climbs,: credit suisse despite reporting a bigger fourth-quarter loss than expected. an update about the outlook. >> overall, we are positive. swung,k the pendulum has at a turning point. but we think the pendulum has swung. market sentiment is better. you have all kinds of indications of that. slaton acquits. donald trump's national security adviser resigns after allegations of improper contact with russia.

attention turns to janet yellen. toshiba troubles. shares plunge as the electronics giant failed to report earnings. the chairman is to step down. we will hear from the ceo later this summer. i am francine lacqua, here in zurich for credit suisse earnings. mark barton is in london. i think we are getting gdp figures out of italy. mark: italy's economy expanded in the fourth quarter, below economist expectations. the country's growth this year is seen by the ec is the smallest in the euro region. gdp rose 0.2% in the three months through december. that was below the 0.3% estimate of 30 analysts in a bloomberg survey. gdp expanded 1.1% from the same quarter of 2015. italy is the euro region's third-biggest economy. it is set to expand 0.9% this year. so said the e.u. yesterday. that compares with an expected

gdp rise of 1.6% in the e.u. as a whole, and makes the italian economy the laggard in the 19 nation bloc. we will get fourth-quarter gdp for the eurozone a little later. let's have a look at what is happening to equities today. yesterday, the stoxx 600 rose to its highest level since december 7, 2017. unchanged today, down by a mere 1/20th of 1%. stocks in the u.s. falling after donald trump's national security adviser resigned, raising concern of disruption to the president's strategic team. the u.s. 10 year yield was lower earlier. it's sunk by just a basis point now. janet yellen, the fed chair, testifies before congress today. tomorrow, one of the big questions is, is the march fomc meeting live?

and gold, in this more defensive marketplace today, in the wake of michael flynn's resignation, is up by 0.25%, rebounding from . 0.7% loss less wednesday, it rose to the highest level since november. here is sebastian salek. seb: white house national security adviser michael finn resigned amid allegations of improper conduct with russian officials. keithd lieutenant general kellogg has been named acting advisor. an administration already beset by a wave of protests and a court order that blocked a travel ban on citizens of seven predominately muslim nations. steven mnuchin has been sworn in as treasury secretary. the senate voted 33-47 in favor of the former goldman sachs banker, who had to defend his record with a mortgage lender accused of confidential -- controversial foreclosures. >> i share your economic vision

and goals and am committed to enact policies to grow the economy and make better economic opportunities for all americans. to: toshiba says it expects put a $6.3 billion write-down in its power business and is considering withdrawing a stake in its chip business. the chairman will step down. earlier, toshiba shares plunged after it failed to report earnings as scheduled. they are set to hold a news conference at 9:30 a.m. u.k. time. china increase last month for the first time since 2011, rising 6.11 percent from a year earlier. the world's biggest exporter is poised for bigger fourth-quarter genes. the consumer price index climbed 2.5%, boosted by the long lunar new year holiday. powered by 2600 journalists and analysts in more than 120 countries, i am sebastian salek and this is bloomberg.

zuriche: we are here in because a little bit earlier on, credite to the ceo of suisse. shares are up as we speak. they did post a bigger loss than expected, mainly on the fine they settled with the boj in december. the ceo is confident that means things will get better. that cost-cutting is not only compliant, but ahead of his expectations. we still expect him to cut and 6500 jobs this year. we talked about volatility. we also talked about the investment bank and his swiss unit ipo. >> it will be a source of volatility. , ittenure french treasury has gone to around 1%. it is going to create some uncertainty through the year, as the market focuses on the outcome, uncertainty for the outcome. >> this is good for markets,

good for trade? >> it is in some ways. not in others. it is always good when a big uncertainty is removed. for people who are going to make medium-term, long-term decisions, that is always true. francine: you mentioned your ct one post rmbs. what is left? >> there is always a pipeline of issues, but that was by far the and the one that had the most potentially damaging outcome. francine: but coming up, how would you describe the environment? if you look at a lot of these crisis and litigation matters, the worst? >> overall, we are positive. it is hard to call. it a turningll point, but we think the pendulum has swung. the climate is better for banks. market sentiment is better. you have all kinds of

indications of that. francine: and why? >> i am a very pragmatic person, so i tend to focus on what we have and manage in this environment. but you can see the market , since january, you see the momentum there. .t will be very strong in q1 something always has to be said -- markets can always be a disruption. the sentiment is better. it looks like we are getting toward more constructive solutions in terms of regulation. francine: are you worried that deregulation in the u.s. does not make your as competitive in europe as your u.s. counterparts? >> never forget we have a really strong franchise in the americas. if you take one of our targets to get to 10% to 15% in global markets, america's is at 13%. we are already at target. we have capital in icbm in the fourth quarter in america.

so we have a really, really meaty position. if you look, we have done 63 years so far -- feel so far in q1. if you look at ipo's, we have done 19. our exposure to america is a positive, not a negative. francine: can you talk to me about the bonus pool at the investment will -- investment bank? who is getting one? >> not yet. we are behind schedule. we will communicate. francine: coastal your peers are doing, or different? is it important to retain talent? >> it is very important to retain talent. everything we do is motivating and maintaining our resources, taking into account -- but as i described the results, they are reasonably good. is that the paved would be reasonably within expectations. but no decision has been made.

in the end, the compensation committee will communicate later. francine: will your politics be reasonable this year? if you look at market expectations, you see more volatility in currencies are equities? i'm talking about geopolitics. we talked a little bit about the french election. you had turmoil in italy, germany, brexit. how do you think the markets will react? will it lead to volatility in currencies are equities? >> i do not see a lot of volatility. i, like many people, worry that there is too much comfort right now, and maybe some uncertainties are underestimated, particularly political ones. and i think as we get closer to some of those moments, you are unlikely to see spikes in volatility. given reasonably cautious stance, the way we like operationally -- we have done

hard work to drive costs down. that gives us well-positioned to pick up on the rebound. you have improved the intrinsic profitability in the global market. have an: when will you actual brexit plan? how would your u.k. business be affected? tidjane: frankly, the question -- we don't know yet. our british physician has always been that we are flexible. e have migrations in the e.u. we have a big platform historically that we have used for many years. and we have opened, january 16, a platform in dublin, which is very helpful to us. that leaves us in a relatively comfortable position of flexibility and being able to manage different scenarios. the ceo ofhat was credit suisse speaking to me a little earlier. it is very clear the settlements in terms of fines they had to pay for the doj did put a little bit of a dent in their capital

buffers. however, he tells me he sees a much better environment for the industry as a whole, especially in europe. i did try to press him on the swiss unit ipo, something markets have been questioning. has, in this show a couple of weeks ago, said he does not think he needs it now, because there is strong revenue across the board. when i put that question to the ceo, he said it is still a planned ipo. he wants to use the capital he gets from that elsewhere. however, he did quantify it. he said there are other options on the table, and it is too soon to say. on the bonus question, i really tried to push him, as we want to see whether they are on a level playing field compared to their competitors. again, he pushed away. he said, it is too early to talk about bonuses. he will unveil it when the time is due, in a couple of weeks. mark: great job. member, if you are a bloomberg customer, you can watch the show

using tv as well as the video stream. you can follow all our charts and functions and reach out to the show directly by sending ib to show producers, at the bottom of the screen. that's get the bloomberg business flash. here is sebastian salek. seb: earnings fell less than expected as it deepened cost withand a late surge airbus boosted revenue. profits fell to 13 million pounds. that beat the estimate of 685 million pounds. apple shares are the highest on record on optimism the next iphone would drive sales and help the company's services business. the stock climbed almost 1% in new york after it set market capitalization at $699 billion, making it the most valuable company in the world, ahead of google. alphabet. it predict a further gain apple shares in the coming 12 months. while disney's maker studios has cut ties with youtube star pewd ie pie after he posted videos

with anti-semitic content. he made about $15 million last year as you tubes highest-paid star and did not immediately respond to our request for comment. that is your bloomberg business flash. mark: the white house national security adviser michael flynn resigned under allegations of improper contact with russian officials. in his resignation letter, he said because of the fast pace of advised inadvertently the president-elect with incomplete information regarding my phone calls with the russian ambassador. that put the dollar under increased pressure. the man who will be the chief spokesperson for the dollar and spokesperson for economic priorities, steven mnuchin in, has been sworn in as treasury secretary. the senate voted 53-47 in favor of the former goldman sachs hiser, who had to defend

record running one west bank, and mortgage lender accused of controversial foreclosure practices. markets today will turn attention on fed chair janet yellen. she will testify to the senate banking committee 3:00 p.m. u.k. time. bloomberg users can also follow livehe news on tlvit go.with are joined by bill blaine and simon. ,ill, if i can start with you our wonderful go function is telling us a 30% probability of a fed rate hike in march. we'll yellen want to boost those expectations today and tomorrow or not? bill: i'm struggling to understand why that would be the case. the market seems to have got itself in this position where it is now talking up the chances of doing something, but i do not feel the data is there. there is nothing to pressure to go there. and of course, if she would do that, it would simply put her in

opposition to the new administration. so i suspect that we will not see terribly much happen. mark: are you in agreement with bill, simon? -- be loathehe lo to stress that maybe march is a possibility? simon: why with the chair leave data dependency? why would she not by herself additional time to see if the current raft of upbeat macro data is buttressed by clear signaling around the fiscal trajectory of the new administration? of course, we heard from the white house press secretary that the tax cuts are penciled in for the 2018 budget, so we may be more than 18 months away from a big fiscal boost. the amount of uncertainty -- a number of events are going to take place over that period. why would she not sit on her hands? i think that is what she will do. mark: what you expect on this phenomenal tax plan in the next couple of weeks? bill: one of the key things to look at is how does trump, and

next two years -- i used two achieveliberately -- this push for the u.s. economy? the appointment of advisers such of that plan.part but if he does not deliver quickly, then very quickly the electorate will turn against him, and that is when he loses the current support he is getting from the republican party, which is critical. the fiscalan, and spending plan which is going to go with it, needs to start coming soon. they need to see signs about how this is going to drive recovery and create the kind of jobs he has promised. i am expecting it to become more front and center than it is just now. the problem is, we are still in the distraction phase. last night's event with flynn, which looked like a series of on asals, has been seized further evidence of chaos and confusion. we will get word soon, i expect,

that we do need to see more evidence of what is going to happen, if we are going to see a trump administration -- francine: with the mere mention ifa phenomenal tax plan, sent investors to the reflation trade thinking. trump junke continues, we need to see it. mark: more proof in the pudding. house, first white off will be obamacare, repeal and replace. the amount of congressional time -- mark: it is a distraction? simon: and enormous distraction. trying to run two parallel physical transformations is too much for even the trump administration to attempt. i think they will be strategic. i think bill is right to point out this two-year horizon to get those sequentially, head of the midterms. mark: getting some news from samsung, bill, simon. they give for the moment. it is news on jay y. lee, de facto head of the samsung group.

there has been tension surrounding him. south korea's special prosecutor is re-seeking the arrest of same g's lee.amsun prosecutor brought back jay y. lee for more questioning over allegations including bribery, keeping up the pressure on south korea's biggest business empire. up next is trump and trudeau talks. australia's finance minister tells us he is hopeful the u.s. will sign up to eight pacific deal -- to a pacific deal. ♪

mark: i am mark barton in london. donald trump has derided it as the worst trade deal in u.s. history. he reassured justin trudeau that canada is not the main part of his plan to reset trade relationships. president trump: have an outstanding trade relationship with canada. we will be tweeting it. we will do certain things that benefit our countries. it is a much less severe situation than what has taken place on the southern border. mark: australia is holding out hope the u.s. will eventually sign up to a pacific trade accord, as the economic benefits prove irresistible. the finance minister spoke to bloomberg. >> there is still 11 countries who are keen to do more business with each other. in time, we believe the united

states will want to be a piece of the action in the fastest-growing part of the world, which is the asia-pacific. we think the transpacific partnership agreement provides a very good framework to further boost trade. why the united states made a decision at this point, when these things are put in place for the medium to long-term, things change. mark: still with us, simon french and bill blain. bark worse than his bite when it comes to trade? he is outspoken about japan's currency, and when he met abe, friendship. trudeau seemed to go well. bill: with body language, the canadian is realizing he's been pushed out to the side. trump looking fairly disinterested and wanting to talk about mexico. this whole point of appearing constant, making a

repeated point about how strong he is to get the best deal for america -- we are now seeing that becoming a greater and greater concern amongst the scribblers of the strategy sector, like ourselves, like , this couldying become protectionism. there is a danger that could happen. at some stage, we have to see strong talk, but growth occurring on the back of international trade. he could stall the global economy. that is the danger people worry about. mark: will he stole the global economy? simon: it depends whether the tariffs he has spoken about, the tariff with china, the tariff with mexico -- him and his broader alternative right movement are playing a role in european elections. is it an attempt to disrupt what has led to, act trade surplus for germany? the u.s. is on the other side of the trade.

he talks about canada. you look at those three countries -- germany, mexico, china -- and the real question is whether he is going to follow through with his rhetoric by imposing tariffs, or being expansionist in european politics. mark: he is interventionist in european politics, isn't he? advisers saying the euro is grossly undervalued. do we pay much attention? these comments -- shouldn't it now be steve mnuchin that talks about the dollar? bill: steve mnuchin is treasury secretary i think number five in the order of who succeeds if the president goes down. it is a very important position. and yes, you would think so, that that is part of the oversight. but i suspect we will continue to see this kind of -- how would you describe -- almost off-the-cuff approach he is making, which makes things more -- more uncertainty

uncertain. it throws an element of uncertainty into the whole equation. i think there is an expectation that over time that will be controlled, and that will make things less volatile. but it does not seem to be happening, it raises an interesting trading opportunity. trumpism ore get a a trunk tweet, the market overreacts completely. and he is never going to achieve the goals he says he wants to, the cause he is a businessman, a player. he is gaining it. mark: we will be back with bill trump trade -- short trump, essentially. next, u.k. consumer prices. we will bring it to you live here on "surveillance." ♪

francine: this is bloomberg surveillance. i am francine lacqua in zurich. we are looking at critics with and michael flynn -- credit suisse, and michael flynn. let's get to the bloomberg first

word news. sebastian: credit suisse posted a fourth-quarter loss of 2.3 5 billion francs. this is after the charge to settle investigations into its role in the 2008 run and shoot crisis, the second consecutive annual loss for the bank. the ceo is upbeat about the outlook. >> overall we are positive. we think that the pendulum has swung so it is going to go, a turning point. we think the pendulum has swung with the climate, the market sentiment is better. you have all kinds of indications of that. sebastian: michael flynn has resigned amid deepening controversy over allegations of improper contact with russian officials. keith kellogg has been named acting security director.

stephen mnuchin has been sworn in as president trump's treasury secretary. this -- the senate voted in favor. >> 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 activities for all americans. expects tothe shiva book a $2.3 billion write-down and is considering a majority stake in its chip business. toshiba shares plunged after it released its earnings. they are holding a news conference right now that just started and we will bring you

more of that as it continues. china's producer prices increase last month i the most since 2011, rising 6.9% from a year earlier. at the same time, the consumer price index climbed 2.5% boosted by the week long litter new year holiday test lunar new year holiday desk lunar near holiday. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i'm sebastian salek. , you havemark breaking news out of the u.k., i think it is inflation figures. mark: inflation picking up less than economists forecasted in january. clothing store discounts keeping the rates from reaching the bank of england's 2% target so could consumer prices increasing 1.8% from a year earlier compared to 1.6%. anticipated 1.9%.

the core rate held steady. sterling coming down on this news. the weaker pound is set to push boe's goalose to the very soon. some forecasting it will hit 3% by the end of the year. upward growth in factory input costs surged since the past -- fastest pace since 2008. simon french is still here and bill blain. we did not reach two, but we were creeping toward it. some content -- getting concerned. would you be in that camp? simon: no i would not. kristin forbes said she was concerned and then announced in june she was off. by the time this comes to, getting to 3% by the end of the year, she will no longer be a voting member. there's an arm wrestle between

consumers and -- at the moment, who is going to pay for the sterling depreciation. producers arethe facing massive inflation pressures. three and a half percent on their output and yet consumer prices remain great spread -- quite spread. i think we have got to look at that as a story in terms of profit margins going forward. mark: one of the games, what is the bank's next move? market suggesting connect movably up, just when will it happen -- moving up, but when will it happened? is it too soon to be talking about rate hikes? bill: i am pretty sure the next move will be up but it is a question of tightening. there is no reason to think we are under any pressure to see that in a timescale would make

sense. we have got two ch -- a change in that fundamental supply versus demand equation that simon is talking about. there is nothing to change the view right now, remains a game the currencye how affects consumer prices and a market where consumers are not really demanding more. simon: we were talking before the break around being data dependent, especially in the u.s. and the federal reserve. one of the things you have not mentioned is the article 50 process kicks off next month and that will run for a minimum of two years. the uncertainty of mpc will have to deal with, what kind of exit deal, transitional deal, trade deal that may take the best part of a decade, in that environment there is a strong bias toward inertia, sitting your hands, ending the current qe program.

going on a path higher until such point as we have a bit more certainty over the relationship with the e.u.. mark: the toshiba news conference is kicking off right now. big news continuing to cross the bloomberg terminal. the headline was they are going to book this $6.3 billion write-down in its nuclear power business citing cost overruns at a u.s. unit, finishing prospects for its atomic energy option. down asrman will step chairman of the conglomerate. bill: i just think this is terribly interesting. what is the big hawks for the chinese economy under abenomics would be the boost we would get from japan's expertise in nuclear power. we are seeing that all being questioned.

it is a much more difficult business than people thought, much more costly. it just has not delivered on the promises we expected. mark: japan economy is growing, i think for four quarters, something it has not achieved in a long space of time, but very reliant on exports. it's come back to the yield curve. the boj is desperate to keep that 10 year yield around zero. with yields rising in the u.s., is the boj going to be increasingly under pressure and use its firepower to keep that will it havero, or to raise its level of where it is going to keep? simon: well qe continue in cash will greeley continue -- will qe continue in its current guys? what you'll see is a globe in this global phenomenon. -- global phenomenon.

they will be watching as much what the inflation dynamics and growth dynamics in the world's biggest economy, the u.s. will do in terms of driving the trajectory forward for the jgb curve. bill: i think we are about to get a massive change because for the last 10 years it has all been about monetary experimentation, and japan is at the forefront. very little real effect. we are now moving into a different phase where we have turnarounds in policies, turnaround in politics. the delivery we are going to guess is going to be fiscal, infrastructure spending, tax changes, playing with the real drivers of economies rather than tinkering with the monetary side, which has simply caused financial asset inflation. think japan is going to find itself on the wrong side of that turnover. mark: have they had their 15

minutes of fame? bill: abe is not been completely inert in terms of his fiscal stimulus. did it change the underlying dynamics? no, because it is much more structural and the third arrow continues to be problematic. fiscal isee the starting to take over as the key lever of public policy, it only buys time. it does not what it -- matter what jurisdiction you are talking about. if the time is squandered you do not change the dynamics. mark: simon french and belle plaine stay with us. credit suisse in its home market as the bank reports, we will hear from the chief executive on the plans to cut jobs. grows less than expected last quarter. how the euro area's economy is faring.

the next hour we will talk u.s. monetary the ahead of janet yellen's testimony before the senate ranking committee. -- banking committee. ♪ .

francine: this is bloomberg surveillance, live from zurich and london. later be joined by tom keene in new york. talking credit suisse, toshiba, and michael flynn, and what that means for the new security advisor to donald trump. there may be an angle to do with oil. we are seeing the momentum falter a little bit in the global equity rally after we saw the u.s. doc benchmarks -- stock benchmarks hit records. we saw a weakening in the asian

session and we are seeing this stoxx 600 down for the first time in six sessions, quite a bit of red across various indices. the fx space, a weaker dollar, weakening after donald trump's security advisor resigned a few hours ago. looking how this plays out across the european fx space, a ,tronger euro up 2/10 of 1% even after the worse than expected german gdp data. sterling up slightly. a bit of a mixed picture index income markets and commodities, brent crude holding up. a number ofh in industrial metals after that cpi and ppi data out of china. taking a look at the msci all country world index, this is near an all-time high reached in the spring of 2015 even though it is flat today.

i am looking at the 14 day relative strength index, suggesting the current rally maybe getting a little overstretched. in the fx space, i talked about the weaker dollar. we saw the aussie strengthening in the asian session, boosted by business confident data and the data out of china, particularly the producer price growth. we are talking about that feeding into the global reflation story. yen.ker dollar, stronger we are seeing a little bit of push and pull because the reflation trade not holding up entirely as you are talking about a weaker dollar and yields ticking up on treasury. one.nal chart, i love this i have been waiting for a good moment to pull it out and what a time as we are looking ahead to u.s. cpi data and yellen testifying. it is about u.s. breakevens breaking down. mark: just want to tell you

about tartan motors, the parent company of jaguar and land rover . it announced third-quarter net income of 937.7 million rupees. expectations were 22.6 billion, so that is some miss from charger motors, the indian automaker -- tarcher motors. francine: thank you. ofly on we spoke to the ceo credit suisse after they reported earnings. the loss was bigger than expected, mainly because they took huge hits for settling the rmbs. thatid he was relieved they settled with the department of justice of the united states and they can move on, although he did not tell me it was the end of these fines related to the crisis era. i tried to push him on the ipo of the swiss unit, something that when he became ceo he said,

he laid out his plan and said, what i want to do is ipo the swiss unit because this will unlock value and give me more capital. in the last couple of weeks, the markets and investors have been testing him, saying is this the right strategy? if he is increasing revenue and margin, he may be able to keep it all together without ipo in the swiss unit. i asked him many times whether this was on the plan, whether he was speaking to that, but he would not give me a probability. he was firm on the idea they are reviewing options. 14% and we are at were at 13% last year. arewhere interest rates negative. we think it is a very attractive asset. francine: when you said you are looking at other options, the

market will test you so what is the percentage of the swiss ipo happening? >> probability? i am not going to speak to that. we have always taken a cautious approach to capital management and we think that given all the uncertainties, the french election, all the uncertainties around this, sentiment is better but we are not ready to give a final probability. it is on the table and we are working it. we said the second half of 2017 so that gives us time to look at it. , we look at expect -- as well. francine: how many job cuts are expected in the swiss unit this year? >> we were targeting 1600 job reductions over the three years in total, and we thought we

could manage that mostly for attrition, because attrition is that 2%. we are not trying to maximize job losses, we are trying to maximize savings with as few job losses as possible. mark: what did he say about the macro economic environment? francine: he was very cautious. one of the first things i picked up in the press release, it was also interestingly in the press release,se -- press they put a copy of their letter to shareholders. they talk about the macro environment, saying it is still quite volatile. make hiss i would first of all, it was interesting , thatr from tijane thiam he is more confident about the landscape for the industry, the banking industry as a whole in europe. there was a sense that have been through a lot of pain loss something should be better, but

we talked about the markets and volatility because of the french elections, the trump reflationary questions. this may not be a bad thing. if you are banking and trading volatile, as long as you are on the right that come -- bit -- bet, you just have to make sure your investment bank is on the top of it. mark: increased uncertainty abroad, we saw german gdp growth less than expected loss quarter. how the euro area economy is faring. ♪

mark: i am mark barton in london. let's get back to the toshiba news conference. $6.3 billion write-down, the chairman is to resign. some big headlines coming out of the japanese conglomerate. we will keep monitoring that for you on bloomberg television. german gdp grew less than anticipated in the fourth quarter.

italian gdp rose .2% and within the next 10 minutes we will get the aggregate number for the eurozone. let's get some thoughts on the euro zone economy. simon french is still with us, bill blain. the french election, there is the spread of the french 10 year which has widened to a four-year high, expressing concerns about the likelihood of marine le pen winning. simon french think that will happen. simon: i do. 33% andability is up to i would probably double that in my own estimates, the reason being marine le pen, well-being right of center in terms of her views on immigration and international issues, very much left of center in terms of her domestic agenda. i believe the socialists will not make it into the second round. i think we see parallels with

the bernie sanders block who did not go to hillary clinton but went to donald trump. there is a job to be done by the alternative right media by whoever makes it through into the second round, do we get another wave of fake news, russian involvement? i think the market is far too complacent. bill: i would like a quarter, whatever it is you are smoking that you think marine le pen will win. it is great to think, we have had the shocks of brexit and trump, therefore the same thing will happen in france. no, it is not. the french are going to vote in anyone but le pen. they will get a terrible compromise. you will end up with -- i cannot remember the chap's name who is supposed to win and friends will remain as bad -- france will

remain is that. you are not going to see the ultimate surprise. she is capped out by the number of people who were stop her getting in -- who will stop her getting in. mark: is she capped out? simon: the parallels people are drawing are the campaign between action rock and her father, when in the second -- shock sheetrock ues chirak -- you have to look at the messages that you take from the trump trade from the brexit trade. the ftse and s&p are at all-time highs. this isomy are accelerating. you can have whatever i smoke. bill: you cannot look at europe in the same way as -- i was

going to say the real world. the same way as the anglo-saxon world. we have shocks and surprises, and we cope with them far better than we expect. i do not think we will see the same thing happen in france, but even if it did i do not think it will be as shocking because there will be an outbreak of reality at some point in europe. simon: the first thing she plans to do is run a referendum on the euro. mark: we will play that portion of the tape, the day after the french election whether it is april and may -- or may. surveillance continues, this is bloomberg. ♪

♪ tom: general flan quits. the president's national security advisor resigns over

allegations of improper contact with russia. the markets turn to chair yellen and her first testimony for lawmakers in the age of trump. credit suisse will cut up to 6000 jobs. shares rise. their ceo speaks to francine lacqua. >> we think the pendulum has swung. the climate is better for banks. markets are better and you have all kinds of indications of that. tom: toshiba tanks, turmoil were saints as the chairman -- worsens as the chairman will step down and they have lost more than half their value in the past two months. i am tom keene in new york, francine lacqua on assignment in zurich. here is taylor. taylor: president trump's

national security advisor has quit. overel flynn resigned allegations of improper contact with russian officials. he said he inadvertently misinformed over allegations of improper contact with russian the vice president about his russian contact because of the "fast pace of events." the justice department warned the white house he discussed russian sanctions with the u.s. ambassador. steve mnuchin is the new u.s. treasury secretary, sworn in after the senate confirmed his nomination. he is expected to move quickly on to trump administration goals , dismantling financial regulations and cutting taxes. there is a report the trump administration is considering a tactic to discourage china from undervaluing its currency. it falls short of a direct confrontation according to the wall street journal. would designate the process

of currency manipulation as a direct subsidy and american companies can bring & anti-subsidy actions. the majority of prisoners banishes -- british businesses are not set to deal with a cyber attack. the chairman says nine out of 10 businesses do not have a deal -- plan to deal with cyber attacks. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: francine lacqua in zurich with credit suisse here to me with the dominance of ubs and credit suisse in zurich. they are almost a swiss landmark, aren't they? francine: you mean credit suisse? they are and landmark and they are no in that if you look at the push and perfect -- but in neck in terms of

performance. ubs had a huge downfall years ago and cleaned up their act. it was more like four and a half years ago. the overhaul of the bank took place a lot quicker at ubs because they put in a new ceo and credit suisse came around with the appointment of tijane thiam. you could say both banks are going for the same strategy, is going after wealth management for which agent countries. sooner.ted the process tom: somebody at the mcdonald's just had a heart attack over a $20 value meal. if i look at credit suisse in their future, it seems to be a stumble from one run off to the next. what will they be doing in the next quarter, what is the

mandate? francine: i think it is a little bit too early to tell what their future holds. the ceo has been in charge for a year and a half so we are halfway through the plan. if you look at the numbers, they are not all that bad. the critics will say they are taking too much risk is why the revenue of their margins are stronger. if you look at the figures, they are a little bit better because they put the doj fine behind them. now you have to look at whether they can actually retain and grow clients. tom: right now let's look at the data. equities, bonds, currencies, commodities, it has been a real churn. it has been an extraordinary equity market. futures take a rest this morning, curve flattening fractionally and oil up after a wild day yesterday. francine: this is up -- what i am looking at overall, equities

overall. i want to bring two pieces of data i've been watching closely. one of them is inflation. podeeps the boe on a time because it is exceeding expectations, and gdp figures out of italy. we are not seeing that much of a stock rally anymore, and dollar is down. that is what i am watching from zurich. let's begin our coverage of the resignation of general flynn at the nsc. chatham house follows closely. it seems to be almost a chaos between the u.s. intelligence committee and the white house. -- does the run right president trump right the ship beyond what he can do with the chairman? there: i think right now is a significant question about how much further this will go.

we have had this resignation but this is a much bigger question about when or if anyone in the administration, cabinet, or donald trump knew about this prior to what is in the public domain. of course the big question is whether that is going to be further interrogated, will they pursue this? if that is further pursued it will make the president feel antagonistic toward the intelligence community. it will continue to be a difficult situation. tom: the history of these affairs, this is where the adults in the room entered. at theere be a seachange white house where general mattis and general tilson takeover or are they -- rex tillerson take over or are they removed? leslie: this is the moment of opportunity for them to come exerter and really

expertise. to make sure whoever is in this position next is a credible, professional, and that the nsc gets turned around. there's also a question of the senior staff on the nsc. a lot of these people have been appointed and they are flynn's aople, so this creates tremendous amount of uncertainty and instability within the nsc. tom: we will talk to your colleague in a bit. help me with how is news ties in with vladimir putin. he has got to love the chaos, right? leslie: he might love the chaos but again, the has been a little bit of a quiet on this broader question of the relationship between trump and russia, and the administration and russia. now it is right back on the front pages, the question of

sanctions, unofficial ties. nevermind the fact that the phone conversation was inappropriate and possibly illegal, but it raises questions of what was he trying to do? why was he trying to undermine the hacking sanctions? we have had quiet on this issue, quiet on the issue of the dossier. time i thinktable for the president and the question of the u.s.-russia relations. francine: do you know, doing have any indication of whether he resigned of his own volition or whether some but i forced him? is it donald trump also him and says this is sticky for me, or does someone put pressure on him to resign? leslie: i think it is fair to say the media has played an important role. the justice department has warned the white house and there

has been conversation of this. this is not new, especially in the news, i do not think. the intense media scrutiny in recent days, and if you watched what was happening in this final few hours up to the resignation, it was very unclear. i think there was a sense that flynn was probably going to go but when it happened it happened very quickly and abruptly. we do not know for sure exactly how that transpired but it raises this big question -- was there prior knowledge of the actual content of these enceunications, or was p misled as we are being told? francine: do we know about donald trump's relation with iran? michael flynn was one of the harshest critics and i'm checking to see if there is impact. is it a moment to reset relations or are we on the same

warpath against iran? asking aou are question about iran or russia? francine: the question is about a run. mike -- itron. -- iran. michael flynn was one of the most outspoken critics. will it still be the same situation with the administration as it stands? -- therehere have been has been a sense coming from some in the administration but in the short term, the iran deal would be respected. that is obviously very different from flynn's hartline, putting them on notice. of being muchance more suspicious of iran is likely to carry out, but i think this replacement of flynn -- and it depends very much on who it is that he is replaced with --

it is likely to lead to a moment of pause. this is the second big strike for trump in the last week. some going to lead to reconsideration within the administration. line isd taking a hard probably not going to be at the top of the agenda when you do not even have the national security council. tom: leslie, thank you so much. robin niblett will be with us in a few minutes. gideon rose will be with us -- with us in the next hour. we will get more perspective on general flynn and the ramifications to donald trump. a busy morning, a quick moment with michael purves. we will come back with much more on the volatilities of the various market. i believe it is a melt up. are you surprised? michael: ultimately i am not

surprised. we have been waiting for trump to make volatility great again. tom: you have the hat, i am sure. michael: we have to wait for that. when you step through all these chaotic stream of headlines coming out of washington, d.c., that does not mean you get a higher vix, not necessarily right away. my framework is i pretend hillary was actually elected. tom: so does the rest of the country. continue. michael: if you pretend for a second hillary was elected he would have the status quo maintained. 2-2 world.my 2- you might have equities, bond yields, and the dollar a little bit lower but not that much lower. if you think about the overall

economy domestically and globally, but the market has to fall back on is nothing really that horrible. the market got bit up on trump factors. you saw a one point extension in the s&p and you did not necessarily, he did not necessarily have a complete absolute panic rally that is sustained. watching michael purves struggle here with a melt up. 102% in equities, 29% return in the last 12 years on the s&p -- the last 12 months, rather. we will stay with michael purves and continue. i want to talk about asia and this great call on a weaker asia basket of currencies. michael mckee in washington,

chair yellen will testify before the senate banking committee. that will be more than interesting, 10:00 a.m. this morning. ♪

francine: this is bloomberg surveillance. from zurich and new york, francine and tom. i spoke earlier on to the credit suisse ceo tijane thiam about results. they posted a bigger than expected loss, mainly because of the fine they settled with the doj in december. the ceo told me they feel like they are in a better place, however they will continue to cut costs. he is halfway through this three-year overhaul plan. year, we ares this

expecting around 5500 to 6500 to be lost. andked him about trading the investment bank and upcoming volatility. >> it is going to be a source of volatility. the 10 year french treasury, is down to its lowest point and will create some uncertainty. certainly as the market focuses on that outcome. francine: the equity capital seemed in line. revenue seemed pretty much in line, a little bit of concern on the fund impacting their long-term profitability, but the share price gaining 3%. something i tried to push him on is bonuses and he would not talk about that because he said they will and out something on that in due course. hes was ipo is something announced about 16 months ago and the markets want to know, is he sticking to his plan?

ago a couple of weeks coming on our show, saying that maybe he does not need to do that because things are going ok. toane thiam told me he wants stick with that but they are looking at other options. >> given all the uncertainties, the french election, all the uncertainties, sentiment is better that we are not ready to give a finality. it is on the table. we are working with it. we said second half of 2017 so that gives us time to look at it. as you would expect, we look at ours as well continuously. francine: tijane thiam telling me they still have time, tohough it is about four five months for him to decide whether he will ipo the swiss unit. let's bring in jonathan tice from bloomberg intelligence.

you hear him spake and look at those results, is there anything they could have done better? jonathan: the one comfort you can take from these results is that the restructuring is beginning to work. , they need at 211 billion and capital and they raised six, and another billion or so from disposals. theirre talking about liquidity coverage ratio and they will lower that which will boost leverage. from a capital standpoint we are getting to the stage where we are comfortable with capital and the environment is changing as well. francine: do you believe we are over these kind of legacy crisis litigations with fines coming out? jonathan: obviously we still we will and no doubt discover other areas that will continue to drag, but near to medium term we are getting

through some of the large headline numbers, yes. we are getting better visibility on the run rate for profitability and the capital bill. francine: can ubs and credit does theth thrive, or fact that one do better than the other automatically mean the loser will have to merge or disappear? jonathan: i do not think we are anywhere near merging orders -- or disappearing. credit suisse has a slightly different focus, did not go as wholeheartedly down the wealth management route. he suffered a great deal of pain. -- they suffered a great deal of pain. given guidance on net new out sets -- assets, they are still looking at the emerging markets and they did not want to give us goings on revenue.

if you are asking in three years time will there be ubs and credit suisse, absolutely. will they be in the current structure? i do not think it will be significantly different. tom: you make the wonderful distinction they are not in wealth management. where do they sit in terms of scale? are they heading towards being a large boutique or a small, too big to fail platform? i do not understand where credit suisse fits into post crisis banking. largean: they are a very wealth manager and they follow ubs, talking about asia as the great white hope of net new asset growth. they are a financial services conglomerate. asset management, equities, vix they haveding, -- brother capital up to sustain the business model -- brought

their capital up to sustain the business model. where is the profitability going forward? several quarters ago ubs told us they could've written all the new net money they wanted but it would not be profitable. you sonathan tice, thank much for your wisdom on credit suisse and the challenges of european banking. michael purves is with us. bring up the chart, this is the u.s. banks. jpmorgan on top, wells fargo just below, tumbling in the last year. down below are bank of america and citigroup in the darker blue, a little hard to see. where is the new banking going? how do you perceive american banking if you need scale to make margin but do want -- but do not want to be too big? certainly

american-based investment banks -- global sacks, jpmorgan -- they clearly will be stealing from their european counterparts . all seem to be instructional retreat of some form. good news out of washington, or let's hope so, in terms of construction the right -- constructive the regulation. then you have a trump yield curve as well. perceive a u.s. platform being able to acquire something like credit suisse, to pick up a euro platform, or they do not need to do that anymore? michael: in 1992i started off working as an investment banker for the largest investment bank in europe. goldman sachs and jpmorgan -- morgan stanley were just making roadmaps and years later it was a game changer. i do not know if they need to do that. maybe they can extend their

brands. there is great assets to pick up , but overall i do not know whether that would happen. i am not an expert on swiss investment banks by any stretch. tom: it is nice to talk to someone on surveillance who has actually lived the business like michael purves and many of our other guests. does scale matter? i get the idea that we have five to six banks they cannot grow deposits anymore, but where does scale fit into modern banking? michael: on the investment banking side, you can grow that organically reasonably well. you can pick off the right talent you want. tom: the right relationships. michael: i do not know if you need to set up a big premium for an existing franchise. tom: are there too many banks? domestically, 15 years

ago there might've been 15,000. 30 or 40 biggest users of bloomberg terminals, are there going to be fewer in five years? i cannot figure it out. they're like a bad rotary lunch in a midwest town. no one wants to merge because they like going to lunch. michael: there is the domestic questions about, let's unpack the question domestically for the united states. there is a lot of systemic issues you will run into. , how was too big to fail concentrated a banking system do you want? the other answer, which is more of a global question, you touched on an interesting question. if we are going to and every country for itself environment, does each country hang on to its deutsche bank? tom: which is a theme that was

brought up at davos. it is hugely nationalistic. michael: that is something that might be more revealed as we get through the european elections the next year months. tom: this is fabulous, michael touches upon an extremely important observation that we saw a davos. at the end of the day it is like pan am or lufthansa. we are going to continue in international relations. we just got lucky. we have gideon rose. gideon rose of foreign affairs magazine, our next hour. ♪

francine: this is bloomberg surveillance from zurich and new york, francine and tom. i am still looking at brexit. a lot of the banks posted in xeric, credit suisse among them -- zurich, credit suisse among

them, but ubs has a big operation in london. we want to know where they are thinking of relocating their stuff at the moment. also looking at inflation figures out of the u.k., the u.k. inflation figure was not as high as it economist where expecting. that is probably a boon for the be a way which is struggling to see what its next move could be. the underlying cause not being as strong as thought in the u.k. , is because a lot of the clothing retailers had to slash prices and give big discounts. this is not great for the bottom line. taylor: a late-night resignation at the white house, national security adviser michael flynn has quit over allegations of improper contact with russian officials. he missed test he inadvertently misinformed mike pence about

those contents -- contacts. the white house said he discussed u.s. sanctions with the ambassador and misled u.s. .fficials about the talks in california, almost 200,000 people who fled their homes cannot go back yet. the evacuation order will stay in effect until they are sure it is safe to return. the water level has receded, slightly reducing concerns. the majority of businesses and britain are not equipped to deal with cyberattacks. according to philip hammond, companies should work with the government to fight cybercrime. upre is some anxiety ramping among british startup companies. shows theyompanies are worried about brexit.

than 1/5 of the companies expect open offices in continental europe. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: thank you so much. inflation, weu.k. have more data out of your -- european inflation. what does that mean? does that mean tapering will be delayed, and the impact on the fx? let's go to george servo from deutsche bank. great to have you on the program. how concerning are these figures in terms of gdp for germany and italy? think they aret that concerning is that if you look at more of the

forward-looking surveys, they are not -- they are suggesting gdp is holding up quite well. i think going forward, the market will be a lot more focused on the political risks in europe, in particular all of these elections, and the impact of those events on growth. the q4 number is quite backward looking and the market reaction has white -- rightly been quite muted as a result. look at theen you ecb, officials will continue to argue monetary stimulus is needed to support this recovery, i would say this green shoot. it is not a recovery so far. when will we see the markets push for information on tapering from the european central bank? allge: for the ecb it is about core inflation at the aggregate euro area levels. they are welcoming growth and like the fact that it is proving quite resilient. to get more -- more news on

taper, lesser amount of qe we need to see that core inflation number heading higher. at the moment, most of the move up and inflation is headline because of the oil commodities. inflation is still stuck at .8% to .9%. our own expectation is that rises toward 1.1% or 1.2% over the q3, which is when you get the next potential announcement huge you have to go through these major political events without an accident for that to take place. francine: i know tom wants to about some yields talking political pressures, possibly from france and a little bit of italy. talk about u.k. inflation, it was below expectations. is there ay there or concern that when article 50 is triggered it shoots up to 3%?

u.k. is one market where we have stronger views in terms of where currencies are going. being negative on the pound, there is sterling is one of our strongest views. the inflation numbers that came out this morning are helpful in that direction. they will provide a bit more scope for the boe, a bit more ram for them to stay dovish. ofhave a small number dissenters but i think the core committee will stay dovish over the course of the year. the brexit negotiations will soon start, and even though intentions are positive on both sides, we are concerned about the lack of time to complete a are in two years, and we worried negotiations will get stuck around this issue of the payment the u.k. has to make to leave the e.u., and things will stall quickly. it is one of the reasons we are negative on the pound. pound? you see a 1.10

what is your next call? george: we have been quite negative for a while. we are looking for a move below 1.10, down to 1.08, 1.05. it is a big move. the drivers are, on the one hand, political. i think the market will worry that we will get cliff brexit, that we do not have enough time to reach this incredibly complicated agreement with an two years. on the other hand, if you look at market expectations, data surprises in the u.k. are at cyclical highs to the neck -- the risk is that data starts turning lower. the market is pricing rate hikes from the bank of england, which we think is highly unlikely. the risks seem to be asymmetric in terms of a weaker pound. bring it down to under

1.10. hsbc was at 1.10, and we see deutsche bank ratchet down from there. let me bring up the euro trade weighted chart. the basic idea is we have a further depreciation in place. do you just assume a structural depreciation in the euro over the next two to five years? george: we also have quite a negative forecast on the euro, but the difference with the pound, our big driver is the u.s. side, your side of the atlantic. we are very heavily focused on who trump will appoint to the fed, the composition of the new fed. he has the ability to change that dramatically over the next two months. also focused on the corporate tax return -- tax reform plan. thingseurozone side,

should go smoothly, allowing for a taper by the ecb that the drake -- the big drive for the euro going lower is the u.s. that will make it a lot more asymmetric, a greater euro downside. assuming that does not happen, a big driver will be the u.s. tom: we have stopped talking about negative interest rates. the german two year rolls over again. bring up the chart, this is the two's and attends in germany -- germany.in the continued roll over in the two year yield, why have we forgotten about negative interest rates being an impulse to our financial system? george: part of the reason is that central banks have signaled they have probably reached a limit in terms of how low they can go.

we were assuming they could keep cutting because of this issue of bank rough and ability, the expectation -- profitability, the expectation is that we have reached the end. why the focus has shifted away from negative rates, i think going forward it is about tightening. who will tighten the most on a relative basis if the differential against the euro continues to widen against the dollar? that will mostly be because u.s. yields are going up, not european yields going down. looking at the swiss national bank and quite a lot of deposits. site deposits rose 0.7% last week. what is your call on the swissie? george: interesting that you raised switzerland around this debate on currency manipulation.

the swiss national bank is still quite actively intervening in the exchange rate market as can be shown by the rising liquidity, the rising site deposit balances. think the margin at the moment is clearing. the only reason euro-swiss is holding up is because the smb is intervening, and we think is intervention levels will have to go down. tom: thank you for coming out today. , you almost fell off your chair. 1.08, 1.05ations of sterling are profound. strong dollar, week british pound. have focused on is the inverse of what he was just saying. the real rate differentials between america and japan, america and germany, and so

forth are so key. when i am factoring in is nominal rates are still really suppressed by the boj and ecb, and inflation is continuing to grow higher. you have a small differential before the election and after that you had real rates going up to 60 basis points suddenly and contracting again. my tactical playbook for the next few weeks and months really is that real rates are going to be contained. that is going to keep -- if you look at the dxy basket, that will be pretty contained and we will not see too many upward movements. i think how yellen squares off against higher inflation prints and two hikes, three hikes, one hike, all of that will affect the trend. the longer end of the yield curve will be important so i'm expecting the dollar to be in pain. the basket should be contained

.- dollar to be contained the basket should be contained. tom: it is early in your u.s. morning, midday in london. you need to know tv . we have been working for years on this. over on the death star, as a new team have been working on this. if i click on the chart, up comes the actual segment on the chart. you can talk to us down here, look at the chart. you can actually download the charts, the just then chart banner that i make here. this is really cool on the bloomberg terminal. we will come back with michael purves, gideon rose in our next hour. from new york and from zurich today, this is bloomberg surveillance. ♪

francine: this is bloomberg surveillance, from zero to and london, francine and -- zurich and london. tom and francine. john freire joins us. there is a lot of turmoil when you look at yields, and i guess thanks. at the credit suisse birding a lot of people were asking about the french election. what are the real challenges of marine le pen, president? ton: it depends who you talk . certainly if you look at the poll numbers, she is struggling in that second round to get much higher than 40% in the polls, in a runoff against any of the major candidates. of course in a two horse race, somebody with political skills

of marine le pen tapping into the zeitgeist of angst always has a chance, but the mountain is still a very high mountain for her to climb. guess,e: the concern, i is through bloomberg's reporting, we found out n, the frontat macro runner has a long way to go to find out -- you make sure the provinces find out about him. that russiasaying and vladimir putin are trying to hack him. that is true, and the shadow of russia meddling in the election has been around for quite a long time, but eagerly when we saw them in the u.s. last year. about, yes,to think we know russia likes to meddle in other country's domestic affairs to do this sort of shadow warfare, but important to think about this, does vladimir putin really want marine le pen?

if she does get a referendum on the euro through, that would cause huge volatility in the exchange rate. if you think about just how much the russian economy relies on the eurozone for trade, how much the people around putin personally have invested in the eurozone economy and in that inrency, if you were sitting the kremlin you would probably want to think twice about the volatility you would see if le pen became president. this is about dutch fund managers. we talk about the dutch nationalist, but when you look at dutch fund managers, they worry more about le pen than their own politicians. john: that is right. do a certain extent i think they are traumatized are the events of last year with brexit and trump. there is a tendency to see destruction and malaise and

populism everywhere they look. if you look at the netherlands, it is true that they are looking -- they are doing good in the polls. a lot of these western european parliaments and political systems are designed to keep extremists out. in the netherlands, i think the astest we have ever seen coalition come together is 10 days and it could take months. it is not even guaranteed that they would be in any government that was formed. the action of going into a coalition government forces a policy isolationist to water down his policies. the potential policy impact after the election, it remains to be seen how much of an impact he could have on policy in the netherlands. is the betting of what chancellor merkel does, how does she adopt and adjust to euro

populism? john: she has her own problems in germany. there has been talk about the alternative for germany party. the challenge ironically is coming from the establishment, from the centerleft. martin schulz has been catapulted back into german politics. he has seen a huge surge in the polls. for the first time in a decade his party is leading. is that a short-term bounce? we do not know. merkel does have a serious challenger and that challenger, considering the up session of the populist -- obsession of the populist, is coming from the far left. tom: john freire, thank you very much. coming up on bloomberg surveillance, credit suisse. i do not think it is an interview with francine lacqua.

we will talk about foreign exchange and the litmus paper of the global system. this is bloomberg, stay with us. ♪

francine: this is bloomberg

surveillance from xeric and new york. -- zurich and new york. breaking news from the auto show --- auto sector, p talkst says they are in to buy general motors european division. these talks, if you look at gm's european division, we are talking at -- about brands such as walks all. these talks are actually quite advanced, we are learning. if you look at pew show's eotrnal and shares -- peug shares, there may be concerned they are overpaying. tom: it has been such a troubled section for general motors. frankly within

american finance, a sinkhole, but it has gotten better in the last number of years, hasn't it? francine: look, the combination is huge edges lie there is a lot of talk about it in the auto sector. it would create a many facture is about 16%, and would leapfrog one of the most successful .rands, renault this would really shake things up in europe. matt: the point you just made is a very important one, because renault had just overtaken peuge ot in france. renault movingof into different markets to become a real world player, or even more of one that it is now in combination with the. peugeot a bigger

position than 10. -- renault. the problem is, they are not great brand names and do not have a lot of pricing power with consumers. that is a real problem. tom: matt miller, thank you. michael purves with us. i want to go back to one of your great calls, the rollover in asia dxy. let me get the chart up. . i do not have the magic super bowl's patriots pans. here we go with the asian recovery. michael, you have nailed this rollover of asian coercion sees against the dollar -- currencies against the dollar. does it continue? michael: i think we will see a consolidate a little bit.

what determines the fate is how trump and his team negotiation with the chinese. in a way, there is a source of common interest. a weak dollar might hurt japan and might hurt europe, the developed markets. needing market macros stability. you are obviously seeing that with what the pboc has been doing. tom: michael purves, thank you so much. rose ofp, gideon foreign affairs magazine and the council on foreign relations on general flynn. ♪

tom: this morning, president trump attempts command and some control of his national security apparatus.

general flynn is out, out, out. discussing national security affairs is in over dessert at the winter white house. football.mic the intelligence community. they are deflated. it is trump time in this hour. didion rose, a foreign affairs magazine -- gideon rose of foreign affairs magazine. is "bloombergthis surveillance" live from new york, high-end tom keene. in zurich, francine lacqua as well. what did you learn today? what is the single bullet item i need to know about the beleaguered swiss bank? francine: job cuts. there are more to come. pretty confident about the future. focus on currency volatility. the pound is the worst performer after weaker than expected u.k. data. we go to janet yellen's testimony a little bit later on and the impact that may have on the dollar. tom: you heard deutsche bank

talking about a weaker pound-sterling am a down under 1.10. general flynn with our first world news. telco the national security adviser has quit. michael flynn returned -- resigned last night after improper contact with russian officials. he said he is inadvertently informed vice president pence. the justice department warned the white house last month that flynn had discussed with the ambassador. stever mnuchin is the new u.s. treasury secretary. senatesworn in after the confirmed his nomination. the vote was 53-47. he is expected to move quickly on two trump administration goals, dismantling venture regulation and cutting taxes. nato secretary-general says the trump administration is committed to the european military alliance.

big knowledge and president trump is concerned -- acknowledging president trump is concerned. >> in my two phone calls with president trump, defense spending has been a main topic. he has strongly expressed his commitment to nato summit to the transatlantic bond. but at the same time, president trump has also underlined the importance of fair burden sharing. taylor: defense minister is beginning a two-day meeting tomorrow. under report warns the majority of british businesses are not equipped to bill -- deal with cyberattacks. workg the company should together. nine out of 10 businesses do not have a plan to deal with cyber breaches. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries.

i am taylor riggs. let's get to the data. it is still a bit quiet. on.much going the euro a little bit weaker over the last three days. the dollar stronger. the next screen, if you would. the dow, wow. the vix finally broke yesterday. for francine did because she cannot afford zurich. francine? francine: thank you so much, tom. they will sin me back to a much cheaper -- they will send me back to much cheaper pound. this is after inflation was not as strong as expected. italy and germany. let's look at the vix.

it will be an interesting day as new york starts to wake up. tom: i open a blur of intelligence and security moments over the last four, five, or six days. general flynn's outcome out, out. we knew that was coming. themore worthy images of president looking at national security materials at the white house table. kevin's not in charge of the atomic tag, but he is in charge of making us smarter. cut to the chase. when to the adults into the room? how do mattis and tillerson respond to what we have seen in the last week at go -- last week echo >> this is a political victory for vice president mike pence. the sources i'm talking with inside of the white house tell me that there was widespread frustration within the u.s. intelligence community that michael flynn just simply was

not one of them. clearly, this outage is something that was in the works for quite some time. it is a victory for the more establishment type of figures in the u.s. humidity. tom: within your reporting, is any indication the president got the message last night? quitel, i think it is telling that president trump did not fire general flynn, the general flynn actually resigned. we have seen this time and again through the short lived career of president trump in that he is a loyalist. he is someone who stands by his people, particularly, when they have stood by him. i think there's no question that president trump would have liked to have seen general flynn stay on through his administration. however, that is simply not the case. tom: what is the linkage of in a sea to the department of defense? there's another set of generals that seem appropriate to take general flynn's position.

is this where secretary mattis says, my guy is going to run the show? >> yes. to cut it short. but i also think there are widespread calls on capitol hill, people like senator john mccain as well as lindsey graham. they are clearly behind the scenes, despite publicly being against president trump on many of these issues. they are going to try to increase their influence. another rumbling we are hearing in the halls of congress, general petraeus as someone who would like to get back in. having had a close relationship with president trump. a lot of moving parts now on foreign policy behind the scenes. this is a very fluid situation. i cannot stress this enough, tom, a big victory for the establishment type figures in the u.s. intelligence community. francine: kevin, we at a little news overnight on new rulings on

this travel ban, making it even harder for the white house to revive this plan. kevin: yes. the administration has said they're going to act in juxtapose new executive orders as this executive order action case goes all the way to the supreme court. however, sean spicer also saying they're not going to take a bold action that would cause them more of a legal headache. this has gripped the nation in the u.s. and around the world to a large extent, as well as the business community. that continues to evolve. truthfully, will make it all the way to the supreme court. francine: kevin, i know a lot of finance ministers in europe will be relieved that steven mnuchin has been appointed because they know who to call if they want to talk about currencies. to we know what his priority over the next week will be? tevin coleman we do not know what his immediate -- kevin: we do not know what his immediate will be.

he is working to get some of these to regulatory policies on dodd-frank in motion. he is working with the president on tax reforms. he has emerged as the goto person on capitol hill to work with people like mike pence and the sooner congressional liaison staffer on capitol hill -- the senior congressional liaison staffer on capitol hill to invoke tax reform. i would anticipate that there would be a lowering of the corporate tax rate relatively soon, perhaps even a directive coming from the administration for congress to act quickly. tom: thank you so much, kevin. was scheduled. here's the fabulous new foreign affairs magazine. i have already got through about 1/5 of it. i cannot say enough about a subscription to foreign affairs to make you smarter and make the brain go. gideon rose. this had to be your toughest issue ever to do.

are you still searching for trump time? >> the challenges, he said a lot of different things and you never knew which of the things he said he was going to do. putting the issue together during the transition was very, very difficult. of: to go to the news general flynn, one of the subtitles within your wonderful set of essays, "first, do no harm." is the president doing harm to our intelligence and national security apparatus? >> absolutely. there is essentially an amateurism about this administration to date that has ton quite worrying, not just the professionals throughout the national security office, but to foreign leaders, american allies, and even probably in some respects, american ever terry's you do not like the uncertainty that has infused the state of the world right now because no one is really sure what the administration is going to do next. tom: this is a question that comes up all the time when i'm

having beverages of my choice. what does the old line republican establishment do, on foreign relations, on nick burns, and others? how do they respond? >> they are out of power and they are not actually in a doingon to respond by much at all. at this point, the white house and the administration is going about its course. what will happen is what they choose and everybody else is just watching. tom: is this enough with the news event of general flynn stepping aside to get us to some form of intelligence, foreign policy normality? >> it depends on who he is replaced with. tom: who do you want to see? >> it is not who i want to see, but what -- who donald trump was to see. you have gary cohn and economic side. from what i hear the real power is cohn. people in finance a door him.

the people on the street i know think he is one of the best people in the entire industry. a serious adult professional. you do not have anything like that on the national security or foreign policy side. that is why everyone is so puzzled and concerned. even to listen, who you mentioned, was a corporate executive and still does that have a deputy. no one has any idea when or whether yet adult will be brought in -- adult professionals, to run the foreign-policy and national security show. tom: do you have any confidence that there is anybody on the watch right now? are the offices into within our apparatus worldwide or are there actually people showing up for work on this tuesday morning? >> it is not that -- there are a lot of positions not yet filled in a lot of people from the obama administration and even some career professionals who

have moved out. there are vacancies throughout the system. that does not mean phones are not being answered because there's a whole professional bureaucracy. the challenges, to those people have any input into the decisions that are being made in the white house? put it this way, there's a skeleton staff still running the show on day-to-day affairs, but it is not clear if they're connected to the people setting policy. tom: i want to show you this. here is why gideon rose is my favorite guy. adult sized font. merewe near s mortals need adult sized font. we're going to continue this janetsion and talk about yellen today at 10:00. good morning. ♪

francine: this is "bloomberg surveillance" from new york and zurich. i spoke to credit so is early on after they posted earnings that fell short of analyst estimates. it is a loss, but mainly of -- because of the fine. they settled on that back in december post up one thing i asked was, not only about the swiss ipo. we went through bonuses, volatility. i wanted to get his gauge about the threat of the regulation in the u.s. and whether that would hinder a lot of big european banks. we have done 63 deal so far in q1. if you look at ipo's, we have done 19. our exposure to america is a

positive, not a negative. francine: he was a little more optimistic when he came to the industry as a whole in europe. ofstill sees quite a lot volatility, which is not necessarily a bad thing when it comes to the markets, but political risk with the french election is at the forefront of his worries. >> there is going to be a source of volatility, tenure french treasury -- 10 year french treasury is around 1%, will create some uncertainty. howhe market realizes uncertain the outcome. francine: he is been on the job for about a year and a half and we are halfway through his three-year overhaul plan. he is pledged to cut between 5500 and 6 -- 6500 jobs. let's get to jonathan tice, our expert on banks. jonathan, what do we learn about cost cuts. ,t seems it is finally his plan

his plan is starting to bear fruit. >> that is one of the takeaways. it looks as if the restructuring is beginning to kick in. we have been slightly gross net margins going the right way, decent investment banking results. certainly, more positive than we have seen for several quarters. we're still getting to a stage now where we are a lot less toughd, even with a regulator, got the capital position. francine: one of the things that i try to present one was on the swiss unit. let's have a listen to tidjane thiam talking about his thoughts on the ipo that should be decided by the first -- second half of this year. ,> given all of the uncertainty whether it is the french elections, all of the uncertainties around this, we're -- we are working

on it. we said the second half of 2017, so that gives us some time. ,f course, as you would expect we look at other offerings as well. francine: jonathan, do you think he will go through it yet that we had harris associate saying he does not think the bank needs to ipo the swiss unit. >> certainly, compared to when he talked about it, they have raised 6 million since then. they needed nine to 11. about another billion from disposals. going to be returning to profit in the near future. there's a lot less pressure. it is a bit of a jewel in the crown. the need to do this -- when they have 44 billion and risk assets still to run down in the sru, it is better than it was.

i would not say, no, they won't do it, but there is -- it is nowhere near as pressing as it was. tom: whether it is credit suisse or any other european bank, did have any ability to mint money? is their profit margin to be had? thirds ofabout two the way through. two things that surprised me, one, bad debts. still going lower. that is been a huge boom to the european banks. that will continue for a while. the revenue is picking up slightly. i think return on equity of a percentage of percent -- of 8% to 10%. not particularly exciting, but if we got to a level playing field where we have some reasonable underlying profitability, i think so. now it is still about the cost and the overbake nature of europe. tom: jonathan, thank you so

much. europeanstery that is banking. coming up, no, he is not part of credit suisse management and he will not discuss their earnings or lack thereof. talking much more about four and exchange and the dollar. stay with us. this is bloomberg. ♪

tom: good morning, everyone. francine lacqua in zurich. i'm tom keene in new york.

we're following the general flynn story. through the that hour. gideon rose with us from foreign affairs magazine. with now, shahab jalinoos us on the strange leakage of rising inflation, tangible rising inflation after the oil to 240 and now a full exchange. ring up the chart. i showed this on facebook live. didion, i think you will find this interesting. deflation. the u.s., germany, and italy will stop and up we go, gideon. help me here with higher inflation and how foreign exchange reacts to that. >> if you have persistent higher inflation above your trading partners over a long period of time, it should fall. tom: massive illegality. >> the market tries to --

.om: massive ambiguity >> that tends to boost the currency. i think the second affect normally is important to start with. tom: what is your call on pound-sterling? >> we have the 1.20 forecast, which is what we had in the post-brexit type of environment even a year ago. to see more losses in the pound-sterling, dramatic losses, what you need to see is something that we call a disruptive brexit. earlier, it isd about the politics. if you get the political drama, that is how you get to a weak sterling. >> i think so. the market knows the u.k. is going toward what we have hard brexit. if that were to happen, the question is, do you get there in

a benign way or will it disrupted? here withb jalinoos us. coming up on bloomberg radio, president trump. give him one book to read, it would be "the commanding heights." juergen and the 7:00 hour on bloomberg radio, bloomberg television. this is bloomberg.

francine: this is "bloomberg surveillance." i am looking at u.k. inflation here from zurich. it is extremely important because it came in below

estimates, which means markets are selling off pound because they think it makes it less likely that the boe and the governor mark carney will actually raise interest rates. it is something we need to keep an eye on. we had that incredible forecast from george saravelos saying he's ease the pound at 1.05. something we need to keep an eye on, especially when you look at the swiss franc still being a haven.

+++ second. -- in a second. taylor: late night resignation of the white house, michael flynn has quit over allegations of improper contact with russian officials. he said he inadvertently is in front michael pence -- is informed uncle pence because of the fast pace of events. the justice department told the white house that he had discussed it with the u.s. ambassador in misled u.s. officials about the talk. in northern california them almost 200,000 people who fled their homes in fear of a dam break cannot go back yet. the evacuation order will stay in place until they are sure it is safe to return. the water level at the lake reservoir has receded, slightly reducing concerns there could be a catastrophic collapse. the british government has rejected a petition asking it resent invitation for president trump to visit the u.k.. or than 1.8 million people signed the petition. the foreign office has the president should be extended for courtesy of a state visit. no date has yet been set. according to people familiar with the matter, exploring an acquisition of general motors european business. psa is in talks to acquire to brands. it would give them about 16% of the european car market. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: thank you. this is a big deal. if this still comes to fruition, taking over, combining with european union, it would create around 60%that owns of the carmakers in europe, leapfrog renault of the number two after volkswagen. it seems by ridding the reports, people are very interested in this because it means peugeot, who is been a laggard in the past, it would actually hold some key technology. it is not so much the models of the cars, they give some of little of that distribution and better technology. tom: within the margin, it shows the eurosclerosis of the auto industry. let's bring up the chart of peugeot quickly. it has been a wild, wild underperformer coming out of the

depths of 2008 and 2012. the price of peugeot, back to where it was 18 years ago is really jaw-dropping. we will keep looking at that transaction as we go through the day. gideon rose with us with foreign affairs magazine. we talked earlier about the incredible trump time cover. here is mr. putin riding a horse. here is little tweets out here. they did not teach us this at foreign affairs magazine. here's a flock of tweets flying around. you had to adapt for the tweeting president, didn't you? gideon: we gave a fictional landscape with all of the various features of trump world and what he might encounter. tom: i would suggest that gideon rose for the north koreans would launch a missile. , reviving the art of the deal. can a deal like -- guy like president trump deal with north

korea? gideon: the world is not made an run on deals these days, it is built on relationships. the entire liberal order is a set of alliances of the good guys, as it were, trading, collaborating, cooperating with each other for ever greater peace and stability and prosperity. the fact that it is not clear that trump even understands that kind of concept because he is alles, enemies, bystanders is simply other partners to have some kind of zero-sum transaction with. tom: is there consensus he can be dragged toward the washington consensus? >> the council on foreign relations does not take a side. everyone is basically -- i would say, this cannot continue. it is not sustainable to do this kind of amateurism. either the will be an evolution toward a more standard, professional competency or it will be some kind of dramatic crash in crisis.

about thetalk zero-sum game you were just talking about. could we not suppose if we assume that zero-sum game does not work when it comes to labeling countries, currency manipulators, talk about the economy could work in foreign policy, after all, isn't this vladimir putin's strategy? >> it is, but not the liberal order. the united states is not just the strongest power in the globe and the most important one, but the head of a whole team, an alliance of other strong major powers including europe and japan, including a lot of others. what trump does not seem to understand is it is not about relative gains within the alliance -- which is what e-zines was concerned about -- the alliance and the liberal order versus the world at large. we do well when europe does well. we do well when japan does well. everybody benefits when they trade, and collaborate with each other.

the problem is, that is not something that seems to come naturally to this administration. francine: all right, but he is been talking tough on north korea and iran. does that make sense? >> the interesting thing, there's been a lot of talk but not a lot of actions. ee, you saw them pull back on a few fronts. they acknowledge the one china policy. they pulled back on israeli settlements, from backing them too much. they have done a variety of things that essentially are less crazy and less in usual. but we don't know how far these things will continue and we don't know what is going to happen next. tom: it is time for a book review with shahab jalinoos bonus round. fabulous book, gaining currency, the rise of the renminbi. barry eichengreen was on the show a few days ago rights --

their discussion here. is it really a global currency? i am not there yet. is it? >> it depends on how you define a global currency. china is a major trading company and currency is important from that perspective. the single biggest component of u.s. dollar trade. can you freely buy and sell chinese assets in the way you can the u.k. asset? not yet is china completely clear of capital control. if anything, those are on the rise now. there is a long way to go before you can say the remember the is totally -- tom: let's review the chart. let's bring it up. your strong, strong, strong remember the -- renminbis.

then up we go with the recent appreciation. does that continue? do they manage toward a weaker currency? >> i think that is where we are going at the moment simply because one of china's major policy shifts in the last two years has been to really trade a lot of domestic liquidity. china has had to pay back the corporate sector, in particular, a lot of dollar debt in the central bank has replaced that funding in the system with lots liquidity.inbi that tends to drive the currency lower over time. it is hard to fight against that too much. all you can do is try to slow the pace. it does not help that the u.s.-dollar seems to be in a global uptrend as well based on u.s. policy. the market believes we may see order taxation come through. academics believe may take the dollar up i 20%.

that type of backdrop makes it difficult for the chinese, given, as we discussed, china's -- china is u.s. major trading partner. francine: quite a week in mid-january in devils -- davos. talkingident of china about globalization, having open borders. then he had the inauguration that same friday president trump. is this an opportunity for china to be finally taken more seriously in foreign policy and filling a vacuum that u.s. may leave in asia? >> sibley. we have never seen anything like this with the major powers in the globe like the united states, like the united kingdom, essentially try to abdicate the leadership by crazy them a self-inflicted wounds in their various different policies. if you're china, russia, you are a little unnerved but also going, what a gift and being given. you want to sit there and let this play out without getting in the way.

what is happening in the west seems like a self immolation. pres. trump: did he and rose with us -- tom: gideon rose with us. truck time is very thought-provoking in the tumult of where we are right now. talk about interesting. does chair yellen amend her testimony given the new washington she is within? we will learn at 10:00 a.m. this morning. michael mckee is in washington. ♪

francine: "bloomberg surveillance" from zurich and new york. we're looking at politics coming your president trump, foreign relations, and the new appointed

as national security advisor means for koran but also from -- iran but also russia. we're looking at banking. no better place to be than switzerland. releasingsse earnings. the share prices up because they're still going to cut costs, about 5500 jobs will go this year. tom: very good. let's get to the yellen testimony, 10:00 a.m. across all bloomberg platforms. it is a privilege that michael mckee would've come our international economics and policy correspondent. michael, this time is different for the chair. how will she be greeted by the senate committee? will be an interesting question. all official washington consumed by general flynn and the ongoing soap opera at 1600 pennsylvania avenue, which may be exactly what janet yellen wants. she would like be able to address wall street and talk to them about the timing of interest rate moves.

she does not want to lay out a particular time, but she does want to keep march as an open option. she doesn't want to raise the fed profile in a way that it becomes part of the story and becomes part of the problem. we will be watching to see, particularly, the new chairman of the senate banking committee taking over from richard shelby. is it going to be somebody who is anxious to mess with the fed come to change some of their responsibilities to crack down on some of the regulation that they have put on banks? that will be an interesting subplot today. tom: the subplot that maybe is the sub the subplot, i believe there are some into chairs of the fed led by the new emptiness of governor tarullo, the regulation guy. can this committee tell chair yellen who to put in that slot? >> no, they can tell her who they won't let fill that slot. the fed governors have to be confirmed. that may not even come up today. that is a presidential prerogative to name members of the federal reserve.

it may come out and passing of they talk about regulation, however. they never appointed -- the obama administration never appointed a vice chair for the supervision as the dodd-frank calls for. not only do they have been to reload leaving, but there is -- enter a look leaving, but there is an opening. they may make it known. you know you will hear from elizabeth warren on that. francine: how much will the markets listen to janet yellen? it will be interesting to hear her thoughts on regulation, but how much can she set the tone for monetary policy given there are three vacancies coming up that donald trump will fill? michael: she will still be running policy, at least until next january. people will put a lot of credence in her word. she will get what she wants for the rest of the year. the question they want answered is, what does she want? hikesg for three rate this year, back in the summer.

if so, what is the timing echo -- if so, what is the timing? ie would like to leave, as understand it, the option open. we have several fed officials saying that recently. they might want to go in march because it might be that window of opportunity between the time the congress starts talking about trump fiscal policies and when they are enacted. tom: michael mckee, thank you so much. look for his interpretation of the q&a later today at 10:00 a.m. shahab jalinoos with us. there is a parlor game down any rate rises are going to do in all of that, but the idea is, we have the best economy going. is dollar strength owing to be an issue for chair yellen, not now, but 1, 2, 3, 4 meetings down the road? >> luckily for chair yellen, the dollar has been one of the worst-performing currencies out there. that is a bit of a pullback from

the strength we saw at the end of last her. the point is, it is not soaring away at the moment the way some observers suggest. i think the issue becomes this -- will we see fiscal plan put forward that includes border adjusted taxation? tom: to you, that is the number one short-term focal plot? >> i say this because firstly, we've never had a policy like this before. it is hard for the markets to know how much it should impact things. secondly, the academic theories to just it is worth 20% in the value of the dollar. i'm not saying that is necessarily how things go. it if the market believes that is possible, it is going to want to take the dollar higher anyway as a basic reality. if you add in as well the u.s. still has positive rate differential relative to japan, europe, there is a lot of potential good news there for the dollar. i think you need the catalyst now to get the big move. tom: shahab jalinoos will continue with us.

i mentioned this in the last hour, tv , way cool. it is the idea, yeah, you can watch tv go and talk to us down here. us right there. get a chart. you you can download the chart. you can bring up that segment right on tv go. stay with us. gideon rose, coming up on a .abulous essay stay with us. this is bloomberg. ♪

"bloomberg surveillance" live from zurich and new york as we talk to the credit suisse ceo. two stocks to watch out for, one is peugeot. they are exploring the acquisition of general motors european business. that would make it a huge company, leapfrogging renault is number two behind volkswagen. understand -- we

when anglo american, the chairman stepping down. coming up next, the midwest and -- david westin. what are you most looking forward to? of news here in washington. general flynn out, steve mnuchin in. we want to focus on what the economic parameters are for this president. we will talk with a man who was in the room, literally and figured it -- figuratively, daniel yergin. aboutl talk with them with the priorities are for the business humidity as well as for the president. that and a lot more. tom: thank you, david westin. this is important. this goes to the heart of surveillance and why you watch and listen every day. and we greatly appreciate that. here's a single best chart. what is way important is a pr

are all of the experts and what -- up here are all of the experts most of the pundits, the gurus, and all of these data points. gideon rose, maybe has in his new edition of foreign affairs magazine, my essay of the year. tom nichols at the naval academy writing on the death of experts. what the hell happened? think of the anti-vaccine movement. here you have a bunch of parents who have a little knowledge and look at some correlation said say, i know better than medical experts. i think this will -- autism is caused by vaccines. that has been debunked. whichind of attitude in lehman basically do not just have their own opinions, but consider that they know as much or better than the experts, is

spreading throughout society. essentially, what this is about is how nobody basically trusts serious experts anymore because they feel they can do it just as well. tireless came from the analysis of expertise by richard edelman. we fight this every day. you and i know, the pseudo-experts are from the new digital news flow and information flow that we have. how do we get our kids back to an understanding that there is an expert dialogue that has value? a 16-year-old who thinks he is an expert at everything and tries to tell me about foreign policy. the thing is, you hope people grow out of that when you stop being an adolescent, when you become an adult, and you realize there are levels of expertise, that people have training and knowledge. the problem is, there are a lot of people who still think about in as and a fairly -- fairly childlike way and do not

ignore what the are some people who do things professionally. if i've a plumbing problem, i want to call a licensed plumber. if i've a foreign-policy question, i want to collect foreign policy expert. and forcefully, that is not the way the country is going. unfortunately, that is not the way the country is going. in the run-up to brexit, asked, all of the experts in economics think this is going to be a terrible idea for britain? he said, i think the country has had enough of experts. that is the kind of attitude that is pernicious and will screw everything up if we let it go too much further. thisine: the problem in case, the experts were wrong because the economy in the k did not follow the cliff. .t may come at a later stage does this go inside with social media? if you look at the birth of radio, the birth of tv, the birth of social media come at we go through massive changes. gideon: that is true, but let's see if in 10 years from now serious economic experts and

historians say, brexit was a wise move that actually helped britain and the world. i don't think that will be a tough call. on: gideon, congratulations the newly minted issue. mr. rose will continue with us on bloomberg radio. francine lacqua with those important news of layoffs at credit suisse. the dollar a little bit wissnger, a euro s strength. there's a beautiful shot of washington. ♪

flynn out, mnuchin in.

yellen in the hot seat. her last chance to make a case for a march rate hike. the turnaround plan working as andcompany cuts more jobs stockpiles cash. a happy tuesday morning. a beautiful sunrise over washington, d.c. where the action is taking place, from president trump's administration to janet time before congress. i am alix steel with david westin. we have a cause in the global equity rally with s&p futures a little softer. european stocks, -- theronger dollar across board against all ga currencies. dollar-yen turning lower down a