anna: trade war rooms on the border. canceledan president his trip to washington after donald trump promises to rewrite nafta and make mexico pay for the wall. theresa may meets with president trump today. the u.k. prime minister hopes to lay the groundwork or a post-brexit trade deal. flattening the curve. the boj buys out more bonds to keep yields low sending the yen into its biggest decline in a week. the swiss banks profit more than triples in the fourth quarter. we break down the numbers later this hour. ♪

anna: very warm welcome to bloomberg daybreak: europe. from here in london. let us get straight to the numbers in ubs. profit has increased substantially. let us talk through how well they have done over the estimates including a rally in equity boosting banks security. you seeof those areas substantial improvements. increasing profit year on year. to give you an idea of the uplift in profits, fourth-quarter pretax profit 848 million swiss franc versus 234 million swiss franc's, the same period a year ago. inus is on the ground

switzerland talking to the ceo of ubs at 6:45 a.m. london time. let us pull up the risk radar. show you where we are on various metrics. the boj is evident here. substantial weakness in the japanese currency coming through this morning. to buy is stepping in bonds. aiming to keep the 10 year yields at 0%. away, therried japanese central bank stepped in to bring that back down. .he boj meets next week no changes expected. cpi data out of japan. we will discuss those details. radar, have on the risk the futures in the u.s. showing we could be weaker. next results at of u.s. corporate's. and more tensions on the u.s.-mexican border. many asian markets are closed

including china, south korea, taiwan -- the mexican peso is also in there. weakness in the mexican currency yesterday and again in today's session. but we are not up to 22 on the dollar. let us get a bloomberg business news. let us start things off. u.s. and mexican relations plunged into chaos on thursday pushing the countries closer to a trade war. the mexican president scrapped his trip to washington after donald trump double down on campaign promises to rewrite and to to rewrite nafta build the wall. 20% tax was floated for all of mexican imports. departmenttate officials have quit in the wake of donald trump's election.

sources say president trump is keen to shake up the state andrtment bureaucracy making changes in what he sees as decades of failed foreign policy. greek'san officials say officials will not be able to unlock help. greece has less than a month to iron out complex. -- conflicts. fellmer prices in japan for the 10th straight month. expectations for a return it to inflation later this year. cpi was down 0.2% from a year back. remain over a slow wage growth and lackluster

consumer spending. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . i am david in glace. this is bloomberg. let us get to the asian market session. a number of markets are closed. juliette saly has been scanning them for all of the information. juliette: the last day of the year of the monkey. we start the year of the rooster tomorrow so there are a number of markets closed including china. hong kong shut a shortened session pretty flat. higher one closing third of 1%. for its -- for a weekly game. underscoring the central banks move to maintaining the yield

curve target. australia had a pretty good session, up 0.8%. fairly interesting week for the australian share market but a strong finish today. mixed movement coming in from southeast asia including malaysia, which will also close for the lunar new year. the regional index at its highest level since september. watching the gold price. gold closing for its first weekly drop. today -- toatch sheba. anna: -- toshiba. toa: theresa may will work secure a strong relationship with president trump when she becomes the first world leader to meet him at the white house later today. yesterday, she told the republican congressional debate that -- republican congressional

meeting. it must work for both sides and serve both of our national interest. it must help to grow our respective economies and provide the high skilled, high paid jobs of the future for working of people across america and the u.k. more, guy johnson joins us now from washington. what kind of agreement can be negotiated at this time? to a large extent, the uk's hands are tied. guy: the u.k. remains a member of the eu currently and the customs union consequently it cannot negotiate trade deal yet theresa may arrives in washington today with a deal, a has putal that liam fox together, traveling with her. the question is how far can she go with it and what can be done

at this stage? i think very little but the trump administration has made it clear that it wants to do a deal. when you put that together with the mexican relationship and the u.k. relationship, donald trump is seen to be more protectionist globally. a a result of which, from u.s. point of view today, there is definitely going to be a desire to say -- we are open for trade and we want to do a deal with the united kingdom. it will be interesting to see if the prime minister can take advantage of that. anna: theresa may clearly wants to point out the ways that they see things in a similar fashion but there are differences in the worldview including globalization and the way they view russia. guy: and there is the view of torture. she does not want to go wherever donald trump goes, that is clear

and downing street is making that crystal-clear at the moment. but i suspect she will emphasize the positive rather than the negative on this trip. the focus is on trade and security in some ways the yetrity issue is easy and difficult at the same time. you highlight what is going on with russia and the torture issue is there but we do have the issue of nato, the u.k. pays what it is supposed to pay unlike its european peers in which maybe they can stand shoulder to shoulder on that issue. anna: in terms of the politics back at home, how find a line is theresa may treading? note have been some voices, happy that she is making this trip so early in the presidency of donald trump. guy: jeremy corbyn is not happy. he has made it clear that there are risks to the u.k. in cozying up to the president.

given what he stands for, many in the u.k. would agree with him on that but many would see this as an opportunity, a chance maybe to make brexit work. and if you are on that side of the fence, this trip is incredibly well-timed. what homeaden out means. it could currently mean euro. if you are watching from the rest of europe, this will be raising concerns. how far the u.k. goes in this relationship at this stage, the early stages of brexit before article 50 has been triggered is interesting and theresa may needs to balance that as well. if she goes too far towards the washington side of the fence, that might make life harder for her in negotiating with the eu. guy johnson is covering theresa may's trip to washington. scrappedan president

history to washington after donald trump double down on campaign promises to rewrite nafta and charge mexico to build the boulder -- the border wall. and the u.s. has floated the idea of imposing a 20% tax on all mexican imports. thank you very much for coming in so early for us. a lot to talk about. let us talk about the u.s.-mexican story and the trade conversation taking place. i have this chart here. cute nature of the trade balances between the u.s. and various other countries. in the blue and purple we have mexico and canada. in the white we have china. if this is the kind of fight being picked over what is actually a small contributor in the overall scheme of things to wait untileficit, conversations start between donald trump and the chinese i

guess. >> there was a lot of teeth not forget that donald trump has been talking drop the campaign trail about a 45% terrorist on chinese imports into the u.s. , you canof materiality worth of0 billion imports from mexico, and a iff is what hear could use to build the wall. be the u.s.at would consumer paying and not mexico. >> it would not stand this great need of real interrogation of who actually funds the contributions towards the wall and what retaliatory measures

you might get from the mexicans. we have not firm -- we have not side mayt the mexican choose. let us talk a little bit about the u.k. visit to the united states. this shows the trade relationships from the u.k. perspective. big trading partners is germany, the u.s. and china figures there. the relationship between the u.k. and the u.s. is incredibly different from the u.s.-mexican relationship. explains a long way to why there may be an earlier deal on that front. up, butnk i picked it there may be a memorandum of understanding. the u.k. authorities are constrained for more than two years from signing a formal deal but something that might indicate what donald trump might want to do on bilateral deals

and a nod in doing a deal with an old ally. the u.k. could wave a piece of paper. it would be important. but the response function from the european union will be key. in her speech last night to the republicans, she put a lot of pressure on europe through the defense route calling out a number of countries who are not contributing their 2% of gdp defense target. and with tensions on the eastern border of europe, that is going to be interpreted very cautiously in the european union. anna: what would a good deal for the u.k. look like with the u.s.? would it be around banking and freedom of movement? is that where the conversation will focus? trade surplusarge with the u.s. on the services

side, financial services and healthcare services so there is the opportunity on the good side costings to source lower production particularly in the health care space which may be of interest. in terms of the markets, the desire to expand on financial services and offset potentially losing the passport to the european union, will be key and that is where the focus will, and what liam fox has put together. anna: thank you very much. the european union finance ministers are meeting in brussels from 8:00 a.m. u.k. time to discuss a financial tax as well as the region's growth survey. growthsts expect to see albeit at a slower pace. atwill get those details 1:30 p.m. u.k. time.

and theresa may wellhead to the white house to meet president trump. she is a first global leader to do so since he took office. coming up on the program, japan on target or not. sachs japan vice president if the boj 2% target is on track. the views on brexit and theresa may's trade talks with donald trump coming up. and we speak to the ubs ceo regarding the bank's latest work. this is bloomberg. ♪

anna: welcome back everyone. looking at live pictures of hong kong. beware that many markets in the asian equities session are into monday asd well. 6:19 a.m. in london.

here is juliette saly. ubs profit more than tripled in the fourth quarter as rising interest rates and a rise in equities boosted the security unit. 800 48 million francs, far exceeding estimates. thosel be talking about numbers at 640 5 a.m. with ceo sergio ermotti. missed estimates. alphabet reporting more than $3 billion in capital spending. shares fell more than 2% in extended trade. microsoft quarterly sales and profit beat as to -- estimates. upe consumers are signing for cloud services and stabilization in the personal computer market. shares gained at -- in after hours.

toshiba's board meets today to discuss a range of turnaround options. the sale of part of its chipmaking business will be on the agenda. the company is facing up to $6 billion in right downs. to sheba will hold a press conference at 7:30 a.m. u.k. time on its chip spinoff. zeroresident says terrorists in europe is a must-have. tie-in topositive what he heard from prime minister may. >> i think we are really encourage with what we heard rum the prime minister around her premise of a zero tariff environment. 12 million automotive jobs in europe. we build engines here in the u.k. we export them to europe and we import them back to europe. zero tariff environment is a must-have. juliette: that is your bloomberg business flash. you. thank

japan's consumer prices fell in december for a 10th straight month but the pace of decline eased. down 2%.was a pickup in oil prices is likely to draw inflation but questions over lackluster consumer spending and slow wage growth. we speak with kathy about the boj reaching its inflation target. >> given that most forecasters assume that will not happen immediately although as i said inflation momentum should be improving later this year, it is likely to result in the reality that the bank of japan is unlikely in our view to dramatically change the current framework. anna: the japanese currency dropped against all of its major peers as the bank of japan boosted its purchase of ons --

of bonds. give us your thoughts on this. we are tracking japanese inflation. japannt out also that the cpi, in blue, year on year. people are getting excited about this small uptick. is the worst over? >> no. there are a couple of temporary factors that kathy spoke about and the food and the oil price dynamics and a weaker yen and recovering commodity prices, those are base fx that will have transitory impacts and have in the last decade on the japanese economy. what you really need is a cultural shift towards regular pay rises, nominal pay rises on the order of 2% or 3% in line with productivity growth.

haskinds of things that abe asked for in the last several years. the corporate sector has not responded. that that cultural shift will actually lead to the bank of japan hitting its 2% target. anna: it is about wages. you called it a cultural shift. that this is a global conversation. trees are made talking about spreading the benefits of globalization further while we hear donald trump talking about that subject as well in his way. how does a government like abe's nudge companies to pay a higher wage? planen the bank of japan's evolves to targeted helicopter money and only rewards those pays that are passing on

increases and you start to get a monetary policy looking like fiscal policy rewarding the right kinds of behavior. i think we are not too far from that in japan. that getting the money to the corporate's? -- to the corporates? oflook at the purchasing japanese equity, we rd have some targeted interventions from the bank of japan. it does not take much of an ideological leap to change parameters and purchased the corporate debt of those firms doing the right behaviors and i do not think that is far off from where abe is right now. chart --king at this the thing i want to point out is the purple line. this is the jgb yields. they are trying to keep this

around 0%. they have been trying to keep it there. do you see this as a policy that is working? >> i think it is working and it is one of the positives of the policy framework at the moment. they won't change a because they have bought themselves a lot of time. 2019 2% target is a long way. would we have foreseen much of what has gone on both in economics and politics if we looked two-year's ago. they won't want to be in wait and see mode and be mindful that the current policy is effective in passing along low debt servicing costs to the consumers. anna: thank you very much simon french. we had to brussels where european finance ministers are meeting. their views on brexit and theresa may's trade talks with donald trump. those topics may not be on the agenda, but certainly the brexit

conversation is front and center. we will have some comments from some of the finance ministers attending that meeting right here on bloomberg daybreak. this is bloomberg. ♪

anna: welcome back everybody. it is 3:30 p.m. in tokyo. the dollar is higher against the yen, 115. the boj is stepping in to buy bonds. impacting the currency market. new edition of daybreak is now a bailable. let us take a look at some of the stories. the cover story is opposites attract. the british prime minister hopes so i had of her much touted meeting with donald trump. she made these comments on the plane over to the united. she asked reporters -- haven't you ever noticed that opposites

attract? that was according to our reporter on the plane. bank outfirst european of the box with earnings. the ceo coming up on this show very early -- very shortly. the numbers looking good. shell --focuses on sea asset on north sales. it is close to devasting about 3 billion in north sea assets. asian stocks head for a weekly advance while the yen extends its slump after the boj's latest round of bond buying. naomie: -- nejra: i am starting with the yen, and we see it weaken against most of his peers underscoring its commitment to steepening the yield curve. dollar-yen, against the 10 year

yield in blue and the 10 year treasury yield and purple. what you are seeing is dollar-yen at 115. the yen extending its biggest decline in a week. the 10 year yield down one basis points, we are at 0.08%. the 10 year treasury yield is pretty much unchanged at two point 51%. how this is translating in the equity markets -- unchanged on the index. but it is heading for a weekly gain and trading near its highest level since september. a number of markets are closed ahead of the lunar new year. sessions shortened that japan is still trading and on the weaker yen we are seeing some strength in japan as you can see here. japanese stocks of approaching a one-year high. topix within a few points of that peak.

here to take a look at the cross assets. s&p 500 came off the record high yesterday. bloomberg dollar index, higher. the yen down. bit of a weaker sterling. here is japan's five-year yield basis points. two looking at commodities, brent crude and wti are pretty much unchanged but gold is down for a fourth day heading for its longest slump in three years. anna: greece was top of the agenda at the eurozone meeting on brussels -- in brussels on friday. creditors will not unlock future eight unless athens needs its reform promises. today, they are joined by non-eurozone prime ministers.

how -- theresa may and donald trump not on the official agenda of this kind of summit but how has that visit gone down in brussels? does seem quite upsetting to this meeting. according to some finance ministers. the most outspoken about this was the french finance minister. i spoke with him yesterday here in brussels. -- itim if this meeting asked him if this meeting was going to make the brexit negotiations more complicated for the eu? theresa may can see whoever she wants. i understand she goes to see the new u.s. president. she is not going there to negotiate. neither she nor mr. trump are in a position to negotiate.

it is a courtesy visit. >> theresa may is not in a position to negotiate. that is a view of the french finance minister. the threat from the u.k. to lower taxes if they do not get the brexit deal that they want is a concern for him but he says it does not scare others when you are trying to lower taxes so i do not take this seriously. technically, the u.k. is legally barred from entering any trade agreement with the united states until the brexit is actually done. and that is the reception that we got here for this first meeting of the year. anna: you also spoke exclusively to the portuguese finance minister of midst fresh concerns about their economy. what did he tell you? >> it was a timely conversation

because last night we had many concerns from eu officials about portugal. the managing director saying that the markets will never allow portuguese debt level and that is something we can see in the bond market. even if portugal narrowed its inicit to the lowest level 40 years, we are still seeing the 10 year bond yields for the spread with germany is higher than three points. i asked the portuguese finance goinger whether this was to cause any problems for the portuguese government. >> i think the liquidity of our dead magic -- debt management agencies is quite good. we have a cash buffer that is large enough to face the year in a comfortable position. i think the challenges are there

but we are preparing ourselves for that. the portuguese finance minister is confident that portugal will not have to use its cash offer and the volatility in the bond market should fade away. anna: thank you very much. joining us from brussels. simon french is still with us. let us talk about europe and the summit. all of this talk about the special relationship. banking reforms. the annual growth survey and macroeconomic imbalances are on the agenda but we know brexit will be talked about in the corridors. covered't think sapin himself with glory by suggesting

it was a courtesy call and they could not negotiate. they can say that the u.k. is not free to sign any free trade deals with third-party countries. cannot stop diplomacy from taking place which is already taking place and memorandums are already being drawn up. ofhink there is an element speaking to the gallery rather than accepting realism. anna: in terms of the actual agenda and greece was very much part of the conversation yesterday and crucially around the ims role in further greek negotiations. >> we got the outcome of that being that there was ongoing commitment to hitting the 3.5% primary surplus target almost in perpetuity for the greek economy but the backdrop is much less tolerant, less political tolerance for tsipras around the

idea of this continuing without material that relief and the imf being a key constituent to that. i don't think we progressed any further. i think we saw a little less of economic scenario in greece. there is much more to come. anna: to break into the conversation about europe, we want to update viewers about breaking news out of hong kong. the yuan deposits in hong kong. 546 billionber, yuan. falling by 12.9% month on month. the biggest fall on record. falling by a record 12.9% month on month. back to the conversation about europe. what is your big concern when you look at ahead at the jampacked political agenda?

this is the french election. this candidate is in the lead. this is marine le pen in blue. a lot of people say that france is very much a talking point and illustrates the challenges that europe faces. is marine le pen likely to win? many people say no. or has odds check o fillon winning. what is interesting is the research of this third-party candidate. of marine lement pen versus her up on it, i firmly believe marine le pen will win that.

his -- if her opponent wins, i think he stands a good chance to win. anna: simon french, thank you for your time. we will take a short break here daybreak and when we come back, we will hear from the ubs ceo. we will be right back. this is bloomberg. ♪

anna: very warm welcome back. this is bloomberg daybreak: europe. be fairly we will flat at the beginning of the trading day. focusing on the relationship between the u.s. and mexico. the conversations with theresa may set to take place. ubs beating estimates thanks in part to a surge in their equity trading revenue. they had a record revenue period. the dividend looked broadly in

line with estimates. sat down with the ubs ceo sergio ermotti and this is that interview. 2016 was much more challenging than what we saw in 2015. the good news is that the benefits of our diversified business makes us geographically and in terms of activities have contributed once again to manage this environment. i think investor confidence is there. talking regularly to clients and investors about that and we do see a readiness in notning for investments in only potentially financial markets but also in underlying businesses. but it is quite clear that investors are looking for concrete actions by the new u.s.

haveistration in order to them go into investment mode. manus: have they physically changed and moved to transaction mode? in ao: not really meaningful way. you do see particularly in the u.s. better momentum although i have to say that the fourth quarter in the u.s. was a positive one post elections. but if you look in general outside the u.s., i think the situation has not changed a lot and also for a good, fundamental reason. if you look at the situation in europe in general particularly on the political side and in asia, there is still room for improvements. manus: let us talk about outflows. seeing the end of these

regularization? q4 thiswhat we saw in year was an acceleration of a thatss of regularization we will be going through as the automatic exchange of information is applied globally. there is a phase for emerging markets and in some asian markets this is now executed. outflowsect similar that we saw in 2016 for this year. manus: let us talk about investment line. you went fixed income light. on what thet beat market had penciled in for you. talk me through what the success was in an equity heavy investment bank. is indeed inuccess

equity. the investments we have been making in the last couple of years to rebalance our business mix and make it a little bit more towards the u.s. and it is paying off. if you look at our u.s. businesses in general and equities in particular we have been doing a strong performance. when you look at also a little bit more activity elsewhere, it helps sustain the business. manus: everyone is looking at america. there were hints that there could be deals in the offing and you may be looking at m&a. will you scale up on wealth management? when will you shift gears in the u.s.? sergio: we are already convinced about what we do in the u.s. our wealth management business in 2010, we were losing $150

million pretax. momentum in the u.s. from an organic standpoint is still very good and we are very focused on growing organically. but as i mentioned in the past few times, the time of consolidation in our industry is clearly starting and it is almost inevitable to address both overcapacity and in some cases profitability issues. want to beou say you one of the players in that consolidation? sergio: consolidation is one option but not the option. we have to always look at what fits into our strategy. we have a clear strategy and we ourot want to dilute strategy for the sake of consolidating. a marriage, be strategic and financial in doing that so we are open to exploit

any option that makes sense and accrues value for our shareholders. ermotti speaking to manus cranny. european finance ministers are meeting today in brussels. finance minister and deputy prime minister are meeting with us exclusively. thank you very much for joining us today. i want to get your thoughts on brexit and in particular, some comments at your interior minister made. he said that the czechs should break away and negotiate a separate deal with the u.k. over czech citizens living in the u.k. do you share that view? >> good morning. i do not think so because we are a member of the european union and we should negotiate together. we have parliamentary elections in october in our country so

some politicians are already active and they want to be more funnyr so they have some ideas. so of course we will negotiate together. will make a clear in announcement about brexit february so that will be the first opportunity to really start to negotiate. and the u.k. should activate article 50 to speed up the process. czechthe rights of is clearly the u.k. a priority for you, finance minister. theresa may said she tried to do an early deal on citizens of other european countries that many did not want to do that deal. who stopped that from happening? >> we are ready to negotiate toarately, it is a priority

save the position of our citizens. of our about 40,000 people working in the u.k. and this is very important for us. we would like to keep our trading relations because the u.k. is very important as a trading partner for us. priority, the possibility to work in the u.k. for our people and stay in business is still very important to us. anna: would it make sense for countries to come together to try to do an early deal on citizens? think we have the same view with poland and slovakia and hungary as well so i think we will find the same position to negotiate. it is possible that we could

negotiate separately. anna: you think the group could negotiate separately with the eu -- from the eu? >> ok, i mean we have a different position because like the other countries. it could be separate all theions but finally eu member states have to find an agreement and hopefully, europe will be active and we will find the common and final position for negotiations. anna: what did you think of theresa may's speech last week? what does it mean for the kind of brexit that could be achieved? brexit which was a surprise for me. we will see what is important is important it

for the u.k. to fulfill its financial obligations to the eu budget and we will see if we can find some solution like switzerland and norway has -- have with the eu. anna: you think that could be the future? the u.k. says it does not want that kind of deal and it wants something different. >> i don't know. activateshould quickly article 50 and sit at the table and tried to speed up the negotiations because the uncertainty for eu members, for the u.k., for the stock market -- it is not very good. we have to have a clear picture and try from both sides to reach a final agreement.

anna: minister, turning to the united states -- donald trump says he thinks the eu will break up. what are the chances of that from your perspective? .> look, we will see mr. trump is very active. he takes a lot of decisions. see if what he was saying during the see if what hs saying during the campaign -- if those things will be realized. europe is very slow, very bureaucratic. i have my own experience. and thehting here commission is limited -- has limited our proposal. have already put it on the agenda for a half of a year. sit together at the table with mr. trump and your prime minister and the president of russia to solve the problems

of what is going on. this is a problem of europe. europe is too slow and too bureaucratic. peopleinister, some describe your party as a protest or popular party. have you been inspired by anything from donald trump? meno, he was inspired by because i was first. and our movement, we are not populist. we are problem-solving. and a common sense party. theso as minister, i have best budget in the history of our country. last year i had a surplus, i reduced that by 2.6 billion euro. debtse one of the lowest in europe. and i came from business and we

have the results. i'm so sorry, we are up against a heartbreak. very good to speak to you. this is bloomberg. ♪

♪ brews on thear border. the mexican president canceled his trip to washington after trump pledges to rewrite nafta and make mexico pay for the wall. a special relationship. may meets with trump in the first meeting between the u.s. president and a foreign leader. the u.k. prime minister hopes to lay groundwork for a post-brexit trade deal. to boj buys off more bonds keep yields low. the yen extends its just decline in a week. ubs ceo sitcom. in the fourth quarter. we break down the numbers. ♪

anna: very warm welcome to daybreak: europe. i am anna edwards. a busy week already. earnings coming through from the telecoms business in the u.k.. revenue ofg adjusted 6.1 3 billion. members coming through. is seenderlying revenue as broadly flat. they described a challenging outlook in the u.k. public sector. what we heard from the earlier was very much around their accounting unit and the write-down they were taking there. also cautious words coming from bt earlier this week about the u.k. public-sector and its ability and inclination to spend. somebody to lead

their italian business after the u.k. scandal in the unit? that is a question hanging over the business. on tuesday, the company suffered 21% stock drop after lowering its profit outlook. weaker performance in international corporate business. those numbers coming through from bt this morning. let's look at the futures. muted trading in asia, partly explained by markets over there are closed. we have some trading in other parts. trading in japan, this is the picture of the european starks at -- stocks at the start of trade. stronger, the ftse 100 up about 1/10 of a percent. let's show you where we have been on risk radar in assets. the boj is part of the story. they step in to buy bonds this

morning. aiming to keep that 10 year 10%. around the rally in the dollar against japanese currency and the yield on the jgb, the 10 year in japan with a move. japanese cpi, we discussed that last hour. is the worst over for the japanese cpi story? not so, simon tells us. downside ise to the suggested at the start of trade. tensions on the u.s./mexican thingsweighing on yesterday. the dollar against mexican peso there for you. we continue to see weakness in the mexican currency after yesterday and the rhetoric and counsel visit by the mexican president. a quick look at bond yields. we have already mentioned the story out of japan. where we are on others.

, tormation on tesco purchase about 3.7 billion pounds. this is going to be offered at 0.861 new tesco chip -- shares. stock cashy much a element. buying that other retailing business of a much smaller variety in the u.k.. the deal is expected, the merger will be beneficial to metrics. it will provide a mix and match facility. more details coming out about booker this morning and tesco's purchase of it. once get the first word news. juliette: thank you. pushedxican relations closer to a trade war. tripresident scrapped his

to washington after donald trump --bled down to read right rewrite nafta. the trump administration retaliated to the cancellation by floating the idea of imposing a 20% chance of all mexican imports. ubs profit tripled in the fourth rally infter a equities boosted the unit and wealth management. bloomberg's manus cranny spoke to the ceo. >> the most important thing for me is to see our clients are optimistic. there is a little bit of positive momentum, particularly with u.s. investors. turningthis could be a point, but it is important to see that the administration also puts in action their plans and gives our investors more confidence. juliette: german finance

won'ter says creditors unlock financial aid to keep the country afloat unless the government in asset -- athens keeps reform promises. this after a meeting with his greek counterpart ended in disagreement. reese has less than a month to iron out conflicts to move forward with its package. japan's consumer prices fell in december for a tent straight month. is pace of decline supporting expectations for a returning inflation later this year. cpi down from a year earlier, a weaker yen and pick up an oil prices likely to drive of inflation. delayed by lackluster consumer spending. global news 24 hours a day, powered by more than 2600 journalists and analysts in more , you can findries more stories on the bloomberg. has anna said, a fairly muted session in asia ahead of the new

year break. china closed, it will be closed all next week and hong kong had a shortened session. but flat on the hang seng index. of 1%. low by 4/10 elsewhere, japanese equities have rise further. the boj just trying to maintain its yield curve target ahead of its meeting next week. the australian share market had a good session, up to 8/10 of 1% by the close. a little positive movement coming through from new zealand equities, up by one third of 1%. analysts at bloomberg here in hong kong said for the year of the rooster, which we will start , casino and transport stocks are where you could see some value coming through in the new lunar year. also awaiting a press conference from toshiba, share prices close higher at half of 1%.

that should allow the conglomerate to sell off a stake in the business and raise much needed cash. fairly muted trading across asia, a lot of markets closed for the lunar new year. anna: thank you very much. willritish prime minister become the first world leader to meet president trump at the white house later today. the groundwork for a trade deal as the u.k. prepares to leave the eu. she told the congressional -- she hopes talks with the u.s. will be pursued in the coming months. trade deal must work for both sides and serve both of our national interest. it must help to grow our respective economies and to provide the high skilled, high paid jobs of the future for working people across america and across the u.k.. has followednson theresa may across the atlantic.

he is live in washington. great to see you. what kind of agreement can be negotiated at this time? french,eminded by the the u.k. is tight or some extent. as they remain part of the customs union, they cannot negotiate freely. you would expect some deal to be put in place with the trump administration, which seems keen to do so. i expect theresa may will have some sort of a deal that she brings with her. putting has been together broad outlines of an agreement. i expect the two will discuss it. this meeting will focus on trade and on security. i suspect we will see both issues raised. trade? i think the process starts here. process starts here. will the prime minister confront trump on issues they don't agree on? we heard a little bit of it in diplomatic language yesterday. guy: we heard some of it, but i

suspect we may hear more of it later today. on the plane, she briefed reporters, expressing concerns about what donald trump had said about the use of torture. then comes the issue of russia. this is when life gets interesting for theresa may. in some ways, now that president obama has departed, the u.k. is the most outspoken critic of vladimir putin. she needs to find a way of softening the line, yet finding a way of maintaining that kind of stance. it was interesting what she had to say. thatcherent on the /reagan relationship as a way of healing this. comes to russia, it is wise to turn to the example of president reagan. during his negotiation with his opposite mikael gorbachev, the adage trust

[applause] with president putin, my advice is to engage and the wear. guy: the big question is, will theresa may the the margaret thatcher to donald trump's ronald reagan? i know the latter would like to see it in those kinds of terms. theresa may perhaps won't be quite so keen. but as she says, opposites attract. anna: guy johnson in washington. winky. joining us on set, expert strategist. jordan, good morning. we will talk about the dollar and the peso. there has been a great deal said and a great deal of concern about the relationship between mexico and the united states. what are your broad dollar calls? 's you believe trump can deliver higher growth and that nationally leads to a stronger

dollar. is that where we had? >> i thinking -- definitely provide inflation. tax cuts and tax reform. taxer-adjusted tax and 20% he is spending on mexico, those are two ways to provide a sharp rise in inflation. for the dollar, the big call the difference between the tax cuts and the protectionism. the protectionism could be what sees the end of the dollar rally. the next few sessions, markets are more concerned about u.s. in terms of infrastructure and tax cuts. the mexico story is interesting and consensus is that protectionism is good for the dollar. we have the opposite view. we think the dot -- dollar will eventually peter out. but for now, the bulls will prevail of -- in the dollar. eventually, protection will kick in. u.s. might not provide the kickoff. anna: why are you on a different page in protectionism and the

dollar 20 say is consensus? jordan: it is highly inflationary and not growth inducing. especially the 20% tariff on mexico. real yields will decline in the u.s., a less attractive investment for investors. news one seconds, breaking from the chancellor. philip hammond is in brussels, speaking right now to reporters in brussels. he says britain remains a fully engaged member of the eu. u.k. will abide by rules of the european union. hammond says he wants to strengthen trade ties with partners. perhaps in the context of theresa may's visit to washington. sorry, back to the conversation about the u.s.. there is a lot going on this morning. lots of things to juggle. interesting to consider the role of the dollar as part of the architecture of global trade. i was reading research this

morning, talking about what happens to the dollar if the u.s. is the country that wants to step back from global trade and it is the u.s. dollar that we all used to do these deals. indan: chinese is increasing global trade, but it has yet to be the common denominator in commodities and others. when you buy oil, it is against the dollar. its actually quite hard to do at this stage. some of it will take a long time generation. then you have the decline of the dollar as currencies increase. anna: but china would have to change before that would happen. the peso breaking through three standard deviations. the peso was not on every fx experts radar until donald trump came along and it was something we all watched. we all know what happened in november.

the peso continues to decline as we witness the tensions around the border. ramifications to the relationship -- does it tell us something meaningful about the way donald trump will operate and what to expect in other conversations? for example, with china? jordan: i am worried about the way he handled his foreign diplomacy. the trip was canceled not because of the phone, but because of twitter. as my boss put it, the revolution may be tweeted. we may hear about breakdowns with china, the eu, at a tweet at 4:00 a.m. from an android vice belonging to die -- donald trump. from the mexican side, it is an easy story for him to pick on mexico and deliver on early promises. the mexicans export far more than u.s. due to mexico and rely on many other things on trade and security. that is why it is an easy target. was said,ink it

merrill lynch putting into context the proportion of the trade deficit canceled by nafta is small compared to china. we will wait for the conversation. thank you, jordan rogers. forng up, challenging times bt as they see flat results. we will discuss outlook next, this is bloomberg. ♪

♪ welcome back. 8:19 in berlin. a live shot of berlin for you. the brandenburg gate. pretty flat at the start of the european equity trading day. a lot of news floating about donald trump and mexico and the relationship with between the u k and the u.s.. lots to talk about. markets look to be muted. let's get a business flash. juliette: thank you. google's parent missed profit

estimates in the fourth quarter after spending on promoting new consumer hardware. alphabet promoted capital spending in the period, from the year-earlier. shares fell more than 2% in extended trading. toshiba's board meets today to discuss a range of turnaround options, the sale of part of its chipmaking business will be on the agenda. to $6mpany is facing up million in write-downs and toshiba will hold a press conference shortly on its chip spinoff. more than tripled in the fourth quarter as rising interest rates and a rally in equities boosted the securities u.s. wealth management. , far exceeding analyst accidents. manus cranny spoke to the ceo. >> the most important thing for me is to see our clients are optimistic. positivea little

momentum, particularly with our u.s. investors and clients. i think this could be a turning point. it is important to see the administration puts in action their plans. to get our investors even more confidence. juliette: that is your bloomberg business flash. anna? anna: thank you. let's focus on corporate reporting for a moment. accounting hit by an scandal in italy this week. they say they also face a more challenging outlook in the u.k. for risk sector. set.e joined on hannah, great to have you here this morning. behind the profit warning in corporate markets, what do today's results tell us question mark -- tell us? >> we see a decline come as expected, as we had warnings at the start of this week. if you look at the consumer segment, where bt is proving resilient, we see healthy

broadband at 6000. also, tv seems to be solid as well. in thes resilience consumer segment that could help the business segment. had: also the comment they about the u.k. corporate world and the u.k. public-sector. partse ability of those of the u.k. economy to invest at this time. they seem to be underlining that today. the face and more challenging outlook in the public sector. are the attributing this to anything? >> the problem is, the little projects coming to terminations, they are not able to replace it. local governments are not coming up with new contracts. this is something they cannot replace and as a result, they see double-digit decline. side, this iste the signs of brexit. anna: interesting element. thank you.

analyst for bloomberg intelligence talking about brexit. jordan is still with us. starting to is weigh on corporate spending, investment spending. sometimes there is a lag on that kind of data. jordan: i think everyone is looking for the canary in the coal mine. it hasn't fallen over, maybe a little cough. andou look at consumption gdp up until now, very good. retail sales number of the lower than what people expected, but you have five months of growth above 6%. you see consumers doing well in terms of corporate's. ,he only signals are noises anecdotal, in terms of surveys. pretty mixed. anna: the data isn't really the main story for the pound? this chart, you will get to see in a moment. the whitebasket in line and gdp forecast in the purple.

2015, these are in tandem, not in 2016 and this year. for clues around the u.k. economy, but in the meantime, u.k. politics is at the fore. jordan: markets are good at understanding asset classes. economies are not ghosts -- so good at politics. what we need to grip is how bad is brexit? one thing we are looking at is a, the free trade, recently and donald trump have the meeting. the second, is the financial services aspect. certain banks reallocating jobs to different parts of the eu. credit suisse saying 150 jobs to go to dublin at some point. what affects that has on the fdi. anna: parts of businesses leaving would have on current account balance in the u k, how much it would weaken and what that does to the pound. jordan: some clients told me i

need to start showing up in black suit and black tie. kind of like a funeral. thee is some good news, but point is if we do have a financial exodus from the u.k., if there is a cliff edge, theresa may walks away from a bad deal. no deal as opposed to a bad deal, then you have around 14% of our exports, the financial services aspect, around 7% of gdp. that could weaken the account further. you have a lower sterling. good news, a regulatory environment in january. whatever deal she may come up with europe in 2017, you could have equivalents plus or enhanced third country machines. ableng in the u.k. may be to operate with the eu wants brexit is done with. anna: to what extent can she strengthen her hand and the pound by getting some preliminary positive signs with

the u.s.? jordan: that is part of the parcel of the free trade side. the financial services, mark carney worded it well. financial instability from brexit has subsided for the time, but he said when it comes to european partners, it is still there, the risk. they are starting to acknowledge -- the chief negotiator for the eu side in discussions, he has pointed out financial stability is key for him in negotiations. he wants to avoid this, too. anna: thank you for joining us jordan rogers. expert strategist. that is it for bloomberg: daybreak europe. we have markets, european open coming up next. we will not be moving far at the start of european equity trading. there could be 1/10 of the percent to the upside, a little stronger than that the futures suggest.

but not a great deal this morning. we have u.s. futures looking broadly flat, as well. a lot of politics to talk about this morning. they will be doing that throughout the day. this is bloomberg. ♪

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only xfinity gives you more to stream to any screen. download the xfinity tv app today. ♪ >> good morning, you are watching bloomberg/markets. your first trade of the day is coming up. i am guy johnson. d.c.,in washington, alongside matt miller in berlin and here is what we're watching. a mexican standoff. the u.s. edges towards it trades were with its southern neighbor. this as trump floats the idea for a 20% chance on imports. will this war of words become a protectionist story? the trump card. u.k. prime minister