anna: french face-off. macron and le pen in the first tv debate of the french presidential election. guymatt: brace for brexit. the eu takes control by leaving the u.k. prime minister waiting. we follow the european finance ministers to brussels. anna: a long shadow over a big week for trump. fbi director comey confirms he is investigating russia's interference in the election and establishes that trump's wiretapping charges false.

warm welcome to "bloomberg daybreak: europe," our flagship morning show. i'm anna edwards. miller, here matt in brussels following the euro group and euro meetings. a lot to talk about today, anna, especially as it relates to trade and brexit. anna: absolutely. we will get to those in a moment. let's talk about emerging markets. we saw during the asian session that this has been once again one of the big themes, msci up for its eighth straight day. this is the largest track of the index. if you zoom to the far side of the screen, that unassuming bar represent something quite significant, $225 million worth of inflow into this etf that tracks msci. that is the most since august.

this is a little backward looking, at as we are hearing sayinge fed overnight, there is no need to rush on interest rates, it seems the market is assuming there is no rush and therefore you get involved in emerging market assets. e.m. stocks extended their longest winning streak since august. matt: yeah. the asian session, very interesting. we will have a full update for you with juliette saly in a minute. i want to show you the topix index. japanese markets were down overnight. closed on monday. this is the first a of the trading session for japan. meanwhile, other indices were up and it will be fascinating to see what juliette saly has to say, because south korea continues to hit new highs. take a look at currencies. anna, the fed is really in focus, and the divergence policy between the fed in the ecb seems to have turned around, or at

least the market expectations of what's going to happen -- the market feels the fed is more dovish, and the ecb is more hawkish. interesting to see, the dollar had weakness for four days in a row, and finally gained a little bit. but still the euro is up against the dollar. currencies are going to be fascinating to watch today. let's get to juliette saly who has your bloomberg first word news. juliette: matt, thank you. in the u.s., fbi director james given donald trump a stinging rebuke before the house intelligence committee, confirming that the fbi is investigating russia's interference in the presidential election and whether any of trump's associates collaborated with vladimir putin's government. he made clear that trump's claim that his predecessor had wiretaps in more false. >> with respect to the president's tweets about alleged

wiretapping directed at him by the prior administration, i have no information that supports those tweets, and we have looks carefully inside the fbi. juliette: the european union has signaled its intention to kick the you -- to leave the u.k. waiting before engaging in brexit negotiations. u.k. leaders said they are prepared for the talk, but canceled a summit on april 6 to agree on the outlines of their negotiating positions. they indicated that the announcement that may will invoke article 50 on march 29 comes too late. it will be arranged for the end of april or early may. south korea's former leader has pledged to cooperate with investigators well here in for questioning for the first time over the corruption scandals that ended her presidency. she faces hours of grilling behind closed doors over accusations she pressured business executives to donate millions of dollars in return for government favors.

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 . we're seeing asian markets higher for yet another session. if we have a quick look at the gmm function, you can see korea looking quite strong today. it's up by over 1%, holding at its highest levels in about six years. we have seen this really strong gain coming through into these emerging-market assets. japan coming online today as well, it was actually under pressure. the nikkei also coming under water as it closes out the session. overall, a lot of good buying coming through, particularly in chinese stocks listed in hong kong. hang seng index at 2015 highs, . having a look at some of the stocks in detail that we have been watching, one of the reasons you have seen such strength coming through in korea stocks, hyundai group

making a play. in sydney, a record high for a mining business that wants to make a play for a cleaning services business as it diversifies. and tencent, a little unchanged in the light hong kong session. that has been -- in terms of hong kong earnings, take a look at this chart. you've been seeing the correlation between hong kong stocks traded on the hang seng near a two-year low. this is the external event rather th -- advanced really driving what we are seeing. this is one to watch out for tomorrow when it reports. anna and matt. anna: thank you. juliette saly in hong kong. the top five contenders in the

french presidential race took to the stage for their first debate last night. from runners marine le pen and emmanuel macron were locked in a three and a half hour debate, providing a taste of the head-to-head fight they may face in the second round of voting in about seven weeks' time. >> [speaking french] >> the best way to send a signal, an hottest signal that says we can't welcome you anymore, is to cut off all the parts of immigration. state medical care, access to social housing, various assistances, subsidies, and so on. >> [speaking french] >> the track you are falling into, this is le pen, with your provocations, is to divide society, to make more than 4 million french people lose rights, and the great majority who live in our public would make them enemies of the republic. for me, it is no. anna: let's bring into the conversation caroline connan,

who joins us from paris. good morning. they run pulse during this debates. what do we know about who went down best with the french voting public at this debate? caroline: nino, we just have -- you know, we just have four rounds to go before the first rounds, and emmanuel macron is the clear favorite at the moment. emmanuel macron has the most to lose in this debate, because all the other candidates wanted to attack him on his lack of experience. he is only 39 years old, and that he has never done this exercise before, especially on the ways he would tackle terrorism and integration. but if you look at the snap poll that was conducted last night, among the people who watched the people 29% of the french thought emmanuel macron was the most convincing, followed by the

far left-wing candidate, who was considered more convincing than the socialist nominee representing hollande's party. then marine le pen and francois fillon equally convincing. caroline, were there any attacks on fillon for saying he would resign his candidacy if he was investigated, and then not doing so? caroline: interestingly enough, to sayrancois fillon had some questions about this, but he tried to be very cautious. he did not mention any of his legal troubles. he wanted to refocus the debate on his program, which he hasn't had the chance to do over the past few weeks because of all this investigation and the fact that he was charged last week into allegations surrounding his

wife and children's employment as parliamentary assistants. fillon did not mention any of his legal troubles. he also attacked marine le pen on her plans to leave the euro. he said that would lead france and would behaos, a serial killer for the french. anna: caroline, thank you very much. caroline connan. we are joined live by bnp paribas investment partners and senior strategist, daniel morris. great to have you. when you look at the topics of night, manylast pertain to the economy although it wasn't front and center. there were fundamental questions about society. specifically around le pen and the euro, she said she would only take the country out of the euro with the backing of the country. that even ife fact she does get quite a lot of support in the first round of

this note, the french people in general do not want to leave the euro. >> exactly. even then, the constitutional barriers to having a referendum are quite high. even in scenarios where she has a victory, getting to the point where you have a referendum and it passing are low. natt: so have investors bee hedging too much as what they see as this massive, asymmetric risk, because the chances of le pen getting elected are slim, and even if she did, the chances of her defaulting on french debt is also fairly slim? >> exactly. when you see spreads on the french government going too wide or extreme or reflecting unnecessary caution, we have been looking at that as an opportunity, because when you look at the polls and you consider the structure of the french government, the odds suggest it will be a macron victory. pen: interesting to see le

channeling brexit language in her statements. there was talk of it being economic chaos, if le pen took the country out of the euro. but she says don't fall for this project fear. a pattern of, charts. le pen and macron are at the top. what is your assumption? is that a macron victory in the second round? and what does that mean for the eu and your investment strategy? this is a centrist candidate at a time when many political forums seem to be splintering. >> well, if you question the veracity, the believability at the polls -- we look at the brexit pulls the u.s. election -- in a head-to-head matchup there is a much bigger gap that you saw around brexit or trump. even though people are cautious

about over interpreting the polls were being too confident, i think it is a victory. what that means broadly for the eu, we have what we are seeing now. we have seen it in the underperformance of european equity so far this year, just because of the ongoing political risk. people are going to have to wake of the next day, see the polls were right. it's just a question of, does investor attention focused somewhere else? anna: we need to see the results. we need to see the polls. tomakes me cast my mind back previous electoral events. you mentioned the performance of the eurozone assets and equities. this is a chart you brought to our attention, the ratio between if weo, suggesting that do see removal from the political risk in europe, you are looking for a balance. >> exactly. over the last few months you have had periods where euro has done better, and it goes back and forth.

if you look at what the u.s. has done, we have had strong returns a since the election, the market is in a wait and see mode. if anything it is more of risk in disappointment. in new york, if we can get past the election, we could see more optimism, raising for the right reasons. you could see the momentum continue for a more sustained period. matt: great to get the views of bnp paribas investment partners. will stay with us. daniel morris, senior investment strategist. up next, the u.k. prime minister will trigger article 50 next week. we know that now, but the eu is in no rush to start brexit negotiations. instead, the bloc is going to keep theresa may waiting until at least april. this is bloomberg. ♪

anna: welcome back. this is "bloomberg daybreak: europe." 2:17 in the afternoon if you are in hong kong. hang seng up by .3%. let's find juliette saly with the bloomberg business flash. juliette: anna, thank you. ppg industries is a degree preparing a renewed takeover for noble. they rebuffed their unsolicited takeover bid earlier this month, saying the offer substantially undervalued the company. pbgc at the time it would carefully evaluate its position. spokesmen declined to comment. softbank is said to have invested $300 million in a new york-based company. according to a person familiar with the matter, the investment firm is divesting what could be a larger stake. the valuation increases to about

$18 billion, according to an estimate by a private stock market provider. they both declined to comment. the debate about the pace of said rate rises continues with chicago president charles evans seeing up to three more. however his minneapolis colleague says there is no need to rush. he says there is no eminent high inflation threat, which means the central bank can afford to be patient. was the sole dissenter when the fomc raised rates last week. >> i look at us as her. the same mistakes over and over again. implicitly, i think we are behaving as though 2% is a feeling rather than a target. i hoping to remind my colleagues, let's take a step back and not repeat the same errors. advisors -- omega

alleging the billionaire investor received more than $4 million in illegal profits. a u.s. district judge said the agency advanced a "possible claim" for insider trading. cooperman says he looks forward to going to trial to prove his innocence. a spokeswoman declined to comment on the decision. that is your bloomberg business flash. matt. matt: thanks. i am here in brussels. i came for the euro group meeting of finance ministers who use the euro currency yesterday. today we will have the ego sent meeting for finance ministers of the entire european union. the focus was really meant to be greece yesterday and trade today, because we are getting a visit from shinzo abe today to discuss a trade pact with the eu. but the spotlight has been stolen by brexit, as the british government announced that theresa may would trigger article 50 next week. what has been very interesting

is the order in which these negotiations will happen. will britain have to pay its dues first, before negotiations start eating into its two years negotiation time? will it be able to negotiate a treaty for trade post-brexit the same time it negotiates its exit from the european union? i bring back bnp paribas senior investment strategist daniel morris. how important are these questions? how key is the schedule and the timing on these negotiations? >> well, certainly it is going to be crucial. the key thing for investors will be the tone of the negotiations. it is something that even though each side is trying to promote its own interest, other negotiations believe there is an opportunity or willingness to discuss and to compromise, or does it turn into something more contentious? that is where people will be worried, certainly about u.k. assets. this debate right now, about how

much the u.k. needs to pay, when it needs to pay, certainly very crucial and something worth discussing. we just want to see it happen in a way that points to more or less an amicable negotiation, as to something more unpleasant. anna: this is where the leverage on the u.k. side starts to slip away. , that these warnings u.k. needs realism on the price, on the complexity. as soon as we get to next week, tick-tock, tick tock. >> that's exactly it. but the fact that it's two years, there will be some attention on this for a while, but it will fade into the background. we will assume people in whitehall are doing this negotiation. it will be complex and tedious and we won't read about it every day, but it will come back more next year. anna: will that do to the u.k. economy? it has been fairly robust,

hasn't it, in recent months, much more robust than any had forecast before the brexit vote. this is consumer confidence, two different measures, showing the understandable drop after the vote in june and the very strong rebound, but then the tailing off. what happens to the u.k. consumer, such a linchpin of the economy? >> they will be effective primarily with what happens to sterling. that is the way the u.k. economy is going to address the negotiations. that's good for the economy overall in terms of reorientation toward exports and manufacturing, but for the consumer, it does mean higher import prices . anna: how long will that take? >> exactly. you are going to inevitably see pressure on domestic consumption until the production capacity can offset that, and you aren't importing the goods. the list to say, this has been a

-- needless to say, this has not been painless. matt: we are looking at the pound right now, which i believe has just had the weakest month in 30 years, as far as an absolute level of where the pound is trading. do youget any worse, or think all the bad news is priced in? >> well, i think it can always get worse. i don't want to predict where it is going to go, but to a degree that the negotiations are contentious, to the degree you see a harder brexit, you are going to see that reflected in weakness in the pound, because that is how the economy will adjust, it is how the economy remains competitive. thatworth pointing out something you didn't have in the eurozone -- those economies had to adjust in a much more difficult way with wages falling, whereas the u.k. honestly does have the

flexibility of adjusting to the currency. matt: it's great to have a cheaper pound if you have someone to sell your goods to. the problem will be if they don't stay some way involved in the single market, they won't be able to do that. on the other hand, you have the inflation issue that comes with the cheaper currency. do you think the bank of england is turning more hawkish, as some people are saying the ecb has? that is probably the most interesting thing that has happened over the last week. the discussion was around the diversions of tedder monetary policy -- the divergence of monetary policy. there are tedder expectations within europe, talking about a hike with the bank of england, whereas the fed is more cautious. nevertheless you will get three hikes, if not for. -- if not four. the change in the tone in perspective is quite significant

and we have to think about the implications. anna: we will talk more about the u.s. in a moment, but on the ecb story, what is your expectation? there seem to be a lot of comments coming out of very various policymakers about how it could get out of quantitative easing measures when it chooses to do so. >> exactly. is a huge shift, discussing tapering and when you hike rates. now i think there is a real debate within the ecb. i don't think they know. they are discussing what is the right sequence for government bonds, for the banking sector. as always, and this has been the issue within the eu, what might be good for germany isn't good for italy. they are figuring that out, but we are going to see, at a minimum, signaling of tapering. matt: well, definitely they are floating trials with statements from disco about the possibility of that increasing.

daniel morris will stay with us, senior investment strategist at bnp paribas. up next, fbi director comey deals president trump a political blow. we will look at the evidence given to the house intelligence committee. this is bloomberg. ♪

matt: good morning. 7:30 a.m. here in brussels. 3:30 p.m. in tokyo. the dollar is gaining a little bit against the yen after having lost ground for a couple days, a little bit of a turnaround and respite for the greenback. let's check in on the rest of the market, for that we go to nejra cehic. att, the msci is pretty much unchanged, but emerging-market stocks are rising for an eighth straight day. you can see south korea is up 1%, near and almost six-year high. bloomberg dollar index holding a

four-day losing streak. you are seeing oil regaining some of the previous session's decline in the commodities space. i said the msci emerging market index is up for its eighth day, the longest winning streak since august. if you look at em currencies, the correlation between crude and em currencies is at a two-year low. based a very resilient versus the dollar, despite the recent drop in the oil price. there in mind, if you look at -- bear in mind, both em stocks and currencies are overbought. looking at other currencies, the euro. after that french debate last night, emmanuel macron emerging as the most convincing of the five candidates, according to a poll. that pushed the euro toward a six-week high against the dollar. it's also up against most of its major currency peers. begin rising after

the ecb meeting earlier this month, and that more hawkish tone from the ecb is helping the euro, as well as easing political concern. one-month risk reversal, the white line on this chart, showing the pressure on the euro decline had eased to its weakest in more than four months. perhaps it has hired to go. finally, we wanted to look at treasuries following more comments from the fed's neil kashkari and charles evans. 2.48%, but it is volatility we want to look at. volatility continuing to remain low across asset. anna: thank you. no need to rush in regards to raising interest rates. will talk more about the fed in the moment. for the moment, a new edition of "daybreak" is available on your mobile. let's have a look at the stories that have made it into today's edition. we start with the french debate.

fared best inn the debate, attacking anti-euro candidate marine le pen for her lack of ethics and lifelong presence in politics. to next story is the fbi director james comey, who delta trump a stinging tweet by tweet rebuke before the house intelligence committee. he confirmed that russia's interference in the presidential election is being investigated, and said there is no evidence to back the president's charge his predecessor had wiretaps in. finally, "daybreak" focuses in on the fed. charles evans said the fed could raise interest rates up to four times this year, adding that he backed two or three and that markets will be able to cope with normalization. we will hear from other fed speakers today, including vice chairma -- including the vice chairman. matt: on the bloomberg, you can always get a list, a schedule of

said speakers. it's a function that i get back to more and more. returning to one of our top stories today, the white house was dealt another political blow yesterday. fromt just mentioned it, fbi director james comey and the head of the nsa, michael rodgers. both officials testified in front of the house intelligence committee. fbi isonfirmed that the investigating russian interference in the presidential election, as well as possible links between russia and the trump campaign. he also rejected the president's claimed that barack obama had ordered a wiretap on trump tower. >> i have been authorized by the department of justice to confirm that the fbi, as part of our counterintelligence mission, is investigating the russian government's efforts to interfere in the 2016 presidential election, and that includes investigating the nature of any links between individuals associated with the

trump campaign and the russian government and whether there was any coordination between the campaign and russia's efforts. with respect to the president's tweets about alleged wiretapping directed at him by the prior administration, i have no information that supports those tweets, and we have looked carefully inside the fbi. the department of justice has asked me to share with you that the answer is thae same for all its components. the department has no information at support those tweets. matt: rodgers also weighed in on trump' wiretap charges from the nsa's perspective. >> i have seen nothing on the nsa side that we engaged in any activity, nor that anyone in .asked us . matt: bnp paribas's daniel morris is still with us. daniel, does this deal the trump administration a harsh blow at a difficult time, in terms of the

political capital that donald trump has on capitol hill? i think what investors are thinking about, or at least what we have seen reflected up till now, is much more what the republican party agenda is as opposed to president trump. lens,look at it from that this doesn't necessarily have an impact on what the republicans will try to pass in terms of their own legislation. right now with his health care and they will look at corporate tax reform and someone. i don't think that will be affected by this and that is what the priority is. anna: is the biggest risk in terms of investing in the u.s. growth story right now? is the biggest risk that trump doesn't manage to get through some of the things he promised, that he pledged some of the things that reignited animal spirits? if so, which of those that the republicans won't back him on? >> i think it comes down to what the republican party platform, which of those things he likes. certainly that is true about health care and tax reform,

infrastructure spending, and so on. i think it's an expectation that the republicans half, that it gets through both houses and congress so trump can sign it. what wefails, clearly have seen so far is a risk of falling back. the key test now is what's happening with health care. its controversial, and other things will be controversial. are they able to impose discipline on those that aren't completely content with it? to the g 20, or and in munich for the security conference, i talked to other ministers and they always say they care more about what the congress and the white house do together more than donald trump's tweets. how important are his tweets on a day-to-day investing basis? do you have a feed of donald trumps twitter? >> it is certainly something one

cannot ignore. but if you think about the executive orders and the tweets, there is a parallel between what he has done since his election and what happened with obama during his administration. obama also use a lot of executive orders, that in the end it didn't have much impact.. it's legislation and the budget that has to go through congress. the tweets can have an impact on the market but over the longer term, if we look at the trajectory, it is not the primary thing -- it's legislation. anna: and wonder if the fed has a feed of trump's tweets. they are trying to work out where u.s. policy goes. maybe they rely on the bloomberg for that. let's spin this forward into a conversation about the fed. minneapolis president, the sole dissenter when the fomc raise rates, defended his dovish stance. he argued he would be surprised if core inflation reached 2% this year, and said policymakers

should only pay attention to markets if they were likely to cause financial instability. speaking to bloomberg, he said that there is no rush to hike. >> i look at us as repeating the same mistakes over and over again, because implicitly i think we are behaving as though 2% is a ceiling rather than a target. i hoping to remind my colleagues, let's take a step back, not the people same errors. when the data calls for it, we should remove accommodations. anna: meanwhile, chicago fed president charles evans is projecting several hikes. it has improved noticeably since the fomc took the first rate increase back in december of 2015. an important fact that helps explain why my dual mandate outlook can support two or three rate increases in 2017. anna: bnp paribas senior investment strategist daniel

morris is still with us. when you listen to kashkari, no need to rush -- charles saying there could be three or four. a lot depends on what donald trump manages to deliver on, and what impact it has on inflation. >> the assumption is that the fed did not raise it at the meeting, and people are not taking into account any kind of stimulus from trump, because we don't know enough about it to factor in the implications. we have three hikes projected with no stimulus. we nonetheless expect to get something out of the administration. that would arguably support more hikes, and so on. it will come down to how much the stimulus is, and the composition. is it funded by more treasury issuance, or is it promotes growth, you don't necessarily hide the higher check to. anna: we will continue to watch that. matt, i called up said go -- i called up fed go, one of your

favorite functions. matt: you can also call up boj go, ecb go. we have a function for each of the central banks. they are incredibly informative. one of the things i wonder about the situation in the u.s., daniel, is the trajectory of fed policy right now, clearly up the matter how you see it, whether dovish or hawkish. investors seem to take that in a positive way. even equity investors, whereas traditionally, when the fed starts to raise rates, that is when you see the end of the markets. does that concern you? >> you are generally right, it is usually negative. but i think you need to separate with the driver is for that hike, if it is because it needs to bring down inflation, as was the case with 20 or 30 years ago, not a problem today. when they are hiking because growth is good, that is ultimately for equities.

we know we are getting three hikes and i think the market can accept that, because we are normalizing. scenario where it will be bad for equities is it will get a very inflationary stimulus package from the administration, and anticipating the fed will move against it to keep the economy growing. anna: is that something that drives volatility into the markets? i have pulled up here treasuries, a lack of volatility. a lack of volatility in treasuries, upper assets, whether it is equities are assets -- what does volatility -- what brings volatility back into this market? >> i think it will come back, ultimately, to the corporate tax reform package. there's a lot of variables, big numbers, minimum of $1 trillion. isig range, all of that going to bring volatility back into both equities and treasury markets.

we do anticipate it will go up. anna: daniel, thank you so much. daniel morris, b.n.p. paribas senior investment strategist. remember, if you are a bloomberg customer, you can watch the show and follow all the charts in the functions and reach out to the show directly by clicking on the send id to show producers. and if you make a special request, we will forward it on. matt: you can be a part of the conversation, which i think is the most interesting point of that function on tv . up next, the longest winning streak since august. we will focus on emerging markets' continuing rally. what's driving it? this is bloomberg. ♪

matt: it is 7:47 a.m. here in

brussels, belgium. the capital, the heart of europe. let's get to the bloomberg business flash with juliette saly. juliette: matt, thank you. ppg industries is a did preparing a renewed takeover bid, according to people familiar with the matter. it rebuffed its initial takeover bid earlier this month, saying the offer substantially undervalued the company. pbg said at the time it would carefully evaluate its position. spokesman declined to comment. softbank is said to invest $300 million in a new york-based giant. according to a person familiar with the matter, the investment is the first in what will probably be a much larger stake. with the new money, the valuation increases to about $18 billion, according to an estimate buy a private stock market investor.

about the pace of fed rate rises continues with chicago president charles evans seeing up to three more hikes this year. however his minneapolis colleague says there is no need to rush. he says there is no imminent high inflation stress, which means the central bank can afford to be patient. he was the sole dissenter when the fomc raised rates last week. >> i look at us as are peter the same mistakes over and over again, because implicitly, i think we are behaving as though 2% is a ceiling rather than a target. i hoping to remind my colleagues, let's take a step back, not repeat the same errors. with the data really calls for it, then we should remove accommodations. juliette: omega advisors founder leo cooperman faces a lawsuit brought by the fec, alleging that the billionaire investor received more than $4 million in illegal profits. a u.s. district judge in

philadelphia said the agency had advanced an "plausible claim." fec spokeswoman declined to comment on the decision. that is your bloomberg business flash. anna: juliette, thank you. juliette saly in hong kong. we started of the program talking about emerging markets. haveing-market stocks extended their longest winning streak since august, with one index up for an eighth straight day. the what would two or three fed hikes this year mean for em currencies? speaking to bloomberg, indonesia's finance minister says she doesn't fear a repeat of the taper tantrum. >> it is different from 2013, where the taper tantrum actually happened. they gave it quite clearly. matt: let's get more with bloomberg's tracy alloway,

standing by in abu dhabi. tracy, what has been happening on the emerging-market front this past couple weeks that has driven this move? tracy: sure. there are two things. the first has to be that the fed is perceived to be hiking into a period of stronger u.s. economic growth, and that would bode well for emerging market economies. the second thing is the kind of interesting action we have seen the dollar. even though we have the fed tightening policy, we have seen some softness in the dollar, and that is a good thing for emerging market economies, many of which rely on exports. you can question whether or not that dollar softness is going to continue, but in the meantime, you have a very good mix of trends for emi assets. over the past week or so, we have seen the msci emerging market index now 13% above its five-year average. we have seen currencies rally quite strongly, led by the south african rand and mexican peso. and interestingly, we have seen

emerging market credit continue to be one of the big success stories, and that is despite the fact that we had record ian issuance before the fed raise rates. -- record em issuance before the fed raised rates. d.c. the continuing demand for emerging-market assets. anna: continuous demand, tracy, how are people reacting to this? has many investors been caught off guard by the strength of appetite for emerging market assets at a time when the fed is hiking rates? tracy: i'm glad you asked. remember, the narrative around emerging-market assets a few months ago was that they were supposed to suffer, not just because the fed was tightening rates, but because we had donald trump becoming president, and with him comes potential protectionist trade policies. now fast-forward and it seems like e.m. assets are the big success story of the year. should people have been that

surprised? our colleague pointed out that the last time we had a really big em rally was during the fed hiking cycle, between 2003 and 2007. you remember that hiking cycle also coincided with a softer dollar and loser financial conditions, and that seems to be what is happening right now. of course, that is helping emerging-market assets once again. as to whether some people were caught offguard, it's definitely true. i saw jpmorgan fixed income analysts saying they went under weight on e.m. bonds just after trump won the election, and now they issued a mea culpa. certainly, some people caught off guard, yes. matt: tracy, nonetheless, you bring up a good point. loomis is also saying there's a 50-50 chance that trump started to trade war, starts in acting protectionist measures, their biggest concern is china.

how much of a threat is that to the emerging markets rally? tracy: well, this is the big question, right? people are still trying to figure out how or to what degree trump's protectionist trade policies will effect emerging markets. one thing that has been playing into the yen rally, aside from the dovish height, has got to be some doubts about whether or not trump will push through those measures, given the difficulty we have seen on items such as u.s. health care reform, the travel ban. there are some doubts, and maybe those are picking up pace. but overall, the two big trends have to be macro policy in the form of the fed and the u.s. dollar. anna: thank you very much.tracy alloway in that will dobby . -- in abu dhabi. let's talk with daniel morris, still with us on set. when you hear everything we have been saying about emerging markets, we start of the program talking about this chart,

showing the inflows into the largest tracking of msci e.m. what does this tell you about appetite for e.m.? are you excited? >> well, i think part of it is, what are your alternatives? if you expect interest rates to go up, maybe i don't have the allocation before, right now u.s. equities are probably a bit late, so em starts looking good. it's just a rotation we would expect to see as investors come out a fixed income. secondarily, the weakness in the dollar is crucial. if you have a medium-term perspective, em assets look attractive from valuations,, earnings growth. you are less worried about the dollar for now. we will see how long it persists. matt: why only a medium-term perspective? over the long-term, don't you see real growth opportunity and a lot of emerging markets? >> indeed. right now, if you anticipate

what your expected return is going to be, you are right, it is higher. and it is notable that you have had significant underperformance since around 2008, 2009. that is several years of underperformance, but we still need a few other places to come into place -- a few other pieces to come to place. anna: interesting to think e.m. performs as one amorphous bloc. i did criticize on that, and that is fair enough. this is russian stock. they had their worst outflow since 2013. here,is an oil dynamic in perhaps the geopolitics -- quite a bit of excitement since trump was elected about the possibility for russian assets. things have changed. >> this probably highlights one of the things we need to make. in general it is more commodity

dependent, so you think em asia will outperform, i think it comes down to commodities. on one hand you have to be more cautious on countries like russia because of the weakness in oil and whether you think it will rebound, because opec is going to be able to keep it in place. for is the strengthen the dollar going to weigh on it? anna: do you think the oil price is healthier? >> we're more constructive on oil. if you look at the supply-side, opec is able to maintain this. more importantly it is on the demand side if you look at global manufacturing pmi, it's a pretty dramatic upswing. anna: not too worried about the count. thank you so much for spending time with us this morning. bnp paribas investment strategist, daniel morris. 7:56 in brussels. up next, the top five french presidential candidates engage in a three and a half hour, heated debate.

we will look at what the french election means for investors. we will look at some of the instant polling about who came out on top, and talk about what it does for investment strategy and eu assets. this is bloomberg. ♪

anna: locking horns in the presidential election. theresa may sets the divorce date. the eu takes control by leaving the prime minister waiting. we followed european finance ministers to brussels. over in big shadow week for donald. fbi director comey confirms he is direct -- investigating russian interference in the election. the wiretapping charge is false.

a very warm welcome to "bloomberg daybreak" i am anna edwards. matt: and i'm matt miller. here in brussels. today we have e-gov in -- ecofin wheelie the visit of shinzo abe. anna: let's have a look at where we go on the equity markets. if, we pretty mixed at the start of the day. this can make a slave moved to the upside. bag at the start of the trading day. we talk a lot about emerging markets in the last hour. emerging markets index up for the cycle underway. a slightly more positive trend in asia but japanese market closed yesterday.

the bloomberg dollar index, study after four days have dropped for the dollar. janet yellen later on this week. the euro is stronger by .3%. the blog that has been flirting with the one awaits level could be a strong performance. could that be something that sends the euro higher? near $48 a burial -- barrel. here's julia starling comey, a james stinging rebuke during the opening statements. investigating russia's interference in the presidential election and whether any of

trump associate collaborate with vendor pollutants government. making clear that trumps claims that obama had wiretapped him were false. union has signaled its intention to keep the u.k. waiting before engaging in brexit negotiations. leaders insisted there fully prepared for the talks but cancel provisional plans to hold a summit on april 6 to agree on the outlines of their negotiating position. he indicated that made an announcement that she will invoke article 50 on march 29 comes to light. arrange for early april or may. martin mcguinness has died, retired from politics in january after being taken ill with a rare heart conditions. following the 1998 good friday agreement, he became deputy first minister in 2007, that

alongside democratic unionist parlayed leaders -- party leaders. south korea's former leader has while to incorporate appearing for questioning for the first time of the corruption scandal that ended her presidency. facing hours of grilling five closed doors. she pressured executives to donate millions of dollars in return for government favors. she denies any wrongdoing. david rockefeller, u.s. bancorp paul clement is from a presidential advisor and air to one of history's most people fortunes has died at the age of 101. he was the youngest and last dividing grandson of standard oil powder john rockefeller. it was the only one of the fact -- the five sons be spent his time in the corporate world.

global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . japan coming back online. it has been another good session for asian markets. particularly those emerging markets and the shares in hong kong rising to the highest levels led by property developers since october 2015. a near six-year high on its closer of 1%. since the fed raise interest rates a lot of these coming into the south korean market which helped boost the cost. in terms of stocks, a lot of socks in focus. group shares rising, the merger of the most a year. management is making a play.

a record high. an interesting story, the serving that the business trying to diversify a slowdown in australia making 1.2 6 billion aussie dollar cleaning services company, 10% rising after a down day in hong kong. it is releasing its earnings tomorrow. it has been a good run for hong kong. have a look at this chart. the correlation among hong kong stocks traded on the hang seng. that we couldting actually say a lot of these companies result spur things rather than external factors. you're seeing that trend in terms of correlation on the three-month. matt: arava headlines and the

markets. the top five contenders in the french presidential let race took to the stage the first debates. front-runners marine le pen and emmanuel rock home -- from lock arms. lock horns. >> the best way to send anonymous single that says -- signal is that we cannot welcome you is to cut off immigration, medical care, access to social housing, very persistent subsidies and so on. intoe trap you are falling is your provocation is to divided society. to make the french people whose religion is islam and the great majority who are not but live in the republic, enemies of the republic. >> the french policy when it

to the islamic state is not a success. it is a failure. seen --crone was joining us now on daybreak cio will diminish assets management. let's talk about how this ongoing tension around french election plays in in europe. .his is the spread does this get narrower? more likely tond win the election. >> it is an early assumption. i still think there is a likelihood that she went the

first round. i'm not as sure how global markets are of that. polls have what the said and it does not tell us she will win the second round. that very well understood in europe and france. that could still cause tension in markets. >> that is exactly what i think and that election is a bit of a crowd -- cloud. the economic momentum in europe is very strong. towardsome movement monetary policy. these suggestions that he may .ven raise rates quite an interesting one. a bit more strength in the euro perhaps. all these things are very positive. is there an opportunity year for an investor to get in

?arly and place bets as is were risk that things might go cheaper before the french election if anything happens. it is good to see that my promise starting to the the pack -- lacrombe is starting to lead the press -- the pack. matt: if you have low risk adversity, if you are willing -- if you are a gambling man. i think it is interesting that we talk about the asymmetric risk of this event. it is unlikely that she wins. if he does it would be horribly detrimental to the portfolio. on the other hand after the brexit vote it took three days to recover after the trump vote.

after the italian but it's took three minutes. markets are so resilient. can't you see that is the case? manus: a possibility for that but i think that would be quite a blow to the european union to the very concept of the european union. it would be taken quite negatively by markets who are not entirely sure about the solidity of the european union after brexit. hand, i think that might just be relatively short-term. without a parliamentary majority there is not much that he can do. at the moment it looks very much as if she won't get beyond the first round. high barre's quite a

about the referendum in france. wash a lot ofto hurdles being crossed. touming in the euro lives on fight another day, what do you expect? you expect them to do? this is a big change in the rhetoric. >> i think the ecb has a problem around inflation. inflation in germany is at the high that it has been for a long time and arguably along the wrong does the long-term running average. if you manage to push it up a little bit you can help alleviate those rushers ultimate. makes it difficult to

export the u.k. of the pound is falling. that's a sidebar concern. >> i think the export industries , obviously german industries would not be happy about that. ecb can never keep everyone happy. anna: thank you. matt: we will talk about the the i who told the u.s. lawmakers isterday that the bureau investigating russia's involvement in the 2016 presidential election. kurt her, help him, i think all three we are confident in as early as december. also saying the fbi was looking into links between the truck campaign and russia area is this another political blow

for president trump? we will discuss that next. this is bloomberg. ♪

anna: welcome back everybody this is "bloomberg daybreak" we find matt miller brussels, pretty sunny out there. tomorrow there is more rain. let's get the bloomberg business flash with juliette. juliette: ppg industries preparing -- according to people familiar with the matter, they rebuffed the bee gees unsolicited takeover bid earlier this month saying the offer substantially undervalued the company. pbg said at the time it would carefully evaluate position. $300 million in --

investment from softbank is the first in what will probably be a much larger stick. to $18 billion according to an estimate by private stock market providers. a lawsuit brought by the u.s. securities exchange commission. profit -- in illegal illegal profits. advanced four claims insider trading. going to trial to prove he is innocent and declines to comment further. a spokeswoman declines to, on the decision. that is your bloomberg business flash. matt: thanks for a much. returning to one of these top stories.

the white house dealt another political blow from the fbi director james comey and the head of the nsa. both officials testified in front of the house intelligence committee. comey confirmed that the fbi is investigating russian interference into the presidential election as well as possible links between the russians and the truck campaign. he also rejected the claim that he was tapped by president obama. authorized byen the department of justice to confirm the fbi as art of our cover intelligence mission is investigating the russian government efforts to interfere in the 2016 presidential election. includes investigating the nature of any links to the individuals associated with the trump campaign and the russian government and whether there was any coordination between the campaign and russia's efforts. aboutespect to the tweets wiretapping directed him by the

administration i have no information that supports those. we have looked carefully inside the fbi. the department of justice has asked for me to share with you that the answer is the same for the department of justice in all of its components. the department has no information that supports those. michael rogers also weighing in on the wiretap charges. >> i've seen nothing of the nsa side. anna: let's talk about what this does to the political capital. still with us here on set in london. when you look at the challenges we are talking about with the trump residency in the investigation, how much this is their disability to get through other policy matters that he wants to address? that is what investors are watching for.

>> i don't think it actually damages for much of the public estimation. the electorate will not believe what they heard him i think it will have an impact on capitol hill. congress is going to watch this. approval rating is 38% -- 37%. that is lower than any of obama's years in power. the collector it is not believe what they hear on the news. they believe in his tweets and whatever he says. it might have an impact on what he can achieve through congress. this is where it will be very interesting to watch how scared are the republicans of that midterm election of next year? how much are they going to rally behind him? how able is he to get anything done? anna: a perpetual state of

election readiness. matt: i'm wondering what you think of his chances. what is most important to you as an investor? that we get a tax cut? that we get deregulation? how do you order those things? vision first. what capitol hill intensely around the health got barrel. if you can get that going that will be an indication that you can actually get deregulation going which seems to be the main a driver between the high and estimates in the business. that seems to be quite important. the u.s. economy is already running at quite a high speed. if you did get through with a lot of that we might see more rate prices then we are currently.

something overheating u.s. economies that -- matt: how important is it that the u.s. worked with the rest of the world? global trade, the germans and the chinese just now were incredibly concerned about this. they running massive surpluses while the u.s. runs a massive trade deficit. >> important that we continue to have free global trade as we have. first and foremost, president trump wants to further the u.s. economy. the downturn in global trade, not good for the u.s.. enough intelligent people around him with economic backgrounds will tell him as much. there is quite a lot of rhetoric .

reality will look a little different just as we are now seeing in politics in the u.s.. anna: everybody trying to work out what he will get through. me, --n what they told he argued that he would be surprised at four inflation policy makersnd should only pay attention to markets if they were likely to cause financial and ability. he said there is no rush to hike. i look at us repeating the same mistakes over and over because implicitly we are behaving as the 2% of the ceiling rather than a target. when the data really calls for it, we should remove accommodations. chicago president evans projecting several heights.

>> i would say the letter policymaking it has improved noticeably since they took the first rate increase back in december 2015. fact helpsimportant explain why my dual mandate outlook can allow rate increases in 2017. what does all this mean for fed policy? interest rates below, you are not sure they will be able to get to more done in 2017. why? a suren't think it is bet because we have to watch the u.s. economy quite carefully. there seems to be rolling over recently. stresses all the time, things are not data dependence. if trump gets through more than we currently think. they may have to raise even more than two times.

seeslow movement that we and some things in the u.s. economy, maybe less. is the biggest risk for u.s. assets right now. now counting on through congress. i'm not sure that is the biggest risk. on the back of strong u.s. economic momentum i don't really believe there is that much trump in the current evaluation should be less at risk. china was really what drove last year's recovery. a big stimulus and that is clearly coming back. timing in china, the one i watch more than what trump will be doing in the short term. anna: thinks for joining us. matt: that is it for "bloomberg

daybreak" bloomberg markets, the european open is up next. we will discuss the meetings just about to kick off. this is bloomberg.

♪ guy: good morning. i'm alongside matt miller in brussels, what are we watching recent history makes investors cautious. in 2% for the first time more than three years.