anna: this is this is bloomberg. "bloomberg daybreak: europe." manus: there is one market in the world that is not have a good friday fielding, and it is does not have a grid friday feeling, and it is the brazilian real. there is chaos in the markets. we thought we would try but put this in context for you. there was a close on dollar-real. if you want to understand volatility, it is down to the real. it has trumped the peso. this is the peso in yellow. it was a walk in the park, because what you have in the brazilian real, volatility is ratcheting up to 22%. stocks are in a tailspin, country risk is in a tailspin, but that rise in the real. what happens next from tehran? that is the debate. anna: we have plenty of politics to talk about. is earlyis downgrading in stocks. we have a great story on the bloomberg talking about those investors who feel brave enough that this is the time to buy some of those brazilian assets. we will talk about that during the program. on at the risk radar, let's have a look at where we are in the asian section. .hat a week it has been japanese stocks erasing those early losses. relief.bit of a we saw the s&p done -- down. it is up by 0.4% yesterday. i think there is an interesting article from bridgewater. probability, the the political probability of thep lasting the full-term, risk is 50% that he does not make it to the full-term. houses us transcend -- how does this transcend? we have movement on the dollar -- the dollar-yen. rising.s. tensions are after a chinese jet intercepted a u.s. air force jet. in termsis a mixed day of those risk sensitive assets. take a look at the oil on the board, up by 0.9%. mixed. we have gold up a bit, the dollar pretty steady, so it is a mixed act for you. global shares at an all-time high just from tuesday. let's get the bloomberg first word news. juliette: thank you. iranians are voting today in a presidential election that will either hands of their current president a second term or see control lurch back to the conservatives. a win would give him a mandate to engage with the world economy, but with remaining sections, it could hinder the economy no matter who wins. u.s. treasury secretary steven mnuchin says the breaking up of the big banks would be a huge mistake, testifying before a senate banking committee. he says the u.s. administration does not supporting -- does not support this. elizabeth warren accused the secretary of a bizarre policy shift. hasu.k. prime minister called on voters to give her the freedom to walk away from brexit talks without a deal, reinforcing her hard-line response to leaving the european union. her conservative party's manifesto asks the government to back her plans for a clean break, and supporting her it talks fail. is better than a bad deal. brazilian president michel chama -- defiedve tall calls for him to step down. ogle media says he moved have -- --al media says he has moved the turmoil has seen stocks, bonds, and the real tumble. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg. we are getting very close to the end of what has been a very volatile trading week around the globe. taking a look at what we are saying and asia. a turnaround -- a turnaround in the nikkei, and also a turnaround coming around in the chinese stocks, which were looking down at about 0.3%. tracklian shares are on for their worst week since november. having a look at some of the stocks we are watching, singapore airlines is a big one. coming through with a fourth quarterly loss, it's forth in three years. that sends the sick -- the shares down. broadcom is said to be a leading better -- leading bidder. there have been a number of upgrades from s&p, after its earnings has improved liquidity. we've been talking about what we have seen, the effect of washington and the latest political turmoil in brazil. take a look at this chart. it is showing you that asian investors have dumped their holdings in brazilian equity assets. it fall as much as 9.6%. it is headed for its worst loss since november. you can see it here, the huge decline coming through. a crazy and volatile week for investors, to say the least. manus: great round up there. president trump goes on the defense. houseest -- at a white conference, he denied trying to wash investigations -- squash investigations into his campaign. >> the entire thing has been a witchhunt and there is no collusion between myself and my campaign. but i can only speak for myself and the russians, zero. said it wasesident ridiculous to think he has done anything that would amount to an impeachable offense, but he says he respects the decision to appoint robert mueller as a special counsel. we are joined by patrick armstrong of plurimi wealth. we have interesting comment second to the heart of the matter. this is from one of our trader notes on the bloomberg about whether this is a game changing scenario or not. traders and algorithms can change their mind on a dime, but macro models cannot. unless this is game changing, there is an inclination to put positions back on as soon as we see the turmoil. >> i think it is not a .ignificant risk it is probably a long-term frustration that trump is continually distracting from governing. getting health care or tax reform through. he spent the first two months fighting the media, now he is defending what has happened on the campaign, links to russia. that is the real problem with this. it is a slow burn of negative consequence, and almost an opportunity cost of what could be done, rather than a real event cost. eva sayse ceo from of it is a -- the ceo from aviva says this is a speed bump. ,n terms of the bumps and humps there is more to come. the s&p rose by more than 1%, for the fourth time this year. do we need to get used to this? scale andsense of the what you are doing in terms of your u.s. positioning. >> we are short. it is trading at 20 times earnings on the forecast. it is trailing earnings. it is very expensive. they are only up 1% today, so it has been a short that has not been that costly because we have been in a rising market. we are short u.s. utilities that is trading at 18 times percent earnings. the broad market, the s&p 500 short 4%. the thing that scares me is the cyclical adjusted price earnings. the s&p trading at 21.1 times today. manus: an auspicious day. anna: this is interesting because we are asking you questions about political risk and you are telling us about a value -- about valuations. >> iamb getting frustrated because i have heard a lot of talking heads like myself saying that valuation doesn't matter. it does. it is 1929 before black tuesday. that time we got about 30, and in the weeks or months before. it was the only time it traded above 29. valuation does not matter most of the time. and you get to extremes, everything good that people are hoping for has to happen. if you have the fed hiking as much as they said they would come a market has to go down. -- as they said they would, the market has to go down. you need a great economy where the fed does not pull the carpet out from under you. i think it is spare and likely that if you get that stronger economy, the feder -- the fed it will pull the carpet out from under you. the is the funny thing with market. companies always beat earnings expectations. earnings missed the expect months ago. analysts lower their estimates month on month until they are two weeks before the announcement. then everyone feels good. it is not as strong as the picture looks if you just look at the number someone is beating. manus: there is something else that should've happened yesterday, rather interestingly. he had the u.s. trade representative who went to congress and announced formally the intention to renegotiate nafta. this involves both canada and it involves mexico. anna: not to rip it up. manus: they have had a trade deficit with mexico last year, but it is about the president possibly leadership on trade that will permanently reverse the dangerous trajectory of the american trade. it is about reassessing. how big of a risk is this? because it will not be done on a dime. >> it won't be done and it will be changed on the margins, where trump can claim victories he has achieved. ongoing -- for 30 years, the world has benefited from globalization, outsourcing to cheaper markets, putting capital to more productive use. it has been a disinflationary backdrop. we might be at a turning point if this does go wrong, where we have stagflation airing forces. moving from disinflationary protectionism, and that is a tailwind that is a potential to reverse. there are things to worry about. the vix will say there is nothing to worry about, and there is nothing specific. that have go wrong been going wrong from dutch that a been anna: going right for many decades. do you think we will -- >> you don't want to see long equities. the only thing cheaper instead or bonds. the bad news for balance investors, i could see scenarios with able fall at the same time. anna: thank you very much. stay with us on the program. lots more to talk about. pain: the real, there is and if you have not noticed. yet another political scandal threatens to derail the economy. we bring you the latest. anna: as we go to break, it is election day on -- in iran. you are looking at the capital. this is bloomberg. ♪ manus: it is 1:15 in the afternoon in hong kong. juliette saly is standing by. having a bit of a problem there. we will get back to her very shortly with some of the other headlines. let's turn our attention back to one of the main stories, which is brazil. anna: brazilian markets plunged as a political crisis threaten --unseat the president to just one year after the impeachment of his predecessor. this follows allegations that president tima allowed #to the former speaker of the lower house of congress. but he said he was going nowhere. i will not resign. i repeat, i will not resign. i know what i did, and i know that my acts were correct. i demand a full and quick investigation to clarify it for the brazilian people. manus: that was the pm of brazil. let's welcome the head of our bloomberg markets live blog. .his is the real it is bleeding. the single biggest drop in nine years, and has not ended. foraw the japanese etf go another 5%, 6% on the dime side. the question is, have markets overreached given his demonstrative denial? >> first off, there's a lot to come out still. overreached givenwe do not knowe details. he is denying it and setting he will not go anywhere. what i would say is the markets sleepwalkingare with some of the volatility measures across the world. people have been enjoying the kerry -- the carry. it looks like inflation was under control. the economy was turning around. this came out of left field. it was a shock. the reaction in markets was magnified much more than perhaps was justified. if you can expect that there is enough lyrical will that is behind -- enough political will that is behind this. reaction,knee-jerk extreme, let's see if it can follow through. anna: it was an important reform agenda going on in the purcell. is this a black swan event? because when you use the phrase black swan in the wrong context. does this fit your definition of a black swan event? >> it was unexpected certainly. thehence the enormity of reaction. it was quite interesting to watch the markets, sugar exports from brazil very important, of course. once the contagion risk beyond america, probably not enough to upset them. it came at a very bad time because of the turbulence going on related to the americans. manus: let's bring patrick into the conversation. patrick from plurimi. it's as if you didn't have enough to deal with north of the border, now you have deja vu with the impeachment from last year. we are not at that stage yet. the overreaching by markets, when you see markets overreached like that, do you think i want to investigate if there is any value here? a drop of 9%. this is one of the most successful carry trades in fx of 2017. it has literally turned on a dime. next two days will be very important for brazil to stress the importance of structural reforms. even if there is an impeachment, we know brazil can deal with that. is theortant thing structural reforms, and that no matter what happens if there is a new president, we will still get those. it looks like an overreaction, the fact that it has been denied twice, i don't know if it is a good thing. when you repeated several times, maybe you protest too much. but a 7% loss on the day, inflation is under control, if the structural reforms are put in place, it is a good carry trade. the background: here is that the brazilian economy was showing signs of recovery. there were bills advancing to congress. there were reasons to be cheerful in brazil. >> they felt like it was taking the rest of latin america with it. one of the reasons why that part of the world seemed -- it wasn't just brazil, it was the argentine peso. you begin to see the kind of emerging markets. there is the peso. this is your today. but -- this is the year to date. fromhe hammer has gone hero to zero in a matter of hours. for emerging markets, when you look at the broader context, you look at the one, the rupiah, it is very pressing and, isn't it -- it is very prissy and, isn't it? >> give lemon forced them to trade that are riskier because it is hard to generate real returns. you are losing real value by investing in government bonds in the hold cell world -- the whole developed world. patrick, let's continue our conversation. we have an opec meeting coming up. oil is a big scene there as well. we have the opec and non-opec meeting. a lot of people focus on the ability of opec and non-opec to stick to the commitments. at least the difficulty of sticking to the commitments. it gets more difficult as time passes. >> it looks good that they stuck to the first deal because they were going into maintenance and increase production before the deal. that was a low bar for them to meet. most likely, we get them having 2 million dollars. i think there will be more cheating on the next one. aramco, you need a higher oil price to get it up. an aramco ipotain if saudi arabia is not trying to maximize profit for aramco? they are trying to game the oil market and increase shareholder value. that long-term cannot last. manus: this is one of the challenges that personifies the ever increasing issue for opec. the highest production in the united states of america is 2015. we have come off record output from opec. you just cannot stop this bulldozer. the former head of bp was here the other day, and said that it was just getting started. anna: he said there was more to come on that front. >> i don't know if it will be 30 years or 50 years, but with technological innovation, there are reserves in the ground right now that have no economic value. as we get to cleaner energy and electric cars, people in countries -- oil companies will be trying to produce it as fast as they can, because there will be a time when both -- when oil does not have the value it does now. companies bosses acknowledge the longer-term shifts that are taking place here. what is your attitude to oil? >> we have a small short where we are short call options on oil at the moment. i think we will go out right short after the opec cuts get put in place. you will probably see a small rally on that, and an eventual cheating on that. any non-cheating will be led -- manus: compliance within opec and non-opec was 96%. they increase production to maximum levels just before they agreed not to. then it was maintenance season. anna: that is the point of it getting harder to meet the commitments as time patches -- as time passes. lindsey moore from patrick to come. patrick toore from come. fors: we are live in iran the election, and perhaps a runoff in a week if no candidate gets more than 50% of that vote. anna: and angela merkel speaks in berlin. at 1:30 u.k. time, we get inflation and retail sales numbers from canada. manus: theresa may asks for voters'permission to walk away without a deal on brexit. plus, we discussed the takeaways. so we need tablets installed... with the menu app ready to roll. in 12 weeks. yeah. ♪ ♪ the world of fast food is being changed by faster networks. ♪ ♪ data, applications, customer experience. ♪ ♪ which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver. anna: welcome back. we are going to tokyo where the yen is weaker. around 111 this time yesterday. but a lot of happen. now we are back at 111. it is 7:30 if you're watching in paris, berlin. yellenpolitical risk and seems to have swung -- pendulum seems to have swung from the u.s. to brazil. brazilian stocks and bonds were punished yesterday. in asia, we have seen investors sell. trader in tokyo and another etf traded in hong kong. it is hitting its lowest this year. this chart is normalized. also, keeping a close eye on dollar-yen. the dollar had its biggest gain in a month versus -- the yen had its biggest gain in a month versus the dollar. it is pretty flat now. there is a slight bias toward the yen. that thursday's bounce in the dollar has not fully cleared the risk aversion mood. it is still below a breakdown level that is above 112, just north of 112, that is the blue line. and the chart gap below one time left over could be the last major support. keep an eye on this trade. there is thes, curve on the treasury. the 10 year yield is stable. this curve continues to flatten. it is heading for its first weekly close below 100 basis points since early november. some say that could reduce the chances of a broad-based dollar rally. but it is bullish on the dollar in the short term. where we will see dollar strength most clearly in the short term. i have cable a. we saw it go above 130 of the first time since september on those better than expected retail sales data. anna, manus. anna: we are getting some breaking news coming through. they are giving us our revenue numbers. coming in for the first quarter at $70.5 million. a lot going on in terms of the exchanges story. french and german officials even clearingexit have euro . those calls are gaining momentum with the brexit. lots to talk about when we speak to the ceo of euronext. he will be joining us later in programming. manus: the question for him is can clearing be back in europe? what does it mean for customers? what does it mean for efficiencies? we have "daybreak," and this is how you get up. it is live. it also gives you the morning stories. i would how many times donald trump has been on the front page. is trump cover story on to work. he heads to the middle east where his team hopes for a respite. odyssey begins in saudi arabia, which is trying to them press -- trying to impress the gulf leaders. next story is the rainy an election. the country goes to the polls to choose i president. who gets the unelected job of supreme leader? llied aroundve ra -- brazilian assets are reeling from a fresh political scandal. the best-performing start market in latin america are sitting on a year today loss. manus: let's turn our attention back to the u.k.. theresa may has called on voters to give her freedom to walk away from brexit negotiations. launching the conservative party manifesto yesterday, may reinforced her hard-line approach to divorce proceedings, and says britain's can prosper from the split. believe our united kingdom can emerge from this. of national change stronger, fairer, and more prosperous than ever before. tall ine we can stand the world and provide leadership on some of the greatest challenges of our time. anna: let's bring back patrick armstrong. u.k. is arounde the election right now. the brexit talks in limbo as the in27 get there positions place, and the u.k. distracted by the election. what are the positions on u.k. assets based on? i do not think so much. i think what theresa may is outlining is increasing her negotiating position, giving her the default that if you don't negotiate, we can walk away and i have a mandate from the british population to do that. it is not good news for markets, though. the free that we talked about is very important. it moves away from free trade. i think that is a risk. in theshort ftse 250 united kingdom. anna: that is not usual. >> you want to be short equities, the long bonds. it is that only 1% right now. inflation is at 2.7% in this country. if you get a hard exit, you will have a weak sterling and that will promote inflation. you are not being compensated for any risk with guilds of 1%. it doesn't seem extensive by american multiples, but that is an extensive multiple. we are short both of those as well. manus: to protect yourself, whether it is the u.k. market or using something like swiss, these are the risk reversals in terms of three-month risk reversals. rather than going out right do youf u.k. assets, think there is more efficiency in the fx to protect yourself for that hard brexit that she has asked permission for? >> i think it is shorting the 1% kerry. where do they go? will they go negative? i don't think so. there are scenarios areas where we go back to 2.5% if we don't have a strong outcome. manus: we still have the bloomberg consensus looking at sterling. a dollar $.25. a bigger predicted loss than any other currency. the level where we said internally that we would look at shorting it again. about the dollar weakness? >> and we have had sterling strength from retail cells. -- retail sales. they will not continue to be a strength for the united kingdom. anna: you said that the election is only half of the story. is what is happening on the domestic front matter for your aptitude towards u.k. assets? for example, the debt pile that has pushed out targets to balance the books for 2025. any -- we described in our thatberg copy this morning she is trying to sell this idea of a hard but fair life to the public. does any of that matter? >> not so much as the margin. i think it is an emphasis not only on the budget which is good. it is important to have for country. there is nothing game changing their. they are all subtle, minor trends -- tweaks that will not change the valuation. there is a lot of wiggle room in this manifesto. immigration targets that have no data attached to them. >> she needs a lead in the polls or she can give her some wiggle room and not be at risk of not getting elected. you talk about valuations on the u.s. equity markets, the value taste -- the valuations on the 5250. we see the relationship with the found -- with the pound, give me that. , but thats earnings is based on continued earnings growth. i think there are risks to the u.k. if we have a hard brexit. there will be a period of uncertainty, at a minimum. -- in financial soccer the financial sector, we are seeing some of that. that is a headwinds for the u.k. economy. that is not just the money coming into the banks, but the employees and the spending, house prices, the wealth. all of those things are at risk now. the multiples are not just a stork, the books are not doing is -- are not historic, but the books as well. from patrick armstrong plurimi wealth. is one nation going to the polls. the uranium's are casting their vote today. -- iscumbent is facing it facing a challenge. this comes the day before the u.s. president is due to arrive in iran's rival, saudi arabia. el-din isef gamal following the story for us. he is at a polling station. yousef: and has been an incredible few hours. iranians are heading to the polls in what could be one of the most important elections since the founding of the republic in 1979. the lines go back as far as the eye can see. it is unbelievable, the amount of energy here. by sheer coincidence as well, about two hours ago, we had the president himself here at this .mportant site he was in a rush and got back into his car. there was nothing extraordinary, but if you look at what the polls are saying, yes, there is a suggestion that the president is slightly in front, but that does not take away from the fact that the conservative cleric has a strong stance to make this a fight. that's why the thinking is this could go to a runoff on may 26. it comes down to the turnout. this picture you are seeing on the ground tells you the story about the turnout. the ministry of interior is expecting about 72% of the eligible electorate to come out today. manus: let's talk about the rise of him. some say he is the chosen one. how do these candidates differ to the people that are standing behind you there? quite a bit. that is what makes us boat so interesting. on the one hand, you have the person probably better known to west, and that is the person who puts the nuclear deal together by 2015. he is the man championing better integration with the west, but raisi is a relative unknown. post ofppointed to the an influential charity, was responsible for billions of dollars, and is quite a bit younger. rouhani is 60 years old. both candidates have been with the united states. the story is a domestic one. police here. he also supports subsidies. anna: this is the weekend when donald trump takes his first visit outside of the united states as president. he is going to saudi arabia. tell us how the candidates for in their attitude toward the united states. this a we talked about little bit yesterday, the united states has been an important part of the campaign here. you have seen the posters across the city. ultimately, they want the same thing. raisi wants to take a firmer stance against the united states. he does not believe the deals that have been struck, when it comes to the nuclear's agreement, and improved quality of life for the average ira nian. he also wants to expand influence in the region. whether that is enough to pull ,n a lead here against rouhani it remains to be seen. but on the ground, you have the sense that this will have an impact. you veryusef, thank much. let's see with the turnout is like and if there is a runoff. our middle east editor on the ground in tehran. if you are a bloomberg customer, you know where to go. tv . you get all of the functions that anna and i use, and you even get to ask a question. because it is friday, we are very excited about getting your questions in as early as you can. anna: go to that function and you can send them through to us. coming up, we will be joined by the ceo of euronext. that is in a couple minutes from now. his first interview of the day. this is bloomberg. ♪ manus: it is 1:48 a.m. in new york, 6:48 a.m. in london. hikere seeing a marginal on the s&p futures. it has been a volatile week as trump has promised to send a budget to congress to balance the books within 10 years. 2018budget proposal for will be given to lawmakers on tuesday. so, another piece of the jigsaw. let's get to your business flash with juliette saly. juliette: manus, thank you. it billionaire hedge fund manager has agreed to settle u.s. securities commission inside of a trading lawsuit. they will pay $4.9 million to resolve the claims he made money trading on inside information, according to a court filing. any bar or days suspension from trading. a london ipo is being considered as soon as next year. they are taking to capitalize the success of ferrari's listing. multiple as paris, aston martin be valued at around $3 billion. ikea aims to double its sourcing from india to more than 60 under $660o more than million. they have broken ground in despitend has a goal, having trouble acquiring land. a troubled airbag maker says that toyota, bmw, and other automakers have reached multimillion dollar settlements on claims tied to faulty products. they will reimburse expenses, and help to raise participation in the recalls. the airbags have been linked to 17 deaths worldwide, and prompted the biggest product recall in history. that is your bloomberg business flash. anna: juliette solly there. -- juliette saly there. joining us now from amsterdam is the euronext ceo, stephane boujn ah. thank you for joining us. you talk about the resilience of your model. what excites you about these numbers? >> the realities that the volumes during the first quarter have been slower than last year. of a veryation efficient yield management and good momentum on the ipo front will allow us to continue with a stable revenue. and more than that come a disciplined control of costs, hash is part of euronext, allowed us to deliver a 55.7 percent margin, which remains strong. title of your initiative, agility for growth. one of the lines that stands out in the announcement is the business is up 33%. we think that margins are ready to come to the markets. records and markets, record high around europe. part of the pilot -- how does the pipeline look? will that look healthy in 2017? >> no doubt that the pipeline is very strong. theoubt that in general equity market in europe, particularly the eurozone, is very dynamic. no doubt that something fundamental is happening now in the eurozone markets. probably the outcome to a certain extent of stability marketing. it creates confidence that it is the place to be to raise money and get liquidity and capture growth. ands in both equity markets -- we were just having a conversation with patrick armstrong. he is worried about a selloff of u.s. equities. it is a different story and yelled -- in europe around growth. had you think the moves and equities are from here? >> i don't know of equity markets in the u.s. are overvalued or not. ist i know is that stability in europe and the eurozone. improvements,the significant improvement in indicators and also for forward growth is improving in the eurozone countries. no doubt that the earnings season has been strong. clearly, this is the place to be to capture growth and to protect from political volatility. clearly, if you combine the sequence of events like the spanish elections, the austrian elections, the dutch elections, the french elections, the likely outcome of the german elections, in all of these cases you have probed europe mainstream leaders -- you have pro-europe mainstream leaders elected. and the ball ability -- outside.y is many investors are concerned about the uncertainties around brexit. of the postation trump election in the u.s., where as you have strong stability signals in europe. most: let's touch of stability issues. you are right, some people would say you should be optimistic about the stability in europe. let's see how it pans out. but there are rising christ from french -- rising cries from france in germany. inevitability? talked about this, it will andver costs to customers, a fractionalization of the market. do you concur with those points? brexit.t means may's no, that is theresa line. >> but that is the point. markets have to realize that there will be consequences associated with financial markets to brexit, and those consequences will probably be stronger than anticipated. the reality that we are experiencing today where the single currency of the eurozone is the one of the european continent, but 40% to 70% of the trading is done in london. the finances in wall street and technology in palo alto, in hollywood. in a world where london has decided to move away from the implicit ambition and convergence, things will be different going forward. will that fragmentation result in higher costs, and will that be ok? there will be costs associated with the consequences of the financial markets of brexit. people have to realize that, clearly, there is no way the leaders in charge of financial stability in the eurozone will accept a situation where decisions taken outside of the eurozone could have an effect in the eurozone on issues that are as fundamental as clearing. manus: thank you for joining us this morning. stephane boujnah. anna: up next, president trump the fbirying to quash investigation. we will bring you the latest on this story. this is bloomberg. ♪ manus: trump decries the witchhunt. the u.s. president denies trying to quash an fbi investigation into michael flynn and says there was no collusion with russia. asian equities redound and the s&p 500 clause back part of its biggest selloff in eight months. anna: chaos in brazil as the country things into crisis. the brazilian real shares and bonds tumbled yesterday. manus: iranians cast their ballots. today the country votes for its next president. we will break down what's at stake live in tehran. welcome. it's "daybreak: europe," right here in london. anna: happy friday, everybody. just on 7:00 in london. let's turn our attention to some german data. it is on the inflation front, pbi numbers. up 3.4% year on year, higher than the estimate for 3.2%. the month on month number also higher versus an estimate of 0.2%. this is producer prices. does this add to the inflationary environment that sets germany apart from the more sluggish parts of the eurozone? makes for interesting conversation at the ecb. manus: going to add fuel to the jens weidmann fire that we should be breaking forward in terms of reconsidering what to do. let's have a look at futures. we've got a little bounce on our hands. the worst selloff in eight months in u.s. equities. what you've got is a political storm brewing south of the border in brazil. european equities have a small bounce. s&p futures act unchanged. we have the president denying, saying it's a witchhunt, also a promise from the u.s. they are going to deliver a budget to congress next tuesday. european equity futures are higher. let's have a look at the risk radar. you've got that bounce in the msci asia-pacific markets. anna: we are resting once again. msci asia pretty flat right now. japanese stocks erasing some earlier losses. s&p futures suggesting we will be pretty flat. in thursday's trade in the united states, clawing back part of the biggest selloff in eight months. up 0.4% after the wednesday drop of 1.8%. we will have a look at the rest of the risk radar. it is pretty mixed. we've got the yen for you. gold is up a bit. the dollar is pretty steady. it's a mixed sentiment out there. manus: oil bouncing. i'm going to opec next week. you are going to see that oil market has a weekly gain. the lg aryans are in favor of a nine-month extension and all but one analyst surveyed by bloomberg for opec expects an extension in those cuts. nymex crude, 49.79. let's look at the closers on the asian session. topix of 0.5%. australia just getting back 0.2%. it is all part of the catch-up game. anna: asian stocks generally heading for a weekly decline. the nikkei 225 retreating from that 20,000 mark. here are the bond markets for you. a mixed picture when you look at the bonds and the oat's futures. manus: let's get to juliette saly with your first word news. juliette: brazilian president michelle tanner has defied calls for him to step down, saying a supreme court investigation will clear him of an alleged cover-up. local media claims he approved hush money for the former house speaker. the turmoil has seen stocks, bonds, and the real tumble, with trading briefly coming to a halt. iranians are voting today in a presidential election that will either hand hassan rouhani a second term or see control of the nation's top elected office lurch back to conservatives. a win for rouhani would give him a mandate to pursue his engagement with the world economy but sanctions are likely to hinder the economy no matter who wins. u.s. treasury secretary steven mnuchin says breaking up the big banks would be a huge mistake. testifying before a senate banking committee hearing, mnuchin says the u.s. administration doesn't support splitting commercial and investment banking. >> it is a complicated question. there's many aspects of it. which we don'ter support is breaking up banks from investment banks. u.k. prime minister theresa may has called on voters to give her the freedom to walk away from brexit talks without a deal, reinforcing her hard-line approach to leaving the european union. her conservative party's manifesto allots a future tory government backing her plans for a clean break and supporting her if talks fail. it says negotiations will be tough but no deal is better for the u.k. than a bad deal. leaders of u.k. political parties have criticized prime minister may's approach to brexit. in a tv debate that may and labour's jeremy corbyn refused to take part in, the liberal democrat leader urged voters not to accept the government's brexit plan. >> the decent britain i love is under threat. theresa may backed by nigel farage and jeremy corbyn is going for an extreme brexit that will damage our future for generations. don't give up. the britain i love is not lost yet. juliette: global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on bloomberg at top . what a turnaround in asian markets. we were down on pretty much every index that we have seen the nikkei turn around and close higher 0.2% despite the yen posting its best week of the month. pretty flat in late trade and australia's market down 0.2%. the australian market has had its worst week since october. singapore air absolutely pummeled in singapore today, falling the most in six years after it came through with a fourth-quarter loss which was its first in three years. toshiba doing quite well, closing up 3.3% on the nikkei. rod, and kkr are the front runners in the bid for its semiconductor unit. kong, it has hong had a number of broker upgrades. we've been talking about the political turmoil in brazil and that has followed through to asia. we have seen asian investors dump their brazilian equity holdings by selling out of etf's. as much asnd linked 9.6%. quite a lot of sell down and that was reflected in what we've seen in that market overnight as well. anna: thank you very much. juliette saly in hong kong. let's turn our attention to washington. president trump goes on the defensive. yesterday, trump denied trying to quash an fbi investigation of his former national security advisor and said there was no collusion by his campaign with the russians. >> the entire thing has been a witchhunt. there is no collusion between myself and my campaign, but i can only speak for myself and the russians, zero. manus: the president said it was totally ridiculous to think he'd done anything that would amount to an impeachable offense but he said he respects the decision to appoint robert mueller special counsel. jody, good to see you this morning. what do we make of trump's changing town about these investigations? when mr. mueller was first announced as the special investigator, special counsel, the white house seemed to welcome it. the initial response was welcoming. now we are hearing a different tone and now that they've had some time to think about it, we heard a press conference yesterday where it was an attack on the press, hauling it this witchhunt, so we are hearing a different tone. on capitol hill, they seem to welcome this. they want to change the story from the constant drama as mitch mcconnell said the other day. the white house today did come out with a budget, talking about how they are going to move this budget on capitol hill. they are trying to change the storyline but it is difficult. this is consuming washington right now, and the world. anna: to what extent this is a distraction from the rest of the agenda is a big question. where do we expect this is going to lead? lots of people talking about whether this goes to impeachment. , a we have the appointment lot of people asking, how long is his investigation going to take? >> there's a few things we know about robert mueller. he is very respected and he is said to be a tough investigator. he has been given broad powers to investigate. it may take a wild. it looks like they will go lots of places, speak to lots of people, and the white house is not the only part of this. the hill is also investigating. they are continuing to have their investigations at the same bye and they have asked for, may 24, they've asked for comey, the former fbi head, to turn over all his notes. it is going to get interesting. we're going to have several investigations at the same time. the hill investigators have said they will cooperate with mr. mueller, but there's going to be a panels -- a lot of panels discussing different aspects of this. manus: you are going to be kept very busy on "daybreak" for the foreseeable future. jodi schneider, thank you very much. let's return to one of our top stories, brazil. we saw a plunge yesterday, political crisis threatening the country's president one year after the impeachment of his predecessor. anna: the local market saw $150 billion wiped off its value after allegations that president money to theush former speaker of congress. temer said he is going nowhere. >> i will not resign. i repeat, i will not resign. i know what i did and i know that my acts were correct, and made a full investigation to clarify it for the brazilian people. manus: a very resolute mr. te mer. we have the head of bloomberg markets blog. he joins us now. situation,ng this but he didn't do enough to save the stock market. this is a compilation of south america blended in one beautiful chart. 8.3%, the biggest smack since 1999. this man is causing a rumble. from nowhere as well. i think that is the reason the market reaction was so extreme. we've had such a complacent and unhappy run in brazil. enthusiasm.lot of this came out of left field and that people bruised and shocked as well. anna: we talked about whether this was really a black swan event. investors have been excited about what they've seen in brazil of late. were of these reform bills progressing nicely through congress. inflation seemed to be more under control. >> it was a good story, one of the darlings. stock indexes around the world coming up. everything seemed nice and relaxed. the political seemed under control. the question now is, whether two questions may be, how far will the contagion spread, and how long will it last? we've seen some hedge funds mentioning the possibility that it is a buying opportunity. on the other hand, we've seen ripples spreading across the rest of latin america. argentine peso got badly hurt yesterday. unusual markets as well. the sleeping story, the brazilian farmers rushing to sell. leaks acrossittle into the global market complex. manus: standard chartered have a note this morning, they pick up on the delay you talked about, the delay in the process of reform, but they recommend buying the brazilian real and the mexican peso versus the yen. it is a question of if you have a strong conviction, but this just puts it in context. this is where you begin to use the movements, one big move, whether you are strong enough to get in there. do you think the liquidity is still there? the japanese have taken money out. the hedge funds have taken money out. is this a very strongly positioned market? >> that is an interesting recommendation. the japan-funded trade, the japanese investors are very keen in latin america, australia as well, anywhere they can get a positive return because the interest rate at home are so weak. they would have felt a lot of pain from this as well. hidings going to come back in. everybody is going to wait and see. there's a great deal of uncertainty. anna: just like around brexit, where you asked about disconnect between domestic politics, regional politics, and global business, you get the same. deutsche bank and morgan stanley saying ambev looks attractive. another dimension to it. thank you very much, paul dobson. manus: we're not done yet. we're going to talk about iran. 56 millionpen, eligible voters according to state tv. find out if the incumbent president rouhani can secure his second term, next. anna: you're looking at a live shot of the capital. we will be live on the ground in tehran next. this is bloomberg. ♪ on 7:19 a.m.. london and iran is going to the polls. they are casting their votes for the presidential election. the incumbent rouhani faces a challenge from the conservative clerk ebrahim raisi. the election comes a day before the u.s. president travels to saudi arabia. anna: let's go live to tehran, where bloomberg markets: middle east editor joseph comella the is -- yousef gamal el-din is at one of the biggest polling stations. good morning to you again. yousef: good morning. by theetting busier minute. the polls have been open since it :00 this morning. this is a big vote, given that president trump is en route to saudi arabia. this is shaping up to be one of the biggest elections for iran and's the islamic revolution in 1979. the contenders that are still in play, ebrahim raisi and hassan , who came through here just a couple hours ago to vote and the crowd went wild. a sunny day here, very quiet on the streets. there is security, but it is a festive atmosphere on this particular corner. there's some really fascinating discussions that have been happening on the sidelines. manus: when we talk about the two main protagonists, we have rouhani, the world has become familiar with, the man who brought home the nuclear deal, and you have pricey -- raisi in a sentence. there's a risk that he could win . what might that mean for relationships on the world stage? raisi is aahim conservative cleric, relatively unknown until recently. he's been campaigning on a platform of a stronger iran, more support for the four in terms of subsidies, but also relationships with the west. that thethe argument deals haven't delivered the results the average iranian would see. we will have to see whether he can pull something off in this showdown. is not decided in this first round, there will be a runoff. we expect results to trickle in as the counting begins across the country. they are going to count across the different neighborhoods and then deliver those results and announce them. we're going to wait and see when we get those numbers. for now, -- [indiscernible] anna: yousef gamal el-din joining us live from iran. for more, let's bring in henry smith. he's a dubai-based director in the region. he joins us from their office in london. good to see you on the program. what are your expectations around this election? what is the broad story here? henry: the election has become a two-horse race between incumbent rouhani and hard-line challenger raisi. our expectation for about six months is that rouhani is likely aswin a second term president. there are various reasons that give us that forecast. raisi's profile has raised considerably over the last three weeks of the campaign. he has managed to get strong attendance at rallies and can call on the support of more conservative and hartline establishment figures. it will probably be a fairly close race but we are confident rouhani will win a second term. to thethe iranians go polls on the back of donald trump having issued new sanctions on the missile program, but sticking to the agreement in 2015. do you see further measures coming from the trump administration, and what are the risks to the 2015 agreement? henry: the fundamental point i think businesses need to bear in mind with trump and the nuclear deal is that he has said the policy towards iran is under review. the national security agency in the u.s. is leading on that. in the meantime, trump and his administration are putting in place the steps to keep the deal and taking over. ofhave seen two bouts additional sanctions and these have been quite limited, essentially just labeling iranian people and some iranian companies as sanctioned individuals and entities. but the individuals and entities that have been sanctioned are not particularly economically relevant for foreign companies looking at iran. they are to do with iran's elastic missile system. they are not changing the picture for foreign companies in any serious way and they are not undermining the nuclear deal as it exists on paper. our expectation is that even after that review, you will probably see a similar pattern over the next year or so. anna: what are the risks for businesses in europe wanting to do more business in iran? should they feel comforted by what you just said or should they be concerned about a return to the sanctions environment? henry: any european or non-u.s. company looking at iran at the moment looks closely at the geopolitics. you have to. with the election in iran today, the trump administration revealing not just iran's policy but also its broader middle east approach, there is this big overhang of geopolitical risk that needs to be factored in. when you look at iran more closely, the considerations around whether you can avoid working with sanctioned or politically exposed individuals or companies comes into play, and also whether you can get the banking measures you need to execute your business to work smoothly and reliably. that has been the main handicap for our clients that have gone through those early stages. they line up what their business will look like contractually, but just making it work by getting banks and insurers onside has been a challenge. manus: henry, you would say that if rouhani is reelected, he's made a promise, and that is to remove the remaining nonnuclear sanctions on iran. how real a probability is that? how high a degree of a surety do you think that is, and will not translate into this election? this is about real iranians who have not benefited on the ground. henry: rouhani only came out with the commitment to repeal the remaining sanctions quite late in the campaign period. i think the reasons were, he felt acute pressure from hard-line challengers around his economic performance, around how he hadn't really managed to get as much as out of the u.s. in terms of relief as people expected. i think this was a campaign commitment that was designed to try and manage some of the attention and criticism he was getting from hardliners. for rouhani to be successful in appealing further you ascension, you need trump on board and you need iran's supreme leader on board. anna: thank you so much for your time, henry smith. we are expecting to go a little higher. a and: that is it from ann i this week. this is bloomberg. ♪ guy: friday morning. good morning. welcome to bloomberg markets, the european open. i'm guy johnson. matt miller is in berlin. what are we watching? brazil backlash. the defiant president declares he won't step down. we're going to ask the head of e.m. strategy at ubs if this is a game changer. the president heads to the middle east looking to move the agenda on from what he calls the witchhunt in washington. will it work?

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