anna: trump, long rhetoric, short on detail. president trump urged americans to abandon internal conflict and help rebuild the country. president trump: i will be asking congress to approve legislation that produces a $1 trillion investment in infrastructure of the united states. >> a hike is on the table. of officials speak willingness to tighten monetary policy as soon as this month. firm footing in february. comingr prices rebound

ahead of the continental congress this weekend. a very warm welcome to the program. this is "bloomberg daybreak:europe." from here in london. manus: the market has been bounced into -- into reconsidering the fed, the , you can pick up the chart. the work function and the ois are both that 80%. donald trump was not the extra hour -- extract, it was the federal reserve. you had dudley and williams both pushing the market to reconsider march. anna: the probability is very

high. there's certainly a lot of market rethinking. more about that as we go through the show. let's show you the overnight action. u.s. futures, factoring in the fed story and everything that donald trump had to say. by .2%, theup dollar and stock market pretty unscathed by what donald trump had to say with a little pairing of some of the earlier gains but nothing all that material. thes: when it comes to dollar and the tenure government bonds, you're just trying to see the lack of detail that there was. light on the details. the two-year government bond yields also moved aggressively. this could be the nail in the rate hike coffin as well. that is potentially what will drive the market. adding to the commentary

around the fed are the expectations around the fed. those stories playing in the markets overnight. we've seen that 10 year yield increasing for the third straight there. let's have a quick look at the nikkei, up by 1.4%. the end down for a third day, boosting stocks over in japan. this is work which is in the white line and then the stock market in the blue line. up to 80%.d the market is just trying to whether this is positioning themselves for the possibility and the probability of that rate hike, as they say. if it pairsto see that back. that is the question. anna: let's get some breaking news from the dutch retailer,

giving us the underlying operating income. coming in ahead of estimates. about they're talking synergies between now and 2019 million euros.0 this year alone, they will 220ver synergies of around million euros. that is essentially what the market wants to know and understand. the market was looking for 571 million. we will have a conversation with the ceo later in the show. bloombergs get to first word news now with shery ahn. >> to influential federal reserve officials have signaled

a greater willingness to tighten monetary policy, perhaps us in his next month. in an interview tuesday on cnn, new york fed president dudley has said it's become more compelling in recent months. his remarks follow comments from san francisco fed chairman john williams who said there will be serious consideration at the march meeting. washington will pursue a tougher approach with china and other nations over existing trade deals. he said one priority will be we negotiating nafta and leveling the playing field with china. >> much tougher enforcement. china involves everybody. quick specifically with china, what are you looking to do?

>> you will see, as soon as we have a proper case prepared. >> meanwhile, china's economy has shown more signs of stability but the gauge of factory output being forecast in february was really avoid a recession as the economy moves faster than expected, 1.1% in the fourth quarter. in japan, fourth quarter capital roseing excluding software 3.3%, beating forecasts. scotland's foreign ministers has set a new referendum may be inevitable. he said it could be the only way to protect the country's interest unless the u.k. softens its plan to leave the european union and the single market. she added that factions in the u.k. parliament want to use exit as an excuse to undermine the simi economist government. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the

bloomberg at top . this is bloomberg. let's get into the markets. dollar-yen is moving, the yen a little bit software by point 5%. -- .5%. it looks like the fed stole the show. grexit was the yen dollar relationship that we can. those gains.oop the nikkei up by 1.4%, leading gains in asia. seen as a major export nation and the fact that there was not any concerns about trade wars mentioned in the trump speech, giving some relief to investors. hong kong higher for the first time in five days. looking at some of the stocks we been watching, we did see the

main former site -- pharmaceuticals in sydney against 87% of revenue from the u.s.. trump was quite hard on drug prices. galaxy entertainment looking good and macau with casino arriving -- rising 70.8%. toyota leading those export gains in tokyo. we did have gdp numbers coming through from australia, showing --t australia has avoided the red line was where we saw construction in the third quarter. fourth quarter better than expected. the last time we saw two quarters of negative gdp readings was back in 1991. anna: thank you very much. u.s. president donald trump has delivered his first address to congress, revisiting numerous themes of his campaign.

he used broad strokes to lay out his apology -- policy agenda. >> i'm going to bring back millions of jobs, protecting our workers means reforming our system of legal immigration. the current outdated system depresses wages and puts great pressure. i will be asking congress to approve legislation that produces a $1 trillion investment in infrastructure of the united states, financed through both public and private capital, creating millions of new jobs. this effort will be guided by two core principles. by american, and higher american. tonight i'm calling on this congress to repeal and replace obamacare. with reforms that expand choice, increase access, lower cost, and at the same time, provide better

health care. i'm sending congress a budget that reveals the military, eliminates the defense sequester, and calls for one of the largest increases in national defense spending in american history. by finally enforcing our immigration laws, we will raise wages, help the unemployed, save millions of dollars, and make our communities safer for everyone. for more on his address to congress, let's bring in craig gordon who joins us on the phone from washington. tank you so much for staying up. lots of slogans. the market seems to view this as being light on detail and an absence of reference to banks, lending, dodd-frank, or repatriation. was it light? i think that is a fair characterization. he touched on a lot of things that anyone who followed his

campaign for the last two years with no. a lot of people in washington expected him to come to the podium tonight with a few more specific instructions for congress on how to put his ideas into action. there is really very little of that. high marks for style, low marks for substance. and the missing ingredient was how to pay for things. the repeal of obamacare and a spending,to defense it all sounds expensive and the market wants to know how it's going to be paid for. is exactly right, and so to his fellow republicans in congress are you have a lot of budget hawks who don't want to see the national deficit go up in the national debt increased. he's talking about a lot of the ticket items including the middle to -- middle-class tax cut.

there's a lot of republicans who didn't want to say it tonight because it was a night to put a happy face on his plan, but i just don't think the numbers add up. they don't think he has the tax revenue to pay for all these big ticket items and that's the fight that is looming ahead for donald trump. manus: and what happens tomorrow? this is where the real job begins in earnest. from the calendar on capitol hill, what can we expect? will it be more details followed by legislation? >> i think they are anxious. the first thing we will see is the obamacare repeal rollout. there is controversy among republicans tonight. he did endorse broad strokes of the main republican plan. more conservative members think the plan goes too easy on repealing obamacare. that's the first thing on the agenda.

reformso promised a tax plan in the next two or three weeks. we see little evidence of a plan like that coming together. he can figure out how to pull out a checkbook and paid for it, it's going to be a big fight looming ahead trump for with the republicans in congress. anna: greg gordon staying up late to bring us the details there from washington. his can dress -- congressional address vying for the spotlight yesterday. let's talk about the fed. we heard from some fed members whose comments have gone a long way in shaping market expectations. manus: we heard from john williams who said a march hike is getting serious consideration saidhe new york fed dudley tightening has become a lot more compelling in recent months.

saying the odds of a third rate hike, and then you had the ois spread coming in, ratcheting how are -- higher. simon is with us. the market has finally been forced to catch up with the feds rhetoric. is that a fair assumption? concerteds like a effort from a number of fed members to try to change market expectations. the comfort blanket for a lot of market you want to see north of 60%, and they've managed to do that. there's more commentary to come later this week. then we get stanley fischer and janet yellen on friday. on pc core more data inflation which is the key metric for the fed and softer

it could reverse if the speeches go in the opposite direction. we've had a lot of volatility in the last 24 hours in expectations in the market over a rate hike. so we have various views. what are your assumptions now as to what the fed does? if they hike in march, what kind of message is that? >> i think it's very optimistic to see more than three. the movement challenges that assertion. argue if they move in march they will provide some

dovish guides toward moving ahead. core pce inflation, but also you want to see -- whether some of these constraints in the labor analysthat some labor concern themselves about, will come through. or whether as the president said in his speech to congress, is a late supply of labor ready to be employed? the discouraged workers will be brought back in. not based on a phd in economics, but they might have marched through the front doors of the unemployment offices thus far. i love the title this chart, greed without fear. if we look at volatility on the

other side, there's various ways of looking at this. they say we are underpricing some of the inflation risk. the nail in the fed hike coffin for march? ,> i do think the moderate core and i do come back to stanley fischer and janet yellen, setting the town. if there's a lack of clear signals that they're going to reach the level they've not been out for three years now, they , thent going to get there sit on your hands and wait for more data, wait for additional retail on the budgetary plan. what's interesting about the vix and the lack of volatility in the market, were always awaiting fed policyent from members or from the president to provide more detail, which just

isn't coming. aroundaiting for detail andtax policies of trump border taxation and all those things, we could be waiting for quite a long time. some of this might be delayed by other policy matters. michael mckee talking about how decisions around obamacare need to be made before that can be done. so this could take a lot of time , so there's no reason to expect anything very quick in terms of just how aggressive these fiscal moves are. firstt you saw was the part of what i would describe as a bipartisan approach from the president. looking for support for repeal and replace, but that is a huge hurdle to get over before you are starting to talk about tax reform or tax adjustment, reduction of corporate tax rates.

you're looking at the sequencing and the times scale. you're looking at well into the middle part of 2018. point, there was no endorsement of a border tax hike. so there still let distance from ryan. simon is staying with us. anna: the u.k. prime minister is set to lose a key brexit vote. could it derail the government's schedule? manus: will look at the importance of derivatives clearing. how secure is london as europe's financial capital? meet tod top officials rein in risk. this is bloomberg. ♪

it's 6:22 in the city of

london. let's focus on the u.k.. the government is set to lose a key vote in the house of lords over the right of eu nationals to stay in britain. anna: opposite labor and liberal democrat parties are uniting with rebels among theresa may's conservatives. protect european systems when written leaves the eu. -- when britain leaves the eu. she said at the end of march she wants to trigger article 50. since she said that last year, there's been a lot more expectation around the earlier parts of margin of something could be done sooner. as we start to see a little bit of resistance and some conditions, doesn't threaten the time a little bit? >> you mention the european

council, that would've been her preference for triggering article 50. if we get stuck as what is known as parliamentary ping call -- ping-pong, that delays the timetable. march there's of the unfortunate coincidence with the history of rome and celebrating the anniversary. it's not going to stop the brexit at all. more than 3 million people in the u.k., this has garnered cross party support in the house of lords. manus: of course there is nicola aurgeon who is proposing further decision on independence. would it? almost necessary to give the people of scotland a

say in their own future direction? this is not going to go away. how would it play in terms of complicating the issue? noticola sturgeon is squandering of crisis. brexit for am second and look at the independent question put to the scottish public? there was one key issue that undermined the question and that was the currency question. euro, do youhe join the scottish currency? resolved, question is she won't launch a second referendum campaign. i know for a fact that she's working behind the scenes to resolve that currency question so there's not that current stick that can be beaten at the

scottish nationals. think the possibility of a whole new currency arrangement, but something they can say we've gone away and thought about what the electorate said the first time around. that won't divert from the broader fiscal position because the value of oil and the broader fiscal environment in scotland -- anna: they kept saying we will keep using the pound and voices in london cap saying that's not going to happen. get emi today, tomorrow, write a. it has held up well. softening onquite the retail side since the start of the year. householdstent with seeing uncertainty and keeping adjusted. can londonext,

maintain its status as the euro clearing center in a post-brexit world? this is bloomberg. ♪

anna: welcome back. this is "bloomberg daybreak:europe." it's 6:30 here in london. the nikkei up by 1.4% at the end of the trading day. some decent moves in fx. a new edition of daybreak is available on your bloomberg. let's look at some of the top stories that caught the imagination of the daybreak team. it was the most presidential moment they've seen from donald trump, addressing both houses of congress.

he struck a neutral tone for markets in his speech to congress. -- held yields and u.s. onto gains. some are saying it was the fed that trumped trump. anna: the next story is here in europe. germany calls for the ecb to tighten monetary policy. forecast show xl -- inflation accelerated in february. manus: and the odds of a march rate hike surging after comments from new york fed president william dudley. anna: a quick look at the markets. mentioned, the markets focusing much more on ande comments from dudley

williams, focusing less on the lack of detail that donald trump addressed to congress. we've seen it push up the rate hike in mark 280%. to 80%.rch you can see a lot of gains across a lot of indices. the nikkei closed up 1.4%. japan leading those gains on a weaker yen. the dollar one of the worst performers as well. most currencies declining against the dollar. afterssie a little higher that gdp data. strong data out of china. yields moving higher elsewhere, and in the commodities space, oil and metals gaining with gold

dropping on the stronger dollar. he's -- here is the bloomberg dollar index against the 10 year yield, up more than two basis points. the bloomberg dollar index climbing for a fourth straight day. it dropped slightly during the trump speech. and it's led to some curve flattening. the two year yield has hit its high -- hyatt since december. since december. at spread between the yield its lowest since august on a closing basis. those comments from fed policymakers really playing out in the dollar and treasury markets. japanese stocks had their biggest gain in two weeks.

the yen weaker against the dollar for a third day. talk so much about exuberance in u.s. stocks and lack of fear looking at the vix. this is nikkei volatility, the expected fluctuations dropping following the donald trump speech. anna: breaking news from italy's biggest company, telling us their q4 adjusted profit is ahead of estimates of 1.20 3 billion. estimatet ahead of the of 225.9 million. the improved prospects of organic production growth over the next four years. bag from thed likes of total and bp. turn our attention

to regulation of financial markets. it will be an important issue in negotiations that could be key to the uk's capital future for the financial sector. rulesxt guest leaves the need an overhaul -- believes the rules need an overhaul. he joins us from paris. ain't you so much for giving us your time this morning, stephen. let's start with the question of clearing. third country access is something everybody is debating. in a post exit world, how all this it play out and how does it need to be changed? what do we need to be looking for? as you rightly pointed out, we've already indicated that we should be looking at country systems that are in place in the

eu. that is not only because of the brexit but also because of other developments around the world and also the fact that we now up a couple of years. equivalencee of the regulation was never expected operate in a world where you have the eu and the city of london seeing outside on your borders. is this going to put a big strain on the use of equivalents and therefore necessitate a big change in the way it equivalents is used in the eu? >> obviously the u.k. is a special case. of the u.k. to leave the eu, to leave the single market, we need to look at the principal at the existing arrangements. of eu law, for some parts of the financial markets we have equivalents but

for other parts of the financial markets there is no arrangement for third countries. what we are now doing is looking at the different arrangements in place across the various pieces of the financial services and look at how the relationship might develop in the future. manus: relationships will be important in the flow of money. the ecb has tried on a number of occasions to clawback euro derivatives. do you think an abrupt -- in a post-brexit world that it is an inevitability over time? issue of thee location of clearing is primarily an issue for the for the ecb. and what is essential for us is the securities markets regulator. we are involved in a situation are registered.

what is key for us is where able to properly again to the risk of and the future ccb's from the u.k.. when looking at the system up equivalents, what is essential for us is that we have the right measures to respond to risks which are created by third country participants in the eu. anna: can you see a situation where clearing continues to take place if you are a derivative in london and are given sufficient information and its collected and shared, for you to be able to oversee that can provide market stability and be assured of that, even though the eu doesn't have oversight in london? >> the current situation is already a situation where clearing is conducted. for example, in the u.s. we have a situation where we accept the

activities and services of u.s. ccp's in the eu, looking at how we nowtem now works, have the experience, one of the problems we're seeing is a problem about do we have sufficient information on the risk that the third country ccp's my creating in the eu and the essential element of equivalents will only work if the major economies across the world are quiet. the eu is one of the few regions that applies equivalents and that has the implication that they need to register and are supervised by multiple regulators while third country ccp's have the benefit when they're doing business in the eu that they can mainly rely on their home regulator. let's turn our attention

to regulation. we have a new administration in the usa that's promising a bonfire to regulation. and changing the landscape. if there are structural changes in regulation in the usa, that is consequences for european markets and stability and competitiveness which are the bulwarks of what you look after. we do expect structural change quoour to meet quid pro with those changes as they come through in the united states of america? through a just gone major regulatory reform of the financial markets. we made it safer and more stable and it's important that we continue that line. i think at this stage, it's still too early to tell what other jurisdictions outside the eu might do.

we've had some first signals but the reality in terms of what's happening in terms of practical changes, it's clear that are systems are based on the assumption and when there is an equivalents assessment, as set the existing supervision and regulation stays as robust as at the moment of the decision. if there's going to be changes, you need to reconsider that equivalent decision. are you concerned about start dates? it seems like some of the technical standards are not on the books yet. is it going to be in place on time? >> as you know we have delayed the implementation for one year.

we moved the date from january 2017 to 2018. we are on track for implementation and i'm confident we will make the january 2018 deadline. we are helping market participants to prepare. we're issuing guidance and collecting data. we are on track for the 2018 deadline. one other issue i should mention thate context of brexit is what we're seeing at this stage is market participants are looking for a new location, relocating their activities to the eu. attractancial centers , thatsiness from london it's done in an appropriate way and there's no regulatory competition or supervisory

competition to attract new business. manus: well said, stephen. let's hope all the various central bankers listen to that message. thank you very much. anna: you can watch us on your tv or go to your bloomberg terminal. you can follow along with the charts during the show using the button at the bottom of the screen. up, will be joined by the head of global private equity who will discuss his 2017 report out this week. anna: and we'll have more on president trump's congressional address. will his lack of specifics keep the market focused on the fed?

we will talk about synergies. this is bloomberg. ♪

anna: welcome back. is 6:47.in london we could be a little stronger at the start of the trading day. whether it's things that president trump said or things that fed officials said. let's get to the bloomberg business flash. trump hasesident urged americans to set aside conflict and help him remake the fabric of the country in his first address to congress. however, he offered little detail plans for tax reform, banking regulation, and funding the repeal of obama care. the president called for $1 trillion in construction

spending and a redrawing of trade relations with other nations. president trump: i believe strongly in free trade, but it also has to be fair trade. i am not going to let america and its great companies and workers be taken advantage of any longer. they have taken advantage of our country. no longer. of uber has apologized and said he will seek leadership help after video emerged of him arguing with a driver. ashamed, it is an extreme understatement. >> some people don't like to take responsibility. good luck. ceo expressed brought optimism for u.s. wrote in his own industry and all

trumps administration succeeds reform. jamie dimon was addressing investors in new york yesterday. it.s high time you look at no one in the rational mind could say what we do -- we are not fanatics about it. we know there was a crisis. >> that is your bloomberg's newsflash. manus: thank you very much. let's talk about the rise of nationalism, protectionism taking hold pretty much across the west. that's a subject that takes center stage in berlin. ground.lly is on the good morning, jason. jason: good morning. we are here in berlin, it's been

a very busy couple of days. were getting started on day two of this conference. it's a who's who of private equity. bain and company just released their global private equity report. what was the biggest surprise for you? >> the biggest prize was the continuation of a lot of the trends we saw in 2015. fundraising continue to be very strong in industry. returns are up and very strong as well. dealmaking has been very difficult because of tremendously high prices that have continued to persist in the industry providing headwinds for our investors. >> that's exactly what were hearing. let's talk about fund raising for a second. especially for the mega buyout funds. since the crisis, how long can this go on, this robust

fundraising environment? >> is going to get tougher. amounts of deals done in 2006 and 2007 have monetizing over the last four years. they wanted to put money back into the industry because returns have been much that are from those vintages than people fear. as the fundraising markets have been very strong, putting that money back into the market over the last few years, we've seen the elephant pass through the snake, if you will. there will be fewer distributions going forward and everybody is thinking it's a bit late in the day and at some point over the next five years we may have a macro shock that might drive returns down. we may find a perfect storm in the future of less cash flowing returns being compressed by adverse macroeconomic conditions. that will be tough for fundraising environments down the road.

>> you mentioned the challenging dealmaking environment as well. thee had a huge run-up in u.s.. market. what is the outlook there for the rest of the year? >> dealmaking will continue to be tough because prices will continue to be high. we have well over a trillion dollars, a tremendous amount of shadow capital that is also there. 15%-20%. about another , the numberf equity of companies to buy is not growing at that rate. the amount of cheap debt is actually quite plentiful. to pencil it tough out the kind of returns expected. >> one of the areas you pointed out in your report is technology and just the huge amount of money in the deals getting done. what is behind that? >> both on the software and the hardware side, i think

technology offers a couple of different ways to add value. one is on the software and service side, it has the kind of growth rate to support the multiples required to buy these assets. -- i'm confident it will continue well into the future. on the other side, we're seeing a lot of maturing in the technological space on the hardware side. it's reasonable revenue growth with potentially a lot of cost improvement. it's time to get more efficient and get more lean. has been veryctor attractive from those perspectives. >> excellent. usnk you so much for joining . you have a busy day ahead of you. we have more to come here as we dig into the future of the private equity industry.

thank you very much, joining us there from berlin. we will speak to david rubenstein later in the day. that's at 2:30 p.m. u.k. time. china's pmi came in at 51.7, beating estimates. is the chief demoted you.almost good news from china, i suppose. however, they are diverging. nonmanufacturing has taken a little bit of a turn for the worse, but there is hope. volatility on the yuan is dropping. what do you make of all the data on the lack of volatility in the

yuan? >> you have to give credit to the chinese authorities went on almost every metric the current economy was looking exceptionally weak and led to the selloff on risky assets of anything with chinese exposure. you saw a large fiscal expansion and growth initiatives brought forward. into the second half of 2016. you are seeing the echo of that now. you're looking at a divergence of services from the manufacturing sector. it hit the manufacturing sector much quicker and that's why were seeing that outperformance. anna: bloomberg intelligence even inhere's optimism

china. it's showing that many managers in china are showing concerns about what doll trump in the white house might mean for global trade. suggesting in the u.s. that if we see infrastructure spending , it affects that global trade relationship. this could still hurt china. >> what we expected was that china would be labeled a currency manipulator and then there would be further top of the trade tariff that was spoken about on chinese imports. the fact that they did not happen immediately and that they are referenced less in more recent speeches from the president does provide some assurance for those worried about the forward look for china. the other thing is what comes next as they start to shrink the money supplies back. next, several companies

reporting earnings at the top of the hour. those figures are next. this is bloomberg. ♪

>> trump long record. short on detail in his first address to congress. he urged americans to abandon internal conflict and help rebuild the country. president trump: national rebuilding, i will be asking congress to approve legislation that produces a $1 trillion investment in infrastructure of the united states. nna: a hike is on the table. tie itening monetary policy this month. >> and firm footing in february. china's -- strengthens. the data comes ahead of the national people's congress this

weekend. >> it is bloomberg day break europe. i'm manus cranny. anna: i'm anna edwards. 7:00 here in london. eaking news, getting numbers from c.r.h. >> continued growth in 2017. the profit beat analyst estimates. the full year sales come in a wee shade lighter. 27.1. the market was at 20.8 billion. they are to sell six businesses for 400 million euros. albert manifold is the c.e.o.

there. the election is not going to change our strategy. they have about 1.5 billion euros to spend. he has 1.8 billion to spend. how much of trump is based into that price? the stock at 31.86 at the close of business last night. anna: when it opens up in about an hour, this is a stock that seems to move on that president trump commentary. let's get to i.t.v. the fuel year net advertising revenue is down 3% over at i.t., commercial broadcaster. 1.67 billion pounds they say. revenue coming in at 3.06 billion. a touch shy but not far off the 3.09 billion that was the estimate. on track to deliver organic

revenue growth. they are trying to diverse from the revenue streams and that is the focus of the business. there are big questions about how the advertising market is going to hold up in the midst of brexit uncertainty. how much was that going to weigh on the business? there has been a bit of short nterest built up in i.t.v. short interests jumped up to 8% of free flow, below the 30% that we saw which wases the 10-year high back in the late 2,000's. 2010, sorry. i.t.v. is forecast to outperform over the full year. >> funds under management that man group come in. a dividend if you're a shareholder there, you're going to get a dividend of 9 cents.

when it comes to the outlook for man group, well positioned for the years ahead. they will continue their buy-back program in the coming months. the industry faces some challenges. if you go back to what warren buffett was saying, asset management versus the fees that were being paid, when individuals choose to put their money into hedge funds and the return they are getting. they started the year with a good pipeline of interest. that's a forward looking statement coming from e.m.g. that is the biggest hedge fund on the market. 80.9 billion dollars. anna: we're getting commentary out from bayer this morning. is the german business, with

multihealthcare and agagricultural projects. -- products. they still see their missed single digit core e.p.s. rise in 2017. their e.p.s. forecast is for continuing operations. high performance plastics. that's part of their business. >> let's talk about the markets. almost as if donald trump was the x factor moment that didn't deliver in terms of detail. he asked for $1 trillion of additional infrastructure spending to come through. u.s. equity futures dipped ever so slightly or came off -- closed in the red. we seem so have regained momentum this morning. the markets will open to the upside because the market seems

to be focused on the propensity of the u.s. to take a right hike. anna: 80% probability. factoring in these comments from new york's fed president dudley and san francisco fed president williams really putting that march date back on the calendar. it seems that the market is very volatile in its expectations around that march hike. it is back on the table. it seems to be a live event for -- and the trump comments and the reevaluation over the fed story, this is what the dow futures look like, up by 1% at the start of trade. dow up i by .5%. increasing in the dollar index. increasing for the fourth straight day. >> take a look at 10-year government bond yields. we have those touching up a little bit. a nice move there. pimco are saying these markets are not pricing in enough risk.

they actually quite like -- get yourself protected from volatility and inflation. dollar-yen is moving briskly. you have yen down the third day in a row. anna: the nikkei and japanese stocks higher. let's get to bloomberg first word news. >> thank you. in the u.s., two influential federal reserve officials have signaled a greater willingness to tighten monetary policy perhaps as soon as next month. william dudley said the case for tightening had become a lot more compelling in recent months. his remarks followed comments from san francisco fed chief jon williams who said he expects an interest rate increase will receive serious consideration at the fomc's march meeting. the new u.s. commerce secretary said washington will pursue a tougher approach with china and other nations over existing

trade deals. they will be renegotiating nafta. >> making trade deals if you don't enforce them. >> china? >> everybody. >> specifically with china, what are you looking to do? >> you'll see when we -- >> when can we anticipate that? >> as soon as we have the proper case anna: china's economy has shown more signs of stability. australia avoided recession as its economy grew by a faster than expected 1.5% in the fourth quarter and in japan, fourth quarter capital spending rose 3.3% betting forecasts. the u.k. government is braced for defeat on a key vote in the house of lords over the rise of

e.u. nationals to stay in britain after brexit. uniting with rebels among theresa may's conservatives to support an amendment to her e.u. withdrawal bill. it would complicate the brexit timetable. bloomberg news powered by more than 26 analysts. you can find more stories on the bloomberg. 80% on the work function on the bloomberg for the chance of a march rate hike gave a good boost to stocks in the region today. also we saw the dollar rise after the trump speech. no signs of a trade war from trump's speech. singapore up .8% and also some gains coming flu hong kong. really struggling to get to that near 24,000 handle.

stocks president trump entertainment xy quite strong. mac caw revenue quite strong. we saw those export stocks had a great run today. we mentioned that rise in g.d.p. in australia meaning that australia has officially avoided a technical investigation. you can see in the third quarter there was a contraction up 1.1% in the fourth quarter that was much better than anticipated. the last time we saw two quarters of negative growth in australia was back in 1991. so certainly at least on the technical side you are seeing ustralia out of recession. 6371 on the bloomberg. manus and anna. anna: thank you. u.s. president donald trump delivered his first address to congress revisiting numerous

things in his campaign. laying out policy agenda in immigration, infrastructure spending, healthcare and defense. president trump: i'm going to bring back millions of jobs protecting our workers also means reforming our system of legal immigration. the current outdated system depresses wages for our poorest workers and puts great pressure on tax payers. to launch our national rebuilding, i will be asking congress to approve legislation that produces a $1 trillion investment in infrastructure of the united states financed through public and private capital creating millions of new jobs. this effort will be guided by two core principles. buy american and hire american. tonight i am also calling on this congress to repeal and replace obamacare with reforms that expand choice, increase access, lower costs and at the

same time provide better healthcare. i am sending congress a budget that rebuilds the military, eliminates the defense sequester and calls for one of the largest increases in national defense spending in american history. i finally am enfonsing immigration laws, we will raise wages, help the unemployed, save billions and billions of dollars and make our communities safer for everyone. manus: while it was a battle for the attention of the markets, the fed and the congressional address and it was a big day, the fed looks as if they stole the spotlight. a few comments from the fed have gone a long way in reshaping the expectations for the march meeting. jon williams said that a march hike is getting serious consideration. then we have the new york fed president william dudley and he said there is a case for

tightening and it is more compelling in recent months. anna: let's check out -- the i.o.s. showing well above, spiking up 18% in some cases in terms of market expectations. joining us now of credit agricole. for the market's attention this morning here in europe, we thought it was all going to be about trump but in fact it is much about the fed as we see these market expectations adjusting your expectations. do you think march is -- >> we do expect the next rate hike to come in june. we may have to wait for a bit longer. from that point of view the market may be getting a bit ahead of themselves here's. yes, the u.s. inflation is picking up but it is not strong enough for the fed to move. wage inflation has been picking up but has remained low by historic standards. that said, very near term, given how the markets are

trading and we have that speech on friday 3:00 p.m. london time, the expectations of the fed moving further could actually continue to support the dollar under broadly. manus: you mentioned yellen speaking. the real litmus test for the fed. she is going to be happy. there is a risk she can act pretty much when she chooses. >> it is certainly a pattern here. all the speeches, setting up as if they are trying to really make the market dos their jobs for them really by tightening the financial conditions in the u.s. and they may as well really achieve that in this and next week in the run-up to the fed meeting, especially if the dad is supporting their case. that said, however, the fed decision to hike rates has proven somewhat difficult. we also -- when building our

case going into the fed meeting, to highlight the political risks. the global risks on the whole. they have been on the rise. that may indeed be sufficient for the fed to sit that one out and wait for more confirm nation the u.s. economy continues to improve and hike later in the year. anna: if we do get a hike in march, how would markets interpret that? would markets say we're still looking at three hikes? still at three just that it is coming earlier or would a march rate hike signal a more aggressive fed and actually upwards of three? >> that is the latter bit. it is case of so many clients. if they hike three times, they have to start earlier than june. from that point of view, a march hike would be a confirmation that we'll be dealing with three or potentially even more hikes. from that point, however, i

want to highlight this trump or indeed the expectations about fiscal stimulus in the u.s. should come in. the fomc members when they were releasing their revised -- they were pen silling in fiscal stimulus. there is still not much detail, much to go on when it comes to what to expect and what is going to materialize. the real risk is it won't change much just because the information we got in if meantime hasn't really changed at all. manus: let's try and take all of those thoughts and squeeze them in. going with this confirmation. the dollar, they are indicating the potential -- you were looking at -- the bears are back in charge. also dollar-yen. it is risky and frisky. give us your thoughts. >> i definitely agree that is a risk on the downside.

given the added headwind from the political risks. if risk aversion were to escalate, the point being that it is your usual safe haven if you tend to buy where risk sells off. if you have tightening on the financial conditions, on the top of that, you have political sks escalating in europe, it could do well against europe. the best hedge going into the political elections in europe will be short euro-yen. that's what we have at the moment. yes, i will agree on the short euro dollar story. less confident that the dollar yen is at the current level. anna: a lot to digest for the fx market. manus: up next supermarket sweep. where have you heard that before? beating estimates as it cuts u.s. costs.

we'll break down the numbers and have a conversation with dick boer. this is bloomberg.

anna: welcome back to bloomberg day break europe. >> thank you. u.s. president trump has urged americans to sit aside conflicts and help him remake the fabric of the country in his first address to congress but offered little details in his plans. the president called for $1 trillion in infrastructure spending and a drawing of trade relations with other nations. president trump: i believe strongly in free trade, but it also has to be fair trade. i am not going to let america and its great companies and workers be taken advantage of

us any longer. they have taken advantage of our country. no longer. >> the c.e.o. of uber has apologized and said he will seek leadership help after a video emerged of him arguing with a driver over fares. he said he had treated the driver disrespectfully and said i am ashamed is an extreme understatement. >> you know what? >> what? >> some people don't like to take responsibility for their -- >> they blame everything on -- >> good luck. anna: nissan says it could face hit. it the first time they put a figure on the estimated cost of the u.k. leaving the european union. 10% tariffs on cars built in england and levies on cars

would be disastrous as nissan would have to absorb only of he impact. toshiba is offering a majority stake that would be willing to sell the entire operation. they are grappling with a 6.3 billion write-down in its u.s. nuclear arms. a spokesman declined to comment. jpmorgan's c.e.o. expressed broad optimism for u.s. growth in his own industry if donald trump's administration succeeds in reshaping taxes and regulation. jamie dimon was addressing investors. >> the key principles, it is high time you look at it. no one in their rational mind with say what we do is complete a consistent rational -- we're not fanatics about it. we know there is a crisis.

>> that is your bloomberg business flash. manus: thank you very much. let's bring you a quick look at g.m.m. i suppose a synopsis of risk. which is the fed won the war of the x factor last night for me. they set up their store in terms of what they expect and moved the market in terms to have risk. look at dollar, you have the dollar moving higher. this is all down to shift in the probabilities from the fed that want to make march as live as possible. that's what they have managed to do. the dollar is up. you also see dollar-yen on the move. anna: meanwhile we see a commodity gold down .4%. a lot of moving parts in relation to the fed and trump. let's move on. we want to talk about what's happening in the supermarket sector. fourth quarter earnings and beating estimates. let's get straight to c.e.o. who joins us from amsterdam.

he is dick boer. great to have you on the program. you seem to be taking costs out of the business quick lism what is allowing you to do that in the united states? dick: we continue to focus on our efficiencies in the united states. we need to deliver according to our plan by the merger of the two great companies coming together and at the same time of course in a deflation environment to drive volume growth is also important for our business. manus: you have a target of 500 reduce costs by 500 million euros. that is by 2019. from the tone of your report this morning, could we expect you to hit that number sooner or more quickly? dick: we're not changing the timing of our synergies. for this year, we will deliver he 220 million based on the 22 million we delivered last year. we continue to drive of course

synergies out also in the next years to come. to be sure we deliver our 500 million. anna: you have a big business in united states of course. 64% of revenues last time i checked. we heard last night from dronled trump. a little bit light in the detail in terms of the taxing plan. border tax. tell us how this impacts your business and how you planning for a change in the tax regime? dick: we have -- we mostly source our products in the u.s. market. we clearly have a lot of production coming from the u.s. so we are not expecting that it will impact us a loss. we are really food and all of our products mostly in the united states. i'm not expecting a big impact on that. anna: there is no change to any of your sourcing policy? no change to the way you're

ing business at all in the u.s.? dick: not at all at this moment. we get our fruits and vegetables off-season in the winter now, we get more fruits and vegetables over the border but i don't think at the end of the day, the total consumption in the u.s., it will have that huge of an impact. of course there will something but i'm not expecting that it will be a big impact for our company. manus: you also reference to the return of inflation. which is going to be cheered by many. what makes you so confident you're going to get this return of inflation and more importantly, are you going to pass those prices on? is there an ability to pass prices on to the consumer? are they robust enough to take tax hikes? dick: deflation was caused by meats, etc.

they of course cycled back in the second half this year. that's why we are optimistic. of course we cannot predict anything on this because you never can predict inflation, deflation. at should help us in normalized situations. economic growth. if the economic growth continues. -- that a good start the consumers are also more able to pay a bit more for the products we sell. i'm also expecting that finally it will be absorbed by the customers when the economic situation improves also. anna: ask i ask about m&a in the food production sector? the food sector. we saw that failed attempt by kraft to take over unilever of course. is this something that concerns you that food company also force price rises on

supermarkets? dick: it is our industry that is -- to be clear, we just consolidate our business. rom 25 billion to 1. on the brand side, i would say in general, we are of course a retailer who sells a lot of our own brands and fresh which may be less impacted by the you mentioned possibilities of m&a and secondly, if we look at our sales, 1/3, 40% is brands and the rest is fresh and nonbrands. we are more able also to determine our own cost prices with the nonbrand suppliers. manus: thank you very much for joining us there. trading . of the facility and getting ready for the potential turnaround in

prices. anna: that will do it for our program for bloomberg day break europe. the market open is up next. let's get to guy. guy: thank you very much indeed, anna and manus. this is the market open. i'm guy johnson here in london. matt miller is in berlin. what are we watching this morning? the fed trump's trump. is yellen now boxed into a corner? trump makes america wait again. the speech to congress gives little away in terms of concrete details. how achievable is this $1 trillion infrastructure plan? hina, producer prices recover. wilbur ross says the u.s. seek stiffer trad