topix slipping. a little bit of a weakness of feeding through. in terms of the dollar comest ready after a two-day decline. taking a look at the 10 year treasury yields. treasuries recovering a little after thursday's decline. yieldrs yield -- 10 year down one basis point. global stocks on course for their best week since january after the fed's dovish hike and after the results of the dutch elections. volatility coming down. moststoxx 50 dropped the in yesterday's session. nikkei volatility, dropping to the lowest since 2014. as investors turned their attention to the g-20 summit, the bloomberg belly index steady today that heading to the biggest weekly loss since early february. the treasury yields bounced back from the initial slide. this spread between the 10 year treasury yields and the bloomberg dollar index at the widest in four months. is that a sign that the dollar's retreat may have gone too far. what else may have gone too far? has oil followed to far after breaking below $50 for the first time since december last week? i have highlighted that. it is heading to its first weekly advance this month after u.s. crude stockpiles yield from the record and saudi arabia signaled and opec led deal to cut supply has been extended. anna: thank you so much. a new edition of daybreak is now available on bloomberg and your mobile. let us take a look at some of the stories that has made -- has made it into this edition. the g-20 begins. it looks pretty friendly. germany treading carefully as it welcomes finance ministers and trent -- and central bankers. wolfgang schaeuble cutting back on tough talk. to what extent will the g-20 members be able to form a this around rules-based trading? around protectionism? around use of currency to trade advantage. the next or he the ecb. the euro climbed to a five-week high. a rate hike may be on the way. cook momentsjeremy ago and he said that could be possible. we could see a rate hike from an end tofore we see the qa program. and daybreak focuses on oil. opec may extend supply cuts. the sign is that inventories are still above the average for example. the markets are still not confident in the outlook. we do not see companies or investors feeling good about the health of the global oil industry. we have to signal to them that we want to do what it takes to bring the industry back to a healthy situation. anna: let us head now to the united states. this budget proposal cannot pass the senate, that was senator mccain's reaction. president is advocating an audacious budget with cuts to almost every domestic budget. includeny budget does increased spending for transportation, veterans affairs, defense and security. but there is little chance that congress will except the bulk of those recommendations. here are some of the reactions to the trump budget. >> this to me is a very shortsighted budget. my friend mick mulvaney talked about this this morning saying this was taken from president trump's campaign speeches. if that is what he got out of campaign speeches, you should be a translator at the united nations. i don't think anyone to get this out of what he campaigned on. from some move away of the domestic priorities and moved to protecting us. we are ready to look at this. congress under title i of the constitution that has final say over the pursestrings. we intend to exercise that authority. >> we are eating our seed corn. that is a fair case to make for expanding defense spending. the way to fund that is not by taking or gutting so many domestic programs. the number of senators, republican and democrats. and they are scratching their heads. they cannot believe the budget. marking so believe many people at of programs they need. >> this is not a pro growth budget. but poundnny wise foolish and would lead our country poorer if we follow it. anna: varied reactions to the budget. let us talk about the u.s. economy. jeremy cook is still with us. how do you view the budget and the push back he is getting on capitol hill? everything with donald trump is about negotiation. it starts out so disparate. this is purely another situation harkening back to what he said about china and currency manipulation and the wall and getting mexico to pay for it. it comes down to something more sensible. the moves and cuts we are seeing that he has put words -- that he has put towards the foreign focus departments and moving towards something domestic -- these are huge cuts. wouldt think anyone actually deal with this. it is about the second step. it is about being magnanimous as the president. bringing everyone together regarding the budget. it is really an anorexic budget. does that tell us about the way he will be able to deliver another contentious policy? this does not include some entitlements or what should happen on taxation? there could be fights with his own party. jeremy: on the wednesday with think he would tend to agree with the gop on, social security for example, on tax policy. the more moderate members of the republican party. they think this is too much at the moment. it just means it will take more time. , these broadurdles benchmarks of where we think the budget will come, tax policy will come from health care, which should have been close to being done by now. we are still months off. pitcheds a constant battle of expectations. is this the big question in terms of u.s. assets and the dollar -- to what extent trump is able to follow through and deliver on what he says he wants to do. jeremy: the hike we saw this week was a tacit endorsement of what we have seen from the president in the u.s. economy we have seen for the last six months. dot plot goinghe to three. the continuation of that is dependent on the kind of movement we see from pennsylvania avenue. i think we have to look at the budget negotiations, the health care negotiations, what we here at of the g-20 this weekend -- we have forecast august but it may now be november. anna: a collision course. what you have referred to, the expectations for interest rate from members of the fmoc. what are your expectations? a dovish hike from the fed. they do not suggest the faster pace of tightening coming. jeremy: the communication policy from the fed has been clear and i do now think that every meeting which has a press conference attached is live. we have to look at june, september, and december. we are thinking -- we are sticking with our course for two -- march and september. there is an upside risk. depending on if the trump administration manages to get its act together, we see a continuation in a pickup in wages. butseptember pollack -- september, and possibly december as well. anna: dollar weakness because of donald trump's inability to get everything through. the dollar strength was contingent on the trump administration being a lot less chaotic than the campaign was. anna: we will see. thank you, jeremy. we will talk a little bit more about china. the u.s. secretary of state visits south korea today. tomorrow, wrecks tillerson touches down -- rex tillerson touches down in beijing where he is expected to address the threat from north korea and the economic interests. on this relationship. is that itfor sure could not be more a grace of -- is that it will be more abrasive. i think the relationship can take a little bit more fractious nests without -- fractiousness without it snapping. anna: a growth target of around 6.5%. the chinese president has pledged prudence and neutral monetary policy today. nobel laureate and professor of economics advised the government on policy. he said this about the yuan. >> i think we will see a continuation of what we have got. the situation stabilized because they clamped down on the capital controls which will give them and ability to engage in what you might call it gradual depreciation of the currency until he gets in a territory that people think is vaguely like the market equilibrium and then i think they will increase the band. anna: jeremy cook is still with us on daybreak euro. to talk about china, it has been a big week for central banks around the world. a big move from the fed and the chinese following soon. not a lock standard move. an interest in the market to push rates higher. they did this in february as well. is this working? is it paying dividends? jeremy: it is paying dividends. minimize theng to amount of withdrawals we are seeing out of the chinese economy. the fed is shadowboxing as much as the chinese government is shadowboxing the trump administration. they are waiting to see how these chips may fall. whether he becomes more competitive entree. the chinese are portraying themselves to the wider world as the only superpower that has their head screwed on. trimare quite happy to around the edges and wait for more impetus to come through. anna: interesting to see the chinese in this role of world champions in cherry -- in trade. let us look at some of the dividends that are being paid by some of the controls around the chinese economy at the moment. the chinese are seeing inflows again after imposing capital controls. it seemed around the end of last year as if nervousness around the chinese economy and the slide in the yuan would dominate the conversation but they have not. jeremy: i was in hong kong in november and the conversation was all about the dollar breaking seven by the end of the year and will trump push that. we do think that the conversation will pick up as we move through the summer. the continual guarded the evaluation of the yuan by the pboc will continue, and gradually drift. could promote people to move money out of the country quickly which the pboc does not want. if we see a pickup in capital flows into china, a pickup of to the pboc a flag that the currency is a little more well-regarded and maybe it can move lower. anna: do we expect the pboc to follow the fed at all stages in the hiking cycle? can the chinese economy cope with that? we know they want to take some of the bubbles out of the economy. jeremy: they were loosening policy. we think they will portray following the fed as long as the fed does not do four hikes this year for example as portraying a neutral policy. shadowboxing what is going on with their largest trade partner, the biggest trade relationship in the world. dollar china is the most important cross we had this year. in the u k, we may be looking at cable and no vartan a. as far as the global barometer of economic productivity and growth, you have to look at dollar china. anna: jeremy, thank you so much for your time. are a bloomberg customer, you can watch the show on a regular tv or you can use the function tv on your terminal. as well as a video stream. you can also follow all of the special features, the charts and the functions that we referred to during the program. you can get to those on the right-hand side of your screen. dreckn also send messages late to the producers of the show using the link at the bottom of that screen. coming up, as dutch a politicians get started on forming a government, we focus on france and the next test for european populism. trade moving of the agenda. we will analyze what to affect at the meeting of the g-20 finance ministers. ahead of those talks, we speak .ive to the commissioner he will be joining bloomberg. ♪ anna: welcome back. bloomberg daybreak euro. -- 2:49 a.m. in the morning in new york. we are one hour closer to the time across the atlantic. us get a bloomberg business flash. here is juliette saly. juliette: blackstone says it is shutting its $3 billion --. it has been given the option to shift money into other distressed credit false. the decision reflects the desire of the hedge fund to shield themselves from quarterly redemption which can be difficult to bear when investing in volatile markets. tissue by have gained in tokyo trading. that as its memory chip business is attracting morbid there's including japanese back to equities. development bank of japan is considering a joint offer with u.s. financial bidders. representatives for a toshiba declined to comment. hsbc chief executive stuart gulliver is being investigated by u.k. tax officials over his residency status. he lost a bid to end an inquiry that started in 2015 centering on where he was living in the previous tax year. the ruling says the government is not making any allegations as to the impropriety. he has spent a significant amount of time living in asia. french authorities have joined the u.k. in a corruption probe of airbus. the investigation is focused on allegations of fraudulent practices. including arranging aircraft financing. the probe follows steps by the u.k. office in august. airbus, which is cooperating fully, has said it dropped the questionable middleman. former barclays ceo diamond is said to be poised to return to london's financial center with a takeover of gordon. according to people of knowledge -- with knowledge of the plan, he left merchant capital in preparing to announce an agreement with the stockbroker private. it is already the main shareholder which has a market value of about 9.2 million pounds. that is your bloomberg business flash. anna: thank you. dutch political leaders took the first steps towards forming a new multiparty coalition government under the prime minister -- as the prime minister beat wilders. focus now turns on the next political event in europe, the french election. spoke in berlin after meeting with angela merkel. he was asked about the dutch election and was cautious about making comparisons with france. >> i am extremely careful about that because i think there is no comparison. thattheless, i do believe it highlighted the fact that speech, deliver free when you explain what you do, what your constraints are in your country, you can defeat extremism. discussining us here to this and other geopolitical moments -- geopolitical issues at the moment is charles lichfield. great to have you on the program. we have had the dutch elections. let us focus on where that takes us next. macron did not want to make a link to the french vote. they doubted whether the french voters really cared how dutch voters voted. what is the read across from the netherlands to france? right not to assume that this will be easier for him but i do think there are parallels. wilders did quite well. debtor than the last time. but there has been a reaction from the dutch electorate, knowing that there is a threat and turning out to vote for parties opposing him with a clear line. and the new party, the green, the left green has done very well. offering a polar opposite to the pvv. that is what we are seeing in french politics. the person doing the best at the polls is offering the most polar opposite to marine le pen. anna: you reference to the high turnout. and whether that becomes a characteristic of european elections. pulling up the latest polling. various trending charts. one is round the french election. marine le pen is still at the top but macron is not far behind. you fear they are underplaying the risk. what will do -- what will happen in the second round and those that do not want marine le pen. >> that you run system is a problem for marine le pen. and those that voted for her in the first round will not vote for her in the second. our question is whether it will be macron or fillon in the second round. vulnerabilities in their own campaigns. marine le pen will be able to turn the second round into a referendum on the status quo. to theresents no immigrants and globalization. we think therefore there is a chance she wins especially if abstention is higher. anna: that is another possibility. we are watching what is happening at the g-20. very's delegations from the u.s. coming over and many in europe trying to read the coffee grounds and the tea leaves around what the u.s. administration intends towards euro. comforting words regarding nato from previous visitors. steven mnuchin and sounding dramatic and not wanting a trade war. maybe it just means lower taxes in america and it is less of a threat to european nations. charles: the trump administration has tried to reassure partners to an extent but it comes with several conditions. europeans have to pay more for nato. and i think our outlook for u.s.-european relations is not that good. donald trump has calmed the onations -- the comments nato. all of this was done privately. i think disagreements on taxation, on the department of justice's habits of looking into the habits of european companies and whether they have arrived any officials, all of these were problematic for an under donald trump could become explosive. anna: we will see if they can get on the same page around protectionism and rules-based trade. charles, thank you. after meeting with germany's finance minister, steve mnuchin heads to the meeting in baden-baden. we are live with the events. this is bloomberg. ♪ ♪ anna: kneeling in diplomacy. steve mnuchin strikes a softer tone on trade in his global debut. we are in baden-baden, germany. recent may prepares to pledge a closer union with scotland after a bid for an in the independence vote for brexit. comes trump's proposal under fire in congress. warm welcome to "bloomberg daybreak." i'm anna edwards. program.r 7:00 here in london. let's look at where the futures open up on this european equities session. fed move seems to be running out of steam. flat to negative in the asian session by the end. here in europe, euro stoxx seem down a 10 -- 1/10 of a percent. asia pretty flat, but some emerging markets doing better. japan the weaker link there. volatility still retreating. quotes around it being scarily slow. checking in on currencies. a lot of movement in key currencies this week. 123.65, kristin forbes is leaving soon but raised questions about how far behind the rest might be. how scotland could abandon its current union with the u.k. on currency. euro, 107.79. the talking about a rate increase maybe on the ray -- on the way. way -- seems to be coming to her from the ecb. we put nymex on there for you. from words coming through gordon, something being watched by investors. they are recommending a purchase valueswhere, the deal issued share capital at 15.5 million pounds. not enormous but of interest, a story we have been following on bloomberg. we will get more details on this through the program. let's get the first word news. juliette: the you k's prime minister has pledged to forge a closer union within the u.k. in reviewed. is set to unveil a plan for britain that includes every region in the country as she addresses the conservative conference in the welsh capital. her comments come after she rejected a call for a new independent referendum to scotland. president trump's proposed deep spending cuts hit almost every facetic department, set to opposition in congress. the savings would boost funding for the pentagon, veteran affairs, homeland and transportation. john mccain responded to the plan saying it is clear the budget proposed cannot pass the senate. british officials have complained to the white house after press secretary sean spicer cited a fox news commentators report claiming enlisted u.k.ad intelligence to spy on donald trump. after the briefing, the u.k. issued it is bateman -- a statement disputing it. opec and its allies may prolong production cuts in june if the world's crude inventories remain excessive worried that according to saudi arabia's neg minister -- energy mr. -- energy minister. >> still above the five-year average, the markets are still not confident in the outlook. we don't see companies and investors feeling good about the health of the global oil industry. we will signal to them that we will do what it takes to bring the industry back to a healthy situation. juliette: global news 24 hours a day, powered by more than 2600 journalists and analysts in more .han 120 countries you can find more stories on bloomberg at top . china is finishing its session for the week. the csi 300 is down by 1%. we had weakness in the japanese equity markets. the nikkei up by 4/10 of 1%. emerging markets well bid on a weaker dollar worried a lot of interest in emerging markets. adding one third of 1% to a record high today. on toshiba watch, it closed higher in tokyo. potentially 10 bidders interested in its memory chips business. it is trying to gather some money to pay down its debt. we did see chinese carmakers under pressure. -- that they discounting will weigh in on profits. health care rising in sydney after a recent technical selloff. this chart looks like finally, there could be breakup in the in and equities relationship japan. they are normally divergent, but they are starting to move away from that and we have seen the .en and equities rise in 2017 goldman sachs saying there is a decoupling in the relationship and we continue seeing upside growth in yen and japanese stocks. .nna: a quick word on tenure they have accepted an offer, owned by axis -- atlas merchant capital. the bid from bob diamond and qatari, this perhaps marking the next -- return of the x berkeley ceo to london, taking this 140-year-old stockbroker private. we get more details on that in 10 minutes. steve mnuchin met in berlin. asdescribed their talks productive. that contrasts with other officials called america's $60 billion trade deficit with germany and economic injustice that needs to be countered. here's what steve mnuchin said at the conference. onehe united states has had of the most open trading markets and ishere in the world, one of the largest markets of anywhere in the world, so the president is interested in making sure that our agreements are reciprocal, but they are fair and a reflective of making sure that the american worker is at least at the same playing field and can compete. anna: steve mnuchin arrived today for the two date g-20 meeting of finance ministers. trade is top of the agenda. let's head to baden-baden were matt miller is standing by. role for germany? they have to corral this g-20 on to the same page around trade. germany has taken over the presidency of the g-20 this year and one of the issues they will have to deal with is countries like italy, france, brazil as well as the european commission that want anti-protectionism language in the draft communique and countries like the u.s., objecting to that and in -- instead want the words free and equitable trade in the communique. with germany is trying to do is acquiesce a little bit and make this a little bit of an easier g-20 event for steve mnuchin than it otherwise would be. his teamll putting together, he has just gotten confirmed and into office and they are agreeing to remove that language, but other countries are rejecting the removal and now wolfgang is in the middle of the fight. wolfgang come up to the courthouse behind me, where meetings will take place this morning. the japanese finance minister also is going to meet with steve mnuchin this morning. everything is kicking off here in baden-baden. anna: and he very much. supposed to be a retreat, a relaxing place. we will see how relaxing they find it. matt miller from there. we are joined in the studio billing -- bill, great to see you on the program. when you look at the difficulties that the g-20 will have, around protection to his -- protectionism, a global-based trade system, it goes to shows the extent to which the trump thenistration has thrown rules of the air and many people are working out where it is sitting. >> i'm actually thinking the g-20 meetings might start to get interesting. when you write the communique three months ahead of the -- but no, we got this implied threat that the americans aren't going to play by the rules. the americans are coming in with their own agenda, not necessarily a clever agenda, that it is an agenda. for g-20ave had meetings is the host country trying to make it look as good, look as effective as it possibly can. now it looks like we might have proper arguments going on and this one about fair and trade.le versus free it is going to be very interesting and i think there will be friction, and if we get that, producing that communique will get more difficult to read. anna: he's kind of deficits feet into that. this chart is u.s. trade balance with the european union. this goes to the heart of why they are having this exchange of words between donald trump and others in the administration and some in europe. bill: he got to look at the reality of the situation. you will always have wide swings in trade -- trade deficits caused by who is doing better, who is doing worse. to argue about these would frankly be foolish and a form of protectionism. but that is what is going to happen. you're going to have an awful lot more -- how would you describe this -- agitated discussion over these details of trade. where is the real issue of g-20 should be trying to solve, how do we create more trade, how do we agree on something to go forward is to mark i don't see that happening with the current two camps becoming very established. anna: the new rules of the road around protectionism, at least that is where the administration wants to go following trump tweets. how do you invest around that? what expectations does that give you -- is this higher wages? higher inflation is to mark -- inflation? bill: this is one of the next -- macro things in the coming years. the macro is look at the global economy, the u.s. is in recovery, we have all of potential boost coming from the trump jump in terms of tax cuts and in terms of infrastructure spending we have a fairly flat europe where rates remain low, we have a china that will muddle through. we select massive deflation in japan. the big story is u.s. growth. in reality, it is going to be how much can the u.s. grown if with a protectionist u.s., we end up seeing global trade continuing to contract. that me and the effects of u.s. -- means the effects of u.s. growth do not spread. lower interest rates for longer and some of the heat coming out of stock markets -- there is too much money chasing, too few assets. ina: not much volatility it -- volatility in's box. -- in stocks. amongst that backdrop you paint there, we cover this week's developments, there has been a palpable sigh of relief. bill: and a bad sigh of relief. we've got away from the big macro picture and looking at micro sizes. vote,day's float -- everyone is going phew, populism hasn't destroyed ller -- europe. won him a but he increased his vote 25%, 25% more extreme right-wing racist mps in the dutch parliament and the government lost the same amount. that is in a european country that is actually doing very well. it has one of the highest growth rates on one of the lowest your 7.6%nt rates, in or something in holland. comparatively happy european country. compare and contrast holland with france and italy and that is why you have still got to be worried about populism. anna: fascinating how high unemployment rates have not been a requirement of a surgeon populism. blaineou very much, bill stays with us. , more on former berkeley -- barclays ceo come back we will bring you the details. this is bloomberg. ♪ ♪ anna: welcome back. this is bloomberg daybreak: europe. 8:18 in berlin or baden-baden for the meeting. opec and its allies may prolong production cuts after they expire in june as crude inventories remain excessive. we're looking at global inventories and data transparency is not perfect, and it takes time to correct. the demand and first quarter is not the highest so it has taken time for some of that data to show. but we believe we are on the right track. i think sometime by midyear we will look at where we are. it is premature for us in mid-march to be making a determination on what to do. this six-month program will take its course. we are committed to it. my colleagues from other ,ountries are equally committed and i think late in the second quarter we will be looking at what needs to be done to ensure those fundamental factors are achieved and maintained. >> and you are watching fundamentals, want to let the first six months go. is it then possible you would sit down with fellow producers and expand cuts question mark >> if needed yes. inventories that are still above the five-year example -- five-year margins for example, markets are still not confident in the outlook. if we don't see companies and investors feeling good about the health of the global oil industry, then we would want to signal to them that we are going to do what it takes to bring the industry back to a healthy situation. speaking to kathleen haynes. let's return to european things. poised to return to london's financial center with a takeover of the 141-year-old stockbroker. the deal values issue chair capitol at about 15.5 million pounds. rich, its great to have you on the program. bill blaine is still with us. hadhis a story that confirmation is morning question --k -- morning question mark morning? that we have bob diamond, the former barclays chief executive, since leaving in 2012, he is looking at acquisition of financial service companies. this is his first back in london. a small deal, 15.5 billion pounds. this used to be a much bigger name and financial services, an old blue blooded firm around 140 years. david cameron's father was stockbroker there. interesting company. they could be a call consolidated -- consolidator in the space. withow diamond is in there qataris investors. panmure has been trying to restore profits. what is diamond's interests? they have been expressing an interest in bank assets. >> we heard bob diamond saying he is interesting in acquisitions of financial service companies. he bought south street in new york. a deal for leventhal as well. this is his at -- atlas merchant vehicle. the company separate from his bank and solider in africa. anna: inky for the latest on that consolidation story in the u.k.. let's get back to bill blaine who is still with us. let's leave that story there and talk about brexit. you have some thoughts on this. theresa may is going to make a call for greater union today on the occasion of the snp conference. pushing their case for independence. are you surprised this vote is back on the agenda? bill: scottish independence again. it flummoxed is me. i can see what is going on. it is the snp's last throw of the dice because if they don't get it on the agenda, they lose momentum and concede to theresa may's point. it is a complete distraction as we go in. as a scotsman, i take the view we decided to live in the u.k.. a lot has changed. dealing in the snp reminds me of dealing with my children, when they were going through that difficult teenage age. you have to keep negotiating with them. but i should comment on the politics, we should comment on the market fact is. it is interesting how little the market is paying attention to nicola sturgeon. anna: yes, because you had talk about scotland moving away from monetary union with the u.k.. such a big talking point of 2014 with the snp refusing -- >> the s&p keeps clutching at straws. the last time we said we would use the euro and the euro turned around and said no you won't. you have to joint. -- you have to join. and we won't let you, the spanish would have to let you join. has come up with the expression, we will have our own currency. that is a great scottish expression. its just not realistic. and it will happen until after brexit read that is when we get a vote. what does worry me, knowing my you have to handle them very carefully. we are a very feisty and we take insults very personally. and an awful lot of scots have reacted to theresa may saying you can't have a referendum, not because they think having a referendum was a good idea, but because they don't like being englishwoman that they can't. grow up. just because an englishwoman is busy trying to sort out the future of the whole union, and let's not forget, today is st. patrick's day, or we are celebrating a welshman who is the patron saint of ireland, which includes northern ireland which is part of this great union. anna: i feel we should move on before you bash her head on the table. -- your head on the table. bill blaine hear from and partners. is for this part of the show. let's look at what is happening on gmm. this is a picture for assets around the world. we have the british pound under pressure, down by 2/10 of a of the pound under pressure, down by 2/10 of a percent. that price dissent of yesterday at the bank of england. let's talk about the euro. ,he euro has been rising talking about whether there could be a rate rise from the ecb on its way. deposit may increase before the prime rate. a lot to talk about in europe. that will do it for the outlook. the open is next. we will speak to the eu commissioner. this is bloomberg. ♪ ♪ guy: happy st. patrick's day. you are watching bloomberg markets. is it the european open. ar first trade coming up in half hour. i am guy johnson alights on -- alongside matt miller in boston boston. a softer start. steve mnuchin sounds reassuring as he talks to wolfgang. boston withn boston matt ahead of that meeting. index -- ourstock investors underpricing political risk in europe. we ask one of france's biggest money managers weston later in the program. the euro powers higher. a rate hike is signaled to be on the way. what will it take to convince the options market to follow suit? look, 30 minutes until the cash trade. .hat futures are pointing to a soft to negative open this morning after the yellen trade gave way yesterday to losses in the u.s.. now we are seeing futures down pretty much across the board in europe. what are you seeing in other asset classes? to the gmm and talk about what is going on here. the dollar is trading firmer this morning. backing up a little bit. also that move yesterday on the british pound following the meeting. the 123acking down into .31 area. a couple good charts i want to run you through. the first one is what is happening with the euro. we will deal with the stocks. stocks. this is brexit, this is european equity market volatility yesterday. that was the result of the dust election -- dutch election. talk about that as we worked or the program. is that the right trade? let's see if this one works. this is the euro. the point i want to make here is while euro spotters come up a lot, there is it skew in the options market has not. even i on the skew. watch what happens there. keep an i and euro because you can see a break out of the recent range. we will talk about that as we work our way through the program. that's get a first word news update. the u.s. treasury secretary steve mnuchin will be in boston bottom in germany -- baden-baden. he met with his german counterpart. that is in contrast to other officials who described the $68 billion trade deficit with germany as an economic injustice that needs to be fixed. >> the united states has had one of the most opened trading markets of anywhere in the world and is one of the largest markets of anywhere in the world, so the president is interested in making sure that our agreements are reciprocal, but they are fair and are reflective of making sure that the american worker is at least at the same playing field and can compete. juliette: theresa may will today use the start of the conservative party conference to pledge to forge a closer union within the u.k.. it comes after the scottish national party leader nicolas sturgeon called for a new independence referendum. the u.k. prime minister says the focus should now be on brexit negotiations. >> i say now is not the time and should be is, we negotiating with the eu to make sure we get the right deal across the whole of the united kingdom. in scotland and the whole of the u.k.. i think to look at this issue at this time the unfair. juliette: british officials have complained to the white house after pressure secretary sean spicer cited a fox news report saying barack obama had enlisted u.k. intelligence to spy on donald trump. after the briefing yesterday, the u.k. gc hq issued a dismissal of the reporting. the white house wouldn't concern whether the -- it was under consideration. opec and its allies may prolong production cuts after they expire in june if the world's crude inventories remain excessive worried that is according to saudi arabia's energy minister who spoke to bloomberg in washington. >> the sign is that in the stories -- in the stories are about the five-year average. the markets are still not confident in outlook. we don't see companies and investors feeling good about the health of the global oil industry, then we want to signal to the that we are going to do what it takes to bring the industry back to a healthy situation. juliette: global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. guy? guy: take you very much, juliette. generali is been in the spotlight after tesla announced it was considering a combination . a plan that was abandoned. generali reported annual profits increased. joining us now, the ceo of generali. francine lacqua is also on set this morning. good morning. think you are seeing is here. -- a talk a little of little bit about that. how did it happen? what was it like from your side to see that happen and can you give us a sense of perspective from the generali point of view? .> we're very surprised when we heard the first noise, we were all surprised that we are very confident that at the end, nothing serious would happen because actually, we never thought there would be interesting synergies for both companies. spokene: you have never about it? do you think you are a takeover target question mark talk about , what does itow mean for speculation? every meeting cute get asked to you will merge with? philippe: we are not going to merge with anybody. targetnot a takeover because our plan is creating value for shareholders. that is why we showed our 2016 results. ,uy: the bank insurance model very few cases of it working well. is it a model and in any way that has possibility? bill: banking -- philippe: the bank of france is mainly selling insurance product through bank branches, which most of the banks are trying to do. some of them are doing it successfully. guy: why would you take it one step further? philippe: no use. for us, entering in the bank is -- banking business as an insurance company doesn't make sense. our insurance business is profitable, a sustainable business. it is very attractive. francine: do you have to raise capital? philippe: absolutely not. francine: the market seems to be testing you. it is very clear, we don't need capital. our capital position is strong. veryatio -- our ratio is good, so we don't need capital. if at some point, for a significant admission we need capital, we would definitely discuss it with the markets, with our shareholders. but at this point, no need for capital. francine: had he feel about generali? you have been there over a year, chartse been looking at for analyst recommendations. what do you need to do in the next six months? philippe: we need to remain focused on our industry plan. successful, our strategy is the right strategy for our company. we need to keep this momentum. he can't be distracted. we need to start thinking about expanding again in italy and out of italy. francine: through acquisitions? philippe: acquisitions will be looked at in an opportunistic way. if they can accelerate our strategy, we will look at them. in a very opportunistic and disciplined way. we want to have the same discipline in acquisition as we do on the industrial is this. guy: what is happening more broadly in the sector in italy. idea orit was a good something that shouldn't have been invested in. was it a mistake to put money into that fund? well, we put money into that fund to sustain the italian banking system and i thought it was a good idea to do it. atthe end, between at 91 and 92. stabilized theo situation for the italian banking system, which is good for the country. maybe the solutions were not perfect, but the solutions at the end were effective. soncine: you will -- you own many italian bonds. are you concerned the political situation will be volatile western -- volatile? philippe: our btp exposure is fully consistent with our liabilities. that is the first point. it is consistent with our capital position. the sensitivity test showed some shock on the bdp, the italian spread. italy is confident improving. the government is pushing forward the reforms that have started a couple of years ago. francine: do you have to be harder when you look at your earnings are cost-cutting to make sure that if there is a second general election, some kind of vote, you are cleaner so that you can face anything in question -- italy? -- to have the best ratios of our industry, each we have. we have the best efficiency ratio, expense ratio. we have the best technical ratios of our industry. generally speaking, this is the best way to get through these very -- this very low interest rate environment. i think that is more than many of our competitors, we have prepared things to get things through this environment. guy: congratulations and thank you for seeing us. the ceo of generali. francine will be back on 9:00 a.m.ce from london time. let's go back to matt miller at the g-20 finance ministers meeting in boston boston -- baden-baden. mr. commissioner, let the first ask you about the message tot you want to communicate steve mnuchin, the incoming u.s. treasury secretary. >> first, what is the g-20 about? it is about showing the benefits and sharing the benefits of globalization and also about managing risks. i would like to come out of this meeting with a positive message that we are already and all of us trying to maximize those benefits. there are four pillars for that. trade,s a free and fair which is important. there is inclusive growth in order to produce wealth and also to create jobs. there is financial regulation. and finally, it is about fair taxation. against tax fraud and evasion. i think if we could show a sign sense, it would be a very good meeting and we are welcoming mr. and you should hear -- steven mnuchin. i feel he wants the u.s. to feel they are fully involved in the institutions of g-20. matt: you have no objection to using the term "fair and equitable" in the g-20 hasunique, this paper that all of a sudden become all-important, which will be published on saturday? pierre: we will discuss the communicate in the room next to hear and we will look at the wording very precisely. what i mean is we all share the view that trade -- fair trade has to be shared. trade is good for our economy and protectionism cannot be the solution. i'm sure we will find the right wording to say the right thing. matt: were protectionism itself is a bit loaded in a negative sense. do you think that word is necessary in the communicate? pierre: i'm not talking about the communique, but the spirit. spirit is that we are an open society, an open economy and that must go on. we are building a global partnership all parts of the world and of course, with our american friends, fully involved in that framework. matt: the border tax issue that has been talked about is a protectionist measure. but i wonder what you think about the possibility of rolling back financial regulation? the trump administration has put that forward as a goal and other banks in europe have argued that may tilt the playing field? what do you think about the regulation for banks in the u.s.? pierre: regulation is here for a precise reason, that we had the financial crisis in 2008. he suffered from it and have built a financial relation. the americans are free to their action. regulation is protection for the financial sector and that corporation is always better than -- cooperation is always better than confrontation. financial regulation should go on, of course. matt: will there be an agreement on the basil rules? a lot of people will go from here to basel later this week. the germans have given a little ground it looks like as our is the output -- outlook floor has concerned. all right, let's talk about taxation been in europe. it has been fascinating to see the developments as far as brexit is concerned. are you concerned that the u.k. may try to compete more by lowering their taxes question taxes? free to fixybody is its own tax rates. if you lower your tax rate, of course you need to have other and ores or more deficit debt. that is the problem for national governments. we're not intervening on tax rates, -- >> that even in the sense of ireland? sovereigntynational of the irish people and the irish government and parliament, i'm not discussing that. the casediscussing is for some companies that led to the apple case my colleague raised. differentsomething than having low corporate tax rate. i'm sure that the u.k. -- each is coming player here, a member of the g7, the g-20, will remain with us in the fight against tax fraud, tax evasion. .e are progressing on that we have some important files on the table with the council, the asiness of finance, blacklist. each time, the commission makes it proposal, the u.k. government is there. it was always very cooperative and that must go on. again, there is freedom for rate, even if it has consequences on the fiscal side we can create -- also create some feedback. need to cooperate against tax evasion. communique will reiterate our progress on that matter because people cannot stand anymore that multinationals don't pay their fair share of tax where the create growth and wealth. matt: you are the commissioner for taxation. you are also the commissioner .or customs theresa may said she would like to keep some sort associate membership in the eu. is that possible post-brexit? pierre: the parliament just voted about article 50. i cannot jump to conclusions. the only thing i say is that after article 50 is on the table, then a negotiation may start and that will have principles like if the u.k. defends its own interests, the commission will defend interests . the full freedoms cannot be separated and you cannot pick and choose. and of course, being a member of the club, and the tradition invented the club, had to be better than being out of the club. situation after brexit cannot be as profitable -- good as the situation before brexit, that i am not going to enter into that because negotiation has not started. we cannot say how it will be concluded. we agree on the clean and orderly brexit. we want to keep a strong relationship with the u.k., which won't be a member of the eu but will also be -- always be a european country. of course, i understand this negotiation will be very strong, very important, and enormous one. let's not conclude before it starts. matt: thank you very much commissioner. i appreciate your time. guy, back to you in london. matt miller.u minutes from the european open. we will take a look at movers in trading. airbus in focus. french authorities joining the u.k. authority in a corruption probe. we will deal with that stock and what is happening with the chat this morning. eight minutes to the market open. this is the open. ♪ ♪ guy: five minutes to the cash open. hans already trading. matt, i'm serious to get your take. a decent move in checks -- cap. you have a decent move up in yields. with heavily negative -0.77. but a decent move. this follows the comments from yesterday. matt: absolutely. that was fascinating in the sense that it moved currencies as well. we saw a big jump in yearning euros. making purchases better in u.k. and u.s.. i want to interrupt real quickly the market conversation to say we just saw a team -- a group of tovy suburban's pull up here the house. i'm guessing that means steven mnuchin has just arrived. he has a meeting with the japanese finance minister and wolfgang schaeuble is already inside. things look like they are kicking off here in baden-baden. trackslove the way matt this by which types of car we are tracking. joinednch authorities the british authorities in opening a probe into airbus relating to fraud and bribery allegations. we will keep an eye on this. tom is saying this is a result of self reporting. european stocks called a little softer this morning but the big story has been the massive drop in volatility as a result of dutch elections yesterday. we will talk about that. the market open is next. ♪ guy: let's talk about where we think the european market open is going to go. we think it is going to be mildly negative. the big move has been in european equity volatility. that has dropped sharply on the back of the story surrounding the netherlands. that is the fair value. mildly negative but not indicating much in terms of a sense of direction. the move in the hero yesterday caught everybody's attention. matt: absolutely. after there's nowotny comments, you saw the euro shoot up. it is relatively flat today, about 1.07. still much stronger than it was three days ago, five days ago, gaining some strength. not only against the dollar, but the pound as well. very interesting to keep an eye on the currency move as well as the fixed income moves. guy? guy: let's talk about the market open. we saw a rally into the close yesterday. i think we're going to unwind a little bit of that. the euro comments plus the political story out of the netherlands contributing to that. let's not ignore the fed either. there's london opening. it's a little softer. there's paris opening as well. it is a little softer. actually, let's wait for paris to click over. london is definitely softening up. we will see what's below the surface. here's nejra cehic. nejra: we can't forget the fed. nor can we forget the

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