this is bloomberg "surveillance ." on the show today, we are joined by the global head of g10 at bnp paribas. we'll get to them and the second. first thing is first, let's quickly check on your data. this is the picture for stocks. now, investors are trying to be in a holding pattern ahead of the federal reserve meeting next week in which policymakers are expected to raise interest rates. a key function on the bloomberg terminal. it gives me a 99% probability. 200% probability of a rate hike but who knows? on the back of that, the stocks 600 practically flat. so, stock have been fluctuating. asian shares climbed after we had this import figures. treasuries edging low and the dollar strengthening and watch out for pound. 1.2167.rsus dollar nejra: it is a merge that donald trump met last april with the russian ambassador despite claims he had "zero involvement with russian officials." attention to his encounter with him resurfaced after revelations of five members of his campaign team had contact with him before trump took office. the u.k. prime minister has michaelrmer deputy p.m. heseltine after he led a 13 strong revolt in the house of secondoping to inflict a defeat on theresa may. the upper chamber reroute the in to guarantee parliament meaningful vote on the talks be telling any final agreement and stopping the premier walking away without a deal. china plunged to a $9.2 billion trade deficit in february, its first negative reading and three years. as imports surged by 31%, almost double what economists projected. the lunar new year holidays that fell in january helped to distort figures. for its longest running economic growth and a decade. a revision of fourth-quarter gdp to 1.2% sets the scene for a fisfth straight period of growth. china's foreign minister has proposed a plan to help ease tensions between north korea and the united states. china is seeking to revise talks as kim jong un push for more pushear weapons expand its nuclear activities in seth curry. >-- in south korea. >> it could help us break out of the security impasse and bring all the interested parties back to the negotiating table. u.s. federal reserve is likely to begin raising rates as inflation and growth speed up, according to the manager of the double line total bond fund. the fed's next rate decision is next wednesday. global news 24 hours a day powered by 26 hundred journalists and analysts in 120 countries, this is bloomberg. francine: thank you. the u.k. chancellor of the exchequer is well-placed to whether the challenges of breaks it, -- of brexit, he says. he is expected to deliver an upbeat assessment with an upward revision and better-than-expected government borrowing numbers. bloomberg's anna edwards is at westminster this morning. what otherbrexit, clouds could be on the horizon for the u.k. economy? anna: thanks. we heard from snp. -- s&p. they see it gradually losing momentum. we get to philip hammond later he will talk about making and keeping the economy match fit for the brexit negotiations. he will paid a strong picture of the u.k. economy. it has outperformed expectations and outperform the expectations of the office of budget responsibility, and they are the body that sets the forecast from which the government dated its tax-and-spend plan. what should counselor hammon focus on? let's get voices on this story we are joined by lady barbara judge, from the chair over at the iod. great to have you on the program. one of your big issues at the moment is around taxation and the way that work is taxed. we might hear a little bit about that today but there is a commission coming in this summer. >> first of all, we think that there should be, the tax commission should look at the whole system. we have an old tax system for a new economy. in the short term, we are worried about the business rates for small businesses and the rates are going to go up. we're worried that the high street is going to be decimated. we think that small businesses with properties up to 100,000 pounds should have business rate relief. then there should be this tax commission that should make our tax system -- anna: you say it is an old system of taxation for a new economy. looking at the gig economy, what needs to happen? do we need to see self-employment taxation rates the same as others? course, we need self-employment rates at the same rates. we do not think there should be a benefit to one kind of employment or another but this is a platform economy. there are people working a big warehouses that have low rates. lowertreet stores have rates. the whole thing needs to be looked at. different kinds of working, gig economy, digitization, all of those things commanded new tax system that looks forward and not back. about corporation tax. we heard from the government they made a pledge to kpeeep the u.k. at the lowest corporation tax and the g7. we know donald trump has some big plans around corporation tax. should the u.k. follow the u.s. lower? >> i believe so. we have said we are going to be the lowest jurisdiction in the g7. hedonald trump does what says, moves the u.s. to 15%, i think we should follow suit. we should be at least as competitive as america, and at least as competitive as any other nation in the e.u. the u.k. should be open for business and business tax is one of the most important things that businesses look at. anna: theresa may talked about being open for business, and talked about helping those families who feel that the economy does not work for them. does cutting the corporation tech summit something that well -- >> if we bring more business to the u.k., we'll create more jobs in the u.k., which will help everyone. anna: another thing we might hear about today is maybe around infrastructure or actions to try and boost productivity. if you were to try and fix the u.k. economy away from the taxation story, what would be the kinds of impacts? >> > what we have been calling for for a while and i believe it is more relevant than ever is to increase the cap on the annual investment allows which will let small businesses invest more money in their business right now. after all, what people are worried about is uncertainty. they are worried about brexit. they are differing decisions. if we raise the cap to 1 million pounds a year, then there will be an impetus for small businesses to invest now. and that is, after all, what the basic business of the u.k. is, 80% is small business. say say see the u.k. economy losing momentum. that is not the picture the chancellor recognizes. that are members of your institute, do they tell you that they are losing momentum? that.y do not tell us they are upbeat. our members are basically upbeat. they are saying they are looking at the indicators, they have not seen signs of things going down at the moment. they are differing some decisions. it is uncertainty that is making them puase, -but that- pa use, but they are still feeling good about the economy. are they say about the house of lords yesterday adding amendments to the legislation that has to go back to the commons? we could face delays around the self-imposed deadline of prime minister may. is it the end outcome that matters? >> 80% of our members have something to do with europe. they invest there, they have employees or sell there or buy there, so they are very interested in europe. our members are worried that we have a good transition that we do not end at two years if a deal has not been done. they want a good deal. they want to extend the time period if it takes longer to negotiate are leaving the e.u. and also our new trade, the way we do business with the e.u. those are two big deals. and if two years does not work, we wanted extension because we want a good deal for ever and. we don't want to be chopped off and fall off the cliff. anna: transition is what mattered. thank you for joining us. francine: anna edwards from westminster. for our u.k. viewers and listeners on dab radio we will talking the budget live in an full at 12:30 london time. now to our guests. thank you for joining us. so, chancellor hammond has conceded that the brexit road will be rocky. how difficult is it to predict the future in terms of economic -- of the u.k.? >> it is very difficult which is why the market has already been wrongfooted by the recent strength we had any economy, which is why what he is going to be able to report is a smaller deficit than expected for this year and smaller deficit for next and smaller borrowing for next year and for several years to come. surprise, i guess, of a lot of policymakers as well as a lot of the market, we have surprised on the upside. the fear in the marketplace, i guess, the fear among policymakers, is that going forward we are going to surprise on the downside as negotiations begin to take place. francine: is there anything the budget that would help mark carney and what he is trying to achieve? >> unlikely, i think. i think where mark carney is, looking on a couple of years out view of inflation, there is still this fundamental idea that with high inflation now, real disposable income is going to cap and that's going to inflation of your you have seen the movement in the breakeven inflation market beginning to reflect that story. we're having risen quite high and dropped down a lot. francine: do you like what you see in the budget so far, what has been leaked or hinted at by the chancellor? and if there is one uncertainty that would make you decide to go short or long on pound, what would that be? simon: it is clearly the brexit negotiation's. we see very little appetite in pretty much any u.k. asset with the exception of real estate. the conversations of global investors are about if they are about u.k., they are about brexit, because it is hard from the outside to see how this ends up in terms of the negotiating position, they are starting with negotiating against 27 countries. this is one sequential rather than parallel negotiation. francine: but, at the same time, theyuld end up -- iuf focus on two or three things that they want to safeguard. there is no turning back. and that will have an impact on how mark carney does monetary policy. laurence: i think the what you do, that when the future is so unclear or if you are a policy maker, i think you sit and you try to react rather than to preempt, exactly. i think that is what we are expecting from bank of england. arguably, if they had known the economy would not have been as robust, they would not have attacked the market so vigorously with lower rates and increase q.e., but they did it. q.e. is over. it takes quite a lot to go further and start to push rates up. francine: are you expecting, what you expecting this year, nothing from the boe? allaurence: nothing from the bo, buwhich is remarkable. with the fed going next week and four times in 2018. to signalcb beginning the end of increased accommodation. the bank of england sitting at zero change is really a remarkable dovish statement. francine: what you saying your clients are due in terms of adding to assess her getting out of it? simon: buying a diversified portfolio. he uncertainties, that is the advice we give people in every jurisdiction. with respect to the pound, we see that the bottom end of the range. we have a range of 1.20 to 1.30 for the next six months, although it is not a high conviction opportunity we are proffering broadly. u.k.t's about with clients, talking about diversified portfolios. we're taking our biggest bets on u.s. equities and global equities as a whole rather than u.k. specific assets. francine: thank you so much. they both stay with us. a reminder. if you are bloomberg customer, you can watch the show using tv go. if you log on to your terminal and the video stream with some rts. cool analysis and cha you follow the charts and the functions and right there on the bottom of the screen underneath the video you can i.b. the producers and me and ask us to ask questions to the guests. now, stay tuned tomorrow when i will be speaking to j.p. morgan's ceo gaming diamond in an exclusive interview. that will focus on president trump's first 100 days, brexit and the future of banking. timeis at 12:45 u.k. tomorrow was the timing for china's lunar new year responsible for a surge in imports last month? this is bloomberg. ♪ francine: good morning. this is bloomer "surveillance. -- bloomberg "surveillance." happy international women's day to our viewers. let's get to the bloomberg business flash. german sportswear maker says income from businesses should rise 20% to 22% on average up from a previous tradition of 15% for the company plans to sell the ccm brand as it focuses on its namesake label and reebok. we will speak to the new ceo at 11:35 u.k. time. for ahares have fallen second tape or the owner of the social media platform close 10% lower over concerns over its growth trajectory ways on investors. 30%rought the decline to and the new market value to below $25 billion. ferrari has launched the speediest production car in its history and it has sold out. $350,000. and that is the bloomberg business flash. a 9.2ne: china plunged to billion dollar trade deficit in february as imports surged. that was in part due to the lunar new year holidays which fell in january, helping to distort figures. japan is poised for his longest run of economic growth after an upward revision of gdp. asias bring in our ags reported. a rare trade deficit from china. is this a one off? >> it looks to be. this is the first time we have had in about three years and it is an aberration. most of this happened because last year the lunar new year holiday was in february, that skews those year ago compared is. thsis year, it was the end of january so we had a full month of production and buying in federal. imports surged, exports clipped a little -- slipped a bit. but you have to put january and february together and look at those comparatives. once you do that, you get a picture of rosy times on both sides. domestic demand suggesting maybe there is some move in the property market. that is looking more sustainable than some had worried about. on the international front, there looks to be some good global demand, which is t sustaining demand. even in that deficit month, there was still a trade surplus with the u.s. does not look like we will be seeing this as a way to alleviate any of those concerns over trade and fractions with the donald trump administration. someine: japan also posted decent growth figures. our things finally looking rosier there? malcolm: things are. we are looking there at about five straight quarters of one or more percentage growth. that is the first time we can say that since mid- 2000's. there it is an export picture, as well. the missing picture is wages growth, which would lead to a pick up in domestic demand. it is about company profits and global demand for japan at that stage. maybe that wage pick up, we can look to a rosier picture by japanese standards as well. francine: thank you so much for the update. our asia economy reporter in hong kong. still with us are our guests. we want to talk a little bit but what can ecb, we expect from governor corrode overall -- governor kuroda overall? will he pull it off? simon: i think there are still signs that growth is better. phenomenal growth is a little bit better. has to be seen in a subdued japanese context but what is japanese monetary policy? it is extraordinary with rates negative up to 10 years. we think during the back end of the third quarter they get to raise the 10 year yield target by 30%. that is an optimistic story for us. francine: so, if you look at the central banks of the world, and let's take it region by region, the fed, equities are high, although they are touching down, then you have japan with a cap, the ecb, a whole lot of problems with politics and the bo. where do you want to put your money? simon: going back to year ago, the meme was still that. fast for today, we are seeing picking up in markets. people are buying stocks and sectors because of fundamentals. you look at the fundamentals globally, they are pretty good. it is not that japan is growing. three year high in terms of global manufacturing. and we had economic data come in at or ahead of excitations in europe and in the u.s. and much of asia. we had the citigroup global economic surprise index replicate in. we expect earnings in the u.s to grow 11%. rather than central banks determining investments, it is about where we see fundamentals and that continues to make a case for the u.s. u.s. equities and u.s. high-yield and makes the case bradley for global equities where we also have an ovary -- an overweight. francine: is there a chance that the fed does not hike next week? laurence: there is always a chance but it is a very small chance. something amazing would have to come out of payrolls or something. given the mood music, they look like they are definitely going. simon is right. we, the markets, have been following central banks during the post-financial crisis period. they have been pushing the levers to try and get the world economy and the markets moving. now the economy is moving, the central banks are more responding to what is going on. so, the interesting thing about the ecb meeting tomorrow is the ecb's put in this big framework, keepingoing q.e., rates low, you can rely on this guidance. now they find themselves in a position where probably the economy does not justify that same level of pressure. so the key thing for us, for example in the ecb tomorrow is the opening statement language, the first paragraph about how long are you going to keep these race changing? are you going to give them the same or take them lower, which is what it says at the moment? will it keep going beyond the end of q.e.? how does draghi move from this position to a position which gets to where we think they want to go which is they start to hike the deposit rate in september. the same thing for the fed. at least they are in motion. the question is -- are they going to accelerate? ecb wait doesn't the to see what happens in france first? is it difficult to put monetary policy for different countries, especially when you have germany and france, which are the biggest at the moment? laurence: in any case, it will be baby steps. we're not talking about when we eventually think they moved to hike rates, we think they moved by 10 basis points on the deposit rate. before they get to that, they are going to start changing lang so that move is not a surprise. --- changing language so that move is not a surprise. it is back to the forensic examination of central banks. of thewith all uncertainty we have politically, with the issues we have to respect to the u.k. and the exit and the economic data, we are still talking about headline inflation of 2% or core inflation not changing for three months. this is the wrong environment for the ecb to do anything dramatic. francine: turkish lira depreciating past 3.73. ♪ . ways wins. especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. ♪ francine: i am francine lacqua in london. the turkish lira depreciated, 3.73 has the dollar. you see the huge swing in the last couple of minutes. i brought back a longer-term chart to early 2016. currently, level 2.373. what we had today, we heard from the turkish central bank governor who said the regulator had moved to tighten monetary policy and reduce if needed. we had consumer prices today. those rose an annual 10.1%. talk about inflation, more than twice the banks annual target. we will talk more about this shortly but firstly the first -- bloomberg first word news. met last april with the russian ambassador despite claims by his spokesperson that he had zero involvement with russian officials during the campaign. i tinted to the encounter resurfaced after revelations last week that at least five members of his campaign team had contact with the ambassador before donald trump took office. the u.k. prime minister has fired government advisor michael a 13 strong, he led revolt in the house of lords, helping to inflict a second brexit bill defeat on theresa may. it rewrote her draft law to guarantee parliament a meaningful vote on the outcome of exit talks, potentially leading any final agreement and starting to permit with walking away without a deal. china plunged to a $9.2 billion trade deficit in february as imports heard 38.1%. lunar new year holidays which was in january this year held. -- help. japan poised for his longest run of economic growth in a decade, fourth-quarter gdp at 1.2% on an annualized basis set the scene for a fifth straight time of growth, the longest streak of expansion since six quarters of .ame in mid-2006 the chinese foreign minister proposing a plan to ease tensions between north korea and the united states. china is seeking to revive talks with north korea powerful nuclear weapons -- korea could suspend its nuclear missile activities in exchange for a fault of the u.s. -south korean military exercises. that could help us break out of the security impasse and bring all the interested parties back to the negotiating table. >> the u.s. federal reserve is likely to begin raising rates sequentially as inflation as growth speeds up according to the manager of the double life overturned bond five. he says a sequential type pattern is developing which is almost old-school, the fed next rate decision is next wednesday. global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. this is bloomberg. francine: thank you. less than four weeks ahead of the u.k. trimesters theresa may, beginning the brexit profile, philip hammond will deliver another be update on the economy. will he balance the demand for voters and of businesses? back to westminster where anna edwards is standing by. the federationby of small businesses who worked at what small business wants to get from the budget and how they are faring. vu, we talk about business rates and how the burdens balls on small business -- fall on small business, today we may get some news, hopeful? >> antigrowth tax paid out by any business before it makes one pound of sales. it is great that the chancellor appears to be listening because so badly who are affected by the re-, it is unsustainable and they cannot cope with three or four times as we are hearing from the u.k. -- across the u.k. here in london, calling for increased threshold so smaller businesses can cope with the re-evaluation over the next five years. this is on top of increased costs for those businesses paying the national living wage. a 4% increase coming the first of april. we have the ongoing increases with an enrollment and the vast majority of small businesses having to cope with that and the time it has taken, as well as because. -- doingst of business business in the u.k. key to small businesses. i was talking to directors and the tax system is not a system for a new economy. is it something you have been looking at? how we make sure an economy is increasingly self-employed economy, how we make sure the tax system reflects that. is somethingcation we have long been tasking the treasury to look at. if it is easy for a business to comply, you will get more compliance and more revenue. reduce the tax base is the message. reduce the cost of doing business. equally, you need to reflect the self-employment within the tax system. it does not do that. you have different levels of employment across the self-employed and this is not reflected in tax. the welcoming thing is that government at long last seems to reflect that but occasional training is and should be equal to academics and we wait to hear what the chancellor will an outcome of the new tech skills later today. >> shakeup a technical education in the teenage years. talk about brexit. your members are waiting like everybody else to find out the details of what brexit looks like, apart from brexit means brexit. this impact your businesses, in terms of migration, they want -- to come here in the future. of our members use immigrants, eu and non-eu within the labor force which needs to be protected because we have not the skills in the u.k. to fill those roles. equally, access to the european market is very important for our members, 20% export and 30% export and import, they are being impacted by the increased cost of goods and services coming in from overseas. because of the devaluation in sterling. all of this coming together is the perfect storm and i hope the chancellor will reflect within whatever he announces so that we see some help for the smallest businesses who are often disadvantaged by the tremendous increases they are currently facing. brexit is something to happen, not on the here and now, the domestic economy causing the problems. >> how are businesses hearing at the moment, how are small businesses doing? the s&p says a gradual loss of momentum in the u.k.. bounce backeeing a and confidence level since quarter four of last year which was at its lowest level for four years. north of the border into scotland and in the other deval patrick, confidence is falling which is not healthy for the wider economy. >> thank you for joining us. mike cherry from the federation of small businesses where he is the national chair. francine: thank you, what a great conversation. , plenty coming up, including wikileaks new report that says the cia fax into ecbnes and smart -- and the decision day tomorrow, what to expect from mario draghi and all the market expectations. coming up on the next hour, the latest on the house republicans health care plan and we talked to the ideas ceo -- and he does ceo -- adidas ceo. ♪ ♪ francine: this is bloomberg "surveillance." i am francine lacqua in london. run: a four-day losing seems to have come to an end, stoxx 600 up for the first day in five. it was down earlier, a fifth day of the client, were stretches november 6 with investors pausing ahead of the fomc meeting next week. they day in china and japan. china told us imports surged from a year earlier and the -- a trade deficit in february. analysts said seasonal factors withy explain the swing imports jumping 38.1%, double what economists projected. exports slipped 1.3%. this is in u.s. dollar terms in february, less than the estimated 14% expected which left a trade deficit, the first negative reading in three years. economists said results were skewed because of the weeklong lunar new year holiday. big day in japan, economic growth, we had some, revised upwards for the fourth quarter in 2016. export driven business spending .ffset sluggish consumer demand gdp expanded 1.2% on an annualized basis from the previous quarter and the three months through december, japan's economy expanded for four consecutive quarters, the longest run in three years. if we go for five, the best time since 2005-2006. the yen decline helping corporate profit, columnist skeptical that companies will pass along to workers by significant wage gains. big game, shares up 6%. the german sportswear maker raised its sales and earnings targets through 2020 and gave a 27 -- a forecast ahead of analyst estimates. what a run adidas is having under the new chief executive. francine: the latest on your mark -- market. we give these have published documents that says the cia have the ability to break into ios and android mobile devices to monitor messages and smart televisions. that get more with our technology reporter. you, we were talking about the snap ipo, different, 8000 wikileaks coming out, top of the list is the fact that they can spy on everything we have. did we know? or did we not want to see it? >> a little bit of both. things that were talked about at security cottages and among the hacker community but to see it laid out in such detail i think is a bit jarring, particularly for the companies involved. it matches up the tension between silicon valley and the government which traces back to the revelations of edward snowden. another fight between apple and the fbi about trying to get messages involving san bernardino shooting in california. francine: what happens next? does silicon valley ceos sit down with the intelligence community? will there be more of an investigation? >> there will be another round of hand wringing which the companies will try and ratchet up the security. many companies put out statements saying they are looking at all the documents to see what the vulnerabilities are and they will respond in kind. it becomes a bit of an arms race where you have companies like apple and other messaging services that town security as one of their main features. to be able to continue to do that becomes a -- they ratchet it up and the intelligence services, which are trying to get this information for the reasons they do, try to get inside of it. francine: one of the stories that caught my eye is that cost sense of headaches let's find televisions, the companies that have most to lose, samsung has had such negative headlines in the last will of orders him it is this the last thing they needed? >> not a headline they would have liked to seen. the television looks like it is off but the intelligence service can get in. >> differentiations between the companies affected? operating models at many companies, is anyone excluded? >> it is really across the board. this is the modern form of communication. in some ways it is natural that the intelligence services would try to get into it. it gets into this age-old debate about where having privacy versus security. there is no clear-cut line often about what is the perfect give-and-take. this is another example. francine: what is your take on the industry. away from wikileaks, i do not know if it has a direct impact on the share price. we had the snap ipo's, our valuations looking frothy or do we have to value companies? >> when we look at u.s. tech, a range of companies, most of which i strong profits and cash flow generation and different valuation multiples. we fake tech continues to look very reasonably priced. acceleration,t of not just the u.s. but global growth showing on the screen behind. that's to be a good environment for tech more broadly. i -- we are not suggesting buying u.s. tech sector are 90 plus times second -- francine: evaluations are looking at trends? if you look at automation, the driverless cars, do you assume google will be at the forefront of that and tried to get into those companies in advance? >> yes, driverless cars, we respect what it means for the thate and google -- output -- a better -- alphabet -- where -- industryng leaders network, large private -- runningrs look cyclical businesses globally at a huge amount of interest in terms of technological trends. a whole range of ai related companies with 25 members, before that at m.i.t.. to not onlyt in how stave off competition from technology companies, but how to embrace it and improve efficiency. try to predict the next 5, 10 years at a single company level. francine: let me bring you back to my chart. you see the momentum. we charted the citigroup global earnings revision index. this supports the rally in global equities. or invalidate some of the rallies, saying earnings are going up but being revised upward. this is the number of stocks that analyst raise the profit estimates for firms worldwide. a global index that gives a snapshot of what analysts expectations are. what does this tell us? how much of this is on cost cuts and how much on actual growth? >> revenue base and earnings base. operating leverage playing a role. this chart is interesting because people talk about a trump rally, the improvement in earnings and earnings revisions has been going on before donald trump got in. francine: kind of matches? >> the trent actually has been improving all through 2016. francine: starts in december of 2015. >> we overlay that with another citigroup index, the surprise index which is pretty similar, have a seven-year high with respect to economic advisers. the real story this tells us is people got to negative. secular stagnation, the world was only ever going to be below trends and we had to read treasuries at 1.5% had been turned on its head as we go to in world with inflation back in europe and growth across the world and earnings revised upwards. that chart along with the economic surprise is supported for a general risk on stance within allocation. francine: thank you very much. simon stays with us. , tomorrow, speaking to the jpmorgan ceo jamie dimon and an excuse of interview. we focus on global banking and the future of banks, the president's first 100 days and brexit. that is tomorrow at 12:45 p.m. u.k. time. will mario draghi stay put on stimulus, we will discuss that next. this is bloomberg. ♪ ♪ francine: this is bloomberg "surveillance." let's get to the bloomberg business flash. racist sales and earnings forecast to the end of the decade, the german sportswear maker says income from continuing businesses should rise 20% to 22% a year on average through 2020, up from a previous prediction of 50%. they plan to sell the hockey brand as it focuses on its namesake label and reebok. we will be speaking to the new ceo kasper rørsted at 11:35 u.k. time. stat shares have fallen for a second day in new york trading, the owner of the snapchat social media platform closed almost and percent lower as concern over its growth trajectory weigh on investors minds. the losses brought the decline since front of morning's high didr mark to almost 30% and little to their market value to below $25 billion. the mostas lost production cost in its it -- it cost more than $300,000 and comes with a 6.5 liter, 800 horsepower engine which get from zero to 100 kilometers per hour and as little as 2.9 seconds. we get the ecb's latest policy decision tomorrow, mario draghi will probably -- underlie price growth remained subdued even after inflation accelerates to 2%, nominally above the central bank's goal. does the latest pickup mean his criteria of being broad-based, durable, self-sustaining, and durable over the medium-term. we talked about the ecb. the big question is political risk. how will mario draghi navigate? how many questions will be get on mario then -- maria the pen?> simon: core inflation for the year -- has not moved in the last three months. not facing a behind the curve rampant inflation scenario. but that against the backdrop of the upcoming political events and holland and if france, let alone the triggering of article 50 would seem unlikely that mario draghi will reverse course with policy at this meeting. get through the political events and potentially announced it if the economy improves. it will be september when tapering of the currency -- billion euro a month policy starts and commented place of the -- francine: how do you see politics playing out? -- german yields already in negative territory to protect yourself against eventuality? simon: tried to head to these events, in the run-up, the hedges on the political events come very expensive. recent history, all the events we saw last year have burned investors from anyone who put hedges on lost money as markets did. with the exception of cable around the brexit vote. rather than discreetly says these events, we are trying to mitigate the risk by diversifying portfolios. diversification, having high-grade bonds and a diversified exposure to risk assets is the best hedge for many client. francine: thank you for joining us. bloomberg surveillance continues . tom keene joins me out of new york and we will bring you the latest news on the u.k. budget, brexit, and what it means for the markets. global stocks fluctuating and the pound and oil retreating. we are seeing lower trading. -- data shows japan's economy expanded more than initially reported in the fourth quarter. stay tuned tomorrow when we speak to the jpmorgan ceo jamie dimon and an exclusive interview at 12:45 p.m. u.k. time tomorrow. this is bloomberg. ♪ ♪ francine: wikileaks says the cia can hack into your vote and your smart tv as a report suggests president trump met with the russian ambassador during the campaign. the lunar new year celebration help narrow china's surplus with the u.s. as imports rocket. chancellor philip hammond dusts off his case as he prepares to deliver a brexit budget. this is bloomberg surveillance. i am francine lacqua and tom keene is in new york. we talk bridget -- brexit, we look to your u.s., wikileaks, and what we did not hear from president trump. tom: the mix of it all, especially in the united kingdom especially but we've heard from lloyd king, the ramifications of a brexit budget. first, let's get to the bloomberg first word news. here is taylor riggs. : taylor china calling on u.s. and north korea to avoid a head-on collision, the chinese calling on north korea -- the u.s. was -- china's foreign minister wants to get north korea back to the negotiating table. in the u.s., a new twist in the covers he of donald trump's presidential campaign and the russians. last april, the president met with the russian ambassador even though the spokeswoman said he is zero involvement with russian officials during the campaign. white house officials say the encounter was brief and non-substantive. and europe, theresa may is fighting back against brexit revels in her own conservative party. they handed her a defeat in the house of lords. the upper chamber we wrote her brexit bill to guarantee parliament a meaningful vote on the accounting -- on exit talks, she will try to get the changes reversed when it goes back to the house of commons. saudi arabia, then and russia are have a united front on russian -- on oil cuts. the saudi oil minister says global crude inventories are not going as quickly as he expected. prices are struggling to rise in part because of rising u.s. oil stockpiles. global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. this is bloomberg. .om: thank you equities, bonds, currencies, commodities, sterling leading the way of discussion this morning, the curve not doing much, a lift up, tens and twos hidden job stay in america on friday, the euro one of 5.53, shows dollar strength. the vix 11.26, a 121 .59 was low on sterling. i put in euro-sterling because i have not looked at it in a file. -- while. francine: i put the dollar-sterling, so did you. i wanted to miss in crude because the pound is retreating, global stocks are fluctuating and i think there is a little bit of a holding pattern in front of the federal reserve meeting next week. policymakers are expected to raise interest rates but i guess investors are in a little bit of a wait and see mode and treasuries lower. sterling. look at this is a chart we know well, june 23 at the 1.46 level, down we go. the shock we go of a referendum. we curve down wants, we curve down twice and now a third time. etc., a huge119 deal, we are not there you. francine: i had a pound bloomberg which i changed. i am looking at an index which, until this morning, i did not know this, i like it very much. citigroup global earnings revision index. we have been looking for a long time at this rally in global equities and it seems that they could be getting validation because of this. this is the number stock analysts are raising profit estimates for. they havesically what been doing over the last two weeks to three weeks. clear momentum pre-donald trump 2016 started in january of . the revision is upward and you see the momentum. tom: very cool. francine: cia hackers have developed tools which let them break into devices from iphones and samsung smart televisions to monitor conversations and messages. this is according to the latest reports from wikileaks. .oining us is stephanie baker thank you for joining us. wikileaks released yesterday, 8000 pages. that surprising intelligence agencies could be monitoring your phones? stephanie: the big story is not that the cia is hacking people, a lot of people thought that. the extent of it surprises people. the biggest story over the next few days is the fact that the cia, the agency charged with finding and keeping our top secrets cannot keep its own secrets. they have a leak at the heart of the agency which is the story that will play out. francine: i have read a lot of reports and they are either saying it comes from russia or a leak inside the intelligence. when do we know where the leak came from? stephanie: it will be a while before we get to the bottom of that. donald trump -- this puts it in an uncomfortable position. he already has a tense relationship with the intelligence agencies. this could put him on a collision course with the companies involved who are now being defensive, saying their security is tight and that consumers should not worry. trump, that, for donald who has in the past praise themeaks, saying he loves and that their beliefs hillary clinton's emails. this puts them in a difficult position. tom: i look at wikileaks and my basic observation is that most people in america are not engaged in this. they do not care. this?ould we care about there is no news and not another edward snowden. correct me if i am wrong, why can't the public get engaged in this issue? stephanie: i think it is a big issue for consumers who have -- should be concerned about the privacy. that is why people should get more engaged. as the story ball, will -- you balls, will understand what -- can do andt the cia companies will try to increase their security and engage with the government on what is allowed. tom: how is the president's week going? i read six articles on the health care bill and had to have two martinis to get through it. what about the president's week? a hugeie: he is facing challenge with undoing obamacare, it could happen more ugly than people expected and replacing it will be difficult. as we saw from the comments from rand paul. he seems confident he can get something through but this will be tough in congress. francine: thank you so much, stephanie baker. when you look at this, is it noise or does it come back to the markets and your world of economics? >> i think it -- some things that come back to market in that if someone is watching for trouble, they will find trouble. bypeople secrets get leaked someone you think is just stirring up trouble, the ability to get but more broadly, if i walked from my office to your office, i think there is a camera on the every minute, i'm used to it. does it change the relationship or the institutions looking at donald trump? have you heard anything about what kind of president he will be in the next three years which impacts the economy? in power it is more complicated and different, you have to figure out compromises and live in a world with you cannot just come out on one side. what it is like to think before you act. in this presidency. over time. that may be a good thing in terms of new wanting some -- signal?t does sterling the third time we rolled over and dot on sterling. what will be the significance when sterling breaks 120? >> not sure huge significant. tom: what does a 116 sterling mean for francine lacqua? for an holidays are more expensive than they already are for us. biscuits.and french kit: largely it is lit so they cannot happen right now. -- lent so it cannot happen right now. the budget, we have a chancellor who has nothing to give us of significance. she does not want a budget, revising growth forecast up, a deficit forecast is big enough so that there will be no generosity. that means rates will not be going up anytime soon. because we're talking about high rates in the united states, the pound is heading for this modest, slow and we will see how far it goes. francine: it is difficult to predict what will happen to the u.k. economy given we have not started negotiating with the eu. we have no blueprint. kit: the chancellor is tied in the extent that he needs to be cautious to have ammunition in reserve and for the rest of us, the reality of the sterling fall is that employment growth is slowing, real wages are being eroded by inflation and consumer spending is going to go on slowing. even before any uncertainty comes in, we are on a gradual down fast to the economy. francine: you are staying with us for the hour. coming up tomorrow, we speak with jamie dimon, virginia morgan ceo at 7:30 am in new london, 12:30 p.m. in talking trump, brexit, and the future of banking. this is bloomberg. ♪ >> this is bloomberg surveillance. let's get to the bloomberg business flash. france late -- and a deal that could affect about $2.4 billion, according to people from there with the matter. credit agricole earns a 31% stakes in banks audi, the french bank has been cutting costs and refocusing on its main market to get increased growth. the pay gap between american ceos and their workers keeps getting bigger. chief executives at 42 company saw their pay packages raised 5.5% last year all workers received a 2.8% pay hike. this is according to a consulting firm. has raised sales and earnings forecast are the year 2020, the german company known for its athletic shoes says probably should rise as much as 22% per year. the new ceo announced plans to sell its ccm hockey unit and focus the copy on his namesake label and the reebok brand. we will talk to the adidas chief executive at 11:30 in london. that is your bloomberg business flash. francine: china's trade surplus with the u.s. has narrowed, it may seem like good news for the new administration with a tough stance on baking pretty practices at the data impacted by the lunar new year holiday. our china economy reporter is in beijing. and with us is kit juckes. how much of this was a surprise and is it really because of the chinese new year? >> i think so. in the first quarter, china typically throughout bizarre economic readings which is because of the lunar new year factories closed down for a whole week across the country feared it can happen in january or february so it makes the year on year comparison difficult. we will have to wait until next month when we can see the whole first quarter to get a clear picture of how things are trending. tom: what is the mood in china? when i look at the people's congress, the gloom over growth, etc. what is the mood on the streets? >> the mood on the streets is pretty good. the economy is headed for growth of at least 6.5% over the next year. consumption is rising. good,lly things are very compared to most countries in the rest of the world. much.ne: thank you so our chinese economy reporter. how do you view china? what have we learned in the last week? worried about the nonperforming -- everything seems to be firmly in control for the moment. kit: if we did year-over-year trends on the traded up and try to is a january, february together knowing we need the march numbers to make a full picture of what is going on, there is some life in imports. global trade for growth which looks to be picking up and positive news on global economic activity which appears to be picking up. , a lovetake those import price pressure in those terms.nt numbers in yuan the chinese economy, you get the sense that at the price of borrowing more money and having monetary policy to accommodative again. they have managed the slowdown again and have managed the capital outflows that were eroding reserves. the long-term problems have not got better as a result. for now for the rest of the world, if i was an australian exporting to them for a net help to the global economy. francine: how do they view donald trump? a businessman they want to strike a deal with or could he go badly wrong? kit: they are learning how to deal with them in my sense is that, as they learn, i am not sure china was the big winner of the transpacific trade deal. the not having that and going back to one-on-one deals with china with the united states is not necessarily the worst idea from a chinese perspective. i do not think they are in a bad place. of: filter in the ratio china gdp to u.s. gdp. i do not have a chart but i will make it. i'm sorry, 6% growth is huge growth relative to the developed world, isn't it? kit: that is why it is slowing, you cannot have the world's second-biggest economy in an international global economy growing twice or three times as fast as everybody else. it will be impossible, away from obvious things like the population growth having slowed so much. that is why their economy is growing, because it is maturing and it continues. necessary, the growth is still strong, they are still catching up with the u.s. and overtaking everybody else quickly. tom: i look at it, the question is, what do you do with brendan the, -- renminbis, how you play it as an managed currency? kit: a difficult thing with a lump currency, everything is positive but the renminbi is overvalued and that is a problem for china competitively at this point. it is not overvalued by developed economies measures. you would not get that. there is stuff cheaper in china, not including cups of coffee and big coffee chains. those measures i do not think help. china as a currency has appreciated in real terms enormously against all of its big peers in emerging and developed markets over the last decade. that is a problem. it will need to weaken over the next couple of years. there is no pressure on it to do so now in an economic upswing. francine: kit juckes state with us. -- irow, we speak with will be in paris because later on tomorrow, speaking with jamie dimon of jpmorgan. we will have a guest post and thought french politics and talk inflation and recovery or not. to a former ecb president at 11:00 a.m. in london at 6:00 a.m. in new york. this is bloomberg. ♪ francine: this is bloomberg "surveillance." five for awarding must read. this come from that time for the morning must read. fromsay that with support a quarter of a population, the forces will be kept from governing i the reasonably european multiparty model which avoids putting stark binary choices before confused voters. people are trying to figure out, on the markets and economists whether marine le pen has a chance of winning. you look at a model that donald trump gave us or brexit when the markets did not want to believe it and you jump a shadows or say you discount completely. where do you stand? kit: you cannot discount anything completely. there is no doubt that the french political system makes it much easier to get a unifying group across all the political spectrum to keep out extremists and extreme parties from either side. that is what it is designed to do. a second go may help people take stock or not. it is less likely. a a runoff, you need to get lot of people to vote for you who are not thinking of voting for you in the first round. it is harder and harder is not a possible, particularly now. francine: i grew up with socialists and the other side, the republicans. now because of macron being independent, the lines are blurred, not a proper political party behind them. the that will make situation more confusing when we get to parliamentary elections with a leader who does not have a party behind them. we have to work with some kind of coalition government at the same time. before that, we have an issue for the old lines from our youth of right and left do not apply generally to how people think about politics less and less. we still think in terms of left-wing or right-wing but we do not know where to put populism because it is both. know, let's come back to kit juckes and talk about brexit and where we see sterling now. looking at the bloomberg , 121.63 -- terminal with sterling. the conversation with the secretary of commerce, wilbur ross, someone we have talked to many times, we talked to him on a host of issues, mainly on the commerce between the united states and mexico. one of the themes the president faces. a beautiful new york, very cold this weekend in new york. this is bloomberg. ♪ live-stream your favorite sport at the airport. binge dvr'd shows while painting your toes. on demand laughs during long bubble baths. tv everywhere is awesome. the all-new xfinity stream app. xfinity. the future of awesome. ♪ francine: -- >> this is bloomberg surveillance. here is her first word news. the president is throwing his weight behind a health republican plan to replace the affordable care act. the republican -- the president told rebel leaders -- republicans attacking the measure, one republican senator declare the bill dead on arrival. steve mnuchin struggling to get his fix for management team approved by the white house. safe they ares a too liberal or to wall street. senator john mccain says if wikileaks can hack into the cia, it can hack into anyone. they have posted thousands of files that said they came from the cia which says agencies hackers can break into devices ranging from smart phones to smart tvs to monitor conversations which could expose u.s. spy operations around the world. in asia, china has posted its first trade deficit in three years, imports exceeded exports in february while most $9 billion. economists say the results were skewed because of the timing of the chinese new year. when factories across the country were shut down. china is the world's largest exporter. global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: the u.k. chancellor philip hammond is set to give his brexit budget in two hours from now, expected to strike an upbeat tone and say the economy is resilient. let's get back to kit juckes on the u.k.. i know come wants to talk about sterling. what is the big unknown in the u.k. for sterling? a transitional deal or a safeguarding of the manufacturers for cars and finance? kit: it is one step further on from that, how does the transitional deal, the arrangements we get, how does that affect medium-term growth forecasts? the government is expecting some kind of a slow down now but if you look at forecasts, five years out, what they might've been about 2% growth, back to trend growth. the uncertainty is what are the risks that whatever deal is struck the average growth rate 2022 is a fair bit lower, that is the downside risk. francine: late -- the house of lords yesterday, there was a vote saying theresa may needs to consult parliament for any brexit deal. is this something that is worrying because she has less authority, or will this be overturned? kit: i think it will be overturned, they will put out a unified camp. i think it will play in the press much more. if you win a book by fiftysomething percent, it does not mean you have wholehearted for -- support to go off in one direction without consultation. all, is this austerity for 2017? talking about a new angle on austerity? kit: i think austerity is pushing it a bit far in the fiscalhat there is no generosity the way that people are hoping for from president trump. this is not going to be a generous budget, it is intended to maintain the downward part in the budget deficit to build in some slack needed down the road. tom: let's look at a chart but first the red box. we have video of the chancellor doing what mr. gladstone did a few years ago at downing street. these are live pictures, excuse me. waiting for the chancellor to show up with gladstone's red box. the symbolism of this, he gets a tear in his eye as he looks at the red box. here is the reality. .ring up the chart if you would an amazing once-in-a-lifetime chart. the difference in yield between the u.s. two-year and the u.k. two-year. back to 1992 when the u.k. yield is always higher than the u.s. yield except for these small moments. then things change. to see thearkable yield of virgins of a higher u.s. yield versus a lower united kingdom yield. that is the elephant in the room or the elephant in the red box for the prime minister, isn't it? kit: it is for the currency. has the biggest current account deficit of the major economies. yields in lowest real particular. .ow rates to support it how do you get those to fit together with the cheapest of the major currencies? how much cheaper does it have to get but that is continuous pressure on the pound. tom: that is the key phrase, a massive divide between those looking for weaker sterling, even one of 5, 110 as no layer. 110 as an outlier. was the cop didn't -- confidence the current rate will not -- current account deficit will not deteriorate? kit: it will improve over the next year or two because earnings will be brought back to the u.k. by the biggest companies, they will boost by the recovery commodity price. we will get an improvement but an improvement from huge two big -- huge to big. ugly on the it is other side, if the eurozone implodes, does brexit not seem suddenly like a very good idea in terms of growth prospect? kit: if the eurozone", changes -- implodes, it changes everything with the relationship between the u.k. and the rest of europe. there is a lot of political strength in the concept of the european union and the eurozone is part of that. there is fear about anything that on clicks any single architecture of postwar europe. how worried are you about inflation in the u.k.? inflation really hurting consumer confidence and household spending. kit: not worried about inflation in the long-term, unless you can get it through significant ways price spirals, you cannot sustain the rising prices. i am worried about enough inflation to squeeze incomes and slow growth. i give the u.k. several years of sub trend growth. tom: i want to show a chart, kit juckes is driving sterling lower. this is a boring intraday chart on budget worries and the recent 121.58., down to a bring this to europe. the idea that at the same time, weaker euro, weaker sterling. is that a feasible view into this year and into 2018? kit: it certainly feasible but i do not think the euro can be significantly weaker beyond different elections. unlike the u.k., or the eurozone, it has a huge current account surplus, they only keep the euro down on the back of very big interest rate differentials between europe and the united states. a huge appetite of europeans to buy foreign bonds while foreigners are shunning european assets. take away some of the political uncertainty. i think the euro is likely to advance from maybe a onward. tom: one of the key observations of lord king yesterday was he centered everything back to the door to mark -- dutch mark. how do they do that with the euro configuration? germany needs a stronger currency to rebalance europe, how do they do that? kit: they have to have an internal reevaluation so they need more inflation on the rest of europe in germany to make it happen which is how you do it within the single currency system. i am not sure how you make that happen in the way germany has worked all of my life. the way you do it if you do not get the death rate of the euro or adjust the euro, you have a real appreciation within germany of the currency. there are no policies making that happen. francine: we are expecting the chancellor to come out holding the budget box. we will hopefully bring you the pictures live but let's go to westminster where anna edwards is who joins us from the green with a member of parliament. ian wright. will make hislor budget address at 12:30 local time in the u.k. which is under two hours. i am joined by an opposition member of parliament, what is the labour party want on the budget and the issues in the u.k.. the labor chairman of the business energy and industrial strategy committee joins us. in terms of the budget, what are you looking for? he will not have a lot of giveaways to throw at the british people and families just about managing as the phrase goes. what do you want to see? room,will not have wiggle a reflection of the poor economic recovery we have seen over the past six years or seven years. the revenues he has gotten from improved profits for improved wages have not materialized. the amount of tax is not what he has in respect to what he would like to see. >> the deficit may be lower than expected because the u.k. economy has done better than had been previously foreseen. >> a slightly when fall partly because of sterling's deval uation. a mess andnces worsened over the last couple of years in terms of debt is larger than ever. in terms of the current deficits which is a problem. you do not have a lot to do with . he needs to do a number of -- in termstrumps a of short from a political and social problems, he has a problem with social. and these to spend more on the national health service. underfunding and investment but also because of reforms. in terms of the integration between health and social care, that is important. he has a problem with business, the weight businesses are taxed in terms of property. there are winners but also losers and the losers are really shopping. -- the losers are shouting. >> you -- your committee has been critical and suggest it does not get enough of a blueprint into were industrial strategy goes. what do you want to hear about how he spends his productivity funds to drive that industrial strategy? the long-termsee focus about how we will pay our way in the world in the future which is addressing some great opportunities we have in terms of the industry opportunities or the industry revolution. but also in terms of the structural weaknesses, low productivity and skills deficiency, not enough investment in infrastructure. >> we have seen the lord's voting against the government on the brexit bill, will the commons change their voting pattern when this goes back to the commons next week? >> no, i think the views of the comments are very firm. -- commons are very firm. >> a bit muddy here. francine: there is no music, what a shame. wright.ork with ian we will be back with kit juckes and later on we hear about the u.k. chandler as he presents the u.k. annual budget at 7:30 a.m. in new york and 12:30 p.m. in london. this is bloomberg. ♪ ♪ francine: this is bloomberg "surveillance." i am francine lacqua in london and tom keene is in new york. let's talk oil. tom: she is holding court on the sands of abu dhabi, near dubai. way too long since we caught up with you. $50 oil and the confidence the different nations have that consisting and move forward. what is the interior confidence in kuwait? the interior confidence in dubai and the interior confidence in your abu dhabi that they can move forward five years, 10 years, 20 years out with $50 a barrel oil? >> i have to say that it seems like the dominant emotion among opec members has to be one of surprise. everyone is shocked that we have not seen oil inventories fall as much as they had expected, following the opec production cuts. instead, opec members, especially saudi arabia, have run into a problem of economics which is one of free writing. you have shale producers coming on the back of the opec production cuts and enjoying -- $50, 50 five dollars a barrel prices and using them to ramp up production. that is upsetting opec at the moment. we have seen noises from various opec ministers in texas. we have seen the secretary general talking about bringing about shale producers into the opec fold and tried to get them on message when it comes to boosting oil prices. francine: you went to the joe weisenthal university of macroeconomics, how cartel is the cartel, are the unified within the gulf states or separate and apart? >> they are certainly presenting a unified front. we have -- the way we have fed and they opec speak are all on message but the berdych -- brought of the production cuts are borne by specific members. specifically saudi arabia. if you look at the price differential between psi rating crude and wti crude, it is massive. saudi arabian crude is much more expensive than what you get in the u.s. going back to the free rider problem, one of the least effective solutions to this is appealing to people's sense of -- allrism or fairness truism and fairness and that is what opec is doing in texas, talking about your producers and trying to get them on board. whether that will be effective is a question. the market is really hoping for an extension of the opec production agreement and we will have to wait until may to see that. will get an extension of the production cuts . we have a call from pioneer saying that oil prices will tumble to $40 a barrel if opec does not extend its fact -- extend it pact. >> it is amazing. around this time last year at davos, january of 2016, the saudi arabian oil minister said they did not think they would need a production agreement at all. now, fast-forward months later, not talking about one agreement but potentially to. the reason the agreement has not worked and boosting prices as much as people have expected, i think you can go back to behavioral economics. the show producers are essentially fighting for their lives once we get oil at something like $26 a barrel. they have different motivations to a country like saudi arabia or kuwait or meringue waste and maybe withstand such levels for a little while longer. arabia has miss under estimated the determination of some of the show producers in the u.s. to stay alive. francine: thank you so much tracy in abu dhabi. kit juckes is still with us. what is your take on oil? the share producers are so scattered, which ones are viable at $40 and which ones are not? kit: getting a sense that there is a level at which you get more investment, a level where you do not get investment and a level where people stopped producing. position where the idea they stop producing and go away at $50 a barrel does not work. over time, if we do not get more investment in the industry and of global demand continues to .ise, that is important global oil demand consumption is still going up. takes longer than opec thought. not longer than most people thought but longer than opec thought. equally, technology means that wherever you think the upper limit to oil prices is, that number is coming down all the time as people get more efficient in the shale industry. it probably means we are not going very far from these levels and oil prices become dull for a long time. francine: thank you so much. kit juckes stays with us. if you are a bloomberg user, follow us on tv , go to your terminal and type in tv and you see kit juckes and you can ask them questions directly. some cool data checks and tom's most outlandish charts. they are critical. this is bloomberg. ♪ ♪ let it isi >> bloomberg business flash. apollo global management wants to raise the biggest goal of capital corp. private equity deal since the financial crisis. billion for its latest global buyout fund, last year they went on a buying spree and snap the company such as diamond resorts international. ceo making good on his pledge to seek leadership help. they are searching for a cheap operating officer. last month, he promised to get help after his verbal altercation with a driver was caught on video. that is your bloomberg business flash. tom: thank you. the dollar, the number of dollars per pound sterling. --whatkes knows that we matters is eurosterling and that dynamic across the channel. give us a greater framework, can sterling weaken through the odd parity of eurosterling? kit: the parity of eurosterling would be a stretch and all in my life which would make vacations -- awful in my life and make vacations expensive. i think there is a significant danger, given europe's balance of payments and given the risk of capital outflows from europe stop after the elections in france this spring. the euro strengthens at the same time as the pound weakens because of the problems the u.k. has with the slowing economy. if we get higher german government bond yields in may, june, july at the same time the u.k. economy is on a slowing trend, we will probably trade eurosterling up into the 90's. i do not think we get to parity and do not want to think about the idea of getting into parity. tom: this is the partial differential that he does professionally. eurosterling, long-term gentle movement of stronger euro, weaker sterling. here is brexit, june 23 at up we go, strong euro relative to a weak sterling and mr. juckes suggests this 90 level and not to parity. does the officials of europe understand the kit juckes theory? kit: i think it is understood what is happening. the problem for europe's officials and the european central bank is that the success of keeping the euro down with a combination of negative interest rate and quantitative easing, crowding european investors out of domestic assets, that is a policy which is running out of room as inflation comes back and is growth picks up. eurosterling will be a place where that is exposed. how does the ecb react, we will see. tom: kit juckes thank you very much. sterling weaker today and the budget discussions in london. in the next hour, kate more on doubt 21,000. -- down 21,000. ♪ >> the pump, the circumstance and the budget box from gladstone to hammond. the prime minister of the united kingdom gets a brexit budget. const darling tests -- tom starling tests new weakness. in washington, obamacare light. seriously, delicacies of the beijing washington dialogue, suddenly korea is topic one. this is bloomberg surveillance. we're live from our world headquarters in new york. i am tom crean -- i am tom keene. the budget in the united states is a little different. ours is a stack of cardboard boxes eight feet tall that everybody is waiting through to get to volume one through volume four. you do so much better. course, we have a clean so we have a lot of pageantry. you must've seen a million times. every time he presents a budget, it comes out at number 11. you know what? i was looking at it this morning. that budget box is not the same box but a budget box has been used for more than 150 years. the word budget apparently came from that because it goes back to old french, the french word bugette. tom: they retired the gladstone box in 1860 and chancellor darling brought it back. we'll wait the chancellor with our first word news this morning. over to asia.ng china is calling on north korea and the u.s. to avoid a head on collision. they are urging north korea to halt its nuclear activity four days after a test fire. the u.s. is called on to suspend military drills with south korea. they want to get north korea back to the negotiating table. a new twist in the controversy over donald trump's presidential campaign and the russians. last april the president met with the russian ambassador even though his spokeswoman says he had zero involvement. during the campaign. officials described the encounter as brief and nonsensitive. in europe, theresa may is fighting back against brexit in her own conservative party. redrafted theber brexit bill to grant parliament a meaningful vote on the outcome of the talks. they will try to get the changes reversed when the bill goes back to the house of commons. saudi arabia and russia are presenting a united front on oil production cuts. the agreements between opec and non-opec producers will work but the producer announces that global inventories are falling as quickly as he expected. prices are struggling to rise because of the rising u.s. oil stockpile. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: equities, bonds, currencies and the stock market, kate moore here in a bit. zero dollar, 10560. the next green is oil light today as well. 1.2152.at sterling, dollar strength is out on dxy. it is a nudge upward and a strong dollar. francine: overall, a bit of an off day. think about treasuries on their since 2012. the pound is dropping in oil. the vix index a little bit down. tom: we have shown this chart to few times.ur, a here is sterling. here is brexit. is one leg down, two legs down and now we've got a third recap. their level here would be a big deal. we have been there very quickly. francine: this is a global profit boost that we are starting to chart. this is the citigroup local earnings revision index. this is the index and this is a 20 day moving average. this is basically the number of stocks that analysts are raising profit estimates on for firms worldwide. they see those lowering them for three straight weeks. tom: very good. we will get to that with kate moore in a moment. right now, in washington, kevin cirilli is working a 20 hour day. the various policies discussed in washington, no question to me . i am going to call it gop care, ryan care, trump care, what is it >>? senator rall -- senator rand paul is telling me it is "dead on arrival." they are led by the likes of representative jim jordan and representative mark meadows of the ultraconservative house freedom caucus. as well as a group of senators in the upper chambers that are adept. they say it is not conservative enough. was michael cannon absolutely scathing in his review and then it got worse. let me bring up my morning wall street. megan mcardle kills it. if need to read one thing you don't trust so really's knowledge. something must be done. tot as light foods failed keep americans from getting fatter, the gop version health care reform doesn't fix the huge problems that currently exist in the individual market. what is the talking point within the administration of how they are going to sell this? >> they say this is exactly what president trump campaigned on and they also say this has been done through an open committee process. that this is several years in the making, that this has been litigated and relitigate it again -- green litigated again. they are stilld, waiting on their timeline for whether they get a score back from the nonpartisan budget office. they have to prove they want to of hurt a filibuster in the senate, that this won't cost the government any money but even if they get a score that they want from the budget office, that said, they still need to convince conservatives and people like senator mike lee and ted cruz. they don't like this so this is headed for a first policy fight that president trump will have to reference -- moderate between the tea party and the moderates. francine: we are talking about russia and what president trump met or did not meet in a massar from russia during the campaign. when do they have a final say? >> yesterday it was announced the house intelligence committee has scheduled a hearing on russia. we are hearing from top u.s. officials including fbi director james comey who will testify at this hearing in mid-march. these hearings are only going to continue. these investigations on capitol hill are only going to continue and the intelligence committee is looking into that as well. francine: talk to me about wikileaks. how will that play out? wherestill wait to see this is from or do we never find out? can centrald out, agencies keep a hold of their secrets? such aneaks had influence during the presidential election and now we are seeing it continuing. as far as that goes, u.s. intelligence officials are looking into this matter but they have not been able to stop these leaks. part of this huge cyber war, so to speak, where nothing is safe in terms of electronics. tom: kevin cirilli, thank you so much. you are down in washington with too many topics to mention. it is a wonderful time to check with kate moore of black rock strategies and she said she would return unless it was dow 21,000. >> i don't have the dow 21,000 hat. we are still especially relative to fixed income even with extremely high prices. i've got a great chart today on bonds versus equities. tom: i want to go back to the president right now. bring up this chart. i will throw this out on tv as well. .his is a trump reflation chart up we go, the election in blue, the next day in yellow and then we rollover. link equity confidence and to the steepness of the yield curve. we are in a stasis now. >> what we saw on the fourth quarter after the election was this relief rally in equities that coincided with the yield curve. the sense that we were holding back on absorbing the macro in the fundamental stock prices. it was kind of a relief. you are right that we have been fretting water a little bit on trade more recently. i think we are just really waiting for more policy confirmations to get the macro and the fundamentals. tom: aren't we waiting for more earnings and revenue confirmation? >> the earnings story has been fine. it is quite strong outside of the u.s. and i think francine pointed out earlier there has been significant over dimensions to earnings around the world in 2017. that is not the normal pattern we have and it is actually quite encouraging. not just for analysts or conservatives but there is a fundamental reason to actually look for an expansion in earnings. francine: let's bring it back to this global earnings revision index. basically what the trend shows us which i highlighted in pink four-week gauges the moving average. this is the 20 day moving average. it turned positive for the first time since 2011. does this mean -- how much does it have to do with trump entering the white house? or how much does it have to do with indices propped up by earnings? we can see it going up from january of 2016. >> looking at where the earnings revisions are from around the world, the u.s. has different -- decent earnings provisions but the biggest ones are coming out of europe and the u.k. where we see significant improvement on expectations with slightly better contributions from weaker currencies. this was under recognized by the market in the second half of 2016 and people are only dipping their tell in at this point. you see a strong macro picture and a cyclical recovery coming through on the earnings story. about trump and expectations for change and policy. look at the earnings divisions and there is a lot of strength in many different regions. better revisions outside of the u.s.. francine: what would it take for these stocks to actually go through the revisions and pull back in a sharp direction? >> we will have to see what happens in policy and politics over the next couple of months, particularly in the u.s. we were talking about the health care proposal from the republicans and whether or not that will be well received by other republicans, the rest of republicans, whether or not we are actually going to get to substantive tax policy reform in the near term. there is going to be a wait and see before we get another round of earnings revisions. particularly in europe where everybody is in a wait and see mode around the french election. francine: all right kate moore, thank you very much. coming up tomorrow on bloomberg daybreak: americas we speak with at 7:30n of jpmorgan a.m. in new york and 12:30 in london. this is bloomberg. ♪ >> this is bloomberg surveillance. let's get to bloomberg business flash. -- france'sedit credit agricole could benefit $2.4 billion. credit agricole owns 31%. the french bank has been focusing on cutting costs to get increased growth. adidas has increased its sales through the year 2020. it is known for its athletic shoes and profits should rise 22% a year. their new ceo also announced plans to sell its hockey unit. they want to focus on the namesake label and the reebok brand. next we talked to the adidas chief executive at 6:30 in new york and 11:30 in london. that is your bloomberg business flash. francine: thank you so much. -- budgete the brexit , we are looking at down a street with live pictures and we expect today's budget. they say the economy's resilience is ongoing. now from westminster, you have had some great interviews. talking about small businesses and the institute of directors. how difficult is it for the chancellor to set the budget? we have not started negotiating with the eu yet? >> and a lot of uncertainty in the future of course. the office of budget responsibility that gives the forecast to the government on way the government spends its taxing plans, they have to make assumptions about where the economy goes from here. sometimesmore upbeat than they made in november and that is one of the big changes in today's budget. growth will be upgraded for this year, ending in march 2017. we call this economy has been in the short-term more resilient than economists predicted since the vote in june. we are expecting heat for the chancellor today as things are better on that front. will there be a big giveaway or no? for those brexit negotiations that lie ahead, you want be splurging on flashing that cash around. we have to save it for a rainy day. francine: we are not going to see a radically different budget to what george osborne was putting in place. this is not the anti-austerity budget from philip hammond. >> austerity is still something of a word even though you don't hear that word itself mentioned all that much. still trying to get a handle on the deficit. chancellor, philip hammond, leaving number 11 downing street. he will be making his way to the houses of parliament at 12:30 u.k. time. he will take to the podium to make a speech. .t contains important documents of course, everything takes place against the political propped up -- backdrop. where does tom stirling fit in? tom: the people of the united kingdom, do they really care what happens to sterling? >> advantages one way to describe it. he has seen some companies that make their profits overseas benefiting from that. weaker sterling, back into re,nds, reporting in the but we have reports from one union and the gse was forecasting. what it does to import inflation, how that is going to impact some spending power in the u.k. from here out to 2020. there were talking negatively about that. there was a super impact to that weakness in the pound. i spoke to one business leader early on today who says you've got to weigh what people want from brexit but also what the uncertainty at the moment is doing. those conflicts are waiting on the pound. tom: thank you so much from westminster abbey this morning. the chancellor driving away, budget in hand. kate moore is with us from black rock. glasgowin london or orlene ever and i invest in u.s. equities in the last 12 months, i haven't made 23% a year. i have made 44% because i'm in the strong dollar. there is a massive disincentive for people to invest. >> i think that is an interesting consideration. we ask our clients, are you interested in hedging your currencies. it is very mixed based on the type of client we are working with. some people don't like hedges, some people are looking for the long term. and therefore it doesn't make sense to pay for the heads but you are right. in this case with the dollar appreciating against the pound bet for the a great currency translation. tom: we will come back with a careful bond equity analysis and a chart. we will do that later. .rancine: we love our charts we also love press conferences. coming up we hear from the u.k. chancellor as he presents the annual budget. that is at 7:30 a.m. in new york , 12: 30 p.m. in london. this is bloomberg. ♪ tom: it could be chart of the day with kate moore of black rock. it is a good runner up. , way out front of where janet yellen and the fed is. this gap is truly unprecedented. 3, 4, 5, 6 or maybe the seventh rate hike we will see in 2018. i don't know what they are going to do for march 15. i want to know what they are going to do for november 1 or january of next year when we get a new fed chairman and we are into the rate hikes. >> i think a lot of it depends on whether or not we have 2, 3 buterhaps even, unlikely, four hikes in 2017. what the committee does is communicate the pace of normalization even after yellen moves on. tom: but if they are measured, does that affect the stock market? >> at some point it will but there are a couple of things i look like -- i look at from a corporate perspective. have locked iny low rates, they turned out there debt, they are not sensitive to floating interest, but we have to consider many companies have been managing their balance sheets so conservatively with lots of cash. that has been frustrating for the administration and certainly for house republicans. that is also going to allow them to be much more thoughtful and allow them to continue to earn and maintain their margins even if we have slightly higher rates. we think that is really important if we have higher rates from better economic data as opposed to some inflation scares. i think we are on track for equities to do well. francine: thank you, kate moore. black rock's chief strategist stays with us. coming up we speak with the adidas ceo, kasper rorsted. quite a lot of products we need to talk about. he wants to invest in the u.s. because he wants to fully fund nike. we will talk about the reebok turnaround. it is not shaping up as quickly as you would have thought but it will probably take four years. it seems like a long time. will he make losses in between? have some gorgeous pictures out of the thames. this is bloomberg. ♪ tom: bloomberg surveillance. good morning. i am tom keene with francine lacqua in london. we held up the red box. right now, let's get to our first word news. trumpthe u.s. president is throwing his weight behind the house republicans plan to replace the informal care act. the president told republican leaders he is proud to support the replacement but conservatives are attacking the measure. dead ontor declared it arrival. senator john mccain says if wikileaks can hack into the cia it can hack into anyone. the organization has posted thousands of files it says came from the cia. mccain says hackers could break into devices like smartphones and tvs. that could expose u.s. operations around the world. china has posted its first trade deficit in three years. imports exceeded exports by him as billion dollars. economists say they were skewed because of this year's timing of the chinese new year. factories were shut down. china is the world's largest exporter. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor riggs. his is bloomberg. francine: thank you so much taylor. u.k. chancellor philip hammond is set to give his brexit budget. he is expected to say the economy's resilience is ongoing. on roger bootle. great to have you on the program. what comes after the traditional budget? >> it is not so dramatic as it sounds. what we see is the malformation of the traditional budget. you're going to have one big announcement in november. i have been around so long that i have seen this before. they chancellors have said are not going to have this set up and then they have gone back to the traditional budget so i am not sure if this will prove to be the end of the road. francine: are you happy with what you are seeing from philip hammond? >> we haven't seen much of him. francine: but the outline is clear. >> he is probably striking the right note. i want to see the government embarked on radical tax reform but i think it is too early to expect it to go down that route. he is right in saying that just because public finances are looking stronger he shouldn't go on a spending spree. francine: was brexit clamoring for someone who was less austerity? it is less austerity, how could philip hammond deliver? >> he did announce some relaxation last autumn and he has brought up plans for public investment. i don't think actually at the moment austerity would be a good idea because what we should want in this country, i think, is fairly tough fiscal policy, easy monetary policy and a continued weak pound. he is probably on the rise. tom: what does a weak pound mean for the nation? we talked about what it means for business. what does sterling mean for the people of the united kingdom? >> it means ordinary people spending money in the shops, things get worse because prices go up. some wages will grow up more, but what it does is it helps exporters and it gives an incentive to substitute against imports so it tends to boost demand in the economy and to boost jobs. that is a good thing. tom: help me with the phrase austerity. it was all the rage three or four years ago. i don't see any change at all. is this a budget of british austerity? the chancellor will be able to bring the budget deficit down. it is not as though there are big cuts in spending but there is some spending reduction and spending overall is very tight. deficits, thehe deficit is a share of gdp and will be coming down. tom: what is your confidence in the ability to collect revenues? brexit turned the world upside down. help me with the collection of revenues. is there a confidence tax receipts will be good? >> recently revenues have been pretty strong because the economy overall has been strong. looking forward i think we are pretty confident of that. if the economy were to go into d of weaknessperio that be a different matter altogether. what is your take on the pound and how much should that influence what hammond does or doesn't do? >> i don't suppose he will say much about it but i think the pound being at this level and staying here is profoundly important, the most important thing. that is one of the reasons i think he is doing the right thing and not spending more money because the less money he spends, the easier it will be for the bank of england to keep interest rates low and that is one of the reasons why the pound has weakened recently. some people think it is due to brexit but i don't think it is. i think it is the change in interest rate prospects. people are confident those are going further and faster in the and that europe might not be so far away. francine: do you actually see parities with dollars? if you live in the u.k. you are not necessarily feeling any pull >>. we nearly got to paris under mrs. thatcher and she was appalled by the idea. she really went into a fast spin when the pound nearly got to parity. at these levels the pound is very competitive. tom: you represent the telegraph. they are certainly pro-britain. which institution are you watching right now in europe that will establish the dialogue with the prime minister six weeks from now? >> we've got to watch all of them. there is a big difference between different countries. it is widely believed that france is less friendly to britain than germany is. some of the baltics and the former eastern european countries, poland, are quite similar to britain. there are security issues there. we have elections coming up in holland, in france, and later on in germany. these are going to be extremely important. inwe get marine le pen france, that certainly upsets the applecart. francine: roger bootle from capital economics. we have earnings. it has been a strong day for adidas. it has tripled the pace of performance sports gear. they are focusing on fast fashion and stripping away businesses and boosting profits. we are pleased to say we are joined by the adidas ceo, kasper bavaria.oining us from thank you for coming in. talk to me about your rightfully with -- rivalry with nike. how much will you spend in the u.s. to counter your biggest rival? >> it is clear this is not a u.s. only battle. this is a global battle for the sporting market and we are well-positioned. we had a fantastic 2016 and delivered one billion profit. it is a battle all over the u.s., but only in the creating right products for the right athletes in the right places. we are confident we can get to where we want to get but it is not one battle against one competitor. that would make the market more simple than it is. francine: a very fair comment. donald trumps comments make it harder to sell in the u.s.? >> i am not concerned about the policy of the current president of the u.s. because if any taxes would come it would hit the entire industry. the industry is characterized by having 80% of all products being manufactured in asia. we have small local manufacturers in the u.s. but nobody will be able to circumvent that so that will be a challenge that will hit the entire industry. if the president starts attacking an industry that really makes people more healthy, that is not one of my main concerns. tom: i want to congratulate you on the massive recovery of your company in the last year. bring up the chart. this is nike versus adidas. likeerstand the players under armour have a grim outlook given their trump supporters ceo . here is the moonshot with nike and here is the failure of adidas. what a turnaround in the last number of years? how does cool factor into this? it is about the kids going into the store and wanting to be cool. aftero you do about cool under armour has stumbled and nike keep doing it every day? what is your secret sauce? >> the secret sauce is creating a correct product for the correct consumers. we have a great creation sense in north america and here in bavaria we have a fantastic creation center. the coolo help create factor, whether it is coming out of l.a. or the top basket ballplayers or football players. it is putting the right spin to we are engaging with the kids through digital devices. tom: help me here. stan smith is 70 years old. that is your cool factor. kate moore of blackrock has 14 pair of stan smith speakers in her closet. how did you do this? how is your cool factor the reinvention of a 70-year-old? >> stan smith is an icon. he has been a great partner to our company. over time, we have developed a market with him and changed the product to be more contemporary but we have never taken away from its origin. a fantastic relationship with stan smith and all the kids on our campus were running around and got a couple of our grass -- a couple of autographs. it helps us really be the creator. tom: i can't convey in the united states the impact of this. , i saw him aer million years ago, he is 70 years old and he is cooler than any of the others. francine: i know stan smith. and i know tom keene probably has a pair as well. talk to me, casper, about something which is not as cool as stan smith. reebok. how is that turnaround shaping up? it may take four years to turn it back. that seems like a long time. >> we are a performance driven organization and we have expectations. clearly reebok did not perform up to our level of expectations. we have made a number of changes in the fall of last year. we put a turnaround in place. we want to turn around in a sustainable way to a short-term position. we are convinced we can get reebok where we want but i want to stress we are seeing strong growth outside the u.s. for a .ery long period of time reebok's 6% and all of the growth came out of the u.s. and most of it was double digits. i am convinced we will turn it around but we will do things correct and sometimes it takes longer than you really want. francine: why have you been your golfsell business? >> we have not been able to -- we have not been unable to sell the gulf business because it doesn't belong to a particular portfolio. we want to find the right long-term solution for the business that has a lot of employees. we will also appropriately communicate when the process comes to an end. francine: i completely understand, but is nike's decision to discontinue golf making it difficult to find a buyer? >> i don't think there is a correlation. interesta lot of around golf and we have recently signed tiger woods with a business, so i don't believe there is a correlation between the two. tom: i've got to go out and buy a pair of stan smith today, and add to the closet. no away. francine: one for me. tom: we greatly appreciate it. we have a killer chart of bonds versus equities. later, the secretary of commerce. yale university. wilbur ross will join us. look for that in the 7:00 hour. this is bloomberg. ♪ >> this is bloomberg surveillance. i am taylor riggs. let's get the bloomberg business flash. apollo global management wants to raise the biggest pool of capital for private equity deals since the financial crisis. wants $20 billion for its latest buyout fund. they snapped up companies such as diamond resorts international. it is international women's day, an event that civil rights women's achievement while calling for gender equality. this theme is "be bold for change." on organizers of the march washington launched a campaign for women to stay home from work today, calling it the day without women. that is your bloomberg business flash. tom: international women's day, going back to the soviet, communist movement of 1907, the un's switching over to a much more nonpolitical moment in 1979. what i know is it is about hard work, whether it is taylor riggs, francine lacqua's knowledge of europe, or our guest kate moore of blackrock. she took the most prestigious set of degrees at the university of virginia and then went down scaled to the university of chicago and got their most prodigious degrees. forget about women's day. it was just a grind and you did it. >> i am very proud of the schools i attended and i'm really big supporters to both institutions. tom: i talked to sallie krawcheck and others. is first ratef academics and you are a walking, talking example. >> one of the things we are talking about is the importance of diversity in education. a lot of people look at the undergraduate and graduate programs the people who understand history and politics and real broad social policies are the ones who can really navigate these markets. tom: look at jeff rosenberg with your shop. a massive stem belief. you got part of that with a liberal arts education. you know jeff rosenberg, he knows kate moore but it is a broad background that can lift men or women. >> he has a great understanding of politics which makes him a well-rounded strategist. tom: but he can put you to sleep. tell me about women's day and what it means for you at merrill lynch and now at black rock? are there not enough women the offices? >> i would love to see more women in black rock with diversity and inclusion. we look to hire the best talent but as i was mentioning before, diversity is not just about women versus men but also diversity of thought and that is something we are focused on. a great track record of women investors and i would love to get more young women involved in the business which i think is like solving a puzzle all the time. tom: what was it like your first day in chicago? >> it was intense. we were assigned are lockers in the library. tom: that was orientation. standard fare but it was also super impressive, the rest of the student body and graduate program and i felt like i learned just as much as some of the professors. tom: we will continue with the bond stocks analysis. as we tell you about tv , it is always gorgeous up on tv . it is a sin to even put me up there. look at this previous interview on trump reflation. you can grab the chart and take it to your bloomberg. we spent years on this, decades i think. francine with her equity chart as well. stay with us. kate moore on equities. this is bloomberg. ♪ tom: put up the budget box for the foreign exchange report. the dollar is stronger but still near 102 on dx. jaw-dropping, post-brexit. we are getting there quickly. david westin is in washington in an important interview. david: we have wilbur ross, the new executive secretary of commerce. we will discuss trade. there is a lot of talk about obama care but as i go around washington a lot of people say what is going on with trade? a billion dollar fine against a chinese company. what is going on in china and nafta and mexico. as you know, angela merkel comes to town so we have a lot to talk about. tom: not only german trade but when we hear out of the white house today. david: absolutely. a white house has been very active. they had a problem with russia, and encounter by the president with the ambassador from russia. the question is, are they getting away from tax reform and obamacare? tom: david westin with secretary ross. look for that. here with kate moore, i have been dying to do this chart. this is the bloomberg barclays line, stableber bond with total return, grabbing the coupon, versus the s&p. it is a different s&p. this is the standard for 20 years back with the dividends calculated in. this is a great bull market. this is a great chart that shows the volatility of equities and yet the capture of dividends as well. >> how important is it to stay invested in the equity market over the long-term even through volatile periods? we are looking at this 20 year chart and we have to remember that we are in this as part of a 35 year ball mark. the steady return is probably going to be harder to capture going forward. the volatility and equity markets, whenever we had a significant sellout has been a great opportunity to enter. tom: but right here is the bond bull market from 2009, the mother of all times. slope matters. you've got to withstand this. you've got to withstand this to play the game. this is a major challenge you have with black mark -- blackrock clients? >> you have to be willing to withstand some of these ups and downs in the market. you really focus on the fundamentals. people get to short-term in outr time horizon and miss on great opportunities. we have gone through this in the upper part of the charts where we have had very few pullbacks, very few points where people feel like markets have gotten exceptionally cheap and yet we have ground it higher. tom: let's resurrect this for the next time you visit. thank you for being with us. kate moore with blackrock today. program, james dimon of jpmorgan. we will talk about a german bank. jamie dimon tomorrow. the capital.day in budget day, big ben seeing you out. this is bloomberg. ♪ >> sterling pounded for a third day ahead of the u.k. budget which analysts say will do little to support the valid currency. payrolls poised to steal in march rate increase. they're about to go old-school. global trade and border taxes, a conversation with the commerce secretary. .ood morning from new york city welcome to bloomberg daybreak. i am jonathan ferro alongside alix steel in new york. in dce is david westin. we are talking about a border adjustment tax. david: we certainly are. nafta and renegotiation with mexico is a big item on the agenda. the question is how do you negotiate if you don't know the answer to that question? we are talking to wilbur ross about trade. alix: peter navarro said you were going to privatize the economy and growth versus inflation. how does that square when you come back -- when you commit a reflation

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