guy: europe rising. the global rally maintained momentum on faith that the selloff was overdone. super tuesday for trump and clinton. the front runners strengthen their grip on party nominations. thethe market priced in possibility of a trump presidency? blackrock predicts a brexit would be bad for britain. we speak to one of the authors of this report. welcome to "the pulse" live from

bloomberg's european headquarters in london. i'm guy johnson. let's check in on the european equity story and show you what is happening. front foot forward, risk on, tax 1% higher. ftse up 0.5%. nearly 0.8s up by percent. asia had a solid session. the nikkei roaring ahead. take a look at dollar-yen. that is up 0.3%. the nikkei up 4% overnight. go to your terminal. the nikkei, the stoxx 600 and the s&p. the non-us markets have a lot catching up to do. oil is trading lower. let's get you caught up with all the news. here's nejra cehic. donald trump has a firmer grip on the republican presidential nomination. he's taken seven states as part of a commanding super tuesday

showing. ted cruz won texas as well as oklahoma. hillary clinton defeated bernie sanders by wide margins in democratic primaries to give her and all but insurmountable lead. moody's has cut its outlook for china's credit rating to negative the cause of rising government debt and falling reserves. the agency sees state debt increasing by next year. moody's affirmed its long-term rating for china but says beijing's policies may slow the reform of state owned enterprises. apple and theween fbi heated up yesterday as lawmakers in washington heard arguments from both sides on the phone encryption issue. are no demons in this debate. you have a lot of good people who see the world through different lenses, who all care

about the same things in my view. the companies care about public safety. the fbi cares about innovation and privacy. we care about the same things. we should make this any easier conversation. >> if what happens here is that apple is forced to write a new operating system, to degrade the safety and security in phones belonging to tens or hundreds of millions of innocent people, it will weaken our safety and security, but not affect the terrorists in the least. nejra: global news 24 hours day powered by 2400 journalists around the world. guy: thank you. leave the. votes to eu, it would lose a major budget contributor and easy access to world-class financial center. that is the view from black rock.

let's welcome one of the authors of the report. watt, good morning. who loses the most, the eu post brexit was a u.k. post brexit? en: good question. i think it is a little bit of both. the u.k. is left to make it up as it goes along. probably greater for the u.k. from an economic point of view, and quite challenging for europe on the political front. currency look at the market and look at euro-sterling, it does look like the book is priced into the sterling. ewen: we have had a decline over the last six months. with the opinion polls saying the outcome is going to be a of ato remain, the chances

surprise would be to the downside. guy: how much of the regulatory impact do we understand? someone told me the other day the eu negotiates for the whole of the eu but on a country by country basis, the deals on global trade are something the eu could walk away with. ewen: i don't agree with that. umbrellae deals are deals. the other thing is, it is not just about the trade deals. it is about the regulatory barriers beyond the border. imagine a situation where capital markets union presses forward in an eu that does not have the u.k. in it. it would have a material effect on financial services. guy: let's talk more about that. what would be the impact on the financial services sector in the u.k. and eu? ewen: the u.k. is the largest

financial services sector in the eu by a long way. any suggestion it will lose that is fantastical. i think it becomes a kind of onion chopping process, where things like euro securities, central clearing party, a number of listing requirements, move more towards europe. and away from, and sort of eat into the u.k.'s surplus on financial services with the european union. in a brexit, the way it works is the european union, not the u.k., determines the terms of the divorce. with that type of surplus, with the european union not wanting to make it easy for other people to leave, you can guess which way the negotiations are going to be biased. guy: many people who made the argument for us staying are making the argument around the .uro, joining the euro

these are the brexit people saying that if we listen to the same voices again, we are making a mistake. comparable,things the eu? ewen: i think the most respectable argument that campaign has is that ultimately, if the european union can work, the euro has to be a stronger based currency. ,here has to be more federalism more fiscal union, and the u.k. doesn't want to be part of that. nor do a large number of europeans. most plausible argument, and the best argument i think, the economic side. the sovereignty and immigration side which we've chosen not to address is exactly that, leave now rather than 10 or 15 years down the track. the answer, i think would be, we've negotiated a membership.

opt out.egotiated an we can reform this from the inside. let's move forward. guy: if we remain, where does the u.k. sit? give me a financial assets sort of top-down. do we get a bounce in sterling, the ftse 100 rally? ewen: we get a bounce in sterling, but i think we get a bounce in the 250 rather than the 100. the 100 benefits because of 70% of revenues coming from overseas from a depreciating currency. circumstance, mid and small cap in the u.k. would do better than large cap. i want to show you this chart. it is a fantastic story that has brought up the volatility that is priced in already to brexit. this is kind of the trump versus brexit story.

around equity markets, i get a lot of volatility surrounding the brexit referendum story, and we've got nothing priced in to the u.k. -- the u.s. elections. are we overdoing it on the brexit or under doing it on the elections? ewen: the brexit has had a lot of focus in the last couple weeks. it is tied in with political issues which could be quite tricky. issue has, the trump been made in the markets. until we get there, we don't know what the program is. i think the markets, if you ask most people, are taking the view that if it is hillary clinton on the other side, she stands a pretty strong chance of beating trump in the general election. i think normally, markets focus on this stuff about three months in advance. follow-up upuick

on that, do you think the rest of the year is much more focused on politics? the first half of the year is, are we having a recession? is the u.s. having a recession? do we now focus on politics? ewen: politics comes and goes. there are a number of flashpoints. one we haven't discussed is how theeu is going to cope with migration crisis, which is just getting worse. i expect we're going to get these events coming along. , ing back to that chart between, the economic narrative will rule. guy: thank you very much indeed for your time. en stays with us. stay with "the pulse." pedro sanchez makes a pitch to be the country's next prime minister. with a no-confidence vote, does

europe face another crisis? and, leaders backing the brexit. we will speak to john caldwell in an exclusive interview. and, hillary clinton sweeps the south as donald trump dominates the republican race. have they locked down their nominations? we break down super tuesday results with a former clinton administration aid. ♪

welcome back. let's get a bloomberg business flash. here's nejra cehic. nejra: rolls-royce has named a representative to its board. willey singer, a partner, join the board immediately and become a member of the science and technology committee. value act owns about 11% of rolls-royce, making it the biggest owner in a company whose stock has declined. tv has posted revenue of 2.9 billion pounds and better than analyst estimates. the forecaster announced full-year operating profit of 66 6 million pounds and proposed a special dividend of 400 million pounds. the company shares are trading lower. electronicsench have jumped this morning after sky-hook international holdings made a 662 million pound bid for the company. that rivals a 640 million pound

deal agreed back in november. the company that helps manages the fortunes of silicon valley given stanfords university and endowment. it will focus on private markets, including making coinvestment alongside private equity firms. that is your bloomberg business flash. guy: thank you very much indeed. it is 10 weeks since the general election in spain ended deadlock. pedro sanchez is attempting to houston mariano rajoy's people's party. ben is in madrid. talk to us about the importance of this note. which way does it go? is trying to play to the crowd today. he needs to get voters to see him as a statesman like leader

who is trying to move the country forward. he's almost certainly going to lose the vote today. he will almost certainly lose a second vote later this week. but he has two months before elections. his strategy is to rally public support behind his effort to form a broad coalition. podemas point of view, you would have thought there's an argument that says, we want to go to elections. talk to us about the prospect of such election and who would do well within it. questions the big hanging over these negotiations. december,election in the initial polls suggested that the main beneficiaries of repeat elections would be podemos and the pp.

the latest polling suggests that demos have been losing support. that is very early days. if those trends were to continue, sanchez's position would be strengthened. if the polls have moved around an awful lot over the last few months, it is a bit early to start drawing any firm conclusions from that. guy: thank you very much indeed. let's bring back in ewen cameron watt from blackrock. there's political risk that we've been talking about. the economy is great. ewen: kids got a better debt profile, better demographic profile, so it is politics at that point. guy: how much of a discount can we apply to europe in aggregate right now? we've got an ecb trying to

figure out what to do. we've got a migration crisis that is firmly underway. we've got a brexit story. what is the discount we can apply? ewen: we've seen european assets struggling on the equity side. an enormous amount of that is banks and insurers. i think we can track down the reason for that. the domestic side of europe hasn't been too bad. i think there are plenty of challenges out there that are going to distract people and the interesting point is why the euro isn't trading weaker. i suspect that is to do with the current account surplus. you would think it would be trading weaker. idea for europe -- are negative rates a good idea for europe? ewen: i'm not sure negative rates stimulate demand. steepness of the yield curve is what stimulates demand.

i'm not sure it is because of negative interest rates. what we've seen with switzerland and denmark is the first effect. the effect diminishes as you go forward. it seems to be a shortage of colorado -- of collateral. there seems to be some gumming up of the monetary transmission mechanism. i don't think anybody really knows. this is uncharted territory. to be in a lotms of uncharted territory. some of the basic mechanisms of the eu are under pressure. , which has been so focused on whether the u.s. is having recession, has the market actually woken up and smelled the coffee on account of the risks that are being proposed here? ewen: people focus on the risks to your question, but they need to remind themselves how the european union has survived.

how strong are the commitments to be together? back to the previous conversation, that would make it hard for the u.k. outside the european union. i don't want to underestimate the political will and the will of the majority of the population. there are separatists in spain. there's going to the referendum in denmark. there could be a referendum in holland. at the end of the day, i think most europeans prefer schengen to work in the network, but the trade-off is having more federalism. guy: we will come back and talk about the market risks and what is happening around the world. eweb cameron waatt is going to stay with us. ♪

23 past the hour. we talked about political risks in europe and the u.s. .et's get the thoughts of ewen equity markets are on a rally. why do you think that is? how do you take advantage of that? ewen: i think that as an got too. change ino have some

the second derivative of economic releases to get people a bit more confident. since february 11, there's been a decent rally. guy: let me bring up the work function. they are the expectations on where we see the fed going. ewen: it is the new goldilocks. got down to the 30th, 50th percentile. depends which measure you use. that was inviting an opportunity. the credit markets stopped selling off. i felt for a long time that if the credit markets are under pressure, the equity markets can do well. if the credit market is costing you more money, you can't expect the boss man to help. i think we've seen stabilization in the credit markets.

thettle bit of weakness in dollar. emerging markets have been back in favor recently. some better news on the supply side as well. guy: european markets are still underperforming the s&p. the european banks have been badly beaten up. the banks are trading strongly today. can europe, with more negative rates on the horizon, outperform or do well, or do we need to look at the euro getting cheaper? ewen: european banks divide into two groups. those whose business models are severely challenged, people with capital market operations, and those with business models that are reasonably robust, the non-capital markets. well had a huge hit to the perception of their ability to pay any dividends in the future because of the flat

yield curve. equities have been the hardest hit as well. i think we have a story that investors are shooting first. this is going to impact profitability or lending growth. it has to be one or the other. i don't want to be involved in that part of the market. guy: three major japanese institutions are calling the yen higher. is that going to make draghi nervous? if you bet on europe, you are betting on a cheaper euro. of europesensitivity to the euro is quite low in reality. i think the currency issue is much more important for japan. if you look at the nikkei and the yen, it is surprising. the yen is a lot stronger. maybe that is something you do something about.

great to see you this morning. ewen cameron watt has been joining us from the blackrock institute. next, we are talking about brexit. john caldwell, next. ♪

welcome. "ou are watching "the pulse live from bloomberg's european headquarters in london. here's the bloomberg first word news with nejra cehic. nejra: hillary clinton has delivered a decisive super tuesday performance. she defeated bernie sanders by wide margins in democratic primaries. , chung has a firmer grip on the republican presidential nomination. home state ofis texas as well as oklahoma.

moody's has cut its outlook for china's credit rating to negative from stable the cause of rising government debt and declining reserves. the agency sees state debt increasing by next year. moody's affirmed its long-term debt rating for china but says beijing's policies to support growth may slow the reform of state owned enterprises. and thele between apple fbi heated up yesterday as lawmakers in washington heard arguments from both sides on the phone encryption issue. >> there are no demons in this debate. the companies are not evil. the government is not evil. you have a lot of good people who see the world through different lenses, who all care about the same things. the companies care about public safety. the fbi cares about innovation and privacy. we devote our lives to stopping people from stealing our innovation and secrets. we care about the same things. >> if what happens here is that

apple is forced to write a new operating system, to degrade the safety and security of phones belonging to tens or hundreds of millions of innocent people, it will weaken our safety and security but it will not affect the terrorists in the least. global news 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world. guy: thanks very much indeed. lots of green on the screen when it comes to equities. mark barton is here to tell us all. mark: european stocks rising for the fifth consecutive day. longest winning stretch since october. beating data out of australia, the united states. the gains come after chinese stocks had their biggest rally since november.

the government announced measures to boost growth. stoxxs a great chart, the 600 going back to 1998. since february 11, the european gauge has risen by 12%. of 10%ack to 1998, gains or more over a similar period were followed by advances in five of the seven instances they happened. with median three-month increases of almost 10%. investors who held on for the full year ended up suffering losses more than half the time thanks to the new chief who came up with that wonderful chart. this is the rupiah. this is the dollar against its major peers. the rupiah is the second best-performing major currency against the dollar. today, the indonesian currency is gaining for the 10th consecutive day. it is the highest since october

on speculation the central bank won't cut rates too aggressively. what a rebound we are seeing for emerging-market assets. the msci emerging market index has rebounded 11% since january 21, when it sunk to an almost seven-year low. the euro down for a fifth day against sterling. the longest losing stretch since july 17 last year. last wednesday, it rose to 73.7 pence. it is still up by 5.4% this year. already on track for its best year since 2008. hsbc is the most bullish on the euro, forecasting 83 pence at the end of the second quarter. is the most bearish, predicting 63 pence. the only currency which has fallen against the pound is

argentina's peso. guy: thank you very much indeed. let's talk more about the u.k. european decision. john caldwell, having founded retail phones back in 2006, also a prominent supporter of business for britain, which campaigns to reform the eu-u.k. relationship. good morning. i'm going to pick up where mark left off, talking about the relationship between the euro and sterling. that is the perfect liquid way of looking at how the market has viewed the risk both sides face. they've decided the british face a greater risk in this brexit campaign then maybe the rest of the eu does. are they wrong? are they right? john: there are a number of times the financial markets have gotten things wrong. guy: the markets aren't always right. john: the markets are very regularly wrong.

i would actually like to talk about objective assessment. if we look at the first objective assessment that people are regularly making, and george osborne says this could be a messy divorce, i prefer a messy divorce been a disastrous marriage. that is a subjective assessment. are theely, what reasons to stay in europe? ones that are provable and definite and guaranteed? i can't think of a single one. people can speculate on what it ,ight mean coming out of europe but there are some very objective issues about staying in europe. we costhose is that britain 10 billion pounds to be in europe. that is a big cost to the country. we don't need to debate it.

we've got a deficit with europe on our trading activities at 59 billion pounds, another fact. how important is the trading between europe and how might europe look negatively? guy: i don't think anybody's disputing these facts. what they are trying to understand is the nature of the relationship. that is the bit that becomes hard to quantify. all those numbers, they are facts now, but they may change further down the road because of the nature of the changing relationship. what might happen if we stay in, what we know is it will cost us more money. what we know is we've currently got -- guy: we don't know that because we don't know -- john: let me quantify that. more money than if we go out.

go a different way. what businessman in his right mind would have another corporate entity that costs him money to put their that has a disparate range of interests? business inunning a the u.k., why would you ever that youlding company pay money into that makes decisions not in your best interest? guy: you at this point have a voice in how some of that money is spent. there is an argument that says we would have to contribute a significant amount of money and adhere to some of the rules to take part in the single market but we would have no voice. at least there is an argument that says we can say how some of that money is spent and may have a determining factor in how the rules are set. post-brexit, maybe we wouldn't. john: i can't see any way that

britain is going to be contributing significant amounts of money to europe when we are outside of europe. ,hat we should have always done i was very pro-common market, having a set of trading policies that enable you to trade easily with your allies and your partners. it is a very sensible thing to do. we need to do that throughout the world. we need to have good trading relationships, everybody. i was very pro-the common market. but why it integrated into one of the greatest follies ever conceived by politicians, and i think it was done out of egotism -- somebody wanted to go down in the history books having created something that was huge and history-changing. guy: let's talk about some facts.

let me take you to a carpark in mayfair. you are going to knock it down and build a flat. i would be curious to know whether you think -- be the world's most prestigious apartment. guy: it is a very nice car park. do you think square footage will be higher or lower post--brexit? john: i can't answer that specifically. first of all, i will never let my own self interest in the way of what i believe is best for the country. that is the genuine statement. i'm giving my money away to charities. i won't let money compromise my belief. whether the carpark is worth more or less after a brexit, i can't judge. ist i would say is, london the economic center of the world, the most desirable city in the world, and the most

desirable city because of all the principles that were built out of a sovereign britain. to have all the thinking from europe rolling in, in the form of welfare, employment laws, and of course let's quote the issues of bananas when they had to be five inches long -- all of that rubbish coming into the country, we don't want. what we want is a well-run country. we want excellence in every way. our trading environment, law and order, and education. we need to keep london right at the top of that. magnificent city and will always be so. i don't believe exiting europe will have a negative content at all. it may have a positive. a lot of businesses don't want the bureaucracy of a european

force. they don't want that bureaucracy. the bureaucracy that has rolled in as a result of europe is phenomenal. it is costing businesses fortunes. why not get rid of red tape, get rid of bureaucracy, get rid of cost, get rid of all this negative content, and make britain truly great on its own? we are the fifth most successful country in the world economically. that wasle could argue down to europe. i don't believe that at all. guy: great speaking to you this morning. we will see what happens to the car park. john caudwell. up next, donald trump is unstoppable and chris christie will be his running mate, that is the prediction from my next guest.

we will break down super tuesday results. ♪

guy: welcome back. let's talk super tuesday or super wednesday depending where you are in the world. morris was staff during the clinton administration. it looks like we've got trump versus clinton. >> i think so. both these guys came out of super tuesday. trump is now moving in the

direction of consolidating the party. ,ou saw the press conference very different. he's saying different things. when you get closer to the nomination, you get a little more sane. hillary clinton is different. she's showing that she can pull together a coalition that can beat trump. guy: neither candidate is particularly popular within her own party. clinton, you've seen what sanders has done. he changed the narrative. people thought he would be long gone. uz is still there, rubio hanging around as well. the republicans look dis-united. how is that going to play in november? >> both sides still have to do some things to reach out. hillary clinton is a party person.

she's a power broker. she does need to reach out to people. she does need to connect better. ernie has tapped into something. can he expand the base? the difference on the republican side is that there has been disenchantment with their candidates and anxiety. trump has been able to tap into that anxiety and expand that base. can they get more people excited? i don't believe everyone is happy with any of the candidates, but it will be interesting to see who can consolidate the muscle. guy: is the story coming out of the primaries different from the one we take into november? if you look at the way they targeted voters, both candidates start to look at changing the story they are portraying. >> not only does the story change, the rhetoric changes. most cases, a primary, the far

left and far right control it. you see the candidates running to that direction. as you get to the traditional middle, when the candidates become the nominee, they go more to the base. that is one third of the american population. you will see much more middle-class language, not the rhetoric that you see on each side. donald trump has already started. guy: wider you think the financial markets are pricing very little around this election? do you think it is too early, or is there very little risk? >> is too early. hillary is a known commodity. donald trump does not scare the markets yet because he's not the nominee. if he continues to have this outlandish language after he becomes the nominee, he could scare the markets. the clintons are a known commodity. we are talking about this in march.

the focus on this election now is because of donald trump. i believe he's been good for the process. guy: we will leave it there. thank you very much indeed. up next, from the courts to congress, the battle between the fbi and apple continues. the u.s. attorney general ways in. we bring you that exclusive interview, next. ♪

between applee and the fbi heated up yesterday as both sides testified in washington with opposing views on encryption. u.s. attorney general loretta lynch shot down apples argument for refusing to help unlock the dead terrorist's phone. the comments were most expensive to date on the fight between the worlds most valuable company and the fbi. ms. lynch: we feel a middle ground between apple and the fbi where law enforcement can work is supported. that is where we go to, to arbitrate these disputes. we have a difference of opinion as to what the law means or what compliance means or someone should comply. we go to court. that is what we think is the current state of affairs and where we think this dispute is going to play out. inwe discussed, this is also

a larger forum of ideas in our country. having a discussion about what it means to have both privacy and security. we do it all the time. we can do it in this case also. emily: in the court, a brooklyn judge ruled that apple doesn't have to do this in a separate case. does that undermine your argument? does that change your strategy? ms. lynch: it doesn't change our strategy or our reliance on the court. we are disappointed with that decision, but we will be resubmitting it with additional information. that was a case in which we were working very well with apple and they agreed to help us with that particular device. that particular case doesn't involve encryption. public,e issue became then they filed papers in opposition. we still feel there is a path to discussion, to working on these issues.

emily: tim cook says there is no middle ground that doesn't put everybody at risk. it is not just about one phone, it is about every phone and about the future. how do you respond to that? ms. lynch: in the present, we've seen how we do balance privacy and security every day. until recently, apple was able to comply with our requests. they have some of the strongest security out there. i think we have seen it done. we have our finance companies, our health care companies, all important sectors of the economy depend upon in cricketing data to protect all of us. they also maintain the ability to manage the data, to also keep us safe and secure. emily: the government is asking for the same access in 12 other cases, 14 phones. as we understand it, the range from drug dealers to general criminal activity, but not

terrorists. where is the middle ground that is not a slippery slope? ms. lynch: that particular fact indicates just how important our device has become and how much data they contain. we are in a situation where in so many cases, we see electronic evidence becoming paramount. we still of course will get files, papers, boxes of documents, and rely on interviews with people, but electronic evidence is what we are seeing in every case. that is how we store data. that is how we maintain data. that is how we access it, through our devices. the fact that there are other phones shows that this issue is going to grow. in every single one of those cases, same as if we were going to someone's house to look at documents, we request support, we narrowly tailor it. we only look at what the law will allow us to look at.

if there's a third party that can provide assistance, apple in this case, we go to them and ask them to help us voluntarily. if we feel they can't do that, we say, let's go to court and get some help in deciding that issue. guy: loretta lynch, the u.s. attorney general, talking about the case between apple and the fbi. stay with bloomberg. fromine lacqua joins you new york. he's still in washington, d.c. they will bring you extensive analysis of super tuesday. what do the results mean? when is the market going still tart -- going to start pricing all this in? we've fate of the rally a little bit that we saw earlier on. .e are now up 0.2% earlier in the day, we had the tokyo market up 4%, and amazing rally. europe and japan still have a great deal of catching up to do with the s&p, which had a decent

session yesterday. brent crude currently trading down 1.1%. that is it from "the pulse." "surveillance" up next. ♪ .

>> a super tuesday for trump and clinton. the frontrunners strengthen their grip on the party nominations. global stocks rally on stronger economic data from the u.s. and australia. was a selloff really overdone? what does it mean under u.k. banks? this is bloomberg's "surveillance." this is francine lacqua in new york.