anna: trade-off. g-20 finance chiefs resist protectionism as the trump trade trickles into the communique. deutsche discount. germany's biggest banks will raise 8 billion euros with share sales at a 35% markdown. and exit strategy. policymakers could step away from their commitment to keep rates low for a long time. a warm welcome to "bloomberg

daybreak: europe," our flagship morning show from london. let's talk about what has been happening in the markets and what has not. volatility has not been happening. i've got this chart, volatility in fx markets. swings, currencies remaining well below average. of volatility is something we talked about with our guest on a number of occasions, and seems important to talk about, given we have seen from the g-20, avoiding protectionism. would there be a mention of trade? will they produce the communique at all? volatility still at fairly subdued levels, and this is out of the week where global stocks have had their best performance since january, and emerging markets have had their best performance since last summer. lots to talk about. let's put up the risk radar it show you where we are in the

asian session. the bloomberg dollar index a little bit weaker. some nervousness around that g-20 story. itsdollar heading for longest losing streak since the trump win, the yen hitting it strongest level since february 28, a bid into the yen. closed away japan from that overall number. a mixed picture, retreating in australia, south korea, new zealand, led gaining in hong kong, malaysia, and thailand. a mixed picture. i put the south korean won to highlight some of the moves we are seeing. last weekh continuing in some places. indonesian -- malaysian, indonesian, taiwanese having a strong session. 're expecting to be a little

bit weaker as we head into the start of that trading day in the united states. let's get the first word news with juliette saly. juliette: anna, thank you. in germany, deutsche bank says it will raise 8 billion euros in its new share sales. it will issue 687.5 million new shares. that's a 35% discount from last week's closing price. john cryan reversed strategy after saying he didn't want to tax shareholders. the move comes as the company seeks to show off finances and growth. chinese home prices rose last month despite increased restrictions on transactions by local authorities. new home prices, excluding subsidized housing, gained in 56 out of 70 cities, compared with 45 in january. beijing raised down payment requirements by 10

percentage point in an attempt to cool prices. angela merkellor and japanese prime minister shinzo abe have called for a concerted effort to defend free trade. two days after merkel held what was called an inconclusive talk with donald trump in washington, she and abe said it markets can be both open and fair. they were speaking at the cebit technology show in hanover. anothers set to meet deadline to unlock a bailout, inching the country closer to a repeat of the 2016 drama that pushed europe's most indebted state to the edge of economic collapse. economic ministers will reiterate that alexis tsipras's government has yet to comply with the emergency loans that has kept them afloat since 2010. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries.

you can find more stories on the bloomberg at top . japan was closed for a public holiday here in asia, and it seems that volatility and risk appetite also have the day off. good gains coming through from hong kong, we saw material 200,rs hurt the asx jacquard also coming off that record high. japan was up for a seventh session. if we have a look at stocks in particular, shed more energy is the standout after announcing a special dividend, rising by close to 16% in the late session. company says it will have a long-term goal of retreating oil from palm fruit . australiaerals in shows the impact of copper, retreating from six days of gains. we saw copper stocks across the asia pac come under pressure. jakarta came of record highs

today, but is still holding at that record high, and it is the only index to do so. is starting to show that the jakarta index is near that overbought territory on the relative strength index. quite interesting as we see a lot of movement, and focus on the emerging markets. technical indicators are showing this e.m. rally could have gone too far, too fast. anna: juliette, thank you. juliette saly in hong kong. breaking news this morning. we understand that m7 real estate venture is kneeling a deal to acquire a u.k. london business, its continental hatopean property assets of t business because of the improving economy in europe, it seems, and the demand for logistic assets.

this is according to two people familiar with the matter. blackstone is nearing a $1.4 billion deal for hansteen. he will follow that story with interest through the morning. of june finance ministers wrapped up in germany over the weekend. in their statement, the finance chief dropped references to resist trade protectionism, renewing concerns about donald trump's desire to pursue new trading terms. for more on that and what came out of the g 20 meeting, let's head to brussels, where matt miller is. good morning. what was the reaction to u.s. treasury secretary steve mnuchin and the delegates trying to understand what the truth is about what america first means for global trade? matt: yeah. although i'm not sure donald trump has ever beat around the bush when he is talking about his america first policy or when he talks about the protectionist policy he intends to enact.

i think the trade ministers know what the white house wants to do. they were really trying to gauge what kind of power steve mnuchin is going to have us treasury secretary and forge a relationship with him. they were pleased with what they heard from the secretary, but concerned about what kind of power he actually had when it comes to policy. in any case, listen to what usin.mnhucuch told -- steve mnuchin told us. >> we believe in free trade. trade has been good for us and good for other people. having said that, we want to re-examine certain agreements. examination is the crux of the issue. the americans seem to think that fair trade, free-trade should be fair trade, and if they don't get fair trade, they may want to reserve the right to enact protectionist measures.

that is what the other 19 members of the g-20 wanted to avoid. -19 plusd to be the g one. anna: where does this go next? what is the focus now? matt: aside from the trade issue, there was a little talk about currencies, which i found fascinating. a lot of talk about regulation, and especially bank regulation. we know the trump administration wants to roll back regulations. the president has said that himself. that steve mnuchin said they do want to have one global platform. they want everyone on the same page. they want to get through this final dazzle free negotiation sticking point, with regards to global bank regulation, and figure out one set of rules that all banks can act according to. many staff members are going to switzerland today and tomorrow

as the finance ministers come to brussels for the euro group meeting that will happen today and tomorrow. anna:ma matt, thank you so much. matt miller. 6:09 in london. joining us here in london on set, allen higgins. morning to you. >> good morning. anna: the week after g-20, trying to put together the things we have heard about, or not heard about, things that were included or not included. the delegates kept everyone waiting a very long time for their communique, and they dropped this reference to ensuring that there aren't barriers to protectionism -- that there aren't protectionist barriers, sorry. is that material to you, that they took so long? >> presumably the u.s. simply said no. for us, the markets have seen tariffs before, huge ones under reagan.

that's kind of where the markets leave you -- that is why we have calm markets. what the market is being complacent about is trade war. i think probably the market, on balance, is right -- anna: i have this chart here, the u.s. trade balance, the deficit with the european union. do you think the market is right to be complacent, that trump isn't going to see this come after the eu? >> well, i think half the u.s. trade balance is in china. china is dominant there, and yields a small portion, a relatively small portion. a big part of that will be germany, and then germany quite cleverly said, it is nothing to do with us. go and talk to those fellows down the road at the ecb about the euro. on thell be a focus, absence of any comment about free trade. but look, at the world can live

with tariffs. obama put tariffs on steel. reagan put tariffs in place to protect one company, harley davidson. japaneseriffs on motorcycles. you couldn't get much more protectionist than that. it's a big of a misconception. anna: how does this play of her markets? markets are quite relaxed, and perhaps they are right to be. we saw dollar weakness, how does this play out in the trade conversation? >> in terms of currencies, certain participants have put too much emphasis on rates, rates going up, rates going up. if it was just about rates than the swiss franc would be the world's weakest currency. the factt trade, and is that the euro has a trade surplus, and i can see good

reasons why the euro is still out. it is fascinating to see vault no doubt it will break at some stage. we're lonely by the sterling with a break to the upside. anna: we have had other people suggesting sterling. i have this chart because you offer it. sku index. tell us a bit more about this. the risk of outlier returns to a more standard deviation below the mean. we're at 154. it means that the perceived distribution of these abnormal returns is becoming more likely. >>t two ways of looking at it. we know volatility is low. it is sucking people in to buy production, because when volatility is low, everything else being equal, buying protection is really cheap.

however, what this shows is that people are really paying for options. how expensive is it to be cautious or bearish? the way we look at it, you won't be surprised, we are a little contrary and. people are scared. i need to buy those options, bid ding up the price. it's actually at record highs. underneath the surface of the slow volatility, low vix, is a lot of scared people. with their are scared people, guess what? the market tends to go up against the scared people. the market doesn't reward the majority. anna: ok. >> a bit of a contrarian. anna: alan opinions stays with us. -- alan higgins stays with us.

angela merkel and shinzo abe are holding a joint news conference. later, the u.s. house intelligence committee holds its first public hearing on its investigation into russia's interference with the election campaign. at the same time, euro area finance ministers gary in brussels. french presidential candidates hold their first televised debate at 8:00 p.m. u.k. time. coming up, as u.s. secretary of state rex tillerson strikes a note of reassurance on his first official trip to china, we will look at relations between the world's two biggest economies. the favorite as the five leading candidates face each other in the first tv debate. we will focus on the fight for the french presidency.a and the new mobile company with millions of subscribers. the india telecoms market. this is bloomberg. ♪

anna: welcome back. 6:18. .6%,ang seng is up by japanese equity market closed. let's get the bloomberg business flash with juliette saly. juliette: anna, thank you. uber's president jeff jones is quitting after less than a year amid multiple controversies. after bloomberg published video last month showing an uber driver, he said he would seek "leadership help" and was planning to hire a coo. the plan was viewed internally as an effective demotion. vodafone's indian unit has creating aerge, wireless company twice as big as at&t by subscriber. vodafone will own 45.1% of the combined company, after selling

a 4.9%. the of the company will take a 26% holding, with the remainder held by the public. the new company is worth $23.2 billion. china's industrial sector reforms will bolster the iron ore export market as the shift support demands high quality raw materials,'according to rio tintos ceo -- according to rio tinto's ceo. >> as you have seen, last week, it is moving in the right direction. -- we we have plenty of are supplying both sides, supplying copper. once again, i am not concerned. juliette: and that your bloomberg business flash, anna. anna: thank you. let's talk china.

-- anquities expected meeting next month. rex tillerson's tone was more measured, with president's teachin xi jingping. in his first visit as secretary of state, tillerson emphasized areas where the u.s. and china could work together. our china reporter joins us from beijing. good to have you. to what extent do tensions over north korea dominate the agenda in beijing, even if the tone of what he had to say was more measured than earlier? issuereally was the top for tillerson on his trip to china. he had in seoul talked about the imminent threat from north korea, saying that 20 years of diplomacy have failed and it did not rule out a preemptive strike.

he said that the chinese would look again at trying to persuade the north koreans to trying to move away from the nuclear program. washington wants them to sit down and have talks. they say that will not happen until north korea steps away from the missile program. saw another test of an engine from their missile systems over the weekend. it was a start. we had the conversation, but it was a long way to go, and the clock is ticking on this issue that is creating increasing tension in the korean peninsula. anna: tom, did tillerson managed to reassure his posts about u.s.-china ties? i think he was echoing chinese phrasing directly, something seen as quite a positive. >> yeah, that was interesting, wasn't it? he went out of his way to mollify his chinese host, using that language from the chinese

government, emphasizing the need for mutual respect, which went down well with the chinese media. so definitely trying to reassure the chinese ahead of this presidential meeting between xi and trump, in april, likely in florida. it's the relationship that he says is at an inflection point, and it will help set the agenda for the next 50 years. that is something we will watch clearly coming up in april. anna: tom, thank you very much. tom mackenzie in beijing. chinese home prices rose last month in more cities, despite increased restrictions on property transactions by local authorities. new home prices, excluding subsidized prices, gained and 56 out of the 70 cities tracked by the government, compared to 45 in january. beijing raised down payment requirements for second homes in an attempt to cool prices.

alan higgins is with us on set. i turned to my colleague, tom horlick, who said suddenly it is all going right with china. aboutalking in particular this data around home prices moving higher in more cities than previous. i don't know if that is good , though. when you look at industrial output, factory prices, slower capital outflow, certain things do seem to be moving in the right direction for the chinese. >> they do. and it was interesting to hear about the down payment on the second home, but that's a characteristic of the chinese property market. it's not like here in the u k or even in the united states. you need very big deposits. concernnot quite ther -- at least, we don't have the concern. it's remarkable how prices keep going up and that is why i think

the pboc followed the fed. they tighten into a boom. reflect on the fact that we have a global boom in developed markets. it is hard to find a country -- anna: they said today they won't the offering the interest rate environment. this is the tool they are using. but they followed the fed is so hot on their heels, and they have done similar moves the month before. do they need to do more? -- the economy is strong enough. they can do it, they want to do it, otherwise the market will continue to be strong. they want to stabilize the currency, and it is one of the favored hedge fund short stories and it has been remarkably stable. they want to stabilize the

situation. anna: we saw a strong week last week for emerging markets, and emfx strong again. i pulled up this emerging market rally chart. something of a surprise for some people, when you think about the central bank's hiking policy next week. we do well on emerging market assets, and in face of the fears of what a trump presidency would mean. >> partly i think it reflects huge flows out of e.m. a lot of the nervous owners of e.m. are out. two, it is measured tightening. -- so wellening flagged, so the markets can come to terms with that. giving toward higher levels, that is much lower, especially compared to the u.s. market and when you normalize. anna: all right.

alan higgins stays with us. up next after the break, french fight for the presidential election. they will take to the tv stage today. this is bloomberg. ♪

>> we believe in free trade. we are one of the largest markets in the world, one of the largest trading partners in the world. trade has been good for us and good for other people. having said that, we want to re-examine certain agreements. and i don'td trade, think we have to worry that much. regarding the discussions we've had over the past months, we still have some work ahead of us. the u.s. administration recognizes the importance of an open economy. they may have some views about the risks of competitive evaluations that seem to be

legitimate. at the same time, the idea of balance and a level playing field, i think, should be clearly addressed without limiting at all the ability of free trade to improve our productivity growth and ability to have a better life. attitudeto me that the is still to be formed, and we have to understand how to learn. >> the position of france, i think, shared by all, is not just that we should distance ourselves because things are going well. it is because we are doing better that we need to continue working together in the most confident way possible and the most multilateral way possible. >> the openness to trade is key. there is no evidence that trade is destroying jobs.

therefore, trade is one of the core engines of global growth, and we should not go to protectionist paths, down the protectionist path. clearly, the world should stay as it has been. >> i think the current one which iss saying that it's going to keep doors open, and keep the trade dynamic going. some countries will have different meanings in terms of their own domestic situation. >> reciprocal trade, open trade, that will be on the agenda and is. anna: all the voices we were speaking to over at the g 20 on friday and over the weekend as well. let's check in on the markets with nejra cehic, joining us with details. good morning. nejra: good morning. g-20 admitting the pledge to resist against protectionism, after a lot of wrangling over the weekend talks.

this is how the markets are trading over in the asian session. japan closed for a holiday, the higher, gold what you are seeing is a mixed picture across the equity markets. you are also seeing a weaker dollar, deals move lower across the asian fixed-income space. wti crude it down more than 1%, brent lower as well. some weakness in metals, gold up .4%. keep an eye on this cdf as well. after vinci 20 meeting -- after that g-20 meeting, the bloomberg dollar index was down for a fourth day, which is its longest losing streak since the election of donald trump. the yen, meanwhile, maintaining last week's strength. this session has touched its lowest level since the end of february. 112.65 now on dollar-yen. it is fairly steady today, but there is still a bias.

speaking of fx in general in volatility, we are seeing a lack of volatility across equity markets, across fixed income markets, and across currency markets. here is the jpmorgan g7 volatility index. you can see the slings and currency remaining well below average. that is following the g 20 meeting, too. focus of the meeting was the relationship between the u.s. and china. what i want to show you is the relationship between treasuries and chinese bonds. you have to look at the futures markets, but take a look at this. china bonds and treasuries really starting to move together, especially now that we are seeing the pboc following in the footsteps of the fed's hiking path. this is coming together, a reverse of the previous two years where the debt markets of the largest economies were diverging more. anna: a new edition of "daybreak" is available on your mobile. here are some of the stories

that have made it into this morning's edition. this big story around deutsche bank, the lender raising capital and priced its stock offer at a 35% discount to friday's closing price, in line with earlier guidance. week andstarts this will raise 8 billion euros. john cryan is trying to get the finances over at deutsche bank, perhaps taking advantage of a good time in the market to do it, so says some of the analysis on the bloomberg. the next story is america getting its way at the g-20, with finance several countries frustrated over trump's rejection over the trade trends. they dropped a pledge to avoid "all forms of protectionism," although we did hear from steve mnuchin, saying that the country is pro trade. finally, "daybreak" focuses on

angela merkel and shinzo abe. they opened the cebit conference and had over last night. the two leaders advocated a trade accord be. they hold a joint press conference later today. french under five weeks, voters will make a preliminary choice for the most open presidential race of the republic, and tonight is the first televised debate of the campaign. there are five main contenders, only two will make it through to the final round of voting. according to a poll yesterday, macron and le pen lead the pack, neck in neck.n th let's talk about french politics. le pen, the national front candidate, macron, an

independent -- it's almost an entirely outsider front runner grouping, if you could call macron an outsider. >> i was just thinking that. he went to a top school, etc., so he is less of an outsider. i have met macron, he is very smooth. i expect him to win. but if he doesn't, then markets will be concerned, because le pen has said she wants to get out of the euro. the reality is it's very hard to do under the french parliamentary system, because you need parliamentary support. remarkably, is still quite popular in france. the eu isn't, that the euro is. anna: that has happened in other parts -- >> famously greece. anna: and italy. >> italy is the one we need to worry about. it is the one country where it is more like 50-50.

it really could be on a knife edge. if the euro will break, it will come from italy. anna: speaking of the french aection, macron, fillon -- lot will depend on how the voters for these others decide to vote in the second round. that is something we will have to watch. how shall investors prepare for this? how are you preparing for this? >> not much. basically our approach would be -- should markets selloff on a le pen victory? very hard to do anything going into it. i wouldn't advise that. we would be looking at italy. if le pen does well, that's a negative side for the italian elections coming up. that is when we will get nervous, and that is probably next year's event. anna: in the dutch election,

people were extrapolating, to work out what it told us about the euro. once again, with the french election, we are looking to expand on that. alan, stay with us. i want to bring in another voice. italian-20 meeting, central bank governor ignacio visco weighed in on quantitative easing. somehow ot say that qe is being maintained. consistency between these components is important. it is a package, really. it is not single measures one by one. anna: ignazio visco. he is talking about shortening the break between qe and the rate hike. ratesrd about how deposit

might rise. a lot of conversations going on right now about how the ecb chooses to exit. >> quite right, just like the fed, they are data dependent. they are itching to take away some of the stimulus. i think rightly they are pointing markets to the idea that we might stop qe and almost immediately raise rates, why not do it before? anna: deposit rates in october -- is that a possibility? with what it is doing to banks and lending, it is that front of mind. >> banks hate negative interest rates, one. two, do we really need this degree of stimulus, now that we have this global boom that we have? the only reason not to have this is that the global boom will come to an end. anna: interesting. alan higgins stays with us.

let's turn our attention to what's happening in the indian phone market. vodafone's indian unit has agreed to merge with idea cellular to create a new mobile market leader. it would be more than twice as big as at&t by subscribers. in the market that is highly competitive after india's richest man offered phone calls for free. let's speak to our executive producer in india. he's in mumbai. good to have you. talked to us -- talk to us about the significance of the steel. >> this is a big one. it will change the dynamics of the telecom sector to create the largest player in india telecoms. vodafone's indian unit will merge to create an entity value that $23 billion and will have 395 million subscribers. here is how it is structured. vodafone will pick up 45% stake in the combined entity.

idea cellular will own about 26%. what does this mean for vodafone? billion,has nearly $7 it has written down $5 billion and has been consistently losing money. deteriorating financial health of the telecom sector as a whole, this is an opportunity a sense,lt int-- in put them in a better position, and hopefully they will start making money. but this is a big one as far as consolidation is concerned. anna: a big one for consolidation. how does this merger change the dynamics in india's telecom sector? can you give a few clues? >> to financial health of the sector has not been good at all. many have been bleeding for a long time. india's richest man thinks the

worst, so you now have picking up in business. they are merging with another telecom player, and now comes the big one. hopefully it means they will become more competitive in will start making money. anna: harsha, thank you very much. our executive producer in india, joining us on the megamerger in the telecom space. 6:43 in london. if you are a bloomberg customer, you can watch the tv show on a regular tv, online, or go to your terminal and use the tv function. you can also follow all the chart and functions we are using on the right-hand side of the screen. any of the charts we discussed, they all pop-up there. we also have a button to press that allows you to send a message to the show's producers. banking on a turnaround.

we will drill into the details of deutsche bank's share sales, coming up next. this is bloomberg. ♪

anna: good morning. it's 6:47 here in london. we're still one hour closer across the atlantic, a little bit less time difference this week. at the end of the week european clocks change, and then we will be back to situation as normal. s&p futures suggest we will be weaker at the start of trade after the g-20 caused people to wait quite a long time for their communique, and took out references to avoiding protectionism. the bloomberg business flash -- we get to that straightaway. here's juliette saly. juliette: anna, thank you. jeff jones is quitting uber after less than a year amid

multiple controversies engulfing the right human company. after bloomberg published a video last month showing the ceo berating an kluber driver, he said he would seek "leadership help" and was planning to hire a coo. according to a person familiar with the matter, it was viewed as an effective demotion for jones. vodafone's india unit has agreed to merge with idea cellular to create a company that is more than twice as big as at&t by subscribers. vodafone will own 45% of the combined company after selling a 4.9% in the new entity to a billionaire holding company. the other company will take a 26% holding, with the remainder held by the public. company is worth $23.2 billion. ofexpects to deliver a head market volume growth as a post a 16% rise in for your profit. -- in full-year profit. it sees overall volumes growing

after a 3.2% volume growth in 2016. net income for 2016 was $1.02 billion while revenue was $4.6 billion. south korea's largest maker of mobile games aims to raise as much as $2.4 billion in an ipo, selling 17 million shares when it goes public. it's capitalizing on rising demand for games played on smartphones. a december it released role-playing game set in the middle-aged fantasy world, which collected more than 180 million subscribers in its first month. and that is your bloomberg business flash. juliette, thank you. juliette saly with the business flash. raisehe bank says it will 8 billion euros by selling stock

and a 35% discount. germany's largest lender will issue 687.5 million new shares in an attempt to shore up finances and boost growth. it has had a strong run since september amid renewed optimism in the banking sector. an analyst joins us now -- great to have you. anything in the detail on this release? that they were issuing shares was flagged. anything in the details that surprised you? >> good morning. i think john cryan give us most of the detail and he announced this. the bottom line is that they are hopefully raising capital for the last time. we have had four large share offerings, and hopefully this one, coming when it does after a lot of hard work has been done restructuring the bank, should put them in a strong position, something like a 13% ratio.

announcement we heard from john cryan, that he will make this move, do you still consider it a good idea?we have seen a doubling in share price. they weren't able to selloff the consumer unit, but they plan to. this is looking like a good move to you? >> i think it's an inevitable move. john has laid out 18 months or year ago his plan for getting the bank back to health, and that was going to be painful. but it also meant with dealing with a lot of legacy issues. he has it just boosted capital, has given himself capital which allows him to continue to -- to start developing the business in a more positive fashion, particularly in the capital markets, where they historically have been very strong. anna: you have been scaling back risk investment banking. -- risk in investment banking.

dividends --ewed how do you sense appetite for this issue? >> i think the appetite is obviously going to be helped by the 35% discount. that is the traditional way they raise capital, which means he if you are an existing shareholder, it doesn't mean if it is priced at a low level. i think that helps get the deal away. the return of dividends will work well for german investors, coming at an earlier stage than people anticipated. hoping to get on, back into profit this year, i think they will get back into profit. than the big question is when can you move up to something like respectable profitability, like a 10% return on tangible equity, which is what people expect a bank of that size to

achieve in the longer term. anna: and what about your outlook for the sector more generally? interest rates, getting people on both sides of the atlantic excited, maybe more in the u.s., about profits and the banking sector? what are your thoughts? >> where we are focused in the are outlook has been more bullish based on the incoming government, rising rates, that al better capital markets, and the thought of deregulation. europe has not got deregulation on the agenda, and if you want recalibration -- it is well through that to a degree. the big question is can we see the economies pick up. thatusly people look at and will be buying stocks on the expectations. anna: chris, thank you so much for your time this morning. chris wheeler joining us on the

phone. alan higgins still with us. give us your thoughts on deutsche bank. business that you have been involved with since the crisis. >> yeah. one of our largest investments is financial credit, which we bought into quite heavily this time last year. set, theh you have on longer term graph, shows how the markets punished deutsche bank for question marks about capital. quite understandable. this is probably a win-win in the sense that the share price held up, and they are starting to lose a little bit of confidence in their asset management business because there are doubts about credit that really hurt that business. hopefully a bit better for equity holders. fantastic news for bondholders. they are the real winners.

this is a transfer from equity to bond. anna: if you are going to do it, this is the time. that chart we just showed, the way the share price has picked up in tandem with the rest of the sector, a good time to do this. >> relatively. among a short-term basis, the best time is one to two years ago. if you look at that graph -- they deleted equity holders here, but they looked at the success, writes, big and if you are running an asset management business, which they do, then you need a good credit behind that. the market forced their hand. anna: more generally, your strategy, overweight high-yield on financial credit. >> issues like deutsche bank is

mainly invented -- deutsche bank 6% andyou could earn the 4% or 5% capital gain over the next few years to be a debt investor. for us, that's probably the best return out there. that makes this bank super safe. anna: and a final word on your strategy, a modest overweight in equities, still happy despite the recent highs to add more on equities. >> hold on to where we are. are not as with equities as we were because it is more expensive, and part of our job is to buy equities cheap. adly, there is no signal for

setback to put money in. anna: alan higgins. u next, as we diverge on the monetary front, we will talk translating differences. this is bloomberg. ♪

anna: trade-off. g-20 finance chief drops a pledge. discounts pure germany's biggest bank will raise 8 billion euros. representative said the policymakers could step away from their commitment to keep rates low for a long time after qe ends. a very warm welcome to

daybreak europe. prices.pi, factory gate we have a number coming through for the month number for february of .2%. this is weaker than had been anticipated and the previous month as well. the previous month was .7% and the survey, estimate from economists was for an increase. we just get .2% and that means number looksear weak. 3.1% year on year versus an estimate of 3.2%. does this take some of the wind out of the german arguments that the interest rate policy more broadly in the ecb, in there eurozone, need to change to reflect deflationary pressures in the german economy? it is not one million miles away from the estimate, but it is weaker. we will want to conversation with interest.

we need to talk about where we had on the european equity market opened this morning. a mixed bag suggested. we could have downside coming , which could 100 put in a slightly better performance, slight expectation of a move higher. not much in it, really. maybe investors getting caught off guard. hours of conversation behind closed doors. they try to leave out the pledge to avoid -- a lack of volatility in various markets. fx, equities, fixed income. -- despite increases in interest rates by the central banks in the u.s. and china. the bloomberg dollar index and a bit of weakness year in the dollar. a bit of appetite for the yen, hitting its strongest since february 28. a bit of haven buying. perhaps concern around that

protectionist impulse in the g-20 statement. excluding japan, up .3%, and underlying, it is pretty mixed. some of the emerging markets doing very nicely, whereas australia, south korea, and new zealand retreat. let us get the bloomberg first word news. here is juliette saly. juliette: thank you. in germany, deutsche bank has said it will raise a billion euros in its new share sales. the company's largest lender will issue 687.5 million new .65 euros each. john cryan reverse to strategy this month after he said he did not want to attack shareholders. they seek to short finances and boost growth. chinese home prices rose last month and more cities despite increased restrictions on property transactions by local authorities. prices excluding subsidized housing gained in 56 out of the

70 trapped by the government, compared with 45 in january. on friday, beijing city raised down payment for second homes to between 60% and 80% in an attempt to cull prices. angela merkel and japanese car mr. shinzo abe have called for a concerted effort -- japanese prime minister shinzo abe have called for a concerted effort. abe said global markets can be both open and fair at the cebit technology show. greece is set to miss yet another deadline. that will edge the country closer to a repeat of the 2015 drama that pushed europe's most edge of state to the economic collapse pure euro area finance ministers meeting in brussels today will read and reiterate that they have yet to comply with the emergency loans that have kept the country afloat since 2010.

global myth, 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 . we are looking at the regional index. to pen was closed for a public holiday. the regional index besides japan up, holding a 21 month high. hong kong had a good day as well. hang seng ratio has risen to the highest levels in 2011, but mining stocks coming under pressure in australia. jakarta coming off its record high. in terms of stocks, a standout today. ,ong kong, special dividend sending the share price up the most since 2000 eight. a company in malaysia had a strong day as well as it announced the target to retract out of palm oil by 2020. aus minerals showing the downbeat day as copper lead

industrial metals lower. i mentioned jakarta hitting the record high on friday. the jakarta composite did come down today. this is the chart on the bloomberg. it shows, if you look at the relative strength index over the last 14 days, you are starting to see the jakarta composite did very much towards overbought signals, so we have seen this revenue coming through since the raisedsed -- fed interest rates last week. there is concern that it has gone too far too fast. anna: thank you very much, juliette saly, with what is happening on markets. let us put some of the news flow around the g-20 into context and talk about were the global growth story goes. john silvia joins us. he is chief economist at wells fargo. great to have you on the program. we need to get more detail on your thoughts on the u.s. economy and we will do that in our next conversation. looking at the g-20 and what we have heard here, they left out the pledge to avoid protectionism, being seat as the u.s. -- being seen as the u.s.

asserting itself on the g-20. what does that do to the global growth story? yet to be concerned in the sense that there is no free trade. no country has free trade. every country is engaged in protectionism. if you are going to up the ante, it you have to ask questions about supply chains, the cost of ability to sold, the import certain selective goods. it would probably be negative for economic growth globally, that maybe not a major negative. it is a negative. it also means there will be higher prices on certain goods because there will be some additional barriers put into place. is are real challenge you going to be able to get certain goods? are the supply chains going to me not so much so difficult but disrupted? that is the most significant challenge. anna: from your inside, when you look at what comes through in

president donald trump on twitter, and what comes from the people he has put around him, how concerned should we be then about the global trade story? it is easy to get different versions of what america first means and what it means for the global economy. alan: -- john: john: the segment just before was mentioning about aboutd merkel talking fair trade. i think it is fair to say the united states, it is not perceived that trade is fair. your idea of fair and my idea of fair could be two ideas that are very different, so i would say that, yes. you will probably see a ratcheting up in terms of trade restrictions. the biggest challenge for the united states is its trade relationships with china. very nicely illustrated. this is the function on the bloomberg that shows the united states in this case, the deficit the united states hold with with china and

mexico. let us cross over to one of our reporters, my colleague on the ground that the g-20. in germany over the weekend. in their statements, as we said, the finance chief dropped references to renew concerns about what president trump's desires are in terms of trade policy. for more on what came out of that g-20 meeting, let us get a voice from the ground who was there. matt miller joins us now. matt, what was a reaction to u.s. treasury secretary steven the nation -- steven mnuchin ? right, clues beyond what donald trump says almost every day, he basically says we are going to pursue a more protectionist policy, but i guess the world does not want to believe that and they are hoping that steve mnuchin can act independently from the white house. that wasot seem as if

his mandate. still, there was not really a contentious feeling between most of the other g-20 major finance ministers. franceresentative from was one exception who said this was really the g 19 plus one. most ministers wanted to get to explore what his mandate might be. he read from the statement during the debates about the communique, so he did not really put original or new creative thought towards his contribution, but just bought a straight man from -- a statement from treasury, maybe from the white house. if you listened to what game schaeuble, finance minister from germany, he seemed to be more conciliatory. i asked him before the communique what we would see as far as protectionism. know the exact content yet, but nobody mentioned anything about protectionism. but about the right formulation regarding the openness of the

world economy, several countries have sensible positions about it. so, the expression that finance ministers they are used rather than protectionism was rules-based trade, especially those countries that are doing very well with their rules-based trade like china, like germany. it is interesting to note that germany has trade surplus of $340 billion, whereas the u.s. has a trade deficit of $500 billion, and i think john made a great point about protectionism. the chinese would probably say they are openly against it, and the chinese go into other countries and by whole companies including airports, you know, and transportation. here he important national security companies. -- very important national security companies. it is impossible for other countries to go into china and nicole purchases. anna: thank you very much, matt miller from brussels with his experience at the g-20.

into whats saying, you are saying about how free trade -- how free is free trade? sometimes they put in barriers as well as removing them. china is happy to stand up and look like a big believer in free trade right now and the germans are talking that line as well. are there opportunities for other countries to reduce trade barriers if the united states is doing what it is doing on the trade front at the moment? honestly, i think that is the thrust of the policy under donald trump, is that we openbe tough, but if you up a little bit, we will go easy. and i think right now, the american public in general is saying that this is not fair trade for us, whatever that means, and it is a negotiating position and i think secretary mnuchin is in a difficult position because there are other

advisors in the white house such as navarro, for example, and hauser were taking a tougher stand with china particularly. a difficultaking negotiating position right up front, it opens up the possibility that if other countries want to work with united states, those trade barriers can come down and we would not be wrecked. that is aany voices on trade. so many people in the u.s. administration on the trade front. what does this do to u.s. assets? where does the dollar had? what are your that's where does the dollar had -- where does the dollar head? easierhe combination of fiscal policy, tighter monetary policy, and some sense of restriction on trade is going to promote a stronger dollar going forward. over time, the dollar again is

going to find its place in the world trading arrangement. anna: thank you very much. we will get many more thoughts on the on what this means for the u.s. economy, specifically. john silvia, chief economist at wells fargo, stays with us here on daybreak euro. unleashing the animal spirits. we will talk u.s. consumer confidence in the economy under president trump. this is bloomberg. ♪

anna: welcome back. 7:17 in london. eight: 17 if you are watching in berlin. the dax pretty flat. the majorfor most of european equity markets. let us get the bloomberg business flash with juliette saly. juliette: thank you. uber's president is quitting after less than a year amid controversies.

after bloomberg published a video last month showing ceo travis -- he said he would seek leadership help and was planning to hire a chief operating officer. according to a person familiar with the matter, the plan was viewed internally as an effective demotion for jones. vodafone's indian unit has agreed to merge with another company to create a wireless company more than twice as big as at&t by subscribers. what a fun will own 49.1 percent of the combined company after selling a 4.9% stake to a companies.'s holding his companies will take a 26% holding, with the remainder to be held by the public. it is worth $23.2 billion. a blackstone and m seven real estate venture is said to be nearing a deal to acquire property assets. according to two people with knowledge of the matter, they are offering euros for the

properties. the move comes as euro area economic activity unexpectedly rose to the highest level as the region's recovery became more broad-based. another company expects to deliver ahead of market volume growth as it posted a 16% rise in full-year profit. the dubai owned company sees overall volumes growing in low single digits this year after a 3.2% volume growth in 2016. net income for 2016 was 1.02 billion dollars while revenue billion. china's industrial sector reforms will bolster the iron or it shiftsket as demand for higher quality raw materials according to real temples ceo -- rio tinto's ceo. were moving ine the right direction, so you

know, we have plenty of access points in relation to the change occurring. which supplying iron ore, is supplying both sides, copper, diamonds. so once again, i am not concerned for this year. juliette: and that is your bloomberg business flash. anna. anna: thank you very much. trump presidency has unleashed animal spirits, according to some. you this -- u.s. equities -- in march, americans were more satisfied with the current state of their finances and the economy than anytime in the past 16 years. the renewed confidence comes amid stronger jobs market and the prospect for faster growth under the trump administration but investors are still waiting for concrete policy from the white house. the u.s.t more on economy. john silvia joins us from wells fargo on set. still with us, talking of animal spirits, small business bets on trump.

optimism on the economy booms as expectations of improvements in the economy shooting up at the end of 2016 into 2017. is this the big success already of donald trump and is this also the big risk that there is not enough follow-through on the policy commitments that have been made? is both.me, it it is a success that he has said we will change things and people now believe, especially small businesses believe that there are animal spirits, so let us make changes, but there is a challenge. i mean, he has to deliver, and as you have seen, you have to o deal with the court system and congress and even within the republican party, there are groups that are saying, we don't want to do this, we don't want to do that. so that is the challenge that now, you have made your proposals and now, you have got to get them pass congress and out to the public. anna: and you have worked from hill. you have seen the

political process of the united states up close, working as the senior economist to the joint economic committee. john: a little bit strong. [laughter] machinery aten the operation. what does that tell you about his chances of success in pushing through this ambitious policy agenda? john:'s chances of success are pretty good to get through what will be acceptable. public andral congress. like any other proposal, you of itif he gets 50%, 70% done, that would be an amazing achievement. ofa: he has more chances success on reducing taxation. is that where he has a greater chance of success? john: he does have some successes in terms of taxes, reducing the marginal tax rate, changing some of the benefits, but as i say to all my clients, the great can be the challenge to the good.

if you try to do too much, you are going to run into a lot of groups.on for a lot of may be a moderate lowering of the corporate income tax and maybe some territorial taxation , andm being put into place maybe a little bit of business expensing. if you try to really lower tax rates dramatically, then you run into the problem with the border adjustment tax. as you know, that have a lot of resistance in the united states. anna: tell me more about your expectations for that. the business community seems to be split on it. those who export a lot, the likes of ge, seemed fairly happy to talk about the possibility of a border tax. those who import a lot, they are very against it. how does this fallout on capitol hill? john: it does not fall out very well because it is a very complex system. remember, the united states imports about $2.7 trillion worth of product. put a 20%re going to caps on 2.7 trillion dollars, that is going to create a lot of winners and losers and that is

where you get the attention between a lot of importers and exporters. areou know, retail stores in every congressional district in the united states. that is quite a challenge. anna: is it possible to craft the border tax that does not or do we of wto rules deal with a new administration that wants to rewrite those rules? john: i think it will be very difficult. they will try their best to not run afoul of wto, but we know that there will be petitions, complaints, and that will take a process of three to 10 years. anna: it is going to be a long time before we get a full picture of exactly what donald trump and his administration needs. just like we and investors are trying to work out where are trump policy goes, the fed is also trying to work out where policy goes and this is the projections of those on the fomc

on where they think rates are going to end up. what are your expectations, john? there are a lot of things we do not know about trump and that could have a bearing on where these dots though. john: to the extent the fed anticipates a stimulative expansionary fiscal policy and we get, as you and i have discussed, something less than what was proposed, which is actual outcome, the stimulus to the u.s. economy will be a little bit less. the other problem we have is a lot of this push, as people would appreciate, is fiscal policy, aggregate demand. where is the supply? how are we going to get better that activity, more labor force participation rates? those are the two longer run policies we have in the united states, so it is great to say we will stimulate aggregate demand in the united states, but how are we going to get this apply to go along with that without having a significant increase in inflation?

modestly, yes. but nowhere near enough to workershe number of that are going to fill the jobs if you stimulate demand. anna: depending on migration policy as well. infrastructure spending, is that going to be something that can materially affect that productivity debate? i guess it depends on where you spend it. john: where you spend it, how you spend it. if you put bridges to nowhere in congressional district, it is probably not going to be productive. if you think long-term, it can be very helpful. anna: john, great to have you on the program. good to get your thoughts. john silvia, wells fargo chief economist. on the subject of the fed, we will be speaking to the minneapolis fed president at p.m. on. -- 1:00 bloomberg television. you want to stay tuned for that. a quick look at the futures suggests we are looking for a slightly sluggish start to trade.

we will be weaker at the start of trade. the ftse 100, tech iran's, suggesting downside. the features on your screen suggesting we will be stronger. we will see what happens at the start of european trade. this is bloomberg. ♪

>> monday morning. good morning. watching bloomberg markets. this is the european open, where we will bring you the first trade of the cash session. i am guy johnson alongside matt miller. guy: deutsche bank is selling shares at 35% discount to raise 8 billion euros. is this the last time investors will have to put their hands in their pockets? france and focus.