Harker boosts the buck. The Philadelphia Fed president says he will not rule out that rates next month. Welcome to the program everyone. A halfhourthan away from the opening to the trade date this tuesday. Looking pretty flat on the euro stocks 50. , possibly one of the weights on the ftse 100. One of the equities that will be weighing down that particular benchmark. It is been a week performer in the hong kong session. The dax seeing a little bit weaker and the cac keeping its head above the water. Let us pull out some of the interesting moves. Over on the side we have commodities with iron or making another move higher. Highe touched on another overnight in the Asian Session for iron ore futures. A productionning cut. Of some key political gatherings and that is boosting Commodity Prices. On the left, we have the Foreign Exchange markets. We have some decent sized moves in the new zealand dollar. The bloomberg dollar index is up 0. 3 . The is harker boosting dollar headlines. Here is juliette saly. Jon haset donald trump selected hr mcmaster as his new National Security adviser. Speaking at his florida resort in palm beach, florida he says mcmaster will serve with Keith Kellogg who returned to his earlier role as chief of staff. Succeeds Michael Flynn who resigned following revelations he misled Administration Officials about his contacts with a russian envoy. Hsbcs fourthquarter profits miss to estimates a midlower revenue. Adjusted pretax profit which excludes onetime items jumped billion but came in below the 3. 70 billion estimate. The lender also extended a stock buyback that is driven its london shares to a threeyear high. I certainly would not encourage any investor to read too much into the one billion. Ratio at 13rong point 6 , well above the top end of the range that we targeted in terms of ensuring we are well capitalized in our businesses around the world. We continue to focus on investing capital and the growth of our business. And as the opportunity arises we will contemplate as we have done Share Buyback. Euro area Foreign Ministers have poured cold water on a quick disposal of age payments. They agreed to pick up discussions in the coming days. Greek bonds rallied and creditors demanded that the Nation Institute tax, pension, and labor reports before they will sign off on an agreement. Australian Prime MinisterMalcolm Turnbull has described President Trump as a Big Personality with a big job. He told daybreak australia that he has had several frank and open discussions with the u. S. Content ofut the those discussions was not for public view. This comes as australia continues to push the case that tpb should continue forward without america. Vital that we maintain the drive towards more open markets and free trade. Trade means jobs. Australia is a trading nation. Our future depends on not simply selling pe best selling things to 24 million australians but to the whole world. And as i said at the g20 last year, protectionism is not a ladder to get you out of the low growth trap. It is a shovel to dig you much deeper. Juliette global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. This is bloomberg. Talk about the Hotel Industry. Intercontinental hotels group has missed estimates as it released its fullyear results this morning. At least if you look at the revenue line. The pretax profit line though, the full year of adjusted tax line profit, came in ahead of estimates. Let us talk to the ceo of the company. From the london stock exchange, i enjoyed by the companies ceo. You say the you are comfortable in your outlook for the year ahead. How much is that based on your American Business . America is about two thirds secondbusiness but our biggest market is greater china. We saw growth across the world. We are in 100 countries. Viewe have a pretty good and we also undertake a longterm view in our business. It takes a long time to build up our hotels. There is some uncertainty out there but we are confident and that is what drove our decision to raise our ordinary dividend by a 11 and also return 400 million to shareholders. Anna you have given us a bit of detail what do see in your u. S. Business . Is there such a thing as a trump boost . Some measures of the u. S. Economy, some markers are doing victory. St trump what you see in the demand picture for the u. S. . In terms of guest demand in the shorter term we saw a decent performance in the Fourth Quarter. Ongoing is even within negative impact in oil markets. In terms of longerterm, we signed more deals then we have signed in new hotel since 2008. It is hard to attribute it to donald trump or anything else but clearly if the economy grows that is beneficial to the travel industry and would be beneficial to us. A does the trouble then does it the travel ban have any impact on your business . Do you notice that in your bookings . Market is the hotel domestically driven, certainly in the u. S. Where holiday in is our biggest brand. That is mainly domestic. The travel ban is on the margin. In the shortterm, we have not seen it but overall people are traveling more. In the u. S. , we have seen many months of demand levels and documents a for us is at an alltime high. Overall, we are in good shape. Him what are you expecting to do in terms of tax cuts for the Hotel Industry . Is that something on the radar . I wish it were. I have not heard of anything specific for the Hotel Industry. Anna are you lobbying for any . Are you talking to the administration at all . Not on anything specific like that. For our business, it is more growth,ngterm with gdp corporate profitability, disposable income for Leisure Travel and so on and that has been positive. In the u. S. And china we had a Strong Quarter in the u. K. As well. Generally, people travel and that has been growing. And that has been a positive market. Anna any plans for m a at the moment . Plans to retake the crown . The big for the sake of being big is of any value in the industry. We have significant scale. 40,000 new rooms. We signed 500 new hotels last year. We have the scale. Our focus is on innovating with our existing brands. Open lobby, holiday inn. Holiday inn express. Adding new brands and operational excellence. At a time when there is m a going on, what is really important is running your business extremely well. Revenues,r margins, and profitability. And that is really our focus. Ina you say m a is going on the Hotel Industry and elsewhere particularly in the companies that have seen the impacts of them look making cheaper to outside investors. I know we have talked before ut whether your business does it feel different to run a ukplc with the weakness of the pound . For thes, it is neutral year. As a dollar based business reporting in dollars, that is what we focus on. I think it may be a little different press. I think we have always had an open market there has always been m a going on. Line in 2015 u. S. And started to grow that outside of america and that has gone well for us. We focused on running our business. We announced an 11 increase in our dividend. Well. Siness is performing it is a strong business model. As a monotonic team, that is what were focused on doing. A management team, that is what we are focused on doing. On the program, the greenlight for the greenbacks. Chances harker boosts for a march hike. Discuss the Company Results and asset plan. And we talk with statoil. That and more is still to come. This is bloomberg. Back. Welcome this is bloomberg market, the european open. Let us get a Bloomberg Business flash. Heres juliette saly. Bhp billiton has said firsthalf profit jumped more than sevenfold eating estimates. Underlying profit rose 3. 24 billion as Commodity Prices surged on increased demand from china. We will be speaking to bhp billiton ceo andrew mackenzie. Said profitan has within doubled last year beating estimates. Underlying earnings were one dollar 72. 1. 72 a share. Biggest producer of diamonds and platinum no longer needs to sell assets to reduce debt. Russia overtook saudi arabia as the worlds biggest crude producer in december that is when both country started restricting output ahead of agreed curves. Russia produce almost 10. 5 Million Barrels a day, 30,000 more than audi arabia. It was a First Time Since march that russia produced more oil. The u. S. Was the third biggest oil producer. Followed by a rack and then china. To she but is looking to raise a point a billion dollars from the sale of its memory chip business. The Company Hopes to create a trained complete the transaction by march of next year. A spokesman declined to comment. To see but is grappling with a 6. 3 billion dollars writedown at its nuclear division. That is your Bloomberg Business flash. Anna thank you. March madness. Philadelphias harker has become the latest president who says he will not roll out a rate hike next month sending the dollar higher. It the past is anything to go by, a march hike is not necessarily on the table. The weeks before the december hike, traders were 100 certain and increase was coming. Three weeks shy of next month after encompassing futures market shows under a 40 chance. Mark cudmore joins us now. Very good to see you on the program. Given the march hike is a serious possibility, you may be less convinced. It is definitely a possibility. I will continue to repeat that. Lacking the number of catalyst, the number of data events before the march meeting that will make them move towards a definite hike. That is what they need to do. They normally have one priced before they had. Is it probable . No. I think the real probability is less than what is being shown at the moment. Are harkersevant comments if you are not convinced about march . Are think his comments irrelevant. I dont think they wouldve had any market input had it not been for the u. S. Holiday yesterday. There was low liquidity in the market. They overreacted. Harker said pretty much the exact same thing last week. That the market could have three hikes this year. And march is still live. He said nothing new. He is not considered one of the more relevant speakers. A u. S. Holiday, i think the market would have ignored it entirely. Anna there goes my next chart. Is the dollar per merely about the newor what administration wants to do in terms of talking up or down the currency and what they want to do in terms of tax change, and the border . Is all of that were important . Is stillarket theoretically possible and people are still considering that there is a slim chance or a hike, the fed is the most dominant factor. Jan march, it will be whether it is may or june for the next hike. The fed is the most dominant thing at the moment. Until we see a firm policy measure from the trump administration. Whether the border policy comes through or infrastructure plan, when we get some firm policy then we can start analyzing that and it will become more relevant. For now, the fed is the main game in town for the dollar. Anna thank you very much. Go to the bloomberg to get all of the thoughts from mark and his team. Head of macro strategy at state street Global Markets is with us. What are your thoughts about march . I have this nice chart entitled wakeup call. Nots point was it would have been done had there been at their desks on monday. Were making too much about the harker come in. The charge. Iked what it demonstrates is that all of the nays around all of the hike around the probability what your chart demonstrates is there is still a tight correlation between Interest Rate differentials and the dollar. And that is true today. It was true over the last week and the last month. Whatever correlation period you look at, there is a tight link there. Will the fed hike rates in march . Probably no. The fed haso 1995, never gone unless the market was priced at 80 . The reason the comments are interesting is that we also have the minutes this week and we know the fed is gradually trying to massage up market expectations. Maybe not to go in march but possibly may. The fed is talking about gradual rate hikes. The way the market has it priced, they have june and then november and december. That does not feel very gradual to me. Anna it is all about the timing. 36 chance of a hike in march is what we are talking about. To your point, your sense is that number would need to be 70 or 80 for the fed to go ahead. At least 80 . If you look at fed futures on the day when they hike, it was still 60 or 70 . There is no way the fed will surprise the market that much. Before march, they may talk it up a little bit. I think it may be more about trying to get may or june fully priced. Anna when does the fed start to be more concerned about the strength of the dollar . Those that say it is not been important say the u. S. Is a domestically driven economy and the Dollar Strength weighing on exports is not too much of the story but politically it is very much of the story with what donald trump is saying about trade and trying to boost exports . When should the fed start to worry about the strength of the dollar . Terms the dollar has appreciated over 20 in the last three years. The trumpfocus on administration but the interesting thing in the last 18 months is a fed has mentioned the dollar and that has been unusual. The reason it has is that net trade has taken away from growth and that is one of the reasons they have missed their growth forecast. Inflation will be higher than they thought but the growth miss has been because of net trade. It is not just the dollar but the weakness of Global Growth. The dollar does matter to fed policy. Clearly. Dollar moved more rapidly it would become more of a factor. It is a factor. And it has been a factor before trump and it is now a factor with the trump administration. Ata one of the things the start of the areas years recently we have seen expectations running high with what the fed will deliver and then it has had to be rolled back. Quite quiet onn that front. Seechance we will emergingmarket nervousness . We could have had the same conversation this time last year. The fed will hike three times. Starten we had a risk off to the International Markets last year and then the fed was talking about brexit and a lot of International Events that could stop them from hiking. So far this year, you have had almost the reverse. You have had risk on. The reflation trade reflation and potential risk aversion because of the rhetoric that might come out about global trade. Reflation is fine. That trend is still clearly in place. The whole risk aversion thing is not bad. Systemic risk is low. Ok im a yes there is always a risk in china but so far Commodity Prices are telling us that china is doing ok. The international factors are not there to prevent the fed from hiking. Anna we will keep those things on our radar. Michael will stay with us here on the european open. We are minutes away from the start of European Equity trade for tuesday. Let us have a look at some of the stocks we are watching. Hsbc in focus. A stock that was weaker in the Asian Session. Trading down in hong kong. Hsbc, Fourth Quarter profit missing estimates as a surprise drop in revenue. They are boosting costcutting measures and it pending a buyback. I spoke with the cfo earlier from hsbc and is and he was cautioning investors. He suggested we should not be too disappointed in that. I also asked if there would be much attempt to lift the revenue saidh line at hsbc and he and he defended the performance of the key areas of the business. And see how hsbc performs in london but there was weakness in the performance in reaction to this release coming through the hong kong market. Looking at Anglo American. The worlds because producer of diamonds and platinum saying profit more than doubled last year as Commodity Prices soared. The company no longer needs to sell assets to reduce debt. We are seeing a bit of a change in start from the company. Disposals are no longer required. We will be speaking to the about which asset they do need to sell and which they do not. Bigger profits in the stock trade. Anglos Turnaround Program unveiled. It has worked according to my colleagues in bloomberg news. The equity market open. Futures pointing to a mixed a picture. The u. S. Back in play after being out for president s day. Futures suggesting we will be weaker in london but better elsewhere perhaps, this is bloomberg. Anna welcome back. This is the bloomberg market, european open. Less than a minute away from the start of the bloomberg equity trading day. We are expecting futures to be a little weaker. Taking some time to find their feet this point. They looked fairly mixed about an hour ago. There seems to be a downward bias especially on the ftse 100. Especially from the reaction in the Asian Session regarding hsbc. Some disappointed about revenue growth. Some initial negative reaction in hong kong to the hsbc numbers. We are waiting for the reaction to the Mining Sector numbers. Anglo american. Bhp billiton. All of those Companies Reporting numbers. Bhp had better than estimated results coming through. All of tha