francine: flynn quits. the white house national security adviser resigns amid allegations of improper contact with russia. manus: global reflation stirs. china's producer prices surge the most since 2011 as consumer prices rise above estimates. francine: credit suisse reports. we break down the numbers with the ceo this hour. manus: plus don't miss an exclusive conversation with alexandra ricard. we speak to him about trade, politics, and how it could impact his business. ♪

francine: a very warm welcome to "bloomberg daybreak: europe," our flagship morning show from london. manus: we're waiting for a couple set pieces. credit suisse getting those numbers. i think it is the resignation we'll spend time on in terms of the sentiment. these markets are still rallying. me bring you these moving parts. the dollar extending losses, and some will be seeing a little bit of that, reacting to michael flynn resigning from the national security advisory. that's the sort of line you can draw. it seems a bit tangential. does this tell us anything about trump's ability to implement policy? manus: mitsubishi would say -- it's a little bit of a moment for the dollar, but it's not

exactly going to pound it into the ground. the damage to the dollar from the resignation will be moderate and limited. the chinese data, as you said, has that reflation headline driving the aussie dollar. business confidence is the highest in more than nine years. anna: exactly. double punch for the aussie dollar. nikkei 225 down, that's a dollar story, because as the dollar weakens, the yen is stronger, taking the edge off that index of japanese corporates. this on a day -- politically the s&p futures in. we have yellen speaking later, a 30% chance of a hike priced in for march. lots to watch there. but the s&p hitting a fresh record. manus: in terms of valuation, reported,0 -- 358 had 72% earnings growth, but you haven't seen valuations like this since 2004.

timing, we are going to get a little bit of credit suisse coming in across the bloomberg terminal. we're waiting to see what the of -- they terms took that mortgage backed securities hit. in the meantime, let's get the first word. rosalind chin is standing by. rosalind: thanks, anna, manus. a white house national security adviser, michael flynn, has resigned amid a deepening --troversy amid flynn's departure adds to disarray in an administration this set by a wave of protests and a court order that blocked his travel ban on seven predominantly muslim nations. steve mnuchin has been sworn in as treasury secretary.

the former goldman sachs banker had to defend his record. he was accused of controversial foreclosure practices. he'll be steward for trump's economic policy. >> i share your economic vision and goals and am committed to working with you to enact policies to grow the economy and make better economic opportunities for all americans. rosalind: global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . i'm rosalind chin. this is bloomberg. manus: thank you. they came eventually -- the credit suisse numbers for the fourth quarter. the loss is bigger than the market anticipated. 2.30 5 billion swiss francs. the other dynamic is this, the buffers of capital. tier one ratio comes in at 11.6%.

that ater was 12% for the end of september. they have a target of 13% by the end of 2018. and of course, they have that sentiment on the mortgage backed securities issue with department of justice. -- with the department of justice. will they take the charge? but the headline at the moment is a fourth-quarter loss on the 5 billion..30 that's the top line. it seems to have just had a bit of an impact. we'll break down whether ficc did deliver or not. we can come back to it. anna: wealth management, how are those units doing? what about the plans for the banking ipo? the ceo will answer questions on these subjects and beyond. francine lacqua is on the ground to speak to him, and you can

watch the interview at 6:50 a.m. london time. manus: let's get into these markets. juliette saly is standing by. the sentiment seems to be this resignation in the united states of america won't put too much pressure on the dollar. juliette: yes, manus. flynn'sy michael resignation is one reason for investors to stay on the sidelines in asia, but there's caution ahead of janet yellen's speech, and we have some chinese doubt out today. cpi and ppi better than expected, but you are seeing asian stocks halt the rally they had been on, partly because we are at 18 month highs, and this uncertainty about what we will see from the trump administration ahead of janet yellen's speech. looking at the shanghai composite, it's down .2%. there is a little bit of concern that these big rallies we have seen could have been overdone, and as we saw, cpi and ppi came in faster than expected, a

little bit of concern we could see tightening monetary policy from the pboc. toshiba, it ist one stock that has been plummeting today, down 8% in tokyo trade. we did here in the last hour that it has applied for an extension of its earnings that were supposed to come out today but will now come out on march 14. in singapore, reports that -- we saw nikon coming under pressure following a profit forecast. quite a bit of movers in the asian session today. anna: juliette, thank you. juliette saly with all the big movers in the asia session, joining us from hong kong. just over three weeks into trump 's presidency the white house national security adviser michael flynn has resigned, amid allegations of improper contact with russian officials. manus: general keith kellogg has been named acting national security advisor. he was his chief of staff, joining us now on the phone on

this subject is our executive editor for bloomberg news, craig gordon. thank you so much for joining us, staying up late. this is a little bit of a shock. it looks as if it wasn't expected, and it's tied, potentially, to the controversy of improper contact with a russian official. give us the details. >> absolutely. outthey started thinking that he was standing by his national security advisor, but as the day went on we started to get signals, kellyanne conway, one of the communication strategists, was behind him. an hour later, sean spicer said, the president is evaluating flynn's behavior. a few hours later, our reporter was on the scene at the white house, saw him leaving the oval office. 45 minutes later, they announced he had tendered his resignation. trump accepted. keith kellogg is in the acting position. quite a dramatic turn of events over the course of 12 hours. anna: quite a dramatic turn of

events. we also have steve mnuchin confirmed as the keeper of the dollar. what do we know so far about his sentiment toward the u.s. currency, and how he is going to evolve other parts of the world in trade? >> it seems like he has taken a somewhat more moderate stance then trump. as we all remember, trump talked about declaring china a currency manipulator on the first day. obviously that didn't happen. chin said he would do it if it were warranted, but didn't feel it was warranted at this time. he has talked down the dollar a little bit, saying that a too strong dollar can be harmful to the economy. that is blasphemy in washington, generally his job is to promote the glories of a strong dollar, but he is saying it has a drag on trade balance. they are trying to do that. he is walking a much more fine

line then donald trump. so far trump seems to be fine with his comments and letting him have his say. i think the interesting thing to watch is in that the three or four weeks it took for him to get confirmed, gary cohn, the former coo of goldman sachs, has kind of stepped into the role. he announced the dodd-frank rollback, and cohn has been involved in a lot of these meetings. we've already had a lot of power struggles inside the white house national security apparatus. we may be setting up for one inside the treasury department as well. manus: there's a bit of batting back on the potential litigation from europe in regards to a border tax. sort of fighting from the administration. we can defend anything -- but they are moving toward a consumer-based -- a potential consumer based tax. >> that's right. paul ryan, the speaker of the house, a leading economic thinker in the united states government, has talked about the

border adjusted tax, where you would put a tax on domestic earnings and on imports and as ats, get a free ride way to encourage companies to manufacture here and exports your. -- export here. the wto might have something to say about that, because it does on level the playing field -- it does unlevel the playing field. chesty commentsving today, saying that the plan will stand up to any scrutiny from the europeans. i think this is going to be a debate we are going to have. paul ryan and trump are trying to take our tax policy in different directions, promoting exports, punishing him for it, you might say. we will see if they can make it stick. i think there is sentiment even in the democratic party, so it's not an outlandish idea, whatever the wto might feel about it. i think trump and ryan will push this idea as a way to boost

manufacturing and we will see how it works. anna: think you very much. craig gordon, joining us from washington. great to get your insight. manus: two other lines coming through -- go to top live go, there's a lively debate in the credit suisse numbers. looks like the reputation at the bank is intact. but netion apac, revenue for the quarter increased 23% to 5.1 8 billion. those are the numbers coming through. francine will be sitting down with tidjane thiam, going through these numbers in more detail. anna: and with all the progress they are making, that was certainly something hsbc was watching out for. manus: there is the litigation. provision, which comes in at $2.17 billion in the fourth quarter. that potentially hits the tier

one capital ratio. they settled with the justice department for almost -- i could be rounding. anna: let's bring in our next guest. the cio of lloyd's private banking, great to see you. with some of these developments we have had overnight -- we were hearing from our reporter in washington, editor in washington, talking about a number of developments. flynn resigning from the national security advisor, the confirmation of mnuchin. do you see, when you look at something like flynn resigning, is this sign of more turmoil in the white house, or is this a bit of a sideshow for markets? >> i think the ministration is still finding their feet, and the resignation of michael flynn is one example of what happens -- although it feels like this week, there is a calm heer period coming, and the trudeau

conversations went reasonably well yesterday, which is one of the signs that things are possibly calming down. manus: the other thing is mnuchin has been sworn in. we saw the pictures. the keeper of the dollar. the defender of the dollar. the other thing is the debt ceiling, and this is the debt to gdp ratio in the u.s. we are coming up to a g-20. this is where gets more interesting for the gop in terms of propensity to take a little more debt. are you worried about that? >> not necessarily worried, but clearly it's an important element to the story a fiscal stimulus in the u.s. the tax reform plans of the trump administration and the infrastructure spending plans are quite significant, and we don't know yet how they will be funded. there are a bit of cuts of obamacare around the corner, but that is not even a third of the

funding requirement for the tax cut and the infrastructure spending. therefore it will be interesting to see how the trump administration feels with that challenge. anna: it will be adjusting to see how they deal with it. you had interesting comments in your marks -- investor sentiment index that you run indicated that u.k. investor optimism toward u.s. equities is not unusually high, but that contrasts with boy and sentiments on the other side of the atlantic. is that because the u.k. investors can see the potential in the u.s., or because the investors are overestimating it? >> i think it's generally recognized by investors that u.s. equities are fairly rich in valuation. certainly more attractive valuations can be found elsewhere, in the eurozone for example, but also in the u.k. in some asian markets, emerging markets have become more buoyant. on the back half of the year, capital inflows, an encouraging picture there. it's not a surprise that investors in the u.k. are not focusing on the u.s.

from a global and geopolitical perspective, they do, but not in terms of target investments. manus: let's pick up on the global theme. this is the msci all country world index. we're within a nip of an all-time high, but it is getting incredibly -- if you believe, if you could any value in it at all, potentially overbought? are you still as bullish on the global perspective? >> certainly the u.s. equity market is overbought. we see that in our own investor sentiment, in some technical charts, and that is clearly not encouraging for international investors. neither is it for us. are some, ther e interesting opportunities to select companies and sectors within that, and the technologies sector in the u.s. has continued strong, and i don't foresee that stopping anytime soon. i think revenue opportunities

for technology are still very -- anna: thank you very much. he stays with us on "daybreak europe." janet yellen yellen gives her testimony to the senate banking committee later today. you can watch that hear from 3:00 p.m. u.k. time. bloomberg users can also follow all the news on tliv, top live go. manus: coming up on "daybreak," exporting inflation. china producer prices jumped the most since 2011. we ask what it means for the global reflation trade. anna: saudi arabia says it cut output by the most in eight years. so why isn't oil getting more of a boost? manus: and we discussed credit suisse earnings with tidjane thiam. this is bloomberg. ♪

anna: welcome back, everybody. 6:20 in the afternoon. let's get the bloomberg business flash with juliette saly.

juliette: anna, thank you. credit suisse has reported a fourth-quarter loss of 2.30 5 billion swiss francs, compared with analyst estimates of 2.0 7 billion swiss franc loss. we will bring you our interview at 6:50 john chen at -- u.k. time. toshiba shares plunge in tokyo as the company fails to release earnings as scheduled. the conglomerate has now set a new deadline for the financial segment of march 14 as it continues an internal probe. warned it mayusly have to write down as much as $6.1 billion in its nuclear power business due to cost overruns of the u.s. unit and diminishing prospects for his atomic energy operations. apple shares are the highest on record on optimism. the next iphone will help the company services business. the stock climbed almost 1% in new york. that puts the market cap at $699

billion, making it the most valuable company in the world ahead of google parent alphabet. analysts are predicting a further gain an apple shares in the coming 12 months. glencore has agreed to a $916 million deal that will boost ownership of two giant congolese copper mines. it will sever ties with controversial israeli billionaire -- after his business in the democratic republic of congo and relationship with joseph kabila attracted scrutiny from the u.s. department of justice. it also gives glencore greater control of key assets in a time of booming copper and cobalt prices. that is your bloomberg business flash. manus: juliette,. thank you let's focu thank you. -- rose the most since 2011. producer prices rose in january from a year earlier, beating estimates and boosting global

reflation, poised to give more support to the gains. anna: our guest is still with us. when you look at the inflation numbers coming out of china, do you get concerned about inflation and what the authorities in china are going to do about it, or do you look at the global story and say china is not exporting deflation, and that's what many central banks have been after for a long time? >> different things going on here, as you say. from a global perspective -- and you were just talking about the u.s. -- china is still exporting deflation in the u.s. u.s. inport prices from china are still negative, which is an interesting point, because the currency has been coming down. that's important despite the fact that prices from a chinese perspective in local currency have been rising. the currency development has met that there is still a deflationary, slight deflationary, pressure on the global economy.

i'm not that worried about the domestic inflationary context, because producer price index is largely driven by input prices. part of that is obviously commodities, part of it is wage growth. as of now, there are no signs that this is speeding through to retail prices, or if you look at any spectrum of the domestic economy, there are no signs that the domestic inflation is getting out of hand for the consumer. manus: when you look at china, what we have put together for you is loans. loans and discounts in term so -- that's not what i wanted. here we go. they'r ratcheting higher of iron ore. you have questioned the perspective of this chart. you question the veracity. why so? thatquestion by b.i. is

these have been aggressive and fast, and they will stay over the rest -- would you agree with that? >> clearly, you're right in pointing out that commodity prices play a huge role in china, and obviously also for chinese producer prices. that said, that role is decreasing in importance over the years, because china is shifting away from investments to its services, shifting away from manufacturing towards lessl, and therefore it is important for future growth than it used to be in terms of its influence on inflation. i think what's becoming much more important going forward is domestic wage growth, and that is rising at a healthy level, which you would like to see at that point in time for the chinese economy. anna: that perhaps plays into the u.s. agenda around reducing the incentive to offshore jobs, with other parts of the

developing world available to u.s. manufacturers. the latest inflation data after the case, continuing monetary tightening. do you expect that gradual, moderate tightening? >> i think gradual and moderate is right. if you look at short-term and long-term interest rates in china, they have risen recently pretty much the same as everywhere else. that is what you would like to see. what we have also seen is that short-term interest rates kept pace with the best inflation, which is -- consumer prices have only risen moderately so far, so there's no concern here, and i think the authorities are doing a pretty good job at the moment. manus: thank you so much. he stays with "daybreak europe." up next, numbers from russia. anna: we have the numbers in the last 15 minutes or so, giving details on the payout ratio they

are targeting, saying that m&a activity is expected to be limited in 2017, and giving us the numbers for revenue, looking to be ahead of estimates. this is bloomberg. ♪

manus: it's just gone 6:30 a.m. in london, 3:30 in london. dollar-yen is moving, the dollar just a little bit lower, the yen stronger as we see the first resignation from donald trump. this edition of "daybreak" is available. let's take a look at some of the top stories. cover story? anna:, toshiba of course. shares plunged 11% after they failed to report earnings on time, that is it prepares to announce a write-down of as much as $6.1 billion in its nuclear power business.

kyoto reporting it was due to a dispute with auditors. toshiba isis saying considering holding a briefing today. we will watch and see if it takes place and will bring you details. manus: next up is syngenta's $43 billion sale to chemchina, coming under more scrutiny from the ftc, which wants more time to review the deal, but syngenta says it expects to complete it in the first half of 2017. anna: and we focus on sao paulo, the ceo considering a bid for generali, according to people familiar with the matter. he's weighing options for the italian insurers. some investors have signaled they would be open to a bid of 17 euro per share. manus: before we get to nejra, there's a red headline across the bloomberg. we talked about china, we are waiting on the u.s.

india inflation numbers come out at 5.25%. the market had tended 4.35%. there are a myriad of numbers that drive it, but let's get to nejra cehic with all the market moves. good morning. nejra: good morning. we are seeing the momentum in the global equity rally. take a look at the gmm cross asset. we're seeing losses in japan, largely on the stronger yen. stronger yen down to a weaker dollar, because we are seeing the dollar week against most of its major peers, particularly in asia, after donald trumps security advisor michael flynn resigned. you can see the south korean won hitting a session high against the greenback. in the commodities space, a mixed picture in metals. copper and aluminum gaining on the shanghai futures market, but we are seeing weakness and iron ore. it has had a pretty stellar run recently. talking about global stock rally faltering, after four days of gains, the msci all country world index ready much flat

today. it's still near its all-time high, reached in the spring of rallybut the 14t day suggests it may be getting stretched, that this index could be a little overbought, according to that technical indicator. in the fx pace, a bit of focus on the aussie dollar, initially boosted by business confidence data, extended gains on that better than expected china producer price growth. stronger aussie dollar, also a stronger yen against the greenback, 113.33 on dollar has ann dollar-yen. anna: branch that just released fourth quarter earnings. we are joined by the ceo, on the phone from amsterdam. jacques, great to have you. tell us a little bit about how your business has performed, and what you expect from the first quarter.

it seems as if some of your numbers around january look to be fairly positive. you are saying organic sales growth in january up 5% to 6%? does that market positive departure? >> yeah, we think it does. of course we already, end of 2016, a relatively high note. but the start of the year seems to be quite good. we do see europe improving further. countries like france, germany, iberian companies, italy, really off to a strong start.it looks good . manus: well done. let's see how it plays out. let's talk about your america business. you have closed the deal on are under theou greatest jobs president got ever created. with that in mind, does that make you want to do more business in the united states? you said in the press release that m&a will be limited. how bullish are you on the u.s.?

any change in this first couple weeks, this first flurry of trump? >> no. american business is stable. q4, androwth of 1% in that's pretty much what we see into the new year. we don't see a trump flurry in our american numbers, honestly. no sign of weakness, no big swing upwards. anna: your story in the united states is different from the overall macro story. unemployment rates low as they are, there is a lot of conversation in the united states about how much capacity still exists in the labor market. is that something you have got thoughts on? how much spare capacity do you see? >> that's a tough question. what we do see is that the labor market is tightening, and it's tough for us to find people. there is something strange in

that the economic numbers are pretty strong in the u.s. many of our competitors have posted weeak numbers. they were all negative in the u.s., which surprised us. we still see low single-digit growth, but that's mostly because we landed quite a few new clients. overall, the staffing sector is rather stable. you would expect them to be a bit higher, but that's not the case currently. manus: you ran us through a quick global overview, two of your biggest markets are germany and the netherlands. we have elections coming up in both those countries, along with friends. how concerned are you about the anti-immigrant wave of sentiment driving around the continent? are your employers raising it as as a concern?

where does it fit into your level of concern for 2017? no, that doesn't sit high on our liberal of concern -- on our level of concern. it's not a topic with our clients. the elections, for example in the netherlands, is more the fragmentation of the landscape more than the populist wave l. you would need four or five bodies to form a government -- it's more about the global economy than it is about the country. so, you know, elections -- they're always there. there's a certain period of uncertainty, but overall, we think the economic ways of strong. certainly in france, we posted 30% growth, 17% growth in professionals. it's all good there. anna: would you go so far as to say that populism, this wave of

populism, it doesn't really have a bearing on job creation? you see them as separate stories? >> no, no. fortunately, no. anna: let me ask about wages, then, a little bit. a big global conversation about wage growth, low productivity in developed markets. where do you see wage pressures? anywhere in the markets you operate? >> in the u.s., it took a long time because the market has been growing for two or three years. we have many of these conversations, and nothing happened, but now we see wage inflation around 3% in the u.s. not so much in europe. again, most of our business in europe, the wages are defined by collective labor agreements, so it doesn't go up that much. you've got improvements, but it's not like the market is strengthening. then you have wage inflation. it's more of a regulated environment, very controlled, so we don't see it.

manus: jacques, ceo at ran dstad. let's bring our guest back into the conversation. i find that fascinating. a very robust, almost -- elections come, elections go, i'm not too worried. am i living in a parallel universe? >> i think -- manus: he says it's about global -- >> from the perspective of his business, he sees it as a global business. he sees several markets being attractive for them in terms of growth prospects, which is understandable. clearly, geopolitics from an investment perspective are a major concern, a major topic, and the french elections feature prominently on our radar, and it's clearly something that we think a lot about. economically, france is doing reasonably well. we see disposable income growth

for households picking up nicely. more positiveent in the near future. we see france benefiting from the manufacturing and recovery. clearly, industrial production is benefiting from that. so i think 2017, from an economic perspective, like several other countries, it looks pretty bright for france. athink the elections are completely different topic, of course, and i'd say it's currently the probability for huge change is very limited. in theld there be le pen president's seat, there'd be clearly a shock to not only financial markets but also to the european economy. anna: ok. we are looking -- you mentioned the french elections -- we have a great story on the bloomberg today that talks about the ways options traders are looking to put on bets around the french

election, to other protect their positions or make some money out of them. some option traders are betting that german 10 year yields drop to zero in the aftermath of the french elections. this would constitute a big flight to safety. manus has a graph -- the green line is the price of these german bonds. manus: that will take you from .3% down to 0%. >> right. i think there's a fundamental situation behind it which has less to do at an outset with the election. if you look at french bonds and german bunds, currently the differences in economic fortunes is not priced into the spreads at all, right? that's the starting point. and therefore it is relatively increase.e spreads they started to increase, which is understandable, but there's a

lot more to go. and if you look away from the economy, if you look at ecb statistics, you will see target two balances are in huge surplus for germany, which already solidifies the strong position bunds have in the european bond market. but if you look at the french figures, they are relatively moderated. the target to is the cash management system of the ecb. it's a short glimpse of how strong an economy -- banks, in itself, with the ecb. manus: i want to reflect back on the french question. this is fro modm odds checker. this is le pen. she's nevert -- really quite at the level of the brexit campaign. do you think that, at the end of e weday, 35%, 45%, ar ewe

right to assume it's a shakedown, but not a hold up? she is shaking down politics but she will not be at the top table? >> looking at the figures you quoted, that is certainly the case. but we have seen that before, haven't we? we won't believe the odds. [laughter] >> i can fully understand why people that are not long-term investors but short-term speculators are picking up on the opportunities on the option market. in a situation like that, where on the surface it doesn't look like, as you say, there is a major shakeup are on the corner, it's more turbulence through the elections. it's a result that would not be a revolution. that is obviously setting you up, from an option market perspective, for some opportunities. these projects before -- anna: my favorite headline on the bloomberg, "templeton sees

dollar near 125 yen in year of political boredom." there's certainly a lot of politics going on, but maybe that will be the upshot. markus stays with us. manus: let's get to the middle east. saudi arabia has told opec it will cut crude production by the most in more than eight years, going beyond its obligation under a deal to balance world markets. anna: but that wasn't enough to give oil a significant boost, brentrexit -- sorry, hovering around $55 per barrel. here with us, tracy alloway in abu dhabi. crude is rising in early trading. it must be disappointing, given what we have heard about this level of compliance. what's out of sync here? tracy: that's right. these headlines about 90% compliance with opec production cuts, and yet we saw a drop in

oil off the back of those on monday. futures were down about 1.7% at one point, the biggest drop in about three weeks. i have seen three good explanations behind the reason why we haven't had more excitement about those headlines. one is that optimism was priced in to the oil price already. you remember we had a strong rally back in november, when they first announced it. oil has been trading in a tight range since then. the other is that some investors are still skeptical about these self-reported opec production figures in particular. you mentioned saudi arabia in your intro. the third reason is that we are back to this old tension between the opec production cuts versus u.s. shale production. we have seen production in the u.s. come back much more strongly, inventories have been building. we will get more data on that front later this week. manus: tracy, think you very much. tracy alloway in abu dhabi. we've had the credit suisse numbers, down to litigation.

they took a hit, a $2.3 billion loss on litigation. that's the news flow coming from credit suisse. we will hear from to john t on short -- from to john ♪

anna: welcome back, everybody. "daybreak europe" here. the dollar is on the back foot, now, after we saw the resignation from trump's team, michael flynn, national security advisor. manus: ok. we're going to get into the credit suisse numbers. a fourth-quarter loss, 2.35 billion swiss francs. they took a hit for litigation, 2.1 7 billion. they settled with the department of justice on mortgage backed securities. anna: and that put a dent in

their capital, in the results we got this morning. they voted to downsize the trading division. there has been a source of volatility for 10 year french treasury, gone for a few basis points. it's going to create some uncertainty. [indiscernible] francine: this is good for markets, good for trading. >> it is in some ways. t's always good when the uncertainty is removed. people are trying to make medium-term -- francine: you mentioned mbs. it goes back to capital, 11.6. that's post rmb. that's less in terms of funds. >> there's a pipeline of issues, but that was by far the biggest, and one that have the most

potentially damaging outcomes. up, how: and coming would you describe the environment? if you look at a lot of these crises matters -- >> we're positive. hard to that -- it's call. [indiscernible] the climate is better for banks, market sentiment is better. you have all kinds of indications -- francine:w why? >> i'm a very priorities person so i tend to focus on what we have. but you can see the better market activity. momentum, very strong in q1. barring unforeseeable events. market conditions permitting. it sentiment is better, and

looks like we are getting toward more constructive solutions in terms of regulation. francine: are you worried that deregulation in the u.s. doesn't make u.s. competitive ihere? >> we have a very strong franchise in the americas. if you take one of our targets, 10%-15%, global markets america is at 13%. we [indiscernible] in america was 30%. we have a really, really [indiscernible] done 60 free deal so far in q1. if you look at ipo's, we have done 19. ouit's a positive, not a negati. francine: can you talk to me but the bonus pool in the investment bank? >> not yet. we'll publish on march the before, ahead of schedule -- on march 3 four, ahead of schedule. francine: close to what your

peers are doing? is important to retain talent? >> very important to retain talent, and everything we do is aimed at motivating and retaining our resources, taking into account [indiscernible] but as i described the results, you've seen --[indiscernible] in the end [indiscernible] -- if youwould you look at the market expectation , -- i'm talking about geopolitics. talk a little bit about the french elections. there's a lot of turmoil in italy, with brexit. how do you think the markets will react? will we see a lot of volatility in currencies are equities? >> i think we are going to see a lot of volatility.

i, like many people, worry that there is too much comfort right now, maybe some uncertainties are underestimated, particularly the political ones. as we get closer to those moments, you are likely to see spikes in volatility. ut overall we are in a reasonably cautious stance, and we have done a lot of hard work to drive costs down, which leave s us well-positioned for the rebound. we have improved intrinsic profitability is in a global market. francine: on brexit, when will you have a brexit plan, and how much of your u.k. business will be affected? >> frankly, the question we ourt know yet -- on brexit, position has been that we are flexible. we have operations in the eu, a big platform in luxembourg that we have used for many years, and

we'vre opening a platform in dublin, which is very helpful to us. it leaves us in a relatively code will position of having flexibility and being able to manage. manus: that was the credit suisse ceo speaking to francine lacqua, who joins us now from zurich. great interview. the pendulum seems to have swung. the top line from that interview -- the pendulum has swung, th thebs is a game changer, ipo is looking pretty much on track. but it's all about litigation, isn't it? francine: yeah, it is. it's all about litigation. you wouldn't really say they are nearing litigation, but he did seem pleased -- i know it took a hit, but the loss was better than expected. because of rmbs, investors are

looking -- it took a hit because of rmbs. ratio1.6%, that tablet compared to 11.9%, but he kept on repeating -- had we not had this litigation, he genuinely seemed relieved that the litigation was dealt with at the end of december. he would have been in much better shape. halfway through this three-year plan, focusing on cost cuts, on margins, and the numbers seem to be on track. anna: was he reluctant to talk about bonuses? francine: yeah. yeah, he was. i asked him about three times on the bonus pool. it had a explain. he told me that he wants to make sure it retains power -- but he says it's too soon to talk about bonuses. let's see when he has to deliver

and put out his plan in a couple weeks. manus: francine thank you very much,. francine lacqua. we're going to talk about protectionism and brexit. we have a ceo joining us very, very shortly. this is bloomberg. ♪

manus: michael flynn resigns amid allegations of improper conduct with russia. anna: relation stirs. the most since 2011 and consumer prices rise above estimates. manus: the bank posts a quarterly loss of 2.3 billion dollars in litigation. we hear from the ceo. anna: don't miss an exclusive conversation with the ceo and chairman. we will speak to him about trade, political risk, how the business is doing, how those factors could impact the business you ♪

manus: it is "bloomberg daybreak" i am manus cranny. anna: anna edwards, breaking news coming through. u.k. corporate report, rolls-royce on track for around 200 million pounds worth of annualized run rates by the end of 2017. profits comes in at $813 million -- as for the full year. this is a business that is been undergoing a great deal of change. he agrees to play 671 million pounds in fines to the u.s., u.k., and resilient fraud agency to settle bribery forges -- charges. the profit had come in higher than forecast. animates his hundreds of

office jobs and shuffled senior management. the fall in oil prices, this business off guard. stifled demand in the marina turbine business. a bit of the background, the context. they are cingulate for the business, 2017, is where modest performance improvements, free cash flow to be similar to 2016. the comments coming through from rolls-royce. germany gdp number seven, both accelerates but less than the market had anticipated. .1% -- .5%.e of you are talking about everything really thrown in there.

a weaker euro. cheaper oil. all those things which drove the growth market if you think about the kickback. those are some of the things that may not necessarily be futures a helping hand tell us about where we may open up. downward this morning. bound point -- down the .2%. radar, that is certainly one of the interesting moves overnight. extending losses. a little bit then 10 -- 10 gentle to the dollar story. maybe tells us about the current administrations ability to implement policy. we see the hope -- high-profile resignation. .8%.

we have carried us lower. aussie dollar doing nicely. nice china reflation trade. business conditions in australia are the highest level in nine years. she the numbers down 8%. a news conference in terms of delivery area first word news, here is juliette. a forced -- a first-quarter loss. taking a chart to settle a u.s. investigation into the role of its mortgage conservatives -- securities is this in the 2008 prices. resulting in the second annual loss. bigger than the 2.07 billion dollar loss predicted. white house national security adviser michael flynn has resigned amid deepening controversy of allegations of improper contract with russian officials.

keith kellogg has been named acting security advisor. and mis-direction already beset by protests in a court order that blocked travel brands. -- ban. steve mnuchin has been sworn in as treasury secretary. in favor of the former goldman sachs banker who has to defend his one west bank. accused of controversial foreclosure practices. he will take on the role of chief spokesman for the dollar. global news 24 hours a day powered by more than 2600 journalists and analysts in more .han 120 countries you can find more stories on the bloomberg best top . a lackluster decision coming through here. areahai just close higher

higher than expected. in the dalits of a stall to the rally we have been seeing in shares in china. a little bit of concern that this data could tighten monetary policy. the neck a down by over 1%. part of the on id. strength. fall quitetwo sheba significantly, down by a percent. it will release its earnings on march 14. they were supposed to come out today. want ct that they didn't -didn't end there- was no clarification was why you saw the fall down. australian sharemarket closing lower today. strong business conditions number. new zealand and taiwan looking pretty good. elsewhere following these currencies in the region. the yen strengthening. won up by 1.3% against

the dollar. the dollar fell quite significantly as we heard about michael flynn resignation during asian plate. just trade. -- trade. saying 2017 job cuts will take 5500. keep an eye on the cost-cutting plans. manus: keep an eye on top left go. other options for swiss unit ipo. let's talk about the united states and donald trump. nafta, the worst trade deal in u.s. history. yesterday, the prime minister of canada. recent trade relationships. trump: we will be tweaking it, doing certain things that will be better for both of our countries. a much less severe situations than what has taken place on the southern border.

preparing to challenge house leader proposals to overhaul corporate taxes. the leading congressional advocate will say it will survive any challenge that may bring. he says that he fully expects other nations to challenge the proposal of the border adjusted tax. joining us now to discuss this along with the marriott of other issues is alexander rikard. the ceo of the second largest drinks to solar. welcome. your plate is full. there's a whole world of issues for you to deal with. the business first of all. the world has got a better taste for tequila. there is lovely story be looked at yesterday. through this renaissance of tequila in the business. how strong is it?

the world is developing a taste for premium brands. we have two great tequila brands, to give avion, on the prestige side. and we also have tequila altos, a superpremium. of the fast-growing spirit segment in the u.s. market. getting it out of mexico and into the united states, will that be more difficult? -- how modeling amount are you modeling around the potential tax? reporter: the spirits industry is a providence industry. tequila is from mexico. just as cognac is from cognac and france. champagne from champagne in france. scott spencer cut scotland. irish whiskey comes from ireland. bourbon from the u.s..

tennessee whiskey from the u.s.. at the end of the day, we cannot change our providence. anna: do you think you'll be excepted from the taxation increase taxes? is that something you are lobbying for? reporter: obviously we are lobbying for this because if we do cognac it has to come from france. otherwise it is not called cognac, it is called brandy. whiskey's u.s. whiskey, it has a providence as well. it has specificity in terms of taste and heritage and so on. manus: give us a little bit of insight, yes you lobby, how do you lobby the trump administration? is protected designated origin. that is the phrase. you give us the french equivalents. how do you make that was hard -- bvoice heard? guest: we joined a group of members, including walmart and a

loss of retailers, because they tax this potential border just as a consumer tax. if your cost of import increases, the only way to cope with it is to pass it on through to consumers. which is not nice to consumers. we don't have much of a choice because we cannot produce tequila and the u.s.. we cannot produce scotch in the u.s.. interesting alliances. your interests aligned with walmart. guest: the same thing for north american whiskey which is sold across the world. as particular to comes from the u.s. or canada, it has its own taste. the havana club in the united states, they reduced since the change in administration. guest: we are ready. we are ready to be the first

ones, one day, to be able to market and sell authentic cuban rum. i believe it is the best in the world. the embargo is still there. ones, one day, to be able to marketso be it. we are ready. we are ready for the day it is lifted. nothing has really changed. our team here has said that for you, you're getting revenue numbers, you need to repeat the success you have had with irish whiskey with your scotch whiskey. the drop in the pound, is that having -- helping your whiskey business? is that something you factor in? and the fact that donald trump really does love scotland. guest: a weaker pound has had a positive impact on our profits. willis a positive which allow us to invest more and be more dynamic from the point -- pricing point -- point of view

as well. emerging markets have depreciated as well. making scotch less affordable. it is actually good news from that point of view. you have added fast-growing brands your portfolio. what other categories are you looking to add right now? what looks exciting to you in 2017? guest: we don't look at it from the categories point of view, from a moments of consumption. did smooth amber, i great west virginia bourbon. before that we did monkey 47. a great craft german black forest distillery jen. before that we had tequila avion. aboutdid you get excited chinese spirits? where you see the excitement?

-- we don'tn't ask disclose what we are looking at for obvious reasons. in china we did inquire -- acquire a chinese wine. manus: 16 big brands in the world, you are number three. i can only go off the bia. if we are wrong we will acknowledge that. there's only one american brand. with double-shifts, you say you have your tequila brands. incentive for you to look for america for acquisition that you might do in terms of build a brand? blessed when you actually did with the bourbon brands. ruth adler. -- smooth ambler. market is the largest spirits market in the world. it is roughly more than one

third of the whole profit pool in the spirits industry. it is also the largest market. it is a strong growth market as well. the u.s. is the number one priority. to grow their organically and to do both on acquisition. or with tequila avion in mexico focusing on the growth of tequila in the u.s.. anna: thank you very much for your contributions. ceo in the studio. a little bit about europe, the voices of the conversation. manus: the rise of the right and the right and growing antiestablishment sentiment that has put both france and the netherlands in focus as the two separate countries prepare for the upcoming elections. they have been failed by politicians and are looking to the national front marine le pen. more worried about that result

in a win for nationalist indolence. alexandra joins us now in london. investors there to worry about the dutch election? alexandra: no they are not. not as much as they are worried about france. i spoken to a few dutch equity managers and there really isn't an immediate threat to the equity market on this event per se. the reason for that is because they do not see the freedom party, the extremely anti-islam voters, taking power. they are putting their faith in some of the quirks of the dutch political system. based on coalition building. they don't see it of the other parties teaming up without significant lead wandering down his agenda. their concern is more sentiment-based. should he really take power by a greater margin than people

expect? what this -- what does this tell us about what can happen in france? anna: why does the dutch election matter in terms of what is expected in the french election? alexandra: it is the sense of how much is population is taking hold in europe. itshe freedom party wins by current margin it is the leader in the polls right now. it is not going to be enough to really make a significant change to the way things are run there. investorswill make stop and think wait a second, can this happen in france? can marine le pen when there? that is the trigger for people. that is where they are monitoring this. manus: that is indeed. thank you very much. let's turn our attention to paris.

good to see you. why are the french becoming more marine le pen in terms of broadening her support base? guest: -- reporter: the only one that advocates ringing france out of the european union. farmers to use be supported by the european union now blame it for a lot of their problems. russia sanctions, overproduction, falling prices, falling income, failing farms, france is in the middle of its worst pharma crisis since world war ii. the european were union is to blame for that -- the european union is blamed for that. manus: can the nubbers make a difference in the polling on the day in round two? reporter: the answer is yes and no. farmers alone are only 8% of french voters. for me communities are 20%. marine le pen's support is 36%.

her supporters, 80% of her supporters say they will vote for her no matter what. she is climbing among farmers. they are a growth area for her. she still has to get past the two-tiered french election system where she would have to win a runoff against one of the other major candidates two weeks after the first vote. what are the chances for marine le pen? looking at this in terms of where she is polling relative to the brexit campaign. she is still way behind what that brexit numbers were running. give us the latest. what are the chances? investors are freaked out by the fact that she is leading in the polls. her numbers are still not that high. she still got across this barrier of the second round. brexit or think

donald trump was going to win. it is best people options still in mind. manus: that is a fair statement of 2017. we are on home turf. politics. french farmers traditionally voting with the right. your country is facing huge of people either way. is that a firm statement? guest: there is a rise of populism that you can see. veryusinesses, we are global business who operate across all markets. 85 markets across all regions. strong results globally growing 4%. seven in america, three europe, three asia. there are ups and downs everywhere from this point of view.

as long as you are a global business, a large-scale business, you are flexible enough, you can adapt fairly easily to situations. anna: you are a business that is watching the political events unfold. you must be very mindful of how to protect yourself if you're going to see a president of france who wants to take the country out of the euro. the eu does not look good under marine le pen in france. how do you protect yourself? you take actual steps? guest: we are a global business. we export throughout the whole world. as people will keep on developing their taste for premium spirits. that is a given. adapt to the environment. in -- we have operational efficiency programs. strong marketing. we continuously allocate resources.

we believe short-term opportunities lie while still investing in the long run. sub-saharan africa, going through some difficult times because of decreasing commodity prices the last couple of years. we believe in 1520 years from now, the issueom of tomorrow. cash flow is predicated by the united states of america, what you do in the u.k.. guest: an uncertain environment. manus: high risk? guest: uncertain environment in and wee are confident have confirmed our guidance for this year and remain very for the medium term as well. anna: for the medium term as well. anna: on the political upheaval front, brexit they hop -- hot what are you seeking in

her negotiations? scotch whiskey in your interests. guest: and gin. we like to see them negotiate free trade with the european union. we would hope for, that could be an opportunity to see the u.k. when it has exited the european union, negotiated bilateral agreements with markets such as india. a huge potential market for scotch. little bit closed because of entry barriers. anna: do the the -- do you see those coming down? guest: that depends on bilateral negotiations on free trade agreements. that would be great news for the industry. manus: what extent is your voice as a ceo? what you lobby and in the united states? waterfront voices being heard at a politic level in regards to brexit? how are you lobbying on brexit?

guest: we are big scotch player. the second largest scotch player. the scotch whiskey association based in scotland. part of the table. given the importance of scotch and another degree gin. from that point of view we are hurt. i was whiskey, jamison, half of the business you are familiar with with your background. we have new competitors coming up in this area. they say they don't compete with you because they are a remain -- premium irish risky. that hurt? guest: there were only two ago, in two years years you will end up with 35 distilleries. this is extremely good news for the iris risky industry.

obviously jamison is the clear leader but the more people invest behind irish whiskey, the more the high of irish whiskey is going to grow, and therefore jamison. not only jamison but other great brands such as middleton. powers. our entire single irish whiskey segment. a very dynamic category. jamison opens the doors and i think that the new entrance that's will invest more behind it. it is good news for everybody. manus: is there product innovation and that? -- in that? how do you innovate in whiskey? is it changing perception of taste? guest: in the biggest -- innovation is critical. our objective is in a big -- for innovation to drive pretty 5% of the top growth. it should take -- 25% of the top

growth. jamison that is finished in a craft beer barrel, a very smooth taste as a premium positioning to jamison original. barrel, a stronger more robust taste. manus: that division gives a price premium. guest: we tend to always innovate at a premium. the business in china, cognac, how much can that grow? guest: back to growth. the particular is about it is all the segments are growing. with martel, the leader of the segment as well. growing but cordon bleu is back to growth. better leave it

there before we make everybody very thirsty. manus: futures are set. a lower open this morning. that is it for "bloomberg daybreak" the market open is up next.

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♪ guy: abby johnston stay. welcome to "european markets." matt miller is over in berlin. this is what we are watching. swung? pendulum the climate is better for banks. better for management businesses. a bigger net loss than expected. trumpslar dips after's national security advisor michael flynn quits.