot of the press suggests she needs a clean, easy hand. mak --th a simple bill >> it's not going to matter much. the amendments are largely inconsequential except for some very slight negotiating power. i think that is what's going to happen in the end, but theresa may would rather have them as not very valuable bargaining chips that she can use in negotiations. anna: where does this leave u.k. assets? as we head into this week and some people tell us, well, everything to do with brexit is priced into the pound, what do you make? is there risk this week around the event of the triggering? the triggeringk is going to be a specific event that will set off risk. manus talked about implied volatility being low. it is something that's going to be an overhang for the next two years, and i think until we get through the general election, nothing positive will come. if article 50 is triggered, you have to get past the french elections and german elections before europe will show any signs of moving to discuss something that's realistic, because they won't want to incentivize voters to push populist policies and talk about benefits from a breakdown. manus: we talked about this at 6:00 a.m. -- if nothing really good is going to happen for australia over the next period of time, the implied uplift from the sterling drop -- is that priced into equities? would there be any change in your perspective on the equity exposure in the u.k.? >> it has been a big tailwind for equities, especially the ftse 100. we short the ftse 250. a lot of the ftse 250 companies have to import goods from the united kingdom, and that will be a squeeze on profit margins, because in a weak economic environment, you have seen for the first time this quarter some retail numbers, industrial numbers, starting to show weakness. we think it's a cyclical ftse 25 0, at higher valuations and they don't get the currency as much. anna: what changes your view? if you are short ftse 250, you believe in the weakening domestic picture in the united kingdom. how week does that have to get before you change? >> another 15% to 20%. expensive buts expecte so are equities as a whole. they will be weakness in equities despite the constructive you on the global economy. u.k. might be at risk that valuations are full. manus: breaking news coming through from south korea. a 60 day countdown after the impeached, south korea tentatively decided on the presidential election day, according to the local news agency, which may come in on may 9. that is the first indication on the potential date for the south korean elections coming through. risks are rising everywhere. look at the u.s. is -- they are getting pretty punchy. the s&p fell to figures close to one year highs. you shifted your view south on the s&p. you talk about an eight year bull market last week. you shifted part of your team -- what is the thinking? >> we have been short u.s. equities for a number of months, but our portfolio for the first time in eight years is short equities overall. last time i got there was the tech bubble. it is very expensive. it's not an environment where the economy is doing incredibly well. you are looking at 2.4% growth this year, which is sub trend versus where it was over the last decade, but it is improving over where was last year -- how much good news is priced in is the question. it is interest rates are what's going to set us off. equities are expensive become bond yields are too low. i read a great piece about whether the bull market is eight years old. at depends on how you define it. matters aeople it great deal, when the bull market started. but right now you feel comfortable shorting s&p. >> definitely. when you are paying full valuations, you need a continuation of great news, and any time you are paying, there are 99% multiples on every multiple you look at, it's expensive on every measure. manus: we are going to get a you saying it could be as bad as the.com bub -- -- the.com stretched, andre we are long cyclical assets and short defensive deflationary plays. manus: down 15% by the end of the year? >> at some point you will see 15%. anna:. ok patrick, thank you very much. patrick armstrong stays with us. up next, the final stretch of campaigning before the netherlands heads to the polls. will it be upended by a diplomatic standoff with turkey? details next. this is bloomberg. ♪ manus: just gone 7:18 in london, age: 18 and a beautiful day in berlin. 12,000?dax get through let's get the bloomberg business flash with juliette saly, standing by. juliette: thank you. hsbc has named insurance executive mark tucker as chairman. tucker, the ceo of aia an former head of prudential, will take the post in october. his first major task will be to find a successor to the ceo stuart gulliver, who led the london-based bank for more than six years. vodafone says it will add more than 2000 jobs in the u.k. the company says the positions will be filled over the next two years across the midlands and north of england, as well as in scotland and wales. to move is expected to support 2 billion pounds of investment in britain. at breath and howard asset management left after three years at the hedge fund firm. he was a partner in the new york office, focusing on fixed income trading with a global macro strategy. at the endrd plunged of last year from the peak of $40 billion. a spokesman declined to comment, and it tends to reach seebacher were not successful. anna: thank you. a quick word coming through on this ongoing spat between turkey and various countries in europe, not just the netherlands. francois fillon, contender for the french presidential race, says turkey must be told it won't be able to join the eu. this is interesting in the context of le pen trying to capitalize on the fallout between turkey and the netherlands over the weekend. let's get more details. manus: let's reflect on the netherlands. they go to the polls in less than 48 hours, europe's first big election this year. the election was upended over the weekend by the diplomatic standoff with turkey. anna: protests broke out after the turkish affairs minister was denied entry into her continent and escorted to the german boarder. the dutch say she put public order at risk by choosing to "sneak into a netherlands" after turkish officials abandoned talks on campaigning abroad. manus: the turkish president responded by calling the dutch "fascists," and the dutch freedom party leader weighed in on events on saturday. >> i am happy all this pressure mounted [indiscernible] anna: for more on this situation and what it means for the dutch elections, let's bring in the managing editor for government here at bloomberg. we will broaden the conversation in a moment because this is becoming broader than just a spat between turkey and the netherlands, but what is this going to do to the very immediate business of the dutch election? some analysts are suggesting this fallout could get broader -- what is your analysis? >> well, they could boost both of them, to be honest. we had a snap poll come out right after this bat with turkey, i found 90% of people saying the prime minister was doing a great job. the same poll also found that his base was fired up, saying they will certainly get out and that is important because it means while he has a strong base they are not always going to get off the couch to go vote. card,ying the nationalist he is maybe preventing people from bleeding over, bringing people on-site like his strong stance, but at the same time he is energizing his base. the leaders face off tonight in a one-on-one debate. it is going to be a great conversation, this campaign has seen everything and it has been upending the final days. we will be playing close attention to the conversation, to see how they decide to respond to turkey's slurs. manus: thank you very much. the very latest on the election campaign as they get going this week in the netherlands. patrick armstrong is still with us. before we get to that, a couple more lines coming through. he talks about the need for strict parliamentary quotas on immigration, a stumbling block that brought david cameron back to this country to essentially trigger a brexit debate. anna: the potential for turkey to be or not be an eu member. -- this is just illustrating the way that politicians in europe are, in some cases, having to tack to the right on immigration, to neutralize the perceived threat they see from populist parties. >> they have to do things to counter the populist things, moving people away from the mainstream. i think it is positioning before the election, but it has been shown that's an effective strategy, appealing to the populace. manus: these are the quotes coming out of the netherlands. --s is the freedom party this is around the post trumpian euphoria. the risks with the netherlands are much more pervasive. it goes right out into the french election, and that is really where we want to take the riskometer, isn't it? >> if we look at that chart, we see in europe people probably being a bit annoyed by the actions of the statements coming out of trump, and why the populist party is losing ground. see, it's not all good things necessarily that come with trump. anna: in the midst of all this political talk, political risk around europe, had you invest? looking at what your long and short are, you are long on french banks. talk us through that, with the french elections looming. >> with the french elections looming, we are sure euro, short french bonds, and long french banks. they are getting three part 5%, wife p -- they are getting 3.5%, 4%. you have to pay the dividend yield, and the yield curve is starting to work with european banks. the 210 curve is steeper in europe than it is in america. manus: you have a very clear view on rates in europe as well. this month you said you where the ides of march. curve? on bunds, the where are you expecting -- >> the middle of march is the fed meeting. its interest rates are the things that are setting off not necessarily a bubble but extreme valuation. people camp out bonds because they are pushed into other assets. we think the most pronounced over valuations are the defense sector. klaus ipod proxies, people are buying -- qualify bond proxies, anything that has a dividend yield. we think the best asset that equities are there. anna: thank you for your time. patrick armstrong, the cio. we will keep an eye on the house bill, plenty of news flow surrounding the battle over bovin. manus: equity markets, a mixed indication. london up by 0.2%, paris up. european open is up next with guy johnson and matt miller. this is bloomberg. ♪ guy: monday morning, welcome. it's the european open. cash will be opening around half an hour, for the first trade the day. i'm guy johnson, alongside matt miller over in berlin. what are we watching monday morning? the war of words. turkey's diplomatic spat with the netherlands intensifies as riots break out in rotterdam, with 48 hours to go until the dutch election. will euro react when european liquidity comes on stream later on? thinking ouid