This is the stoxx 600. Investors cautious today before speeches i donald trump and janet yellen. Stoxx 600 down by 0. 2 . Dollarg down against the , falling against all its major peers after the times reported that Prime Minister theresa mays team is preparing for scotland to potentially call for an independence referendum in march. The french 10year yield is down to 89 basis points. Emmanuel macron opening up his biggest lead yet over Francois Fillon. Lets finish up with gold, down 0. 2 . Gold will head towards 1300 in as inflationmonths expectations pick up real Interest Rates turned negative. That is according to ubs wealth management. Lets get the bloomberg first word news. Nejra the London Stock Exchange said its 13 billion tie up with Deutsche Boerse is unlikely to proceed after a new regulatory hurdle signaled a potential end to the effort to create a dominant european exchange. Officials had requested that the nsc divest its Trading Platform, but the nsc said it couldnt commit to such a move. The u. K. s house of lords starts a detailed examination of Prime Minister theresa mays exit legislation today. A number of amendments are expected to be put forward, including one which would give parliament a binding vote on the final brexit deal. The pound is down against all its major peers after a report said mays office is preparing for sultan to call another independence referendum. The independent french president ial candidate Emmanuel Macron has won a third endorsement in a week on the suggesting he is favored to win the upcoming election. Techcrunch is seen challenging Francois Fillon with the far right Leader Marine Le Pen expected to win the first ballot. She is currently expected to lose in the second round. The suspended president of south korea has denied involvement in wrongdoing according to the news agency. It sites are written comments to the constitutional court, which is holding its final hearing on her impeachment. Park was suspended over a scandal about influence involving her confidant and some of koreas biggest companies. The court will rule on the legality of her impeachment within two weeks. There was a dramatic finale to the oscar awards in hollywood. Moonlight won best picture but only after a mixup meant la la land was mistakenly announced as the winner. Presenter Warren Beatty announced he was accidentally given the wrong envelope. It was still a big night for la which won six awards. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Im nejra cehic. This is bloomberg. Mark thank you. Bond traders are calling the Federal Reserves bluff. Despite everyone trying to convince investors the fomcs march meeting is live, traders see a 40 chance of a hike. Every rate increase for the past quarter century has been preceded by at least 50 odds according to data compiled by bianco research. One of the reasons for the skepticism is uncertainty about what donald is going to do. We could get an outline of his budget as early as today according to two white house officials. The planfamiliar with says trump is proposing major defense spending increases and big cuts to the Environmental Protection agency, state department, and other federal agencies. The president is scheduled to address Congress Tomorrow night. Lets bring in francesco papadia. The ecb former director general of operations. Is this the week we are going to get more concrete details of President Trumps agenda . He addresses congress today. We could get further details tomorrow excuse me, and we could get further details of his budget today. Francesco there is a lot of uncertainty. I dont understand very well why stock exchanges are so bullish with all this uncertainty that is coming from the administration. You refer to fiscal, but of course you could refer to production tendencies. You could refer to general geopolitical uncertainties. I dont quite understand such enthusiasm. E stock investors setting themselves up for a fall . Francesco the thing i fear is they see possible shortterm gain, but they dont see the longterm pain that is that could come from an asinistration as uncertain so few of our past, like this one. Mark holger schmieding, are you in the shortterm pain or longterm gain camp when it comes to trumps agenda and how it is affecting various Asset Classes . Holger when it comes to the agenda of the Republican Leaders in congress, im very much in the camp of longterm gain and probably shortterm gain as well. What we have to grapple with is the uncertainty that trump causes with his interventions in what is basically a congressdriven u. S. Reform program. Mark the treasury market is obviously where he. Look at the odds of wirp. Fed fund futures 40 . We are led to believe by various fed official that march is live. Why arent we above 40 . Holger investors see so much uncertainty, ranging from trump to the french elections. Having said that, we are very much in the camp of, its likely to be a march hike. Living upic data are to fed expectations. Theres always some Political Uncertainty. Who knows whether the uncertainty will be lower three months from now . I think a prudent fed would go now. Mark francesco, can they, will they, should they . Francesco from a more basic point of view, it does not matter whether they do it in march or slightly later. This will not change the economic situation. This is something that is of a lot of interest for traders, but not for economists. Mark and that leads us to the space beyond march, as francesco was implying. When further details start to create out, when implementation of those plans start to occur, that makes policy much more interesting, doesnt it . Looking out over the next year, yearandahalf, especially when President Trump will have the opportunity to change various positions on the fomc. Holger yes. Interesting it will always be, but i would say the path for the fed is comparatively clear. They need to increase rates with an economy that is resilient and likely to strengthen. We are looking for three rate hikes this year, three rate hikes the year after, and then we see how many we will need in 2019. This is no longer a decision whether to hike or not. It is the decision whether to hike three times or four times this year, the precise pace, no longer the overall direction of policy. Mark francesco, are you in the 3, 4 camp . Francesco i think that there may appear the four too long some kind of tugofwar between the fed and the president. I agree the fed has to increase rates because the u. S. Economy is doing very well. But this may come at a time when yields go up just because trump is carrying out an expansionary fiscal policy. He may put pressure on the fed not to increase rates when yields are already coming up. Then there is the issue of the Balance Sheet of the fed, which could be another area of disagreement between the president and the fed. In the mediumterm, the president will win because he will choose who is the fed. Mark at watch stage is that island at what stage is the Balance Sheet addressed . When does the fed start to fiddle with its Balance Sheet . Holger i dont think this has to be an issue for a year or two. The fed can tighten through increasing rates. It can potentially decide to just no longer prolong assets that are maturing. But i dont think that the fed will have any need for the foreseeable future to upset bond markets by actually selling any of the bonds it has. The u. S. Economy is not roaring at that, that beyond interestrate increases among the fed would have to actively shrink its payments shoot. Mark holger schmieding, francesco papadia, both staying with us. If you are bloomberg customers, you can watch this wonderful function, tv , as well as the video stream. You can follow all the charts, all the functions, reach out to ib toow by clicking send show producers at the bottom of your screen. Stay with surveillance. The u. K. s house of lords starts a detailed examination of theresa mays article 50 legislation. We focus on the path to brexit. Ls givingh two pol emmanuelicron macron his biggest lead yet over Francois Fillon, we will bring you the fight over the french presidency. The u. K. s biggest mobile operator by subscriber numbers. We interview the companys chief executive. This is bloomberg. Mark lets get the Bloomberg Business flash. Heres nejra cehic. Nejra Deutsche Bank has cut its bonus pool by almost 80 according to a german newspaper. The chief Administrative Officer told the paper that germanys largest lender is reducing the payments and is aware it will be frustrating for employees. He said some workers in key positions will get a special longterm incentive tied to the banks performance and paid out after as long as six years. Intesa sanpaolo has abandoned the idea of a joint Business Model with an insurance company. Ceo Carlo Mussina doesnt see sufficient value in merging with generali. The bank now plans to improve the creation and distribution of value for shareholders. Samsung has released a new tablet targeting video gamers and professionals as the company tries to bounce back from the note 7 debacle. They were previewed at the mobile World Congress in barcelona. Samsung also teased its latest smartphone, expected to be released at the end of next month. That is the Bloomberg Business flash. The u. K. House of lords starting a detailed examination of Theresa Mays Brexit legislation. A number of amendments expected to be foot forward, including one that would give parliament the final vote on the deal. Sterling down against all its major peers after a report said mays office is preparing for scotland to call for another independence referendum. With me, holger schmieding, chief executive at berenberg, and franc francesco papadia. Do you think the house of lords can put a spanner in the works for theresa may . Francesco it is very difficult. Im no constitutional expert and i know the position of the house of lords is peculiar. Powers that are difficult to use because they are not elected and there is a referendum and a common vote that has already gone in some direction. On the other hand i understand that in the country, there may be a wish not to give everything an automatic pilot and give parliament the responsibility, the power to take a final view on which kind of brexit there will be. I dont think that brexit can be avoided, however much i would ofh it, but maybe the form brexit should be further discussed, and parliament would seem the natural place to do that. Ger, do you share those views . Do you think parliament will get a final legally binding vote . This is what some it seems are pushing for. Holger i think the house of lords seems to be on the right path. This is such an important decision for britain. It is very difficult to see how parliament would not be given the vote and actually the last word on the final deal. Mark francesco, how do you think the economy is weathering the brexit vote . The data has proven that the economy has weathered it. Is that coming to an end . Are we starting to see retail sales, credit, are we starting to see data pointing to maybe a difficult year ahead for the economy . Francesco the expectation many had that there would be a quick effect from brexit didnt come true. In some shown in particular is doing pretty good. Consumption was not the issue thought of to be suffering from brexit. It was more investment because investment has to do with the future. What you expect is brexit would affect the u. K. Economy going forward. However, it is difficult to envisage a way that the u. K. Economy would not suffer from increased borders. Borders are bad for the economy. If you increase the size of borders, this must be bad for the economy. Mark is it difficult to see a way the u. K. Can prosper under any scenario . Holger the u. K. Can continue to prosper, the question is how much. Before the brexit vote, we had growth at two. 2 percent. With a soft brexit, we expect 1. 8 . Doesnt sound like a big margin, but if you add that up, it is big. If you think that with lower trend growth, less immigration, unless investment, you will need to tighten fiscal policy more in the future to balance the books, then you see there is significant damage to come over the longterm. Mark good stuff. Holger schmieding from berenberg, francesco papadia, both staying with us. . Is momentum with macron where going to examine the french president ial race. This is bloomberg. I mark barton in london. Emmanuel macron looking increasingly likely to be the favorite in frances president ial election. Hes opened up his biggest lead yet over Francois Fillon according to new polls which predict macron would beat Marine Le Pen in the second round. Macron gained a third ally over the weekend in the form of the socialist defector. With us still, holger schmieding, chief economist at berenberg, and francesco papadia. If i can start with you, holg er, the spread as it is now known, down from the highs of last week when we saw a difference of 79 basis points, we are down to 68. Been a fascinating election, twists and turns every step of the way. For the economy, is not run the best option . Holger macron is probably now the best option. For the economy, fillon would have been an option as good as mac run. Toron has the better chances decisively beat le pen. This risk of le pen making it is in a way the biggest sword hanging over europe. It will have a candidate strengthening, who has an extremely high probability of winning overlap and. It is good news for the economy and the politics. Ants probably the minimum reforms france needs to prosper. Mark how worrying would that eventuality be from where you are sitting . Francesco the probability is low. Everybody says that. But we have learned from brexit trump that you get forecasting politics is even difficult than forecasting economics. France, you dont see the are ready to put someone as extreme as Marine Le Pen as president. , theu look at the values opinion in french society, the probability is low. But the risk and the damage that she could do is very high. Basically, the Euro Construction could be put in jeopardy by a victory of Marine Le Pen. Mark in the meantime, the economy, according to the data, is showing signs of life. Isnt it . Is this a false the on or not . Holger this is not a false dawn. The French Economy is expanding at a rate which is probably consistent with its longer run trend. If we get from either macron or fillon significant economic reforms, then next year the French Economy could accelerate to 1. 6 , in line with the german trend growth. Andlways talk about the le risk and this is a huge risk. We should also talk about the opportunity. If we have reforming france, a stronger france, next to a strong germany, then overall europe could look significantly more coherent and strong. Mark francesco, does the prospect of a strong france and germany, is that an exciting prospect for you . Francesco absolutely. This could be the turnaround against populism that we have been hoping for. That would make the entire situation of the euro much, much better. Mark thank you, sirs. Holger schmieding, chief economist at berenberg. Trench esko poverty a will stay with us. Francesco papadia will stay with us. The u. K. s biggest provider was acquired by bt group. We will ask how it is going. This is bloomberg. Mark time mark barton in london. Lets get the bloomberg first word news. Heres nejra cehic. Nejra the London Stock Exchange says its tie up with Deutsche Boerse is unlikely to proceed after a new hurdle signaled a potential end to the efforts to create a dominant european exchange. European Union Officials have requested the lse divest. To said it couldnt come it such a divestment and wouldnt submit a remedy proposal. The u. K. s house of lords start a detailed examination of Prime MinisterTheresa Mays Brexit legislation today. A number of amendments are expected to be put forward, including one which would give parliament a binding vote on the final brexit deal. The pound is down against all its major peers after a report said mays office is preparing for scotland to call another referendum. The independent french president ial candidate Emmanuel Macron has won a third endorsement in a week, suggesting he is favorite to win the election. Macron is seen challenging Francois Fillon for a place in the second round with far right Leader Marine Le Pen expected to win the first ballot. Shes currently expected to lose in the second round. President of south korea has denied involvement in wrongdoing. Tocites her written comments the constitutional court, which is holding its final hearing on her impeachment. Suspended over a scandal about undue influence involving her confident and some of koreas biggest companies. The court will rule on the legality of her impeachment within two weeks. Finland has urged europe to increase nato contributions and focus more on security as the continent grapples with political turmoil. Toldountrys president bloomberg that once britain leads the e. U. , the remaining members must focus on t