Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20170328

Answer. We are working diligently. Anna an warm welcome. This is bloomberg daybreak i am anna edwards. Manus i am manus cranny. A little bit more than 24 hours in article 50 being triggered and you should prepare for backlash. That is what we are being told by various voices. You have never had so good. Another prime minister, this is the brexit or mr. Released off the slate this morning. This is the moment that we voted for, Brexit Brexit in the united kingdom. It dropped below zero. Weve risen in the Fourth Quarter and we peaked out. This is with 24 hours to go until we trigger article 50. Is the moment of bliss in the index over . Anna the closer to blissfully get, when you add those core variables that feed this index into here. We will see where this has with inflation on the rise. Lets put the risk radar and show you where the various classes has been overnight. We put this unchanged dollar index in you to show you the contracts the contrast of what we saw yesterday. We got here at the s p futures. That confirms we are expected to go a little bit higher. Charles evans talking about two hikes and might be right. In terms of tightening this year, if there is more uncertainty, there is a lot writing on what donald trump can pursue. Manus the market has rebalanced itself back to the same. The grand old party will has ace, something that much bigger potential. The s p 500 did below the 50 day average price for the First Time Since november last year. We managed to undo all of those. Up it bounced the politics that we kept banging on was the alpha of currency. Personification, dropping nearly 3 . He ordered his finance minister and his deputy to pull out of roadshows in the u. K. And america. A little bit of a move on the downside this morning. 42 to cancel meetings with investors forced him to cancel meetings with investors. Asx ins is dax sex australia. Has there been an overly aggressive kneejerk reaction . Anna that is where we close in australia. Lets get the first word news with deborah. Deborah the ceo of Credit Suisse has said the bank has made a mess of its restructuring efforts. Speaking exclusively to bloomberg, the firm now has enough breathing room to consider alternative Capital Raising options belong the stand to lift its swiss bank in it. We know the market needs an answer. Were working diligently. Donald trump will sign an executive order that begins unraveling rules to combat climate change. Policies designed by barack obama to keep the carbon cutting promises hit Administration Made on site 200 other countries. Although trumps measures. Short of a decision to formally with draw from the paris climate accord. The comments came days after john claude said at the u. K. Will be expected to pay around 50 billion pounds. The bill is set to be an early source of disagreement soon after brexit is triggered tomorrow. Scottish first minister Nicola Sturgeon is expected to win it back in today for her plans to pursue a second independence referendum. She is seeking permission to request the legal means from the u. K. Authorities to hold the vote by spring of 2019. Lawmakers will vote around 5 00 p. M. U. K. Time, a day before the which run from the european union. In china, the economy is strengthening in the future is looking brighter. According to earliest private indicators, Sales Management and confidence in him and enterprise docs to the highest in almost two years. Imagery also remains robust. In australia, the worst bike run in six years has smashed into england. Prompting some of the World Biggest miners to Halt Operations and forced thousands of people to evacuate or seek emergency shelter. Wind gust measured at 250 Kilometers Per Hour and expected to be the most powerful storm system to hit the country since 2011. Global news 24 hours a day powered by more than 2600 journalists and analysts in more , you can findries more stories on the bloomberg at top. Lets get into the markets. We talked about a relief rally, so the asx close with a spike. Sally is standing by. A general sense of release release relief. weve been saying what juliette we have seen a reversal coming through. Unease easing at some point. It was really led by one of the gains in mining. Eating gains by 1. 2 . Also the nikkei reversed yesterday, up by 1 . Downward pressure coming through on the csi 300 in china and weakness coming through in a couple of the other markets including time on and got the taiwan. Confirmation that American Airlines is investing 200 million, a code share with both of those airlines. Higher on the open, down 3 in late trade. One of the best performers, this is in australia. And reports group that marriott is making a play for that company. Rice the most in 22 months although suggestions that the stock is overboard. Overbooked. Lets have a look at the topics because we have seen rebound coming through. If you have a look at the red line that is a 50 day moving average, we are seeing the topics trade very close to that. Cominge bit more rebound through. As we mentioned before, despite the fact there has been fluctuation in the yen as wel l. Japanese equity markets looking well. Assetsiskier asset falling the u. S. Stock staging a recovery. Doubts remain about implementation of the trump agenda how it could affect u. S. Rates. Charles evans spoke exclusively to bloomberg gave his assessment of the rate. To the extent i gain more confidence in the forecast i have, that be a good indicator that i could perhaps support three. Two of my three the right number orre is more uncertainty modest concerns about whether or not we are really going to get fast. Things really are going to take off if we get strong growth and inflation picks up. We could get for this year. Anna a whole range of possibilities. Economist, great to have you here. It could be 2, 3, 4, all depending on inflation and where he had on that particular front. So nice to celebrate with you. The fed has mastered the art of the dovish tightening cycle. The feds cycle of tiding until u. S. Year ensures that inflation normalization is underway and that this is sustainable in the labor market. The realt of that, Interest Rates when inflation is taken into account, remarkably steady for the last two years. Withinflation rising and capacity in the labor market all but diminished, the fed as we have heard from chair yellen is more confident with neutrality. The pace at which the fed goes there could be more gradual. To question the veracity of the inflation. The court is 1. 7 . He is seeing less than i was listening to it and he seems like the little bit less than convinced. I dont know how he got to for in his rhetoric, ru inflicts are you convinced . Lena given how slow this of despite theen, strength of the recovery in the resilience in recent years, the fed should be agnostic when it comes to the inflation threat. Chartn see even from your how the uptrend is now. Rising wages and nominal retail sales or s p earnings. 6 . Of them rising at five, when you consider that against after inflation 1 . Extraordinarily call at this point. Anna a lot depends on how quickly donald trump can pass this was a state of agenda in terms of some of the more fiscally stimulative measures that he plans. What is your take away from what we saw over the weekend . Paul ryan saying the Health Care Problem does make the tax overhaul more problem more difficult. Is your overall impression that this will take longer to be delivered . Ena this is an important point in how the markets are becoming raising. The Political Risk is not a linear function. The Health Care Bill could, in theory, free up capital and congress to focus on tax reform. In reality the tax reform for protectionist white house and a Republican Congress could prove just as contentious. Turkisholitical on the arbitrage. Essentially what youre saying between merkel and a trump. Lena the fact that we have had the remarkable juxtaposition treasuries at the time when a fed is in a tightening cycle and the ecb is still printing money, which will last until the end of this year possibly beyond. There is something other than and the tradeance that has terminated markets and market risk with in recent years. He of the thing of course is the political arbitrage. Anna she stays with us on debate on bloomberg daybreak europe. We will bring you to more exclusive interviews with fred president s this week. Tomorrow we speak to eric rosengren. Manus coming up, bridging the gulf to great britain. Another 5 billion pounds into the u. K. This is bloomberg. Anna welcome back everybody. 6 hang seng is up by echoing the rally at the pacific is up. 7 . A decent round bond rebound from the s p yesterday. Heres deborah. The long goodbye is finally over. More than two years after he was ousted from pimco. Settled their bitter legal dispute. The company will pay him anyone Million Dollars and agrees to dedicate a new founders room at its headquarters in order of him honor of him and those who helped found it in 1971. A slump since been voted to leave the eu. Ramping up u. S. Capacity. The airline ceo said management is taking other steps. The company is unlikely to be able to offset the impact of higher dollar cost for fuel and aircraft. Written is opting for Shorter Breaks and increase competition. That is your Bloomberg Business flash. Manus thank you very much. Whats talk about the middle east. Case are investing 5 Million Pounds in the next 35 years. Its total commitment to 40 billion pounds. Told usnce minister that qatar and other gulf states will also push for a freetrade agreement with the u. K. U. K. Has been a very important market for us. The number one destination for our investments. We already have more than 35 billion in investments in the u. K. We are putting an additional height billion pounds in the next 35 years. These investments will be through other investments. Our main focus is going to be estate,gies, real factors. Toyoure making this enough the same week that the u. K. Is going to trigger article 50 to start the brexit process. Kindere any scenario, any of deal that britain might make with the eu or indeed that isnt a deal before the two years is up that make the u. K. Less appealing . The way we look at our the last 10 or 12 years, we were heavily investing in the u. K. Most of our investments are very much longterm investments. We are not looking at shortterm. That is what we were really like to carry on in our investments. Youheir been reports that have been discussing a bilateral free trade deal to be activated when the u. K. Does leave the eu. Is this indeed in the works and are you working on it to be ready as soon as the u. K. Exits . We work with the community. It will be among the gcc and u. K. Encourage. De we will anna to what this, the chief economist. Free much on how the u. K. Relies on the kindness of strangers. The kindness that u. K. Company is going to need to get through this process. Lena context is important because it shows that starlings Equilibrium Exchange right now the terms of trade between the u. K. And the rest of the world through the Exchange Rate will very much depends on the kind of strangers to finance the large current account deficits. Is coming down to three factors, financial flows, position as a Global Financial center, and global reserve gross with a cycling of dollars. These three phenomenal have been central to keeping the sterling Exchange Rate higher in the past. Manus if you look at cable, we bounced yesterday. More to do with dollar weakness. This is, the personification of the kindness of strangers . Double check watching. You will not be happy. U. K. , the tax angle, these are the countries that are inwardly investing into the u. K. Strangers may be misrepresents what the proposition is in the u. K. It is a fairly good credit rating. Sterling has been battered but it has put in you get a bit more bang for your buck. Not the bigger of the world at the moment to form the gilt program. Lena the breakdown shows just how important financial flows of capital flows are for Financial Security in the u. K. It is very much linked to the subsidies. To three things. The citys flow, position as a Global Financial center, it wealthy attractiveness. U. K. Versus the eu, which will change thanks to Political Risk. Bilateral negotiations, the government negotiation will become a critical factor as seen ough the case are deal qatar deal. The sterling has been traditionally linked to the oil price globally. Supply, a playo on demand through the facts of oil shares and stock markets. Anna we will return to the commodity seen in a few minutes. Lets like these conversations around fdi to Consumer Debt and the ok. This is a link that he wanted to explore later. You put a chart here about credit. Manus that is household credit. You can see the explosion of it. The size of what we are in. Credit card debt jumped 66 billion pounds. The other point in my life, yes. Borrowing. Lena they reflect of the fact that we are spending more than earning. Living beyond our means. Only sustainable for as long as the exchanges are kind from the rest of the world to finance the current accounts. This is why the Rising Consumer leverage ratio is very much a point of contention for economists who are looking to the aftermath of brexit and thinking the economists are resilient. Course, they cannot possibly continue to spend their savings looking. T when we are anna do consumers remain resilient if we see inflation pop up further . Is headingtion higher because sterling is not getting higher anytime. There is one currency in the heart of the Global Political storm. Given what is happening in terms of negotiations in the u. K. And the eu, given what is happening in terms of the european union. The potential for another scottish referendum. Changing global trade under a trump administration. All that means that the Political Risk can become quite inherent. Manus thank you so much. Up next, what if we got . Annex was of interview the credit ceo tells bloomberg his bank has options as it prepares for a brexit. We will have that up next. How close is his business meeting to raise more cash . You will learn more after this break. This is bloomberg. Manus it has gone to 30 in the p. M. In the 2 30 afternoon. The yen is declining ever so slightly. You have a little bit of a move, equity markets are slightly more for us this morning. Lets dig into these markets little more deeply. Ask the risk of sentiment risk off sentiment we saw, the questions over Donald Trumps economic agenda pulling back a little today. We are seeing a little bit of a rebound in asia. Gaining s asia index. We are seeing the dollar stabilizing somewhat. The 10 year yield steady at 2. 38 for a couple of after a couple days of declines. In the commodities space you are seeing gains. And crude up. 7 of 1 . Holding above 48. A lot of focus on dollaryen, you just saw the spot price and a lot of talk about 110 being that key technical level. I wanted to look at risk reversal. This shows that there is still high demand for the downside put. There is still that bearish sentiment coming through in the options market. Not quite as extreme as that end of last week. We are seeing the cost ahead against our weakness coming back just a touch. Im looking at the one month risk reversals on the dollaryen. I want to look at volatility because we saw relatively volatility spike somewhat looking at the next. Nikkei volatility coming down. Cboethis shows is the midterm volatility index which tracks expectations over the next six months has reached its lowest level since the day of the u. S. President ial election versus the vix. Youre seeing that sort of spread of midterm versus short spread shortterm volatility. Muted. Emaining looking at another spreadsheet i am looking at the wti brent spread. What we see is the u. S. Benchmark weakening against branch. This is about the concerns over stockpiles in the u. S. They are at a record high where we had that nonopec opec toting showing a commitment extend output cuts. Youre seeing this spread between wti and brent coming down here highlighted just at the end of the chart. Anna thank you. Lets get a quick word on breaking news coming through from erickson. They are having us another update on their Business Strategy saying they are going to write down assets and that will be done in the First Quarter of 2017. The impact on the operating income is three to 4 billion krone. Writedown will be taken, they are making an effort to simplify the organization. This is what they are saying, twotierd leadership leadership and improve core manageability. And extending business. A bit more of a shakedown at erickson. The business has been under pressure. Anna lets move on to daybreak. The new edition is available. Lets take a look at the stories that have made it into todays edition. I feel calm just reading it. Placiddrifted during asian trading. The rss its proved u. S. Has proved flat. Movement no more than. 10 of 1 . And the per some of the personification of his and and called in the morning. You found the story interesting. He says that the european tral Bank Deposit Rate is it must be cautious about enter any moves that it sends in regard to the measure. Investors are pricing more than 50 chance of an increase in the rate by january versus 7 just a month ago. Anna we will discuss that more. Credit suisse is talking to investment banks. The ceo made these comments earlier on today. The firm needs to plug the hole as much as 4 billion francs and it has considered an alternative to listing part of its swiss unit. With that in mind. Has gone options on the table for brexit and that time is on his side. Speaking at the Credit Suisse Asian Investment conference he said that his london plans remain unchanged despite the u. K. Plus pending departure from the eu. Issue ona very large the horizon. Looking at it, we have time to think about it. And get ready. Credit suisse, our presence in london is quite old and large. We will engage in significant restructuring. Few plans. E quite a where open to investing a new center. We also have a Good Platform and luxembourg. We have options depending on how brexit plays out. You said you have seen the other banks, they have started their contingency plans. They are moving to other european cities. We plan to restructure london. A year ago we had 9200 people in london. We have taken that down to about 6000. Is to get below 5000. Those plans are not affected by exit. Something else youre looking for in terms of clarity, is it more you want to orrn about passport rights you want to see how negotiations are . [inaudible] eu is the major economy in the world and will continue to be. As a bank we have many operations. Considering [inaudible] whatever the final answer is. Youru just had to revise 2016 earnings. To the downside. Could you explain what happened . We refined our targets. We were working with global targets for asia. As we run the structure we have [inaudible] basically [inaudible] what we call the Investment Capital markets. And so we have defined the target. Target in. T the that is market dependent and we will revise downwards does that say anything about the wider sector . We have a balanced approach between developed markets and we have a group target [inaudible] strong. Al market is is the future different than it was . Not really. In terms of the medium term view [inaudible]. Hich were tough terrain and also emerging markets. Anna that was the Credit Suisse ceo speaking to bloomberg in hong kong. With us here on daybreak. We talk about brexit. Lets talk about china. Him talking about asia. What are your biggest concerns . I was the kathy iron ore price. Most people look at this in proximity to the chinese economy. Been raised. Ave should we be nervous about Global Growth as it relates to china . Commodities have been a hybrid story. It is about supply behavior and shortterm stock volatility. A story onvery much Global Growth through the signals that are sent about emerging market demand and stock indices. China clearly remains a central part of the global trade and financial infrastructure. What is disconcerting is this is an economy, and the aftermath of the chinese were off the hook. Find a startues to conflict between expanding the economy but dealing with legacy debt and that is not an easy negotiation. We have seen that in the aftermath of 2008. Officialis is the nonperforming loans number. The China Banking Regulatory Commission said it is 1. 76 . B. I. Has run the interest calculations and talk about interest ratio. In termswhere is of where the real numbers are. Has it stabilized, have they got a grip on it, do you lose sleep over nonperforming loans in china . Guest i have seen the story of chinese cyclical growth and chinese structural growth is a compelling one that should mean that all economies should be losing sleep over this. Manus it takes a lot for me to looseleaf. Lose sleep. Guest chinas growth has not doubled. Their debt has. The chinese Banking System is becoming under capitalizing and unable to leverage further growth ahead without a cleanup of the Banking System, Balance Sheets which will the government will incur some cost in terms of reserves and the cheaper yuan. Anna how do you feel about emerging markets more generally . It was the south South African story and emerging markets. The ranjit dropped like a stone. Down 3 . Anna he was supposed to be meeting but he was called with little explanation. Investors were reevaluating. Another reminder of Political Risk. Macroeconomists, emerging markets have been correlated to the growth of the g7 and g10. We are in a new climate for Global Financial stability whereby the predictable path of linking economic politic expectations with nominal gdp growth and the model favor of central ranks over the last decade is now ending. Central banks from the fed to the ecb are removing stimulus from the markets. That means that more pain and volatility role remain going there is more macroeconomic volatility. A look at the global trade environment is going to change not at least of what happens between the u. S. And of eto negotiations and the u. K. And negotiations. Our guest is staying with us. If you are a bloomberg customer you can watch the show using tv. We have it streaming for you, the functions and chart on the right hand side. You can reach out to show producers. Send a message to show producers using the bottom link. President ial pitches. The three main candidates for france must top job frances top job. With a go to paris next . Will they go to paris next . This is bloomberg. Manus it has gone 1 47 a. M. In new york. This is daybreak europe. Futures up. 201 . Around as s p pull it the market focuses on the possibility of tax reform and infrastructure spending. The grand old party might agree. Deborah the long goodbye is over. More than two years later, the settled the bitter legal dispute. They agreed to dedicate a new founders room at its headquarters in honor of gross and others who launched the firm in 1971. Gary holdings has said it has not been able to contact one of its executive directors for the past week. The comment came in the first detailed statement for suspending its shares from trading on friday after a sudden 85 plunge. According to a Company Statement the manager took a leave of absence and does not want to be contacted. Self driving cars have returned to public roads three days after a crash in arizona put the Testing Program on hold. It has resumed testing and San Francisco and is restarting the program in arizona and pittsburgh. Driving suvs was involved in a high impact crash. Said no one was responsible and no one was injured. That is your bloomberg is this flash. Business flash. Anna there are less than four weeks to go before the first round of the president ial elections. Top threeed the programs to debate their program. Connor joins us. What are the main concerns apart from the obvious concern for french executives and how are the top three candidates expected to respond to those concerns . Candidates have one hour s h to explore the plans. Their plans to merge. The concern is the protectionist program of Marine Le Pen. If you look at the reforms they are proposing both want to protect the european tax. The main difference between the two is that macron wants to keep the 35 hour a week but at some flexibility. While fillon wants to improve vat. The biggest concern is Marine Le Pen must program. Workerss to tax foreign. French workers get priority for jobs. And the program is different as well. Macron is the only one who wants deficitct the 3 target. Marine le pen wants france to exit the euro. The the economic programs of macron and fillon are favored. Macrons program does not cut enough taxes or improve spending. Anna the debate is that the overall conversation has been about so many other things but are French Companies putting in place any contingent plans in case a Marine Le Pen victory . Absolutely. This is the french paradox. Most executives do not deny they le pen risk. The risk is never been so close for her to be elected. Most executives also say they have not prepared any specific contingency plans for a euro exit. This is the case for french banks. When we spoke to them last month during the earnings season, french banks were saying that the risk of a Marine Le Pen victory is so remote there has not beent has considered. If you look at opinion polls they might be right. If macron passes the first round he would eat Marine Le Pen by 61 in the runoff and we have seen Marine Le Pen softening her turnabout you leaving the euro. Saying it would be the final step. Manus thank you so much. Thearis at the beginning of event. We did a whole bunch of ceorviews with the french s. Many of them did not want we used to have a Disaster Recovery plan. A site that we would go to when it all went to pot. They did not seem to want to talk about the propensity for a Disaster Recovery program in france. Territory for which there is now map. That is aa thing realistic possibility. Not anything anyone wants to consider. Remember how is this is reacted to the possibility of brexit or the nervousness of investors globally about potential. And the outcome of the u. S. Election. Markets spend too much attention looking at the french polls and we are ignoring a number of important risk factors. One of them is that le pen has the most loyal following which has resulted in her commanding share of the vote for the first round. Thatis despite the fact credence toy little be given to her economic ideas in terms of how realistic they are. Or how good they will be. Economic stability does not seem to come into her popular support. That means that the terms of this election will be decided on the kind of argument that decided the u. K. Vote and the u. S. Vote in 2016. Anna should Market Participants be more worried about this election . You see it expressed in peripheral bond yields or the currency market. The point is well taken that there is a risk and it has been underestimated. Populism has an unpredictable quality about it. On the other hand we look at polling yesterday. Manus 72 of their french when a to keep the euro. Her doingarkets risk the negative . Guest if we look at the French Elections as a referendum on the euro, which they are not, we should not be that concerned. Even if le pen were to win, the chances of france evening the euro are quite slim. You have to consider this as a economic argument about the credibility of a le pen program versus her opponents. It is totally not helpful in willing of how volatility play out. In the event of the immediate days and weeks before the u. S. Vote and the british wrote, it was not the economy that decided wasvote to read it decisions and considerations but security about social welfare, inequality, and these seems to drivingactors that are political and populist support. We can get any result. There is a real possibility. Manus peter pray talking about being careful about what he said about rates. Probability of a movement up in rates in the eurozone has gone of 250 . On the deposit rate. Guest we should be moving out of negative break territory in the eurozone. Manus by the end of this year . Guest by the end of this year. Rate guidance is shifting higher. For joining us. Great to see you this morning. We will come back and talk more about the fed. This is bloomberg. Manus chicago president Charles Evans sees only to rate hikes and 2017 of uncertainty lingers. Anna battle over brexit bill. Britains eu exit payment will be nothing like what european officials have suggested. The Scottish Parliament votes on whether to pursue another independence reference. Manus the lenders ceo says he is looking at other ways to raise capital besides lifting parts of the swiss bank unit. Wantednow the market answer. We know the market needs an answer. Were working delicately. Diligently. Anna negative developments for ericsson. Putting provisions and charges topping 1 billion in the First Quarter. Manus is bloomberg daybreak this is bloomberg daybreak. Anna welcome to the program. A bit of breaking news. Wolseley as the operator in the givenng space, they have first half pretax profit. Millionprofit 515 pounds. 141 pat pence per share. This is on the outlook statement. This is the part of the business that accounts for 85 of their everyday ebitda. Nordic is this was being watched by many in the market setting the importance of clarity on the nordic business and they say they have made a decision to exit the nordics. Theyre exiting the nordic business, that will be of interest to investors this morning. This is coming through from wealthy. Equity markets in the u. S. Going down. 9 of 1 . There is is that bounce being reflected in asian equities . Manus theres a tentative rally which is the settling of the of theand jen going keys. You have london, paris, and frankfurt indicating a bit higher. This is from axa nobel which is trying to defend itself from any further aggressive moves from any takeover. Saying they are continuing to outline the strategy of dated in the final guidance. It will further unlock value within the company. Those are Company Lines coming in from axa. We have this settling down of markets that is reflected in the risk radar and that is showing predominantly in the dollar. We are down to a 4. 5 month of low. Consolidating itself, equities are better bid and funds are open bonds are open lower. Expect further pressure on the dollar. U. S. Dollar policy would battle as the battle continues within the republican party. Outbloomberg dollar index 0. 5 percent. S p has turned run nicely. Anna the future is looking positive rate we have the South African rand. Down by 3 in yesterdays session yield, up by 33 basis points yesterday. This as the president summoned back his finance minister. He was meeting with investors officers. Rating we saw the rand taking a bit of a pummeling. Ere as theys in th close at the session in japan. We should have a quick word of what happened, the pound moving a bit lower. We happen watching it through the session, it is 125 point 55. Against the u. S. Dollar. A bit of a retreat for the u. K. Currency one day before we see article 50 triggered and on the same day that the Scottish Parliament will vote on whether to request legal permission to hold a legally binding referendum on independence. Manus we have Juliette Saly stunning standing by. Juliette the ceo avenue Credit Suisse said the bank has made massive progress in its restructuring efforts. Hasdded that the firm enough breathing room to consider alternative Capital Raising options beyond a longstanding plan to lift part of its swiss bank in it. Unit. We have made a lot of technicalthis was a backstop and we were clear about that in february which has really helped us. Both in restructuring. We have made some progress we can consider other options. Juliette u. S. President donald trump will sign an executive on doesat combats policies about climate change. Although his measures stopped short of a decision to withdraw from the landmark paris climate accord. Brexit secretary david davis said britain will pay nothing like the sons of money eu officials have floated as needing to be paid when the country leaves the blog. The Commission President said the u. K. Will be expected to pay around 50 billion pounds. The bill is set to be an early source of disagreement soon after brexit is triggered tomorrow. Scottish first minister Nicola Sturgeon is expected to win and dependents referendum. She is requesting to have the vote by 2019. They will vote a day before the u. K. Triggers two years of talks on withdrawing from the european union. In china, early data suggests the economy is strengthening and the future are looking brighter. Confidence in small and medium and small error prices jumped to the highest in two years. And to australia, the worst cyclone in six years has smashed into the coast of cleveland in queensland. They forced thousands people to evacuate or seek emergency shelter. When guests have an measured up to 260 Kilometers Per Hour. It is expected to be the most powerful to hit the country since 2011. 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 at top. We are seeing the nikkei close the japanese session, it is up i 1. 1 . We have seen a rebound coming through and a lot more calm into markets. Volatility also easing. There is a rally coming through in mining players lifting the 2016 highs. There was a dip out of some of the emerging markets. 3 of 1 . Is down by we had china southern, American Airlines confirming that it did i a stake in eight shares. Trade was down by over 2. 5 . Is reportsp, there that marriott could be i this group. And having the best day and 22 months free this is after its profit Beat Estimates although topic on thet the bloomberg. That we are seeing some rebound coming through into the topix index and it is tracking at that redline. Profit growth in japan is being 110 perd by the end at dollar. Certainly a strong correlation between the topix and the 50 day moving average. Anna thank you. Juliette saly in hong kong. U. S. Stocks stage a recovery. More about trumps agenda. Tous Charles Evans spoke Michael Mckee and gave his assessment of the Central Banks rate path. To the extent i gain more confidence in the forecast i have that would be a good indicator that i could support three. To might be the right two might be the right number. If things really take off, if we get continued strong growth and if underlying inflation picks up, we could get four this year. Anna just before we get into a conversation about u. S. Assets, just a quick word on what is happening in south africa. Jacob zuma said to tell South African communists he plans to fire gordon. This is in the wake of the fall we saw in currency. As he summons back his diplomat. This has been a point of volatility, the appointment and firing of finance ministers. Atus this is where we are 12. 99. This was one of the best performing emergent emergingmarket currencies. Almost vertiginous rise that we are seeing. That in terms of the percentage move on the day, we have lost almost 2 value in the rand. We have seen this move, we have not seen a move like this since the start of march. We will keep an eye on that. Anna the rand is dropping. It is being reported to us at the moment. We will wait for confirmation. Back to where we were. We were talking about the u. S. Rates, the fed, that whole conversation. We had some great clips of what policymakers are thinking of. Who joinedto wei lee us in london. Thank you for waiting as we covered the South African story. Lets talk about the u. S. Rates trajectory. How much are you watching that in terms of the how much do you think this is influenced by trump . That is the message we are. Etting from Charles Evans a lot depends on the uncertainty that exists. Tried the fed has always to keep their options opened. They did not need that much time to adjust and manage expectations going into the rate hike. If we look at june and september, if we look at december, they do not need to start cleaning up markets right now. Keeping markets open is probably the best strategy. Markets andat performance, you would be looking at wage pressures and labor markets. It does support the case of a three rate hike this year. Manus this is one of the biggest last week and despite the hubris at the end of the grew 3. 8 s p 500 billion dollars. The consensus is that the fact that 10 billion bucks did not move by the close of business is somewhat of a relief. Do you look through the noise, x andu believe that ta infrastructure spend will perpetuate the inflows . If you look at the flow into theout of markets, first, flows have become more volatile. It is more responsive to news coming out from the new administration. Markets ared equity becoming increasingly depreciated. Were talking about the s p 500 exposure. Small caps ando large caps, youre starting to see a picture emerging which is are findingrs pockets of the market that are supporting fundamentals rather than rhetoric. Anna you think the strength we have seen is about the Global Growth story or the u. S. Growth story and you draw a distinction between that and what donald trump is expected to do on capitol hill. Guest exactly. We do not see investors preferring european equities, preferring Japanese Equities where equity outside has been supported by earnings coming through and as opposed to the equity market where a lot of the outside risk is it is becoming a bit more expensive. There are better ways to play the reflation trade out of the u. S. And europe and in japan. We will talk about that in terms of the european market. More exclusiveou interviews with the fed president. What have a got . Anna we have on friday jim bullard. Next on the program. Where less than a month away from the French Election. We will assess Political Risks in europe and what it means for that. This is bloomberg. Manus it has gone 7 18 a. M. In london. Welcome back to daybreak. The dollar rand is at the autumn of your screen. We have lost more than 2 5 2 in todays trade. A nearly 5 in value as jacob summa told Senior Leaders at the south African Communist Party that he plans to remove the finance minister from his post. Three people who were at the meeting said this. This was as we came in to work this morning. We had the news that he and his deputy have been pulled back from road shows in the u. K. And the u. S. Lets give you a sense of the size of the move, the size of the shift. It has been building up in terms of volatility that there is one of the biggest moves we have seen since [inaudible] at the end of november. November 10. Anna it is 8 18 a. M. In south africa. 7 19 a. M. In london. Lets get the Bloomberg Business flash from Juliette Saly. Juliette thank you. Erickson will boost provisions and charges topping 1 billion. The announcement was triggered by recent negative developments related to certain Large Customer projects. The move highlights the challenges the ceo will overcome as he tries to stabilize the swedish Wireless Networks maker. They will explore strategic opportunities for the media business. Bill gross, the long goodbye is finally over. After two years that he was settled am pimco, he bitter legal dispute. The company will pay 81 million and agreed to dedicate a new room and its headquarters in and others who launched the firm in 1970 1971. And a company has been a nickel to contact one of its directors. It is spending its shares from trading on friday after an 85 plunge. According to a statement the treasury manager has taken a leave of absence and does not want to be contacted. That is your Bloomberg Business flash. Thank you. Juliette saly in hong kong. Theto to brussels where mayor of london is speaking. Is proudaring that he to call himself a european despite exit. He is speaking at the conference saying london will remain open to europe and the eu. When ithe key concerns spoke to the mayor in westminster. Lets talk about Political Risk in europe. We are joined by wei li. Lots of varying dimensions to the risk story. U. K. , dolook at the you say yet more volatility in the pound, the pound dropping just a little bit. Things are quite volatile this time of day. How are you preparing yourself for this week, it is a bit weak on the exit agenda. We get the triggering of article 50 tomorrow. Guest in terms of the triggering of article 50 it is a formality at this point. A lot of that decisions will not be made until later this year. If you think about the eu they will wait before making meaningful decisions and going into the end of the years there will be greater noise about settling the brexit deal. That will not happen until much later. Right now volatility is more headlines rather than fundamentals. Manus many people are saying will settone and tenor the stage very clearly in terms of what is discussed and when. Markets might have a bit of a different perspective. Bloomberg intelligence has monitored four new indicators. We had armageddon in terms of our perception of the future on june 23 last year. These are four facets they put together. Unemploymentowth, growth and employment growth and [inaudible] is beginning to fade. Is this what we can face over the next two years, is that the risk to the u. K. Over the next two years . Guest it has been really surprising to many investors and market disciplines how strongly and how well they data has been holding up and Customer Sentiment has doing well. That negative as one would express expect. To the extent that they holding up has been giving investors the impression that maybe it is not going to be as bad as previously feared. Market performance has been holding up as well. If you look at local currency terms has been lagging there is a lag and you see the performance not really lagging behind. Investor positioning and european equities, what does it look like in the runup to the French Election . Guest it is an interesting phenomenon happening now where increasingly, clients are telling us last year after brexit and the election, run away verys quickly. I do not want to be underweight this exposure going into the European Election events. There is also a lot of hesitation around deploying cash to work before the uncertainty of the French Election. Ort year, almost 40 billion one dollar worth of assets have come out of european equities and index mutual funds. Only 5 billion came in. There is still from a Performance Analysis perspective. Manus on that flow that you talked about, there is a differential between the s p and the stoxx 600. How quickly does that close . Does that only pick up in the Fourth Quarter . Guest were looking at price to ratios. The gap looks even more attractive for investors, considering european equities. That is part of the flows going into european equities has in on the back of valuations and should the path lines from the French Election turned up market positive we expect more deployment of Asset Allocation going into europe. Anna thank you for your analysis. Quick word on what is happening in south africa territory. Said thean for the anc people who are suggesting that jacobs emote is going to fire his finance minister are misinformed. That is the amc line we have coming through but the markets are going with the nervousness around the positioning. Manus three people who were at the meeting on monday said and they are asking not to be identified saying that jacob zuma is firing gordon. He pulled back from his Public Meeting in the u. K. And u. S. The market open is next. They will be speaking to the head of Goldman Sachs in south africa. Stay with us for that. This is bloomberg. Careful joe, theyve got you outnumbered. The dinosaurs extinction. Dont listen to them. Not appropriate. Now im mashing these potatoes with my stick of butter. Why dont you sit over here. Something for everyone is awesome. Find your awesome with the Xfinity Stream app. More to stream to every screen. Thank you so much for that down home welcome. Show me female vocalist of the year. Thank you so much. Thank you so much acms, i appreciate it. Show me acm best moments. I could never have wished for, asked for and dreamt of anything more than this. Catch your favorite moments from the acm awards and an exclusive encore performance by Kelsea Ballerini following the show on xfinity x1. The acm awards. Live on sunday, april 2nd 8 7 central on cbs. Guy good morning. You are watching Bloomberg Markets european open Care Coverage im guy johnson in london. Matt marling is matt miller is in berlin carry the South African president planning to fire the finance minister. We will speak to the head of Goldman Sachs south africa. Call returns. U. S. Stocks rebound late in the section