Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20170427

Anna a warm welcome to bloomberg daybreak europe. On anna edwards. Manus we have a feast of breaking news for you. A headline on airbus first of all. Adjustedst quarter ebit against an estimate of 326 million. Theyre confirming the forecasts and giving numbers for orders in revenue as well. Theyve been facing some production glitches thats been afflicting them with the newest in their highmargin jets facing some of the problems. They have suffered problems because of shortages from suppliers. Two suppliers both said they were addressing the issues but perhaps its something thats giving the Company Policy for thought this morning. Thats one of the companies were covering, airbus saying adjusted Free Cash Flow has come in at 1. 6 billion euros. Manus lets talk about the World Biggest cancer drug maker, roche. The company confirmed its fullyear there were talking about 2017 as being low mid singledigit growth and they been hoping to raise the dividend. ,irstquarter sales is a beat 2. 70 7 billion. The big issue is that they have a trilogy of drugs that are all coming on pace by 2020. Thats looking at a loss of nearly 4 billion swiss francs in terms of revenue. Diagnostics, 2. 70 7 billion, and 2017. Ming anna two point 46 billion against the estimate of 2. 38 billion, so it looks to have come in ahead of estimates for this business. The company reporting numbers this morning bolstered perhaps by recovering crude prices, maybe high demand for some of those chemicals. Competition like dow chemicals and dupont deciding to plan these megamergers and then split into more refocused more focused groups. The pressure on this business to show that its rod portfolio is the way to go. Instead there facing investments in existing plans and driving organic growth. Lots to talk about in that particular space this morning. Manus one other red headline. Firstquarter sales coming in at 5. 4 billion. A very nice red headline for nokia. Another Telecom Business in transition. Was 5. 2 billion. The adjusted profit also beats as well. Firstquarter adjusted gross margin above what the market had penciled in as well. Nokia, ins recap terms of the estimates, depending on how you look at it, just in line or ahead of the estimate. Theyre talking about the focus on cost but not giving any details of where their moving their headquarters if they are. Theyve been at odds with the sweetest government over this. We will speak to the nokia bank ceo coming up in six or seven minutes. Manus i mention that donald trump had been pushed momentarily off the conversation at the top of daybreak, but theres no doubt about it, no termination of nafta. Mexico, you see the peso rally, the Canadian Dollar rally. What youve got is an Immediate Response in canada, mexico could trade up to around 19. The guys on the editorial solder saying the dollar bulls could be trapped on the higher ground. Lets show you what happens year to date. If you think of what he tried to do in regard to lumber just the rate ofy, this is the recovery of the mexican peso. Anna and the Canadian Dollar down year to date. It shows you where the market has been focused and how the canadian story is playing catch up a little bit this week. Its important to get the broader context. Lets show you where we are on equity markets. Nafta hit is in the middle of the morning european time. We were talking about tax reform in the u. S. Many people have suggested is not quite as detailed as the market had been expecting and perhaps thats where we see lackluster performance on equities in asia. Page bulletone point list with less than 250 words. Lets talk about oil, below 50 a barrel. Goldman sachs saying if you look at the odds of opec and nonopec extending their agreement, theyre about 6. 7. Anna lets get the bloomberg verse word news with david inglis. The bank of japan has kept its it stimulus policies unchanged while lowering its inflation forecast. The central bank said it will continue to use policy rates that underscores the view that any sort of exit from Monetary Policy or easing remains far away. We will bring you the ecb policy decision at 12 45 u. K. Time followed by a News Conference 45 minutes after that. Customers can follow all of that. The white house has said President Trump will not immediately terminate his countrys participation in the north American Free trade agreement or nafta. He spoke to leaders of mexico and canada about ways to renegotiate. Sticking with the white house, its made its opening bid for what officials call the biggest tax cut in u. S. History. The plan calls for the slashing of federal income tax rates of 15 for corporations all businesses and partnerships of a tax of, it imposes about 2. 6 trillion of earnings overseas. Mpanies the tax reform package is about growing the economy, creating jobs. Its about the economy. In every trump comes day in talks to us about Economic Growth and prosperity and jobs and what are we doing to stimulate Economic Growth. Thats how we are looking at this plan. U. S. National Security Leaders are emphasizing diplomacy to persuade north korea to dismantle its Nuclear Program while boosting military action here in the asiapacific. North korea showing pictures of kim jongnam marking what is described as his countrys largest drill. Britains largest business lobby has called on the u. K. And the rest of the eu to settle any exit deal quickly and get on with the new trade deal. Saying a good brexit arrangement is not about doing the u. K. A favor but based on solid economic reasoning for both sides. Will be meeting in brussels this weekend to discuss their collective response before fall negotiations can begin. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Find more top stories on the bloomberg at top. Were just passed me day here in hong kong, a fairly uneven will session. Very little price action with the exception of china. Currency,ook at the the boj is in the mix. New forecast for inflation they cut the forecast and pushed the objective for the timetable or the target for them to meet that price target forward a little bit. Begin barely budged. Its on the back foot slightly against the likes of the aussie and the kiwi dollar. Look at some of the big movers where following, a lot of earnings coming through. Story here for santos, 6. 5 . This is on the back of prospects that it may start curbing its lng exports. This, one metric chinesee out today for industrial profits. We normally dont focus on this but the reason i bring you up right now, its the peak essentially, the biggest jump in industrial profits china going back to 2013. People keep talking about china moving out of factories and deflation into inflation. Dpi showing up on the profits of industrials and this chart tells you that whole story right there. Very much,k you david inglis with the latest on the markets. Our score warnings beat estimates, net income came in firstquarter earnings beat estimates. Looking for opportunities to relocate from sweden to denmark at inland. Joining us is the ceo, thank you so much for joining us. Numbers, thet your markets going to be happy with that, but you talk about traditional Lending Party growing in the last quarter and youre focused on cost cuts. Is that what we look at four nordea for 2017 and where youre going to rip those cost out of business . I think weve shown in the last two years that weve been able to turn the negative trend in income and you see that now stabilizing and slowing. You see solid growth in the commission and a stable value line. Its critical in banking, our cost is driven mostly by very Big Investments we are doing. We are going through a major transformation to trade a truly digital front to back bank. In that sense its a very exciting time. Nordea. Citing times for a big decision on where to headquarter the business because of differing opinions on the amounts of money you should pay into a bank find in sweden. Can you update us on that . If you had to put a percentage chance on it, how likely are you to move and which of your preferred options is coming out on top . Its too early to say about options. We will do a thorough and pragmatic analysis of where we stand, and i think we would like ,o make the decision presummer unless anything changes in sweden i think the likelihood is very high. Anna do you think the government is listening to your concerns . Is there likely to be a change in the governments policy in sweden . I will not speculate on that. Andspect their decisions the way they need to make their doisions, and we do what we what we need to make ours. On that basis we need to make our decision. Manus many bank ceos around europe and around the world what maybe a blog you standing up to government and standing up to regulators. There must be a moment at which you blink. What is a fair deal from the government, what do they need to do to halt this attentional exodus . What is the blinking point . This, itsi look at not about negotiating a deal. Theres three things i look at running a bank. I want to run one bank. Themarkets are part of Single Market in europe so i think its fair to say that i should be able to run one bank, and now we have one bank. The second thing i want to have is a level playing field. On local, to go international, and regional competitors. The third thing a like to have is predictability. Its that environment that as a bank ceo or a ceo of any enterprise is a fair expectation, i would say. Anna because of the regulation in the parts of the world to operate, your Tier One Capital ratio is eye watering lehigh by european standards. Where would you like to be . This question of domicile has nothing really to do with the capital side. Im very much for the fact that we have strong, well capitalized of course profitable banks. The capital level is of course the one that protects us and i think what we need to understand , we have shifted from the old world of potential bailouts to bail ends where the key protector for society and the taxpayers is strong capitalization and of course a regime where debt is bailed in. We will probably have closer to 40 bailey and of all capital. That is the protection. Thats why i dont buy into the old view of looking at bailouts. That is the past. Lets get back to basics in terms of banking. Its about margins, its about the tough environment that you work in, the ability to maintain the margin. You have a hugely competitive market both in the Mortgage Business segments. How is that looking, are you seeing resistance to repricing . Can you update us . Think weve shown not only in the last order but the last year and also the last many years post financial crisis that we been able to repricing we consistently been able to improve our return. Return on equity i think is the key measure of profitability and success and we have been able to do it. As i mentioned earlier, the net margin with it negative rating, weve been able to to turn that and see an improved margin in the past few quarters. Were just going to interrupt you for a second, weve got another Bank Reporting are going to break that for our viewers here. This is of course Deutsche Bank, the ceo saying activity is picking up. 7. 35quarter net revenue billion revenue. The capital is the issue we were just talking with casper about. 11. 9 , 500 71 million, thats above the estimate of 474. 6 million. Billion, this is a ceo who has changed strategy and literally decided to wrap the business back into Deutsche Bank , in terms of breaking it down, corporate institutional ranking will be of the key part of revenue, 1. 8 one billion euros. The top line, activities ticking up and net income is a very comfortable be. Headcount will be reduced i in 2017. 300 persons anna we will speak to Deutsche Bank today, to the ceo at 9 00 a. M. U. K. Time. , giving yourcasper thoughts on a fascinating story in the nordic banking sector. Lets go to the spanish bank, giving us their numbers. Billion, that1. 2 looks to be slightly ahead as well. About 50 of their business is in mexico. The reallou have in going to be good news for them. Equity, the buffer of capital, 11 . Its a comfortable beat for them on net income. , so sold assets in china those are nicely coming through on the spanish side. Anna tomorrow we will speak with the berkeleys ceo in his first interview of the day at 7 00 u. K. Time. Manus coming up, timing the tightening. The bank of japan signals the end of japans stimulus remains far in the business. This is bloomberg. Manus its 7 23 in berlin and frankfurt where we have breaking news from Deutsche Bank. Big headlines to come out of Deutsche Bank, 3300 jobs are to go. Its the debt trading side of the business thats going to provide really. There was that concern before christmas in terms of capital, damaging some of the big trading relationship. The debt trading side of the business is a nice used for them if you think about that relative to the u. S. The equity side of the equation, equity did not do as well. The story is one of building capital. The headline net income is a comfortable beat their, 571 billion. They are building capital, but litigation, and this is the other line that comes through, 31 million. Bank of japan is a focus as well. Joining us is kathleen hays. The boj only made a small concession on the big gap between actual inflation and its 2 target. Why was that . Its great to be here in tokyo. Going across the street right behind me in less than an hour to attend the bank of japans press conference. Going into that, no change of , no change in yield curve control, keeping the 10 year yield anchored to zero and no change in the amount of bonds its going to buy. Were waiting for the Monetary Policy report. We knew there was a chance bank of japan would acknowledge the inflation target at 2 and their key rate of inflation which takes out fresh food from the 0. 2all number, that set year over year. Its better than the negative rate that the core cpi had been running. Year 17 boj did, fiscal dad been forecasting 1. 5 . They reduced that to 1. 4 . Our Intelligence Team is looking for 0. 7, but they are optimistic because labor markets are tight, wages are rising, trade surplus and experts are rising. Maintaining an optimistic and maybe realistic sense that steadily but gradually, inflation is getting higher. We will talk about the ecb Rate Decision coming at 12 45 u. K. Time. What will mario draghi say it his dues conference 45 minutes later . Anna welcome back, everybody. Outperforming the broader asiapacific region to some extent. Lets start with lufthansa. At 68ss coming in million, confirming their fullyear forecast. Story aroundre they will be keenly watched. Anything they have to say about their forecast and how optimistic a will be on yields will be in focus as well. Oil prices reduce the incentive for airlines putting more capacity on. Pricing rose in march when adjusted for currency shift. The company signing a deal with pilots, strategy also a big expandingking about focus in february, saying it may expand the corporation. What is their interest in alitalia, thats something that could be market relevant as well. As you say, they have 49 , this is what were talking about yesterday. Showing an informal interest in buying some of alitalias assets in the bankruptcy proceedings. Anna we heard from one tell you official that they would not stand in the way of any interest from lufthansa. The adjusted ebitda ahead of the estimate of 3. 67. Net sales also ahead of estimates and the raising their outlook for 2017. Quite a lot beating estimates. And getting guidance from continuous operations on core eps. The big driver is all around m a. Management is working to get tied up this 66 billion takeover of the eye were called for giant that is monsanto. ,he focus on the drug sector will be speaking exclusively to the ceo. He will join the European Market open team at 8 00 u. K. Time. Correction, up on the previous quarter last year. Just a quick correction on the details there. The technological version of anna and i, lets take a look at the cover edition today. Than 200 50 words, theyve reduced it to three on a postit note. The plan he promised was a onepage list of what points which included cutting the Corporate Tax rate, targeting it is shortfits and of details. Whether its a shortterm sugar rush, the line this morning, under reagan its a 500 page tome for that. Bank of japan, weve just been catching up with kathleen. Suggesting that an exit from extraordinary stimulus remains far away. We will get the ecbs Rate Decision a little later today and will pick over the words delivered by our draghi in his News Conference. Anna and we focus on earnings this morning. We heard from Deutsche Bank, roche, and lufthansa. Others breaking at the top of the next hour. Manus the Trump White House has released details of his new tax code in what it might look like. The big unanswered question is how or if it can be paid for. Administration officials calling is the biggest tax cut in u. S. History. Trump white house finally came out with its muchanticipated tax reform plan. Stocks dropped after investors realize there was not as much to tell us they hoped, and theres the question on how to pay for it all the trump plan would cut the Corporate Tax rate to 15 from 35 . This is what he pledged on the campaign trail. Proposed a low repatriation tax to entice u. S. Companies to bring their foreign earnings back to the country. Theres about 2. 6 trillion stashed overseas taking advantage of a quirk in current tax law that allows those countries allows those companies to defer taxes. One thing the Trump White House does not support is a border adjustment tax. Treasury secretary mnuchin said we dont think it works in its current form and we will withnue to have discussion the house gop leadership about revisions they will consider. Republican leadership in congress once the tax to offset the cuss the cut to tax rates. The question is how the Trump White House would pay for this massive tax overhaul without increasing the deficit. Steve mnuchin did not elaborate very much, saying he thinks the but will pay for themselves many economists disagree with that, saying tax cuts do not pay for themselves. Mr. Mnuchin also said repatriation of earnings would encourage companies to invest in the country and create jobs. Dive into my bloomberg terminal and you will see that that may not exactly be the case. Since 2012, the s p 500 index has underperformed the s p 500 by back index. The implication here is that earnings might go more to shareholders in buybacks and not to domestic investment and jobs. Few if any expect this to pass as is. This is a wish list by donald trump and there will be lots of negotiation with congress over the next several months at least. Thats not all the news out of the Trump Administration and the last few hours. The white house released a statement saying the president will not terminate nafta at this time. Canadianwith the president and the mexican prime minister. Anna he said he will hold off on scrapping nafta. Bell. G us is stephen great to have you on the program. Talking about this trade news weve had overnight, some of the statement from the white house sounds like a different person to the campaign trail. Saying its an honor to do with both leaders and i believe the in result will make all three country stronger and better. It sounds like a much more collaborative trump on trade. Is this a new era . Converted to globalization. He would not use that word. Hes been lobbied by a lot of American Companies that benefit from nafta. There are some changes they can make that would be enormously beneficial to mexico. Increasing rule of or roles which means more value added for mexico Mexican Companies exporting to the United States. Although hes saying this about amending nafta, they still canadianriffs on softwood and are about to impose tariffs on canadian dairy. Hes capitulated essentially on china. Hes lost face over foreign policy. Is he trying to rein back his rhetoric when you see this kind of discussion north and south of the border . There certainly is a tendency for outrageous statements, often tweeted, a mechanism that communicates to the outside world that is not traditional in the oval office. That may be a shooting from the hip type comments. Particularly the secretary of the treasury and other people are more circumstance circumspect than the president himself. Out raw andcome overstated. Its been said many times that the tax plan was short on details, onepage of bullet points. Is there something to get excited about in those will points . The reagan plan you referred followed a that style. Lmost academic the plan announced is much closer to the house and the senate lands, so you could say this looks a bit like compromise. There is no border adjustment tax. Theres a whole series of things that are not integral, and that 15 plan, people do not expect that to be implemented. The market got excited by the phenomenal tax cuts, several thursdays ago. We now have something that possibly the markets had given up on passing anything. ,e may be positively surprised we may have something toward the end of this year rather than nothing. Fan on detail but more likely to produce an outcome. Thin on details. Holding the dollar back, this is the concern that if he goes for a huge repatriation of earnings from overseas, us a sense we get from what i read overnight. A lot of the money held overseas is already in dollars. We in the market are very focused on that. The bigger issue is to try to get a tax plan through. The biggest constraint is not so much the dollar at the question of whether has to be revenue neutral. What you can do with these plans is makeup a number for Economic Growth, and that produces lots of taxes. Some of the more conservative republicans want it to be properly revenue neutral, and thats much more difficult. Manus he will want to get across the aisle for these deals, wont he . If heds a majority of 60 goes it alone with the republican plan. He cannot do it if he has to have 60. He can do it if you just have to have a simple geordie. It comes down to how revenue neutrality works. But there is wiggle room within all of this. There are external bodies that will get involved in all this. A lot of these taxes, if the cutting higher rate tax and leaving revenue tax neutral, that actually reduces the economy because it takes money away from people who spend a lot and toward those who save a lot. Anna there is a debate on whether revenue neutral should be the focus or whether there. Hould be more dynamic scoring you talk about making up the growth estimates. Raise Economic Growth by a tiny amount over 10 years, it builds up to a lot. You can get almost any number you want. Putin and trump are said to meet at the end of the month. Is that another 20 moment another tweet moment . Have been talking about world war iii breaking out. Everyone seems to be relaxed on that now. Things seem to be a little more conciliatory now. I guess that is reassuring to people. Manus stephen bell, thank you so much. You can follow all of our charts and functions and influence the conversation by clicking on the ask a question button at the bottom of the screen. Manus coming up, we will talk more about Deutsche Bank. The clients are returning after the turbulent late last year. Much more to come on daybreak. 1 47 in thee back, morning in new york. U. S. Got a boost from the tax plan and realized there wasnt much detail and fell back down to earth a little bit. Lets get the Bloomberg Business flash with david inglis. David lets get started with playmakers come on you look at adjusted earnings , missing analyst estimates there. Complicated on deliveries of the new model. Hich is slowed it will nots said be converting into a holding company. It came as the tech giant posted quarterly profits that topped analyst estimates on smartphones and component sales. Samsung also announces firstever quarterly dividend. Jesse litvack has been jailed for two years and fined 2 million for lying to a customer about bond prices. He was found guilty and trial back in january on just one count. After his first conviction was reversed on appeal. Onset of the crackdown on shady deals on security deals back by assets. Manus thank you very much, david. Deutsche Bank Reported firstquarter earnings that beat estimates. Matt miller is standing by. Focusing on the net income. The market was looking for 336 Million Euros in litigation charges and it came in at 31 million. Take us through what youve seen so far. Litigation, will continue to be a burden in 2017. The cost will be lower than in 2016 but it is still a problem. They are still dealing with litigation and trying to win clients back that they lost last year. Of trust issues, for lack of a better term. They are still really struggling to win market share in this all important fixed income and currency trading business which is the lion share of their revenue, and get a bigger foothold into the Equities Trading business in which they actually lost some ground. It doesnt look good as first the trading businesses are concerned for Deutsche Bank. Frankfurt to in talk about Deutsche Bank and to cover the ecb story. Lets get a quick word on that front. A History Lesson that mario draghi might be teaching journalists at the assembled group in frankfurt later on today. Hewill want to stress doesnt want to make the same mistake assist predecessor in terms of hiking rates too soon. Matt these stories kind of the low rateuse environment continues to hurt Deutsche Bank earnings. They had a miss on the revenue incomed the net interest , hes complain for many months the low really about Interest Rate environment. The History Lesson are talking about six years ago this month was the start of the Interest Rate increases by Mario Draghis predecessor that led to or at least preceded a second recession here in europe, the second of the doubledip recessions we got in 2011. Mario draghi been came on board and started to turn back around what trichet had started. E remains fairly dovish we learned from the minutes that last month some of the more hawkish members on the ecb wanted to start the discussion of rolling back qe and maybe looking at getting closer to draghi photn, but against that it will be interesting to see how that conversation turns out today at 2 30. Manus thank you very much, we will be tuned into that in frankfurt. Marcus schenck will join matt miller in frankfurt. Anna the boj set Monetary Policy today. The takeaway, the central bank lowered its inflation forecast just a little bit. Manus all Global Demand has been sporting exports, four years of extraordinary Monetary Policy stimulus generating only the smallest of increases in prices. Stephen bell is here to help us make sense of the Great Central bank conundrum. Us have essentially told that they are turning towards a moderate expansion in the economy. Downgrading their view on inflation this year from 1. 5 to 1. 4. Thats aardly say quiver of arrows that are fully impacted on the bullseye. However, if you look at what the situation in japan was before that quiver of arrows, the nominal gdp is clearly positive. Things have improved. The Unemployment Rate in their own alternative or additional measure are extremely favorable. Least the deflationary fears receded. They got the wrong type of inflation which was higher and a combination of oil going up and the yen going down. The end has stopped its calamitous decline, but that was part of the reflation. The corporate sector is behaving a little more shareholder friendly. Theyve made they have a lot of older people. To get women working longer hours is the obvious thing to do, so they are making steps in the right direction. Wea it seems interesting come from a situation where everyone was talking at the start of the year and last year about reflation and look at the fed, how quickly the going to have to hike now given what donald trump is doing and when will the other Central Banks turn and start to try to catch up . Maybe we will hear from mario draghi that they are not in an enormous hurry, either. Thats correct, they want to keep their foot on the accelerator. What you have is better growth. The outlook has improved. What it has not done is the two inflation in japan or almost nowhere do we have genuine inflation. Tumble in other places. Theres is very little domestically generated core inflation. It should come, is just coming very slowly. Japan will keep that stimulus and Monetary Policy. There were some new appointments of doves. So they will continue that policy until they see some sustainable effect. A mild improvement in wages, which is what you need to sustain it. The actual growth of japan is not that bad. Anna thank you very much, stephen bell. Manus were going to talk about the earnings season, next. Next up we have lloyds, astrazeneca, we will break down those numbers for you. Deutsche bank has delivered bbva. Nordea and what can total deliver, what is the breakeven for the Energy Producer . We will break down the numbers, right here on daybreak. The u. S. President will not terminate nafta, but pledges to renegotiate the deal with mexico and canada. This is the white house delivers its tax plan. Inflation day forecast, now investors look to the ecb which is expected to maintain rates later today. After a strong earnings season, we bring you european results come as Deutsche Banks return to growth stall, we get the numbers. Welcome to bloomberg daybreak europe. Right here in the city of london. It is a 7 00 here, 8 00 in france. Here foret of numbers back with him to tell his First Quarter adjusted net net come income, 2. 56 billion. 56 on large. Market . 62 a share. Upper and cause more costly. Mercymething we heard the of this morning, Deutsche Bank, more jobs to go. Operating costs will be cut by 3. 5 billion. Versus 2014. Refining margins remain favorable, going into the second quarter. It is a beat for the french giant for their delivery. Cunningham rises 56 coming beating estimates. In terms of upstream business, operating income Net Operating Income 1. 3 billion. This time last year was 386 million. They maintained their savings of 3. 5 billion. Revenue 5. 4 one billion u. S. Dollars in line with estimates. Estimates,ead of . 99 per share. The estimated to two cents a share, that is written the bloomberg. Red hot headline. This company is in a transition. Toptrazeneca, moving test sellers have been facing competition. What extent can become a new trucks to compensate for plunging revenues that can result from that process . The traitors in the next generations of drugs. This year 2017 guidance confirmed. We have numbers coming through the First Quarter adjusted pretax profit billions of pounds. Thats up investment. Expect them in the top end of the 2015 cet one generation. In terms of the measure strength of the balance sheet, net interest raising 1 to 2. 93 billion. 364hat might million. Sings and u. K. Economy is in the u. K. Of course. Thats not below 2 , should be pti hasf just heard charges for past misconduct selling. Are still, the ins hurting their bottom line. Lets talk about nomura, we have results delivered by nomura fourthquarter net income, 61 points are billion dollars. About below for them. In terms of overseas earnings, that was in line, 60. 7 billion yen. Ain a loss last time thats this time last years is with a big number comes in from trading profit. Billion for 61. 5 billion. The buyback shows the Asset Managers are doing better lastce to the what we saw your, 28 point billion dollars. You can follow the topline results. Go to top life go and you will get all the views. Overseas pretax profits 16. 7 billion swinging from a huge bust this time last year. Brokerage commissions doing better. German Consumer Confidence. , Consumer Confidence comes in comfortable. Circuit that come at wfc 10. 2 is the number. 10. 2. Lets translate that into our equity markets. The markets will break them the individual members and silas. You have pharmaceuticals delivering, bankers. Issue,ndivided when the tax plan from trump which came in 250 words from 500 and equities are low, chevy us equities, point. We have a nice run of this rally into expectations of what trump would deliver. It lacked details. Markets traded lower them equities indicated lower in europe this morning. Not rip up nafta. Could they give a boost . Not necessarily when you look at the European Market. Rate, youof the risk have seen where we have been in the asian equities section. Mostly down, story earlier on in the day. Perhaps turned around a little bit. We were weaker than that certainly an hour ago. Bloomberg dollar index taking a hit from nafta Canadian Dollar, peso as well. On the market down. 5 . 10th week in a row, highest since 2015. This is where the asian markets closed as well. Can see that up 0. 5 . Australia up and 1. 8 . These are bond markets, futures, they are offered were lower on butte on june the futures. Markets begin to judge digest what happens. We are seeing suggestions we could see Deutsche Bank falling, down 1. 4 a trade. The bloomberg first word news. Lets get started with Deutsche Bank. Investors waiting for this return to growth is promised. Trailing in the First Quarter when you look at revenue from trading bond then currencies. 11 and the First Quarter from a year back. That is less than half the 24 increase in the the but reported by the five biggest u. S. Investment banks. Itsbank of japan has kept stimulus policies unchanged while lowering its forecast. Central bank said it will continue to use these policy rates. Then underscores the view that any exit from its unprecedented reviewy easing straight forecast for this fiscal year ends next. We will bring you the latest policy decisions. Draghis newsrio conference. 45 minutes after that, uber customers all of that on po iv. Of the u. S. Left there as well. The white house said President Donald Trump will not immediately terminate his countrys participation in nafta. This decision came after trump spoke with leaders in mexico and canada about ways to renegotiate that. Its a look at what we are seeing his first those currencies. Dollars strengthening substantially after that announcement sticking with the white house, it has made its opening bid for what officials call, the biggest tax cut in u. S. History. The plan calls for the slashing federal income taxes to 15 50 for corporate Small Businesses and partnerships. It also has a onetime tax and 2. 6 trillion in earnings that are pulled. No detail is given including the which proposed cuts. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Japan the Boj Press Conference is happening. Whatever headlines. Towards into the session we are upwards momentum. Call it flat if you will. Here in austin optimist called six days. We are coming up five Straight Days of gains. Theres little to trade, we are set its between this two major centralbank decisions. Very much within one standard deviation when you look at equities. Currencies, bond markets. As for celeste yours of traitor concerned. We did get have a look at these names. Earnings stories, talking about yahoo , japan, line corp. Which is in japan of course. The drop in, stocks, disappointing as far as earnings were concerned. But sewer this is going. As we wrap up this week, one must reading. There is some concern that australia came to curb some of these gas exports are exports, to ensure theres enough supply domestically. Quickly, one last chart. Have a look at industrial profits in china, it is johnsons 2013 as far as the comparison to last year. That coming up to Producer Prices in china. Were now inflation territory. Of the data we just had. German Consumer Confidence. Looks better on the jfk numbers. This morning we go a cps from europes biggest economy through the estimate is 1. 9 euro on year. Thats basically the ecbs target. Central bank will keep Interest Rates and pace of purchases unchanged. Stephen,management schenectady with the ecb in mind. You areut what expecting. Expectations for actual change today are low. But it will be all about the quizzing he gets around the hour. That risks arey balanced for the eurozone . He has got to recognize that the european economy is looking much better. Its clearly growing stronger than the United States, which gets all of the attention. The person tick purchasing Management Index which is the best realtime indicator is much sharper in europe than almost anywhere of the major economies. So yes, europe is looking better. This reflects a global improvement the middle of last year, the one europe has felt it needs. Most significantly. Daye working towards the when they will reign in their asset purchase program. It is not going to be talked about today, he probably will say weve had no discussions. They wont change as you say, but we are moving towards that. Now the guessing game is when things will happen, when will it starts, you and you did a survey of economists of your screens. If. All about when, not we were talking about selectica will the ecbs policy further, which is there for the guidance . Happen givenwont the current environment and the question is, qwest anna mentioned this this morning, we have this story by our team, which is it is six years almost to the month and theres a policy mistake. This is a fine london draghi needs to walk. Is reading back expectation that the stimulus will be able to reduce. Theres still no new the gold. This is a great chart. This is Inflation Expectations five years ahead. We are moving away from movements at all, just dominating inflation. Element foot have legislation is going up. As it did come as much as the anniversary. Same profile for headline inflation. He restricts because it felt it was emergency low rates. Thats not what the European Central bank under mario draghi is ticking of doing. They are going to keep pushing , down thelus accelerator to keep the european motor going until they feel they have sustainable sustainable inflation. 7. 9 but its significantly higher than it was last year, which shows the some substantial improvement. Its a global phenomenon. At least inflation figures linked up with the United States we it moves a bit not have got a busy political calendar, we tend to put things on hold. Is thefirst thing astaire in europe is over. The weird situation where comments were first to cutbacks and in raise taxes is the opposite of what should happen, thats gone. Fiscal policy, broadly speaking, neutral. A bit of a stimulus maybe. Lot president ial elections, we are not expecting fiscal stimulus there either. Mitchells better than it was. Thank you so much for spending your time with us this morning, stephen. Up next, the European Affairs ministers gathered to greet their rights and position. We are live in the on the ground in luxembourg next. This is bloomberg. 7 18 in london. European Affairs Ministers meeting in luxembourg today to agree on eu Brexit Guidelines and negotiating positions. By comes ahead of an external are meeting of eu leaders in brussels on saturday. Changes in luxembourg following the action. Were seeing a tougher stance and the latest draft of the eus negotiating guidelines, thats been debated where you are today. Threat. This latest ref obtained by Bloomberg News dated april 25, theing tougher stance from eu on issues such as Financial Services and citizens rights. On Financial Services, the wording is been touched separated from the wording on a trade deal, coming to blows the prime minister. Recent make a oneday sweeping trade deal, including Financial Services on citizens rights, even you in the u. K. , u. K. Citizens in the eu. There was a more explicit demand of a reciprocal rights, including of course the right for permanent residence after five years of living in a country. We arty know its a first priority, citizens rate rights for the year. On the exit bill, this draft stresses the bill hasnt taken to a cap alltime the u. K. Has been a member of the eu. Ministers will prove negotiating guidelines in the luxembourg today. On saturday, there will be an extraordinary meetings of of the eu 27 liter, to sign a on his negotiating guidelines. These principles will be followed by more detail negotiating mandates later in may. Real discussions want to get until after the u. K. Election on june 8. Thank you very much. Britains biggest business lobby has said that the u. K. And eu need to settle any exit bill quickly, and it cracked and a new trade deal. Confederation of british industrys said a good arrangement is not about doing the u. K. Favor, but about being based on solid economics for both sides. Joining us now Stephen Wilcox who heads the International Trade policy unit in the London School of economic professor, great have you on the program. Earlier on this week by wilbur ross come who talked about the u. K. Having bandwidth issues around trade. So they have not negotiated trails along on time. Trainingen training some of those who will do trade deals. We have bandwidth issues there is negotiating country at the moment on trade . I think its probably quite question, im not so sure. Its not so much the question of the officials being able to negotiate the outcome. It is the ability of the country as a whole tab the right input in order to find the balance. You have to find that in this is these agreements. I see the trade modern trade agreements establish a predictable framework. It bounces the interest of business the liberal economic gains from liberal market access. Urgent Public Policy objectives, environment policy, social policy. You have written about a how want terrorists rather than the Tariff Barriers they get all the headlines. Absolutely. Hasdebate the u. K. Today really been focused on terrorists. Tariffs are a diminishing of diminishing importance. Its getting the balance between his economic objectives and social policy objectives needed. Up until now, the u. K. [no audio] access to the market, but also ensure minimum central requirements for Environmental Protection are the provincial regulations. We just heard from nara and luxembourg, she was clear that the latest twist before we the big on these discussions is from the european side, Financial Services will be less. Thats from an overall trade agreement. Are you surprised by the starting text from the european have disappointing will that be for brits . Financial services missing key issue for the british. Ang equivalent substance acceptance by the eu is important. Typically holds the power in trade talks . The country that provides the product, the country that buys it, or is it just the biggest economy . There are different issues in terms of bargaining power. The size of the economy is important. Are howestions though emergence is it to reach an agreement, which side has more patience. Waitite that can wait and tends to have more negotiating leverage. The eu holds the cards in this case. Timing for the example on a transition provision, it will be the 27th to decide whether transition but terms of a transition. Getting back to my earlier point , what is issued if you have a trade agreement that is not based on formal legal commitments, which we will out ofe the u. K. Moves the jurisdiction of the european on a, and decides preference who decides on a preference . Sites will have access to different European Markets, whether u. K. Food and agriculture projects products comply with eu that will be the eu regulators. What is the recourse than . Ismany ways that is a grape misnomer about brexit, that ultimately you will be governed by institutions. With your brexit are not. Where should the u. K. Focused most . Nafta, trump says he will not repent now but will seek to renegotiate it. Where should the u. K. Focus, the , china, india . Was a Bilateral Agreement that can help europe . You have to look at the scope of the agreement. A fairlyegotiate simple tariff agreement with United States may, other u. S. Tariffs average at 2 . Its not going to be a big deal to negotiate that 2 . May be important certain sectors. You can negotiate a quick maybeent with singapore, australia, new zealand because they want access to the u. K. Agriculture market. That wont be difficult. If you want to negotiate an agreement to provide this predictable framework in other words you have to try to the approach towards regulating markets in other countries the approach the u. K. Wants. That takes time. It takes a long time. Withll be very difficult United States, because the United States have clear has clear videos on its own regulatory policies. I can be difficult and agriculture. Thank for joining us, professor. 10 00 will bring you can use from the Deutsche Bank cfo at 9 00am. Tomorrow was big to the berkeley ceo at 7 00am. This is bloomberg. Good morning, you are watching bloomberg markets. Visited, this is the european open. Im guy johnson in london. About trump tax and tariffs. The president will not terminate nafta for now. Planeam unveiled a new tax which is the nondetails. Our investors are stuck in a cycle of buy the rumor, sell the news. Macro open the door for ecb is. The decision of