chinese producer prices soar the most since 2008 while the consumer price growth misses estimates. global rephrasing intact. manus: crude confidence bounces after slumping to nearly 50 bucks per barrel. u.s. stockpiles or midol markets that opec is not the only player in town. anna: talk but no action. mario draghi gives a rate decision and his assessment of the european economy. is europe's inflation sustainable? exclusive interview with jamie dimon. -- trumps first 100 days in office.

♪ anna: a warm welcome to "bloomberg daybreak" europe. i am anna edwards. manus: i am manus cranny. breaking news. anna: the german pharmaceutical business merged if an update. a couple of headlines coming in at 1.20 per share. euros, ebit 400 and 5 million. -- 405 million. net income figure for the first quarter of 269 million euros. these are the numbers coming through as we speak. the broader story, the

expectation from morgan stanley is that these would be a strong revenue but there were several moving parts in 2017 that will likely drive a cautious guidance. 1.3 -- 1.43 europe's, yesterday was 1.42. manus: some of the big drivers, the probability of a rate hike -- unitedted fans states stands at 100%. inflation, reflation, the great reflation trade. this is what china produced. the ppi nevers. busting through 7.8% on the chinese prices. that is the most since 2008. it is more a question that cpi has underperformed. how strong is that? does that remain intact?

anna: export prices run the world, how much of the chinese consumer? the future for the chinese economy. a reorientation of the chinese economy. that is why we put up the risk radar. asian equity markets under pressure this morning. manus: check in your 10 year government bond yield, 2.75%. the global chief investment officer have put a new position, get involved in bonds. very strong auction last night in the u.s.. does this offer value to you? a big slump in oil prices yesterday, down by more than 5% in the session to the lowest since early december. bloomberg first word news. d: surging last month, the

fastest since 2008. also prices of .8% higher from a year back. course, thetory of outlook for global reflation. u.s. based cbt industries exploring. to people familiar with the matter, the largest company is working with advisers to study a transaction that could involve acquiring a part of axle. in market evaluation of $26 billion. declined to comment. let's move things along and have a look. deutsche bank, two of the biggest venture -- investors. the royal family and china's

group are considering boosting their stake in the bank. a spokesperson for the bank declined to comment, presented this were not immediately available for comment. the bears about to roll her with a $13.9 trillion treasuries mark, benchmark 10 year yields reached 7.25%. the high since december showing unexpectedly high hiring in february. the bond market capital management said it will signal the start of a fair market. news, 24 hours per day, powered more more than 2600 analysts in more than 120 countries. you can find more countries on bloomberg top . this is bloomberg. a quick update, the m&a

story, this is the second biggest pacemaker accord and we projecting the indicative proposal from pbt. women reporting that the world largest protein company would explore the potential for a deal with the dutch rival. it is a whole company or part of it is a whole company or part of the country -- company. thinking internally themselves about this. whether we see pbg come back with another offer, that is also a question. manus: lest week it was unilever and craft. the regulation in the netherlands is more strenuous in terms of potential takeovers and aggressive takeovers at that. they have ways of sending

off that take over. manus: they do indeed. julius, what stands at 100%? the markets are looking stretched and the chinese do not deliver the inflation we wanted. certainly not with pbi. you have seen with this coming through in chinese ox today particularly in hong kong. down over 1%. terms of stocks we have been watching these commodity players. if we see fading chinese stimulus that is going to weigh in to iron ore prices and futures. the drop in crude oil in new york overnight weighing on

energy players today. toshiba as well. westinghouse reports that it is going to call in bankruptcy theers and we are seeing stock trading at 5.9 times estimated forward earnings at the moment. we've been talking about this a lot. the white lines move against the dollar. the blue is the reversal rate. anna: thank you very much in hong kong. mario draghi will deliver a rate decision as well as an assessment of the european economy. matt miller is in frankfurt on the ground. there is a line in the story this morning. the action is quite tied.

in a lot of change. yes that is right. mario draghi basically set policy for the year back in december when he said he would continue intervening in bond markets through the end of the year and he would reduce his bond purchases from a monthly 80 billion euros to a monthly sickly -- 60 billion euros. breathing room to little today. it will be interesting to hear to set policy say for future meetings. can he lookng through these inflation pictures?

matt: both of the things will help. you mentioned the drop in oil prices. with a 5% drop in one day, how quickly the price of that moves around. 2%.e looking at the ecb focuses on the core even though that is not their mandate. the eurozone is made up of many different economies. not as strong as the country i'm in right now, journey -- germany. manus: he has to keep a broad church quite happy. we bring you special coverage of the policy decision as talk: 40

5 p.m. u.k. time 45 minutes -- mario jellies news conference. anna: follow that on the blog address on bloomberg go. group chief economist and head of investments larry hathaway. rates to have you on the program. you are also in common with many others not expecting great change today. what could be interesting is how set in stone is the policy of quantitative easing? think it is said and stone as markets are assuming? once we get through the political uncertainty perhaps have a little more visibility on things energy prices. i think the ecb will look back 2016 we went to negative interest rates.

a large qe program. the world looked very different then. much less confidence in global growth. headline inflation was flirting with deflation. cora was still sliding. all those things have changed. we heard about the emphasis on core which is rather unusual for central bank. that has always focused on headline but they are core is a long way away from zero. 2016mergency measures of will look increasingly out of line with the final levels in the middle of this year. i think further adjustment in language and policy will be forthcoming. we have a grasp of the timeline of when they might catch our attention to say we are ready to do something. you -- i'm curious to get the idea of this. he suggested that might move for to -.3e rate among -.4%,

. -.25. that could come at the end of the summer. oil at 50 bucks. inflation. larry: we have seen it. that's because oil prices may be soft and because of base effects contributing to what is almost certainly in the course of this year the highest rate of headline inflation we will see. the ecb mandated by headline. it cannot simply switch targets usually. the point of potentially tweaking negative interest rates that is right. that seems to be the most logical first step. a relatively modest move. when markets anticipate or in -- it can magnify that in ways that go beyond the small move they

might initiate. anna: how does the politics play in? if they are not changing, that takes them safely through the dutch and french election. then we go up against the german election and that is quite a policy hot topic for ecb best policy to shift. does the political pressure mount around the same time you indicate? larry: i think it is the uncertainty about the french election because that clearly could in certain circumstances change the dynamic of eurozone growth from the ecb. i don't think the german elections have that potential. we may have a change in government, that is entirely possible, but we are not likely to face the same stark differences that the french or dutch elections potentially pose. , thethat perspective

overall environment remains conducive to policy in place. that is a failed reference to earlier elections. they will probably conclude with it is not outcome but so much about political uncertainty. is about the economic fundamentals from german politicians that might say exit negative rates. that standard for them. manus: let's see what the rest of the year brings. there he happily with the team. anna: we will be joined for an exclusive interview by the central bank former president at 11:00 u.k. time. with -- speaking on president trump's first 100 days, brexit, banking.

12:45 p.m.. anna: watch that interview live via top . of the world cranks up again. surges the fastest since 2008, lifting outlook for global reflation. manus: the calm before the storm. the last before theresa may kick soft brexit talks? anna: bill gross in market territory moves at the 10 year yield touches a december high. going to 2.2 percent -- 2.6%.

anna: welcome back. and saying down by 1.3. rejecting proposals from ppg, consolidation in the specialty chemical arena.

they will now consider alternative ownership structures. they did not initiate conversations with pbg. manus: let's see how that unfolds. they may break up the business, we will see. the data for february comes after the week long lunar new year and holiday which had a downward pressure. anna: a reaction from our china team. malcolm, good to have you today. is this data skewed by the lunar new year? staggering import-exports.

>> largely because of a drop in the price of food. newar ago, we had the lunar year since february that dried up the cost of food as people and families prepare for those gatherings. this year those gatherings were in january area february was back to normal and we saw food prices dropped from a year ago. with theews however continued reflation at the factory level. quickest again since 2008. that is a story that does keep gathering. many economists underestimated this one. 7.8% from a year earlier. we have a looking at the cost some of these factory seven facing.

it looks like they may be wanting to pass those on of the export those goods. could this prove contagious? the great debate was 4.5 months china had turned itself from the exporter of deflation into the exporter of inflation. >> there is a bit of a lag that happens. some of the domestic price gathered, exports did not pass that on three has -- because of the you one. -- yuan. they are starting to look to pass on the costs to be buyers. in europe, the united states, and history shows there is a close link between producer prices in china and export prices from china and what you

will be paying at the supermarket and toy store soon enough. anna: thank you very much. our -- thank you so much mike -- still with us here on daybreak. this china factory story plays into the inflation story we were having around the ecb and local equation -- inflation story. >> i think a little bit of sanity checking is required here. producer prices in china rise with a healthy pace and it will affect export prices. it will not make much difference if u.s. inflation to eurozone inflation.

interesting stories whether the higher factory prices and export actually cut into margins in certain businesses because the reality is they're having a addingeal of difficulty on to the uses of their services. few places but a this is not going to make material difference to those numbers. see a tension building between higher prices and the inability to pass those along. manus: this is the great debate. morrison's at 7:00 a.m. in the u.k., is the percent density -- the propensity of companies to pass on those inflation costs? smaller packaging is one thing but that is the debate. the reality. >> it really is.

especially in super markets that has kept a lid on price increases. therefore i think it is actually difficult to see a surge in chinese inflation. taking place in terms of it transpiring to other places. anna: we look at china with growth potential, what are your thoughts? the donald trump administration means for the trade is story that has benefited china to such an extraordinary degree. >> it is extraordinary difficult to answer those questions. we don't have enough visibility about how much of the rhetoric that we saw also frequently in was sworngn before he

into office and even since then. how much of that rhetoric. anna: we are not anti-trade we just don't want bad trade deals. >> exactly. nude emphasis on fair trade and that is a guys for some forms of protectionism but it is also a legitimate sort of political narrative these days when they feel it is not been tilted in their direction. it does not right now feel as though it is going to be the emphasis point on either side of the atlantic. the yuan is softening up. 6.9272. let's see what happens extreme. economist stays with the daybreak team. ceo robin lee on bloomberg markets: asia. anna: up next, hugo boss

earnings in a few minutes. 15% this year, will be run continue? the numbers to do on the closing business. this is bloomberg.

manus: you're looking at a shot of the best in tokyo. it is 3:13 the afternoon. dollar-yen stronger than the dollar. up to 100% probability for a rate hike or march. that is the state of play on the dollar-yen. we are waiting for breaking news . as soon as we get that we will bring that to you. either way we will be

talking about the hugo boss ceo at 8:00 a.m. u.k. time on bloomberg television. waiting for some numbers in fact. manus: there we go. for a 16. million, 489ms 493 million. largely stable for 2017. back in january they guided the markets. they said the operating profit will drop but 70% as opposed to what the market was concerned about. we are talking about stability in 2017. excluding adjusted items. the dividend model we had run here, 2.65.

they had from 2000-2015. he has taken over to -- there will not be a profitable return until 2018. anna: let's go to a french retail now. salese numbers from almost in line from expectations. 17.7 6 billion euros. the spread as 76.8. -- they say they are ready for the brazil ipo. the dividend is consistent with the payout policy, giving us 2016 recurring income 3.5 billion. >> better than expected adp. a lift to the dollar and treasury yields. let's see how it is playing out over asian markets.

equity markets outside japan largely declining. ae msci lowers it nearly month. you are seeing the hensing fallen the most this month. -- yuan the korean one leading. we can against the greenback. a number of them have hit multi-month highs. i talked about eight to 10 year treasury yield, of 1.5 basis points today. pushing the expectation of a fed rate hike this month to 100%. the 10 year yield hit .58% in

yesterday's session. 2.6%. looking at the dollar we have dollar-yen 114 spot 38. tracking estimates the adp data that you can see the relationship. i want to show you wti crude oil halting its losses after the biggest drop in more than a year. we have seen this so below a 100 day moving average for the first time since november. manus: the very latest on the markets. refocusing attention to europe, the leaders gathering today for what looks like the last summit in brussels before theresa may

triggers article 50 and opens the way to brexit negotiations. good to see. what is the reaction from the eu about the delay in the start? >> we felt this is going to be the big start of the exit negotiations. theresa may triggering article 50. between the challenges as she is facing with parliament, this might just be an eu summit with business as usual in brussels. the trick owner -- triggering article 50 might wait until after march 25, celebrating the 60th anniversary of the treaty of rome. the first item of the agenda today in brussels will be the reelection of the eu council president donald tusk.

last night, test actually held a the multi-'sth the prime minister. reactnce said the eu will quickly within 48 hours. a drastic guideline for the 27. they will probably hold another extraordinary permit in april. impact him what kind of this could have on the brexit negotiations. possible> tos as trigger article 50 earlier than the end of march. it is not our decision.

wait if our british colleagues are ready. we are well prepared and our will be fast and responsible. anna: today we expect him to bury his colleagues on the future of the euro zone economy. they will participate in discussions on migration and defense spending. one of the only five countries to respect the 2% of gdp targets as satellite nato. as -- y he might use it

we have a draft of the semi conclusions and i expected to highlight the central role for wto in future trade agreements. we have for example the commission vice president telling bloomberg that the protectionist policy of donald trump might actually be as much as an opportunity as a threat to the eu because the eu may build on the successful trade agreement with canada to improve other trade relationships with asia,america, mexico, four years of discussions with japan and the middle east. coming fromthese

outside and inside the eu, with the rise of populism, we expect the eu to have a strong view today. we have a statement on how we can retain the roles. let's see what the latest thinking in paris is. thank you very much. let's talk about it. thetaking marine le pen in first round of voting. according to the harris poll. anna: in the second round he would be his rival by 65% to 35%. across yourrolling screen right now. larry hathaway again. i'm sure we cannot rely on him to make sense of what is going on at the moment. given trying to get to the bottom of your latest thinking and how it impacts your investment strategy. pollsters are not

believers in their own polls. there is a lot of concern not about technique but about the depth of support and in the case of mccrum, they have improved no doubt but it is also apparent that both marine le pen and francois fillon seem to have a deeper court voters that his unwavering in their support for them and the concern is that mccrum support is relatively thin and if something happens it could peel away. i think everything is still in play in the first round, potentially even in the second round. far: you would go that despite the polling difference? you contemplate and think about the possibility of a marine le pen victory? >> i think you think about this. it is not still the most like the most likely outcome. it still seems improbable. bear in mind in the second round

is the percentage owners who vote. position steve starts at 830-35%. higher than polls are indicating but not out of the realm of possibility. she actually at that point in time votes will be getting close to 50% if turnout turns out to be something quite low by french standards. manus: 15% was marine le pen working -- winning and restating the french franc. the second was italy imploding anth greece exiting. those scenarios are left of center but the risk to the euro, the risk to the currency in the bond market is where we see this most manifest. the euro is not collapsing so the market is behind the rest.

>> in that sense yes. the market is suggesting that there is a small profitability -- probability of a country exiting. we know it must be small because cities brought it -- the spread was near 70 basis points. what would actually happen to those markets if elected took place, the spread could be multiples of that. 1000% or something like that in a truce sort of breakup scenario. it reflects not only the probability but been negative the outcome. there in lies the reason we look at it closely because of the market is pricing as we have to be certainly we are aware of them. manus: the polls have shifted away from. assuming the big

changes which need to be addressed in europe? no matter who comes to power. >> i don't think there is any doubt about it. it is not a transitory phenomenon. if one wants to look at the scraps for optimistic side of things it would be a victory by micron in france. who could work on a partnership with germany. the old german-franco alliance. the center of the progressive solution to these particular issues. yes liberal. yes open. in a wave it is also meant and designed to take care of those most affected by change.

a european solution to this which is inclusive growth. that's where the potential for europe resides. anna: let's get through these elections. he did point me towards this 27,ect, asking the other was the what you're up to look like? , don't we?get this thank you for your thoughts this morning. staying with us here on daybreak europe. manus: china's producer inflation surges. why are consumer prices not giving up? anna: crude could come back or not. a sharp drop, find out if u.s. will handle opec strategy. manus: in aisle three we headed

to the checkout with a basket of financials as this supermarket releases its latest comedy results. this is bloomberg.

> opportunity for> europe and players to take advantage of precisely these construction which would be more completed. i remain optimistic and i see step-by-step more and more positive steps in the europe banking sector. anna: that was ceo frederick benaiah -- oudea. speaking to jamie dimon later today. 12:45 u.k. time. manus: juliette saly is standing by. thank you.

exxon mobil may separate the 4.8 billion euros specialty chemicals is an is. rejecting an unsolicited it for the whole company from u.s. rival ppg industries. amsterdam-based asko says the 83 euros per share proposal is undervaluing the company and was not in the interest of it stakeholders. quebec has agreed to buy general atctric's water unit valued three point 2 billion euros. the french company and the canadian funds manager will hold 70% and 30% of the unit respectively. bringing you with an exclusive interview at 9:45. westinghouse electric, the nuclear business of tissue they has reportedly brought in club see lawyers. lawyers.ptcy unidentified people familiar

with the matter. a spokesman told bloomberg news toshiba is not aware of any intention by westinghouse to declare chapter 11. rusting ousted not response to a request for comment. deutsche bank's biggest investors are said to be buying -- going to people with knowledge of the matter, the royal family and china's group are looking to boost the stake in the bank. they both declined to comment. representatives were not immediately available for comment. to name its new chairman according to people familiar with the matter. his appointment will be announced as soon as today. that is your bloomberg business flash.

anna: the biggest drop in more than a year questioning opec's methods of tech and -- tackling the slump. joining us with the chart of the hour. a lot of the liberation in a term of big drop. small recovery this morning. >> a bit of a recovery but the reality sinking in that us is first time we see the market actually react to the data that came through and once we can underscore, there is a lot of data out there even though if you listen to some of the opec members they are confident the plan is working out. this puts both of these elements of the story in bigger context. picture, u.s. crude supply blue. you can see how they have gone

of the last two up in three months and then you have the white line, opec production. inventories gol up. it points 2 million barrels and last week. .4 barrels. that is a new record in 34 years of eia data. hunting of the crude oil benchmarks are likely to be more range bound to fan believed even as the opec holds. balances may take over then -- wonder than expected. there is more this report. since 1999. another spending binge could kill the oil industry.

anna: in terms of the oil story and how it feeds into inflation. us, you talked with your thoughts about global inflation. let's hone in on the u.s. story a little bit larry. when it comes to inflation in the united states, do you think that that is behind the curve? discrediting the tenure and five-year deal. a lot of inflation into the future, not to guessing the curve. larry: actual inflation is still gradual particularly at the core level in terms of greek celebration. a bit in wages but not in labor cost. economy converging on full employment it, it is super

accommodating. the real fed funds raising adjusted for inflation is not budged despite to rate hikes in the cycle. every bit as a coronated over a year ago. there are reasons to get on with the job of normalization but it is not something that is about manus: manus: panicking or being behind the curve. they don't want to panic. this is an express way too high higher level. the greatest debate is not between 1.3% -- 1.3% and other members of the market saying 3%, 4%. view, whatfrom your is the propensity for this to hit 3% and how quickly thing can happen -- canon that happen? >> reflation has continued strong growth. no changes their. intermodal committal increases in various measures and inflation.

these higher levels you begin to see number one, a preponderance to short positions could be a technical pause. liability matching like pensions fund that come into by. it did not stop deals from taking higher but it is a bit of a break. i think, yeah, by the end of this year he will be flirting with the 10 mark. it is not a linear process from here to there or a rapid one. anna: talk about the bond market in itself and its entirety, when you look across the bond space the yield differentials between the u.s. and not the world still very much part of the story. as you say, even if we see treasuries dropping, demands can increase. that brings new interest in.

>> there are foreign buyers to look at u.s. for the source now. thing ishe surprising isn't stronger than it is. every time we make a run and breaking through the 1.05 we seem to bounce off. it does suggest that yield differentials are not the only thing driving the dollar. --the other side of the european equities a source. manus: let's see what happens. the best back-to-back week since this december. think you very much for sharing your thoughts with us. she executive and head of gamma executive solutions. anna: from the middle east to the far east deutsche bank could be taking a deep dive into deep pockets. buyers for the share sale will get more details on the story. more to learn about how they will rate that money in the

future for that business. breaking news at the top of the hour. we get numbers out of mauritz, abt update. this is bloomberg.

manus: chinese prices soar the most since 2008. consumer price growth misses estimates. is global relfation intact? anna: wti bounces after slumping to nearly $50 a barrel. opec is not the only player in town. rate: mario draghi gives a decision and his assessment of the european economy. inflationpe's sustainable? anna: plus, we give you the interview with jamie dimon. we talk brexit and global banking at 12:45 p.m. u.k. time.

manus: welcome to "bloomberg daybreak: europe," our flagship morning show in london. i'm manus cranny. anna: and i am anna edwards. we are getting breaking news from u.k. corporate, in particular. manus: we are waiting for aviva to give us their numbers, the insurer company. these are the numbers. operative profit, 3.0 one billion pounds with a dividend of 23.3 pence. in terms of the operating level, billion pounds with a dividend of 23.3 pence. we have a little bit of breaking news as well from bt, anna. just looking at that. anna: there are a few corporate. we have got shell divesting the

oil interest in canada for a net of $7.25 billion. this is coming through from the anglo dutch oil business. they will sell the oil interest in canada to cut their share from 60% to 10%. this is a substantial move, producing a net of $7.25 billion, selling at stake to the canadian natural resources limited. this business has done many deals of late. we are getting an update from bt. manus: we have a new chairman taking to the helm of bt. succeed.lessis will the changeover will take place on the first of november. so, that is a new chairman coming into the seat over at bt group. anna: we are now joined on the program in the coming weeks.

let's look at morrison and get an idea about the u.k. high street. the estimate was up by 2.7%. that is a touch below the estimate there. in terms of the full year adjusted pretax numbers, we have profits of 307 million pounds. the estimate was 339 million pounds. athey see their net debt falling by 2017 and 2018. targets are unchanged for all of that. they have identified further cost savings opportunity. we were looking on greater clarity on whether the company would be able to raise prices to offset rising costs. that is a weak price environment and the impact of the weak pound on it. manus: mark wilson, the chief executive at aviva, we will

catch up with him shortly. but his topline on his numbers, the results are clear, more operating profit, mark capital, and more cash. morere operating profit, capital, and more cash. the offering profit is up 30%. general insurance is groaning with the operating profit up 7%. they doubled the online registrations to 5 million. we are becoming a digital disruptor for the benefit of our customers. we will put this question to mark wilson. he is joining usin -- he is joining us in under six minutes. anna: it looks as if the start of european equity trading is weaker. the u.s. session -- sorry, the asian session has been pretty sluggish. the lackluster cpi number out of china taking the edge out of those asian markets. the u.s. looks pretty unchanged right now. we have seen a change in oil prices. manus: down 6%, a little

recovery this morning. that has weighted down the u.s. equities. you see a little bit of catchup. those oil markets trying to decide whether to stay or hold on $50. anna: let's get to the bloomberg first word news with juliette saly. juliette: thank you. azko nobel will separate the 4.8 billion euro mechanical business after rejecting an unsolicited ppgfrom u.s. rival industries. proposalro per share could substantially undervalued the company and was not in the interest of the stakeholders. oil has halted losses after the biggest drop in more than one year yesterday. that came as a record u.s. stockpile of crude began to raise doubts of the effectiveness of opec led efforts. wti threatened to slip below $50 for the first time since december after stockpiles rose to the highest level in weekly

government data since 1982. biggesteutsche bank's investors are planning to purchase shares in the 8 billion euro offer. china'sroyal family and hna group are considering boosting their stakes. both declined to comment, while qatarentatives from were not available to comment. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. you can find more stories on the bloomberg at top . saly.liette this is bloomberg. manus: thank you very much. now, it has been a busy 24 hours. earlier in the morning, we had the chinese data. the cpi falling below estimates. ppi exceeded them. anna: we are watching two big event, the ecb rate decision in frank for and the eu leaders meeting in brussels.

likely the last official summit before the u.s. triggers article 50. we have many dots to join. malcolm scott is in hong kong. matt miller is in frankfurt. manus: let's look at the chinese data. two roads diverge in the snowy wood. cpi hardly budging and ppi rocketing up. reporter: let's get rid of cpi first because we can skip over that quickly. that is likely due to chinese new year effects. overall, demand is looking solid. it came back this month, cpi, but it should get back to 2% according to most economists. the big news was the ppi reflation. it is gathering speed come up 7.8% in february from one year earlier. that makes factories somewhat more profitable and cuts interest rates, making it easier for those factories to pay back the heavy debt loads. it also suggests that maybe

some of those price gains could be coming down the pipe, in terms of export prices. there is a pretty close correlation historically. anna: matt, let's go to you. what are we looking out of mario draghi, then? matt: well, we are not looking for any change in policy today, at least according to the economists surveyed by bloomberg news. no policy change expected, but we could get a change in the ecb's inflation forecast. we are looking at headline inflation in europe of 2%, but the core number is less than 1%. it will be interesting to see how much draghi raises the ecb's inflation forecast. currently they are looking at 1.3% for 2017. we were expecting 1.7% to 1.8%. that will be the major piece of news out of the ecb. then of course, the speech everyone will be hanging on every word, considering the policies in the fed right now and the ecb. manus: will they move to

potentially close out the top rhetoric gap. let's cross over to brussels. the gathering of the eu. it looks like the trigger of article 50 might be a couple of days behind schedule, but what is the feeling on the ground with regards to these negotiations? is there any potential for a delay? caroline: the feeling on the ground is that the brexit, the triggering of article 50, will not happen until the very end of march, possibly after the march 25 summit in rome to celebrate the anniversary of the rome treaty. today the first item on the agenda will be the reelection of the eu consul president. he could be reelected for another two and a half years. he has support from many countries, including angela merkel. he has support back home. from poland, we had the polish

prime minister saying they do not have to reelect the new eu consul president today. we will see how this goes. the consul president spoke with me and he told me that the eu leaders are well prepared and once article 50 has been triggered, they will publish some guidelines for the 2017 year within 48 hours. anna: the politics is all here in this conversation. malcolm, back to you. in terms of the inflation story in china and how that spreads out into the rest of the world. we looked at hr earlier that maps the -- we were looking at a chart earlier that maps the ppi number against the exports. how direct is that relationship? reporter: initially it can somewhat hurt the chinese factories. remember, they are purchasing a lot of this stuff that is then repurposed and exported. what we have heard from

reporting troops, when we spoke to a bunch of exporters, is as soon as -- this was back in october -- as soon as they sub any potential of uptick in global demand, they wanted to pass on those higher prices to their buyers. he followed up with them in february and sure enough, many of them started to do that. because of the weaker yuan, there was a lag in the pickup of ppi prices and the share prices. the ppi pickup might start to take off in china. the rebels might just be starting to spread. -- the ripples might just be starting to spread. manus: matt, back to you. it might be down to the first paragraph to judge the nuances. the debate we are having here today is how quickly mario draghi's timeline might get shifted forward to tweak those rates, maybe even by the end of august. what is the possibility that the rhetoric will change in the

summertime? hawkishhave heard very economists talk about this. some forecast even for, i have heard one forecast even for this month. but most economists don't think draghi will change policy, or really, his tone. he might change the inflation outlook, but keep in mind, t hese oil prices are holding the inflation outlook up. yesterday it dropped 5% in one day. they are very transitory. we have a serious unemployment problem, especially in the peripheral countries of the eu. draghi has to keep an eye on that. though the ecb is based in germany, where unemployment is down to a low, he has to worry about the rest of europe. and actually, the concerns about the germans, with regards to inflation have abated a little bit over the last few weeks.

maybe they understand a little better what draghi has to do and are willing to play along for the time being. anna: thank you very much. we should thank malcolm scott, caroline, and matt miller, running us through the big agenda items. let's turn to the insurance industry. manus: the numbers from aviva, they have announced the full year property profit at 3 billion pounds. mark wilson, the ceo, great to see you. the top line on your numbers, it is clear-cut, more operating profit, more cash, more dividends. how much more is there to come? you are committing to the 50% payout ratio by the end of 2017? are you know if fully pay dividend stock committed to your shareholders -- are you now a fully pay the dividend stock committed to your shareholders? >> there is more to come. there is more to come in all the operating units. i think the other big news, and

you described it well, is about the overall financial position. we have this really high-quality, having too much capital. we said today we will give some of that back to our shareholders in 2017. we are going to pay out some pretty expensive hybrid debt this year as well. anna: you say more to come on those fronts. good morning to you. what about the m&a front? you have done a big deal. are you ready for any more? m&anna, what i am saying on is i know we have a strong capital position. we might do some tactical bonds. we did some last year and that has been a very lucrative deal. we are not looking at any jumbo deals. we don't need it. we are getting organic growth across the board. we had the best year in about 11

years. the life insurance business in the u.k. did well. the asset management, we had some of the best fund flows in the market. it has been a tough few years. we have had to make some 30% profit growth. we've got some parts of the business that are starting to go in the right direction. manus: i just want to take you up on this lovely line in your notes. you have got standard life, aberdeen, delta, lloyd. your fund management business, a breakout year. do you want to build that organically, or are you in the market for an asset management purchase? are you tented at all by the consolidation story on that side of the business? -- are you tempted at all by the consolidation story on that side of the business? >> know, that would not make any logical sense for us. we are growing organically. we have a great team there.

we have rebuilt it over four years. it has taken hard work. consultants are looking favorably at it. bluess we had the brexit there, and we are getting some nice flows in there. anna: returning to brexit in a moment. i want to get technical for the next question. talk about the key compensation rate, a 30 is cutting the rate -- compensation rate, authorities cutting the rate. is there room to negotiate that a little bit in 2017? >> i think that policymaking was a little bit rushed and disjointed, to be fair. we are the only country i can find in the world that has a negative discount rate in that form. i applaud the government. they realize they need change. we need to make sure the claimants get the right amount. all this does is penalized young

and old drivers, and that is not good. i think common sense will prevail. the only question is, when? i am hoping it will be sooner, rather than later. manus: mark, you are living in london. you are the personification of a global ceo. i am looking at asia and what chang said yesterday. he is highly cautious of the shadow banking on finance risk. how do you look at asia? how do asia and china play into your business? you have traveled. how concerned are you? are you highly cautious on shadow banking in china? >> manus, two different questions. i lived there for 14 years. i know the region well. our strategies, we are into digital.

we did a wonderful deal with tencent, the largest tech firm in china. we are looking to be as disruptive as we can in the market. shadow banking is interesting. if you look at the big payment systems, they are now tencent and alibaba. i think tencent over the chinese new year did something like 4 46 billion payments. you are seeing the banking system change. it is not just in shadow banking, but the traditional forms of banking. as to where that will come out, we are not sure yet, but what we are sure of is we want to disrupt the insurance agency, which is archaic in the dissipation models. manus: mark, have a good day. that is mark wilson, aviva ceo. anna: the turkish lira plunged yesterday as rising u.s. yields affected it. we caught up with the economy

minister. >> there was big pressure on turkey to increase the interest rates. to value, to support the value of the turkish lira by increasing the interest rates. or, there was pressure. there was pressure on the table. the market had to press down the value. they didn't do it. they prefer other things, because we have undeother instruments in turkey. there is lower demand for the u.s. dollars. manus: we broke this news. azko nobel has rejected an unsolicited bid from the biggest coding company, ppg industries. azko might separate the $4.8

billion business. fora: we are now joined i analysis on this story. is the political opposition to this deal? we know that the dutch have been quite outspoken on m&a attempts to dutch companies of late. reporter: yes. there could definitely be political opposition. if one takes, for example, an unsolicited bid for unilever, which was not greeted very well by the dutch finance minister. one could imagine that the same thing could happen in this case. manus: and let's talk about the potential antitrust issues. what are they, and what could rise? reporter: there could be significant antitrust issues. both companies have very strong positions in the coding

business. both in europe and the united states. i think with all the backdrop happening now, there is really a lot of deals in the background in the chemical sector. and i think antitrust officials on both sides of the atlantic are very attuned to this industry and would look very closely at this type of deal. anna: what is the mindset of the azko management? statements this morning about, we did not approach them, we were not courting this interest. reporter: that is right. the dutch company came out and said, it was completely unsolicited. but i think the take-home message from this is, to some extent, it will push the ceo of zazko to take a hard look at what many analysts have been

saying for quite a while, that the company could increase its value is it separated out from its specialties chemicals, that the parts could be worth more than the whole. i think unsolicited, it really could push azko management to take a hard look at the company and to decide whether it would be better to break it up. manus: that is the conundrum for every ceo when they get these bids they don't want to deal with. thank you for joining us from our bureau in paris. let's talk about oil and opec. it is not the only player in town. this is what we are talking about, record levels of stockpiles. and they are rising. and that says the cartel has more to deal with in terms of a global glut. anna: oil is now inching back after dropping the most in more than a year. now, stewart wallace is joining us. good to have you on the program. this big move in oil downwards, 5% to the $50 mark.

and then it bounced back a little bit this morning. what we are seeing from the u.s. shale producers, keeping a rise in oil prices. reporter: that is what has been the pricing for everyone, the speed at which it came back. there is a moment when you had the u.s. government predicting they could reach $1h 10 billion. barrels a day that is more than saudi arabia is producing. opec was trying to kill the shale industry. it has not happened. they are all meeting in houston and everyone is asking, are you going to extend this deal? you have to be happy with prices in the $50 to $60 range. and they have not been explicit about it. now they need to start making positive noises about what they will do when the current six month deal ends. manus: let's go back to two weeks ago, national petroleum week.

we had a panel with the qatar oil minister. the qatar minister was trying to push that story of near 100% compliant. what shifted in two weeks? >> they are being incredibly compliant, but it is not enough. that is what has changed. based on the old assumptions about u.s. production and everything else, that was enough. but then that chart came up. when you have half a billion barrels of oil sitting in the u.s., that create concerns. people are concerned that the inventories have not come down as far as people expected. all the evidence we have collected shows by and large, compliance is good. anna: do we expect they will extend the deal? >> no. [laughter] call it i think you wobbles. anything, that is

a good word to use because there was a big technical indication yesterday. the 100 day moving average, which we were excited about. it fell below that and you can interpret that two ways. one, you are breaking the trent. -- breaking the trend. or, you could said the last time this happened in november, we had a huge rally afterwards. manus: let's talk about shell. it is everybody to the pump, excuse the phrase, which is, get rid of everything, but does not say exactly within the marginal production, and making my dividend payout work. >> that makes sense. they have been doing m&a and the shale. that is the stacking in oklahoma. these are the hot new plays. nobody wants anything that will cost a vast amount of money to get out of the ground. then is this a surprise,

for the market? >> the size and timing is a surprise. i was not expecting a $7 billion deal from shell, but it makes sense in the general trend. anna: stewart wallace, bloomberg news executive editor. manus: we will have jamie dimon speaking with francine lacqua in paris. the first 100 days of president trump, brexit, and global banking. anna: and bloomberg customers can watch that interview live via top . we will bring you special coverage of the ecb policy decision at 12:45, followed by draghi's news conference. customers can find all of that on tliv . manus: we will have the exclusive interview with the president jean-louis chaussade.

equity futures are set for lower. exxon mobil will be in play. shell will be in play. "daybreak europe: the bloomberg market open" is up next. ♪

manus: good morning welcome. you are watching bloomberg markets and this is the european open. i am guy johnson in london. matt miller is in frank for, outside the ecb, which is what we are watching today. let's talk about what you need to know. price pressure. the ecb meeting is likely to be all talk and no action. how close is mario draghi to taking the first step to the journey of normalization? shell ditches its canadian oil