Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20170508

Held up in april as Global Demand recovers. The forex reserves rose for a third month. Anna welcome to bloomberg daybreak europe. Manus Emmanuel Macron got the votes. The euro had 90 possibility that this event would happen. This is volatility overnight in the euro. You have things like the ecb. Yellow. Meeting is in it has dropped. Euro is down. Euro sterling is down, euroyen is down. Had alreadynagers covered sorry, they were already net long about this by the most on record. Buyn appalling phrase the rumor. Anna we do not know what the ecb will do as we go into june. We do not know how much of power makcron will have. Let us look at asian equity markets. At theng china come asian equity markets are doing very well. The chinese story is different. Down another percent on the chinese equity market. U. S. Stocks closing at a record. Jobs number was decent. All of that lifting the general sentiment but the chinese story is different. Billion loss in liquid chairs in the last month of a selloff. How much pain will the chinese authorities allowed to happen. We will discuss the volatility in the yuan. Let us look at the oil market. The Oil Market May see an he saysn terms of he is confident the agreement will be extended into the second half. Are backhat, the rigs and more were added last week. The overriding story is that opec and nonopec will have to do more. That thedman saying fault we saw in commodities does not reflect the fundamentals. An interesting line. Along with the saudi comments. Overall context to the risk on scene. Evident in what we are seeing in the stock markets. A little bit of a them partner on the little bit of a dampener. One thing that will be back in focus is tpg. It declines a third take over from ppg. This story will not go away. This is the third time it has bid for the stock. Let us get the bloomberg first word news. Juliette saly french president elect Emmanuel Macron has pledged to unite the nation. Speaking to supporters at his Campaign Headquarters in paris, he says he will work to adjust the concerns exposed during one of the most divisive campaigns in recent history. Of the vote in a commanding victory. In germany, Angela Merkels party has picked up momentum defeating the cdu convincingly. The victory deals a blow to Martin Schulz bid. Saudi arabias oil minister has signaled that output occurs could extend into next year. Speaking in malaysia, he says he is confident that an agreement by crude producers to ease production will be extended into the second half of the year and possibly beyond. He also said that he is confident that the Global Oil Markets will soon rebalance and return to a healthy state. Global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. Can find more stories on the bloomberg at top. Hasnna has mentioned, it been a good start to the trading week. With the exception of china. The member the nikkei and the topix has have come back after being closed it for most of last week and they are both we haveat the highest seen since december 2015. China is a different story. Weakness is coming through the shanghai composite. Isebound in metal prices helping the Australian Share market. Looking at some specific stocks. A frontrunner in tokyo is up 9. 5 . Approvedug has been for the First Time Since 1995. Shares. Hi Deutsche Bank indicating its operating profit will be lower than expected. Sends china. Under pressure. Na under chi pressure. Great read up there from juliette saly. Let us talk about the president elect of france. He has pledged to unite the country following his victory against Marine Le Pen. Beat Emmanuel Macron Marine Le Pen securing 66 of the vote to her 34 . He will address the concerns exposed during one of the most divisive campaigns in recent history. Won. Night, you france won. What we have been doing in the past few months is unprecedented. Everyone said it was impossible but that was misjudging france. Say a few words to those that voted for madame le pen today. Do not boo them. Hey have expressed their anger and i have expressed them i have respected them as well. I will do everything i can in the next five years to make sure that they do not have any reason to vote for extremist ideas. We have the strength, the energy, and the will because that is what has carried us to this position and that is what has made us. That strength will ensure our future. We will not give in to fear, division, or lies. Conceding defeat, the pen le pen said th she was now the leader of. People will have to express themselves again in the general election. I will be leading this fight. And i urge those that want to choose france to vote for us to ensure prosperity and preserve our identity and social model. Anna let us get the latest from paris. Andline is on the ground has been following the events of the weekend. What does Emmanuel Macrons victory speech tell us about the kind of president he wants to be. We are seeing many interpretations. What has caught your eye . Wo things. Tow the music he chose when he walked on stage. Showingns ode to joy that he was the proeuropean candidate defeating the antie. U. Forces. Ntare seeing antibrexit, trump antitrump. Some call it the enlightenment. The second thing i saw from the speech in front of this huge crowd of 40,000 people was the fact that he knows he will have to reconcile france. This will be his major task. Even if le pen was defeated, hes she still got 34 of the vote. More than 10 million votes. She still did two times better than her father in 2002 and she represents those who feel hurt by globalization. Helped byfeel Less Technology and modernity. Hear thoset he would because you do not have to vote for the extremes next time. What will be the focus for Emmanuel Macron . Plus vote. N this 60 what will his focus be policy wise . First name awill new cabinet and Prime Minister probably in the next few days. It might change if he does not win a majority in the parliamentary elections next month. This is his big task. A year ago, his movement did not even exist. He has built an entire majority from scratch. He will have to seek allies from both the left wing, the socialists, and the right wing, the republicans, in order to build this majority. He also said that he wants to bring in some people from Civil Society. Nearly 50,000 people from Civil Society have applied to to represent him but it is unclear if he can really get this majority next month. Anna thank you so much, caroline. As we go caroline through the program. For the moment, let us talk to our guest in studio. The chief investments. So weto have you with us can digest this. Certainty is a relative thing imperative to the uncertainty that we had around the first round. There are still big questions. What can Emmanuel Macron really do . Day, ihe end of the think it is a very positive results for markets. We should not discount that. Majorityeds to find a in parliament and he needs to be able to do the reforms. Clearly, there are some concerns about that. How much he will be able to do. If you look at donald trump in the u. S. , it has proven to be more difficult than people thought at the beginning. The reforms he needs to an act could be tougher than what the 1980sd to do in in this country. Unemployment is still in double digits. Under. 4 for those 25 or he has a fiveyear window to stop le pen. Inbuilding consensus parliament for these tough reforms in france, it is difficult. I would not underestimate how difficult this will be. At the same time, you should e notice that is 35 40 that needs to be reconciled into politics. Ambitious is his reform agenda . Morgan stanley pointing out that the agenda is pretty incremental rather than radical. This is about the 120,000 jobs. Tax rates, job cuts. Incremental. Anna more incremental and radical. About no thatcheresque revolution in the cards. Extreme candidate in the sense that he is not a revolutionary. He will not change the system extremely compared to where it is now. Looking forward, that may be because if something is not reformed in france, you may have more populists support for future elections. Let us talk about markets. Euro sterling is down. Euroyen is down. The euro was so well bid going into this. 1. 10 the top of this . There is a reason why traders short term has been chain replaced by machines. If you look at the next few months, there are clearly a lot of flows coming into europe because of the election risk going away. This is generally supportive for the euro. Thank you. No machines here. Coming up we have more good news from china. Exports are rising. Global demand recovers. What does that mean for markets . This is bloomberg. Anna welcome back. This is bloomberg daybreak. The dollar against the chinese currency. 6. 90 is where we trade. Pity much unchanged. Juliette pretty much unchanged. Juliette xl novell rejected a third takeover offer from ppg. Low. G the offer was too ppg said earlier it would make a hostile takeover bid. Come to the table by next month. Over the weekend, Warren Buffett spoke at length about his failure to pounce on opportunities in tech stack. Ibm shares fell on friday. He said he was too optimistic about the prospects for the company. He blew it byhat not investing early in google. The broadcast group is close to buying the view media. Shareld pay about 45 a or 4 billion. They said an agreement may be announced as early as today. A spokesman declined to comment. That is your Bloomberg Business flash. Manus thank you. Chinas overseas shipments were up in april but down from the hike we saw in march. Imports have increased by 11. 9 . Surplus ate trade just over a billion dollars. A third monthor in april beating estimates. The peoples bank of china says their cash pile climbed by 25. 4 billion. A magic number three. To tighter capital controls keeping money from flowing out of the country and the yuan was stable. Manus our guest is still with us. Capital controls worked. Above three. Ber monthlye the chinese reserves in blue. Capital controls work but they cannot work forever. You cannot have that roadblock for if you want to a global currency. I think this is good news. Again, they are trying to slow down a little bit. They are trying to find a way where they can achieve stable growth and trying not to have too much euphoria in the real estate market. They have been trying to cool down the property our kitchen the equity market to a certain extent and they are being successful. Proven over the year to be quite successful in managing their economy so far. Anna trying to rein in Financial Leverage has raised 453 billion to the value of chinese stocks and bonds. You say it is successful. If the endgame is deleveraging the economy. Will this carry on . There are questions about how long the authorities will allow this to happen, the erosion in the value of stocks and bonds. And we had the electoral event or party event later this year. The expectation is that later this year, nothing will happen but what happens afterward . Onceyou keeping consult they consolidate the power, they will want to balance the economy. After the fall, what will happen in china . This will be partly a function of what happens in the u. S. Manus will they continue lockstep to meet the fed . Yuan volatility. Yuan volatility it is rather ominous. Devaluation will they be more aggressive on the currency after xi consolidate his power . I think they will be. If the euro is strong because of the french elections and because of flows, you may have a situation where at the end of the year, they try to do something about the currency. It is unlikely to happen before the party election. Ina sometimes, what happens the chinese equity market is quite contained. And it does not have much of an impact elsewhere, perhaps because of the lack of linkages. Last week, we talked about commodity. Iron or. And oil. Withhether it had to do chinese growth. Is that an area of concern for you . For the metals it is. If they float too much they will have an impact on commodities. Think there is less of an effect on oil because that is more of a Global Demand picture rather than metals. Manus are we complacent . We looked through these charts this morning. Just under 500 billion in losses. Bond market and the equity market. If i remember correctly, a fall over in china has the capacity really to deliver global contagion. Are we complacent about china . Extent to a certain because everyone is waiting for the party event in the fall. Nothing will happen in the meantime. There is a sense of complacency because it seems nothing can happen before the. At the same time, it is warranted. I think most people need to focus on the u. S. Chinese issues and imbalances will be the same but if nothing happens in the u. S. , it is unlikely these issues will come to the front. By trade. A is united that is a big focus for donald trump. How do you perceive the priorities of the u. S. Administration . Is china a priority . I was at the conference. It was interesting to get his perspective. In the next 100 days, he will try to lay down the framework of an agreement with china. Tois important for markets see that there is a level of dialogue and something will happen in the next 100 days. Pretty positive in terms of the trade side of things. Manus stay with us. We have a lot more to get through. We will dive more into the u. S. Perspective. Risk in perspective for our viewers on trade. They are coming back from holiday. The good news from the fed. The equity markets bid in china. Check into your commodities strip. You have more pressure. Copper is down. This all goes back to the iron ore, copper, and oil. Anna the comments of the saudis about the cuts open potentially has to deliver. Opecat the cuts potentially has to deliver. 7 26 a. M. In france. Win an Emmanuel Macron means for paris. Manus hardly what you would their way in terms of the movement in dollaryen. There is a relief in the equity market. The currency markets, they have taken it in their stride. It was long risk going into macrons victory on sunday in france. We have a new edition of daybreak and is it rude to say they agree . Dayb. Anna the cover story is the victory of macron over le pen. The 39yearold centrist took nearly 66 of votes according to the interior ministry, a bigger lead than projected. He plans to address the concerns exposed during one of the most divisive campaigns. 34. 3 , based on 100 of the vote. Is3 of dissatisfied society a remarkable number. Will it be changed in the next five years . Daybreak take you through the Market Reaction of the french result. You have the dollar strengthened slightly. U. S. Futures ticking lower on the 10 year. U. K. Stock futures up. 5 on macrons victory. An extension to the market. Dont worry. We are here. Extension on the way. Speaking in tokyo, saying the euro Area Recovery is gathering momentum, saying a broadly balanced Growth Outlook is within reach. What will ecb do now given that we have that french risk away into the sidelines . Plenty of other Political Risks to talk about. We also focus in on Warren Buffetts assurances that they will be fine after he is gone. He said the board will consider stock repurchase is after his passing and the firm will be larger in 10 years than it has ever been. The 86yearold told the company that if i died tonight, i think the stock would go up tomorrow. Frank it was a very admission over the weekend in terms of cash, in terms of things he got right and wrong. Anna where do you put the money next . Manus we will talk about that cash pile later on. Caroline connan is standing by with Atlantic Councils nonresident senior fellow, Nicholas Dungan. Caroline . Caroline i am joined by Nicholas Dungan hear from the anche inof maison bl paris. He is a research although at the French Institute for international relations. Here . Re we seeing is it the antibrexit, antitrump . The enlightenment . Nicholas what we are seeing is of return in force the ideas of tolerance, openness, the importance of andation, not telling lies, trying to take into account the real concerns of the people, and the enlightenment was about respect for people and ideas, and what we have seen with brexit and the people who lied to the leave Campaign Lies of trump, it was for people to get elected. Macron is in a sense the revenge of the enlightenment, yes. Caroline Marine Le Pen, she did twice better than her father in 2002. She had more than 10 million votes. Is it really the defeat of the populists . Could she get elected in 2022 . Nicholas it is not the defeat of the populists or the defeat that the concerns of the populists have. It is Marine Le Pen and the political defeat of the National Front. Notwithstanding that, macron understands better than anybody else does, that these issues are real. He said i heard the anger, the rage, and these issues are very real. It is shocking, in a good way, to find that we have the youngest chief of state since napoleon, and shocking in another way to see that we have got a third of the french people who voted yesterday voted for the National Front. So, you know, there is a problem. He knows that and he is going to have to address it. Caroline you heard this anger. What can he do to reconcile these two visions of france . Nicholas two things. He mentions them both quickly. Work and education. And the fact is, if we are going to have the revenge of the am i meant, people have to hope. They have to have something to look forward to. If they do not have skills and they cannot get jobs, then they have nothing to look forward to. They will be disenfranchised, and they will be a real about that, and they would be right to being about that. I think he understands that. The problems of france are actually quite simple. A labor code that is far too complicated, that discourages creation and discourages growing business, and secondly, a tax code which has too many different taxes, so it is more of an Administrative Burden than a financial burden. That is one set of administrative issues. And then the other issue that is very important is that this country graduates a lot of people who do not have the skills to get jobs, and that is why use an appointment is so high. It is not just because people do not want to hire, it is because the people they might want to hire do not have the skills as they would in switzerland or as they would in germany, and that is where school comes in, so reforming school, vocational training, putting them on a track where they can get a job, that will solve a lot of problems. Education will bring the revenge of the enlightenment. Youline one reforms mustve pushed through is the reform of the labor market. He wants to do that over the summer in the next 100 days. Givent going to happen the trade unions and also that he might not have majority in parliament . Toholas what we need understand and what we were just talking about a few minutes ago on the radio was in this country, the legislative elections follow the other elections, june 11, june 18. In this country, the check and balances work within the executive branch, so the president appoints the Prime Minister, but the Prime Minister has to get a majority from parliament. That is a check. He cannot do any reforms a Must Parliament votes it. In order for parliament to vote for them, he needs to get a majority. His movement, which is not really a Political Party yet, en marche, has a zero votes in parliament. He will have to win another election before he can do any of these things. Caroline on a scale of one to 10, how big are the chances he will get this majority . Nicholas somewhere between one and 10. Who knows. It will be very difficult for the veteran politicians they will have to swallow extremely hard to support macron. They will have to make a political judgment which is that it is very risky not to support macron. Continue. E if he can finally, very quickly, what will be the relationship with the donald trump . Nicholas he will have to build a relationship with trump, the white house, the executive branch, and with senators and members of the house of representatives, chief executive. I think that there is ever since i was president of the french american foundation, i realized there is a big need to broaden the u. S. Relationship and with trump in the right house white house, there is more of a need to broaden it. Caroline that was Nicholas Dungan, senior fellow of the Atlantic Council and washington, d. C. , talking about the revenge of the enlightenment with the election of Emmanuel Macron, but of course, many challenges lie ahead. Anna caroline, thank you very much. A nice line, a nice transatlantic conversation. Caroline connan joining us there from the rooftops of paris. The cio at cairos Investment Management is still with us. It was generally as expected, wasnt it . Many people in the runup saying we need to worry about other things on the electoral calendar or that could be on the electoral calendar. Im thinking of italy. One guest said this could happen in the autumn, the fall. Do you think so so soon or do we wait longer for an italian election . It could be longer. No one knows, really, but the expectation is that it could be next year. It probablyably means actually, that it is longer for people to focus on and they will need to focus on other things before. Anna it is more of a worry, italy, then france . Given the lack of support for the voting population in italy . It is a more fragmented Political Landscape than france. Before theeformed election, so we do not know the rules of the elections, so that makes it more difficult to predict. Manus let us talk about europe. We have the European Central bank. The markets converge. If you look at the pmis, we have been expanding for 46 months and a row. Growth is there. Are you applying more money into europe . If so, where would you put that . Just looking at the alliance and a red, and he talks about anna read. He talks about the markets being prudent and orderly. Growth is powering ahead, but the ecb are still on this prudent mode. That is a bit of a dichotomy, isnt it . Michele yes, and it will be interesting to see what happens to yields. Now that this race gets out of the way with france, yields ecbt be higher, and the might be behind the curve. Clearly, that is important, and that will be quite challenging for investors because the fixed income portfolios are very big. Size of earlyd pipeline inflation pressure, the focus is very much of their as the ecb make their last meeting. Let us give it to talk about what is happening in the u. S. Because the transatlantic divide over Monetary Policy is key, isnt it . The s p 500 love its third consent weekly gain following fridays robust data. Payrolls rose by 211,000 while unemployment fell 4. 4 percent. That did little to change consensus expectations for the next fed hike to come this june. Anna San Francisco fed president John Williams said the outlook for three to four rate increases have been shifted and the economy is operating above its potential. , andall of that in mind you look at the u. S. Job numbers on friday, you can go through a rollcall, 211,000, unemployment the lowest since 2007, the broad Unemployment Rate at 8. 6 . Then look at average hourly earnings, they are not writing. They are falling. That is the little piece in this jigsaw which surely brings into question the robustness in terms of the momentum of the data, or is that just me looking for the negative . Michele i think it is right. A lot of people were waiting for Wage Inflation to drive yields higher, but this has not happened, and also growth has been weekend the first quarter, but we got the sense that generally, people are relaxed about that and they do not think it is really a slowdown, which is going to occur in the next few quarters. It is just seasonal. And probably here, we would see the relation of growth. Anna they have got the u. S. Administration they have a target of 3 growth. They are getting a gauge on how committed they are to that. A target is one thing. This is the u. S. And not china. These targets are not just magically met. Michele the focus is really taxes, deregulation and trade. Deregulation is the most important one because it can be done without big support of the congress, and so, it would be done by executive orders and it would be done in financials. And two big areas of the u. S. Economy. The target is realistic if nothing happens elsewhere. They are focused on that. Anna manus Steve Mnuchin talks about this growth target manus . You can move growth anywhere you want to make your numbers add up in any economy. Tal to me about it fromk a dollar perspective. Sinces the lowest september. If you get a cracking good job number and you still cannot get the dollar to really power ahead, my question to you is is the dollar at a Tipping Point with the hedge funds at the lowest since september . Michele a lot of people have given up on the reflation trade, which was the dollar and rates moving higher, but i think that this is probably now done. Anna you have not given up on it, given what you said about the focus on deregulation, doing things by executive order, and focused on that growth . Michele i think the market has replied that risk lower. There is a lot of opportunities, but at the same time, the next two to three month, we will probably see a vacuum of action by the administration, so, probably, data will drive things. At the same time, i think also that the market will be less driven by macro and more offering opportunities which as opposed to a big macro trade. Manus michele gesualdi, thank you for being with anna and i this mind or you can go to tv if you are a customer. Anna hit tv on your bloomberg, and you can follow all the charts and functions that we are using to influence the conversation. Click on the question button at the bottom of the screen. Manus the outlook for crude after saudi arabias oil minister signals production cuts could be extended into next year. This is bloomberg. Anna welcome back everybody, bloomberg daybreak europe. 1 47 in the morning if you are in europe. We have the results of the president ial runoff in france and the markets, at least in the equity markets, the futures suggesting markets will be unmoved by that result. It was as expected. Winning pretty convincingly, even though Marine Le Pen, front national, increasing their presence in the french Political Landscape. Let us get the Bloomberg Business flash. Here is juliette saly. Juliette thank you. Akzonobel hass rejected their third rival. They have rebuffed two proposal, saying the 26. 9 billion euro offer was too low and not worthy of discussion. That attracted criticism from shareholders. Ppg earlier said it would make a hostile takeover bid for akzo. Over the weekend, Warren Buffett has spoken at length about his opportunities in tech stocks. Ibm shares fell on friday after the billionaire cut about one third of his estate after what he described as being too optimistic about the profits. Speaking at the meeting, he said he blew it by not investing earlier in google. Broadcast group is close to buying Tribune Media. 45 per would pay about share were around 4 billion for the chicagobased broadcasting company. They said that an agreement may. E announced as early as today Tribune Media declined to comment. Emails to sinclair were not returned. That is your Bloomberg Business flash. Manus thank you very much. 46. 81 is the price of oil. Oil minister has signaled that opecs crude output cuts would be extended to the second half of 2017 and possibly beyond. Speaking at the is oil and gas conference in kuala lumpur, he said it will return to a healthy state. Anna yousef gamal eldin joins us now. What are the common coming through from the saudi oil delegation, us . Oil was bouncing little bit this morning. Thatis the latest . Yousef is the key. The technical rebound is driving a lot of these gains. A lot were saying it was oversold. That thereng here is is a possibility of that being extended further than the second half of this year into 2018 and possibly opec, and nonopec as part of this agreement, weighing new options. Oil has already made gains. I kept a close watch on the oil prices. They are so critical Still Critical of where it goes from now. You can pull this up on bloomberg, to see how much of a lack of progress opec has not made. In green. E the circle that is when opec decides to cut production at the end of last year. Your white line is your brent crude price and your line in blue is the that production level. You can see the price has not lived up to their expectations. Ultimately, what they are trying to do is to get it to the fiveyear average in terms of global inventories. You look at what is happening in the u. S. , which is the other key indicator, and you are seeing a further build up to 703. This takes us to 30 in gained so far this year. Key points to watch out for, you have the eia releasing the Shortterm Energy Outlook on tuesday and opec is going to release a batch of data as well to give us a lot more context about what is really happening on a fundamental supply and demand basis. Guys. Manus thank you very much, it yousef gamal eldin. Let us put Global Markets in context. Peter toogood is our next guest and he will put everything in context for us. Anna very good morning to you. Good to see you this monday morning. Manus im feeling generous. Your thoughts on Global Equity markets. Let us start there. We saw a record u. S. Markets are pretty strong payrolls number out of the united states. Still, the voices on the sideline say hold on, how long can this go on for . Peter interestingly, the one thing the bullish camp might have had was the january reflation, economic sensitivity, stocks that fly yet actually, we reverted to type, and we are back to the treasury yield telling us something and we will push their valuations to infinite wisdom height. Are down again. We have reverted to the story that was 15 rather than 16. The whole world is expecting a relation trade, yet those trades are fading quite majestically, as incomes the banks have been interesting. That is where the value manages. They are left with the banks. That is sort of the picture. Manus even Warren Buffett with say look, i got it slightly wrong. I bought ibm and it did not quite work. I missed on google. I have got 100 million in cash. He is the personification of success. Cash on the sidelines. Peter in terms of the things that do not work manus he says he hopes apple does better than ibm might. Last to stage anyway with apple, possibly. His original criteria was that it is a Consumer Products company. I think that have not actually changed great deal. He has a lot of cash now, but he is looking for the products company. You can argue that people are busting Business Models to pieces. Projectst a leading manufacturer. It is interesting he has got into there. The one causing the chaos are people like amazon and google, who are general me tearing the book up. That is the problem. Anna big test to apple. Peter lots of tests. They are snapping up the heels. Seeing it in the context of the western world, that is not how the rest of the world thinks. Apple is not as popular elsewhere. It is not the big thing in asia or etc. Microsoft of course, coming up the track with eating macbook up. We have seen microsoft and it has an awful lot manus of money, microsoft. Manus it has got a few dollars it has gotten off a lot of money, microsoft. Manus it has got a few dollars. Oil is an extremely oil is inextricably linked to it. On the oil market, we broke all the numbers. Goodness knows, we broke a lot of numbers last week on daybreak. I have never seen as many numbers on thursday. [laughter] manus the point am trying to make is that there is a lack of Companies Make money at 50. They told us that. Market does not believe it. Energy Index Companies down here. Peter they were all ramped manus you are specifically defined me. Peter ramped in advance of that move. Vampire lot of them are very quickly. That is the thing about the markets. It was not quite the economist ha headline. That was it. Off you go. Let us her number, 50 is where they put it. The basins in america can do 35. Are only 40 of the market these days. That incremental supply is coming from elsewhere so they can sit there and say we will be fine. They are not going to be fine. Manus is this a trap . One of those value traps . Peter they can cover dividends now. They are not in the same that place they were at 35. 50 or 60, they are ok. Anna look at the banking sector. What opportunities now in financials peter the u. S. Have done their bit. That is the case. The next great hope is the european banks selling off most of what they own from what we can work out. There is a general idea that europe is in a much better place and will grow rapidly. It might grow 1. 5 . Surope is anything read ia an aging region. Youre on your fx is as well. Secondary earnings the year before were pretty weak. Catch up to play. The u. S. Position is better in the s p because of global growth. Rate of change, yes. That is the bullish case at the moment if you are a fan of equities. Anna thank you, peter toogood. Much more to learn from him. Manus we are going to talk about macron, and the impacts potentially from his presidency on markets. We bring you the very latest from paris and will give you the opening calls and talk to the blah blah blach ceo. Emmanuel macron decisively beat Marine Le Pen, delivering a blow to europe populist wave. In his victory speech, this interest pledges to unite the country. We have the strength, the energy, and the will, because that is what has carried us to this position, and that is what has made us. That strength will injure our future. We will not give in to fear, division, and lies said opecs oil minister oil cuts could extend into the second half of the year and possibly beyond. Manus remaining resilient. Chinas overseas shipments held up in april as Global Demand recovers. The countries forex reserves rose for a fourth month. Countrys forex reserves rose for a fourth month. You are welcome to bloomberg daybreak europe, our flagship morning show in the middle of london. I am manus cranny. Anna i am anna. Let us go there. German factory orders rising as the economic boom continues undaunted, this is the headlines from our colleague a bloomberg news. Order to increase. Interestingly, the pickup is led by demand from within the 19 the nation euro region, so this is not necessarily about global growth, or German Growth either, but about eurozone growth. The bundesbank said the German Economy expanded. Business confidence is at its highest. If you are looking for positive data on germany, you could make that argument around the data this morning. Manus added to the fact that Angela Merkel and her political momentum is gaining ground in germany, against the social democrats. Futures are strong, equities are strong, and the euro is at a less strident march through the equity market likes what it sees from fridays payroll numbers to the accession to the presidency of Emmanuel Macron and to the defeat of populism or so they would say. Equity markets trading higher. Oil has turned it around by 1. 5 , so that is adding to the overall momentum in these equity markets this morning. There is a sense of relief, i would say, in equities, that the fed can get on with their job. Anna we are pretty flat at the start of trade, but european theater is pointing higher. The euro was down 25 compared to the previous close. It rallied a little bit, on the risk radar. 0. 25 compared to the previous close. It rallied a bit, on the risk radar. Msci radar up. Japan is on a tear on the nikkei. The Chinese Market down by. 7 . They tried to reign in Financial Leverage and despite the strength of the data we lost. Unda bund manus b futures are opening down. There is gold. You and i were looking at this. Slightly better bit on the back of some short company. These are the bond markets and this is where you want to focus on, the french bund, down by 17 takes. This is the chart, relief from Political Risk in the markets. You see the little bit of a selloff in terms of the haven from the bunds. The narrowing of the spread between the Franco German spread. Unabated. D continue the question is how much more narrowing is left in that spread trade . Anna we dealt with the french politics, we have got the ecb. Look for that on the bloomberg if you are interested in the ecb story. Juliette saly in hong kong with the bloomberg first word news. Juliette thank you. French president elect Emmanuel Macron has pledged to unite the after beating Marine Le Pen. Speaking to supporters at his Campaign Headquarters in paris, he said he would work to address the concerns that were exposed during one of the most divisive campaigns in recent history. Votes received 66 of the in a commanding victory over his far right rival. In germany, Angela Merkels party has picked up momentum in a german state election. That is as they convincingly defeated the social democrats in the northern state. If it to read deals a blow to spd leader Martin Schulzs bid to replace the chancellor in the september federal election. Chinas overseas shipments held up in april, aging down from a twoyear high in march. Exports rose 80 in dollar terms from one year earlier as imports increased 11. 9 . That left a trade surplus of just over 38 billion. Chinas export outlook has improved on recovering global the threat of a trade war with the u. S. Overseas. Saudi arabias oil minister has signaled that output curbs could extend into next year. Speaking at an event in malaysia, colorful ear he said that an agreement to ease production will be extended into the second half of this year and possibly beyond. He said hes confident that the Global Oil Market will soon be balance and return to a healthy stage. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Can find more stories on the bloomberg at top. Stellar session it has been in japan. They were closed three sessions. We have the nikkei holding at december highs. Also seeing Good Movement on the asx 200 as it closes out after i. 1 thanks to the rebound in by. 1 base to the rebound. Thatntinue to see crackdown on Financial Leverage in the system. For hundred billion dollars wiped from that market in terms of what we are what stop wise, the really good news in the medical front, and we have seen mitsubishi rise by almost 10 in tokyo. It has received u. S. Fda approval for a drug promotion, the First Successful promotion since 1995. It is being sold off and had a brokered downgrade. Casinos being sold down. This is on new restrictions in macau, really trying to counterfeit Money Laundering in macau casinos. The china trade data, if you have a look at this chart on the bloomberg, it is g 6577. This is the surplus of over 30 billion, the second month of a surplus in a row. Still not quite where we were earlier in the year. It is showing a resilience of exports in the china market. They were weaker than what the equity was, but still rising in dollar terms by 8 in the month. Manus thank you very much. Let us return to our top story. It is of course france. To help make sense of the macron win and what it means for the business community, Caroline Connan is standing by. And to talk about that, i am joined with a tech executive, frederick, founder and president of the worlds leading carpooling company. Good morning. You met Emmanuel Macron many times over the past few months and few years even. Is he really a disruptor . First of all, he is young. He is a new generation. He traded his own party and what has been very striking in this campaign is the Biggest Party the Biggest Party that were here for decades were not in the second round. He is doing something new, which we hope will work for the country. Michele we have seen Emmanuel Macron caroline we have seen Emmanuel Macron going to the scenes in las vegas. Is he the president of big business . He can be both. He understands the start of world very well. He understands the risk and opportunities. He knows that structure. In a new company, you need to take risks and talk to your team. He has done that within his own party, so i really truly think he is close to startups, and he will help those types of Companies Growth further. In terms of what hes going to change for startups, he has had a lot of discussions about what he is going to do for the labor market. He wants labor reform to be his first reform. Do you think you can succeed given the power of the trade unions and france . What can he achieve trade unions in france . What can he achieve . Frederic we all know there is something to change in the labor law. We need more flexible at the and to be able to cope with the world what is changing. We need to cope with the fact that we are hiring people from all over the world, so this is very important for our economy, for european economy, and for the entire industry that we want to reform. I think everybody is aware that we need to change and now, we just need to gather around the table and make sure we make the right reforms. Mikel sr code the charge. Francois hollande tried before him. Sarkozy tried before hundred Francois Hollande tried before him. What will make him work . In relationship to the united states, Emmanuel Macron could just bypass donald trump and go straight to the Silicon Valley . Frederic im not sure it would be by passing, but for sure, he would have contacts with Silicon Valley and he would be able to visit the high execs in the field. He would possibly do it. I do not know. For sure, he is close to this kind of ecosystem. Know the startups very well. He knows american startups and you want to be close to them. He wants our ecosystem to be close to the new world that is coming through all the new companies, so for sure, he would want links with Silicon Valley and we hope it will be something happen. Can foster to caroline you seem to be very enthusiastic, but of course, he has many challenges. First to get a majority in parliament and then obviously, try to get this labor reform through. Do you think you could be disappointed a year from now . What would make you disappointed . Frederic there is an election for parliament in a few months, in a few weeks, actually. Step ina very important the possibility for Emmanuel Macron to conduct the policies he want to unfold. Considering that he can be the unifier of people and make sure he has the power to execute what he announced he would, i am very concerned that it will work and i hope everybody would want to help caroline him. A lot of hope from tech executives in france after the election of Emmanuel Macron. This was the founder and president of the leading carpooling company. Anna caroline, thank you very much. Caroline connan testing what the macron victory means for the far right community and Tech Community in paris. Up next on the program . Manus a little bit more macron for anybody . What does the victory mean for the European Equity markets . The statekel wins election in germany. The latest from berlin. This is bloomberg. Anna welcome back, everybody. Bloomberg daybreak europe. A little after daybreak in berlin. We trade on the euro against the dollar. The euro paring some of those losses we thought earlier on in the session. We had decent, better than estimated those numbers coming out of germany. We will be back with an update on the politics or let us get a Bloomberg Business flash. Here is juliette saly. Juliette thank you. Akzonobel has rejected a third takeover offer from u. S. Rival ppg industries. The Dutch Company has already rebuffed two proposals, saying the 26. 9 billion euro offer was too low and not worthy of discussion. That attracted criticism from shareholders, including Causeway Capital management and elliott management. Ppg earlier said it would make a zo. Tile takeover bid for ak over the weekend, Warren Buffett has spoken at length about his opportunities in text obscured ibm shares fell on friday after the billionaire cut being tooter optimistic about the companys prospects. Speaking at Berkshire Hathaways annual meeting, the billionaire chairman also said he blew it by not investing earlier in google. Sinclair broadcast group is close to buying Tribune Media, opening two people familiar with the talks. Sinclair would pay 45 per tore, or around 4 billion the chicagobased broadcasting company. They said an agreement may be announced as early as today. A spokesman for Tribune Media declined to comment. Emails to sinclair were not returned. At that is your Bloomberg Business flash. Anna, manus. Manus julia, thank you very much. Politics never far from the agenda on daybreak, and this time, it is Angela Merkel is pretty gaining momentum in germany, securing a convincing win over the social democrats in election through the chancellor published a statement after Emmanuel Macrons win, saying a decision by the french voters is a clear commitment to europe. Anna for more, let us go to chad thomas, who joins us from berlin. Great to have you on the program. Other elections taking place over the weekend, perhaps not getting the spotlight, with increasing significance as we go through the year. What significanc do we attach to thee win in this estate of action state election . Chad no doubt, this gives merkel and her christian democrats momentum as we head toward that national election. We are fourmonth out from the national vote. At the beginning of the year, the social democrats have been closing in on merkel being under pressure to be doing more. Now, that gap is widening again. There is an eight percentage point gap. This election last night is only going to help the christian democrats as we head towards the national election. Just one week from now, we have another state election in germany. A much bigger states, about 20 a much bigger states. About 20 of the german population was there. That will be a boost going into the city after that state vote as well. Manus going into one of the stories written by the team, patrick donahue, one of the quotes he used is that this is a disaster. For thea disaster fro spd. Why do they do so poorly . Chad while, it seems, manus, on some levels, in germany, they have been calling it the Martin Schulz affect, the chancellor candidate from the spd. When he took over, it was a surprise that to the other candidates stepped down and made the way for schulz to come in. There was a huge surge for the spd, and the polls nationally, they closed. They were about even with the christian democrats your that affect seems to be wearing off. While the party is still pulling better than they did, this gap betterpolling than they did, the gap has widened. The campaign in the last days was focused around the Prime Minister, the social democrat Prime Minister in the state, and some people said that was not harmful for the spd, but in general, you are seeing an easing of the schulz affect. Anna chad, thank you very much. Chad thomas joining us from berlin with a look at what is happening politically in germany. Let us turn back to the french political theme. Manus Emmanuel Macron has pledged to unite the country. Beat farnt macron right candidate Marine Le Pen. The numbers, 66 for him, 3 34 for her. Anna he will address the concerns during one of the most divisive campaigns in recent history. Tonight, you won, france won. What we have been doing in the past few months is unprecedented. There is no such thing in history. Everybody said it was not possible, but that was misjudging france. I would like to say a few words to those who voted for madam le pen today. Do not boo them. After all, they have expressed their anger, their disarray, their beliefs sometimes, and i respect those as well, but i will do everything i can in the next five years to see that these people no longer have any reasons to vote for extreme ideas. We have the strength, the energy, and the will, because that is what has carried us to this position, and that is what has made us, and that strength will ensure our future. We will not give in to fear, division, and lies. Manus Marine Le Pen said that she was neither leader of frances opposition the great divide between patriots and people in favor of globalization. Well, that choice, the french people will have to make it again in the general election. I will be leading this fight, and i urge those who want to choose france to vote for us to ensure our prosperity, preserve our identity, our social model. The the io of import cio of embarq group with us now. To an stanley pointing interesting question about just how incremental or radical is the reform agenda of macron . And whether it is or not, what can he actually implement . What are your hopes and executions for france . Let us they will then anyway. Good stuff. The reforms currently are laid out quite modestly. Let us go back to the basis of the challenge. Just because a new person is in front of the train does not mean the train will change direction particularly quickly. The supplyside issues have not gone away because macron was elected and le pen was popping into the fundamental question of what we all have got your this whole run of individuals have been this in something called globalization. Macron is going to change that by doing modest tweaks, a Corporation Tax cut here or there, cutting back civilservice costs by government deficiencies. We have all heard this before. He has not got the matchup yet of a crisis. There is no crisis per se in the broader sense of the word. He has not got that. They have cleared everything away. She got the supplyside reform done. He is not going to do that from this position today, particularly not with and a simile in front of him or any sense in which there is a national problem. Comment about the the rise in the National Front even if they lost. Manus we have got a nice article this morning that said this is the last chance. He had got double digits on employment. He has got a structure of a labor market which is difficult, which is difficult to turn. Is france ready for revolutionary change, structural change in the market . Peter it is not just france. We have the change here, the same problem. Low on employment, a massively disenfranchised population in the u. K. As well. We had an Unemployment Rate of 4. 5 , 5 . Is the ax in this country not more to do with being tethered to europe . Peter that is the way we pitched it even though that is actually rubbish. It is automation, globalization. Utter nonsense. Europe,here is a lot manufacturing, human rights [crosstalk] manus you voted for brexit . The u. K. Will be run by peter 92 of the rules would have been hours. It will be copied by us. Brexit is yet another representation of the understandable anger of the disenfranchised disenfranchisement of what was meant by globalization and automation. That is not change because macron is now in france. They have the same issues we have all got. We have got full implement, the americans have full employment. They are affected by the same thing. France is an extreme version of it at this point. Supplysideet reform. We have done ours, and we still have a problem. Anna we had the brexit votes. Let us talk about something investable then, peter. In light of what we have seen in france, given the busy political calendar, where do you put your money . Peter there was the example of incremental. They are in a worse position than us, so even against that backdrop, there is a challenge for the automation, globalization thing. They have more things to do and more scope to do them. Quite exciting possibly. That will be the wave of who do we go, the left or the right . He will have to form a coalition. Very shortis there term. On a relative basis, it is cheaper. There is earnings momentum in europe. The management has been piling and in the last quarter, and probably carries on monitor. A positive european story. Anna thank you so much for your thoughts this morning. We wanted to talk about china with you. We did not quite get there. Peter we did that the last hour. Anna peter toogood, cio of them are grouped. Manus let us see of embarq group. Manus there is more to come of me. Anna is off to digital radio, but london, paris, frankfurt, equity markets are higher. We dissect the macron victory for markets. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. The shlike a bald penguin. How do i look . [ laughing ] show me the Billboard Music awards. Show me top artist. Show me the top hot 100 artist. They give awards for being hot and 100 years old . Well take 2 [ laughing ] xfinity x1 gives you exclusive access to the best of the Billboard Music awards just by using your voice. The Billboard Music awards. Sunday, may 21st eight seven central only on abc. Anchor youre welcome to bloomberg markets, the european open. We bring you the first trade of the day. I am manus cranny. Guy johnson joins us from paris. To are watching the fit remoment. Macron cruises to victory in the french election. The euro burning. What are the implications for his decisive victory for the European Central bank policy . Opecs next move, saudi arabias oil minister says cuts could extend into the second half of