the rome treaty. here you see your trading at 1.07. it has been around 1.08. it is only down 2% versus the dollar from november 8 when donald trump was elected. it has recovered quite a bit. guy: let's talk about this market open. i've taken it back a little bit, this chart. this shows you the move lower, the rise subsequent to that. up here you've got the cac 40 and the german market. the swiss market there as well. how are we opening this morning? we are expecting really no clear sense of direction. the cac 40 barely budging. market makers don't want to give this market and a sense of direction at all. the cac 40 still trading north of 5000 but you are not seeing an awful lot of action. where you are seeing some action is in the economic data. we are some french pmi data coming through, which matt

miller is going to bring you any second now. you useke a look at -- the eco-screen. in any case, we get to the same point. services pmi, 58 point five, ahead of the expectation of 56.1. the manufacturing pmi of 53.4 also better than the estimate of 52.4. point six.te, 57 the market was looking for 55.8. while he got some softer gdp data, we get some stronger pmi data. we were talking about the ecb watching all of that together. producers,a, those manufacturing index rising. guy: in asian trading, the euro went down. it is now beginning to spike back up. not a huge move, but we are

seeing the return as we get more liquidity into the london time zone. let's figure out what else is going on. there's plenty to talk about, nejra cehic. there is indeed. i'm starting with the gilt market open. we've seen the 10-year treasury yield up one basis point. we've seen a little bit of sterling weakness. some are attributing it to those comments. as we look at the guild yield, 1.24%. we are higher by some two basis points. 1.25%.dging towards in terms of the equity market open, we're not seeing a huge move in terms of the benchmark. but it is not following the optimism that we have been seeing in asia and with s&p 500 futures pointing higher as well, the big question is, was that positivity in asia misplaced because there's so much uncertainty on this vote over

the health care bill in the u.s. energy underperforming, down 0.4%. we seeing given that oil gain a little bit today. brent holding above $50 a barrel. overall seeing more industry groups down then up but materials outperforming. i want to show you this chart. 7084. analysts at societe generale saying that while the upside in the s&p 500 might seem limited, europe's improving outlook coupled with a drop in uncertainty after the french presidential election should make european stocks strongly appealing. this shows the gap between the u.s. and european price-to-book ratios. perhaps some potential for catch-up. 7086, a lot of focus on credit suisse today. i wanted to show you this chart to do with banks.

what this is really showing is the gap in the price to tangible book value. opportunityovide an in europe? guy: thank you very much indeed. let's do the mov screen. is's figure out what happening here. i know matt is getting excited. so you explain something to me yesterday. the market is going down. the losers are on the left-hand side of the screen. novo nordisk is leading the laggards. nestle and total also down. the oil stocks are softening up. you've got novo, novartis, trading down. sanofi in the mix as well. banks are bid this morning. look at credit suisse. i'm going to shifted over. where will move it on. there are the gainers.

matt: that is very interesting. guy: we are rotating that. if you believe you are in a risk on environment, you buy the banks, you've got barclays, credit suisse, hsbc all trading higher, miners higher as well. the fact that see is trading up is an indicator. matt: absolutely. it lowered its capital buffer because of a settlement and as it boosted bonuses, certainly something bankers are watching. the u.s. health care bill is coming down to a high-stakes gamble with president trump sending it to a vote a day later than expected without knowing for sure he has enough support to pass it. the whole thing is being watched closely by investors because it is seen as a gauge on his mandate on his power in congress. joining us is yogesh dewan as well as mark cudmore in singapore.

how important is this health care bill passage to the trump rally? yogesh: i think it is very important. it is a stepping stone for what could happen with other policies and promises that were made. the market is watching carefully. the markets need to take a breather in the u.s. they are up 5.5% year-to-date. valuations around 18.5 on a forward-looking basis. we would like to see what happens with this particular vote. guy: mark, are we overthinking it? in some ways, the trump administration is playing an interesting poker game. get on board or move on. does it matter either way? move on, gett to this done, and move on to tax strategy. mark: great question.

i think the market does want to move on and part of the confusion is that a couple weeks ago, no one cared about the health care bill. they had to get that out of the way but it wasn't seen as a big issue. suddenly it is a big focus. suddenly the markets become very focused on it. now they are confused. is it going to pass? does it really matter? we do need to get beyond it just for the clarity, not even for whether it passes or not. matt: yogi, is the tax legislation much more important and is it negatively affected if this health care legislation failed? negatively it is affected because it has a massive impact on sentiment. reform -- of course they are. growth has to be financed. it is not a freebie. it is usually financed through

fiscal spending and bank lending. spend lotsanning to and lots of money. you've got gdp growth at 1.6%. expectations are that gdp growth will go higher. markets should go higher. it is a big event. we need to stay focused on it. guy: mark, we've got one week to go until the end of the month. talk to me about positioning. how are people set up? you alluded to something early on, talked about rightly or wrongly. talk to me about some of the other factors. mark: as yogi said, the market has come a long way. interesting you mentioned month end. more important is quarter end. what you're going to see, it has been a good quarter for equities so you are going to see some rebalancing into bonds. on the other hand, you might see some dollar buying. that is going to start becoming an element next week.

wayree with yogi, either equities need to take a breather. it might be after early friday if the bill passes or it might be today if the bill fails. or it might be stalled again. believe thato you investors are going to take it as a really bad sign if this bill fails? mark: i think they will. it might be subtle in how they take it. i think the initial reaction will be quite negative. it is a real credibility blow to the administration and it undermines their ability to get other policy through. i think there will be an initial poor reaction and then people will go, this wasn't that important. the longer-term element is a negative. it continues to undermine the new administration and does make it harder for policy to come through. i think this is a real problem

for expectations around growth this year but not for the global economy. guy: yogi, we just talked about the dollar and the month it has had. we're focused very much on equities. how much of what we're seeing in the dollar is down to the story on capitol hill? yogesh: what is going on with the dollar is very important. the market has been trading around expectations. the dollar is ridiculously overvalued versus the yen, the euro, and sterling as well. our view is that the dollar will be volatile short-term but longer-term, it has to we can. it doesn't make sense to be at these sorts of levels. matt: don't you think it is more about central-bank policy? >> yes it is. interestt will impact rate hike expectations. we got three hikes pretty much on the table. expectsensus view is we to rate hikes.

we think that is more realistic. certainly more likely with what interest rate futures are pricing in. from our perspective, the dollar should not be at these levels. it is more down to interest rate expectations. but the two are definitely linked. if the dollar weakens, this is good for global growth. it is good for commodities. we're growing above sub trend. growth,alk about global you've got the u.s. at 1.6, europe at 1.8, the u.k. at 1.8, china at 6.7, india at 7.9% gdp growth. the world is growing at a much better level than we've seen in the past five years. guy: as paul dobson says on the mliv function, he says judging therese french pmi's, could be a serious upswing in the european data which could be something we haven't factored in yet. mark cudmore, thank you very

much indeed. have a great weekend. the mliv is a fantastic function on your bloomberg. e ability to get smart analysis, take yourself clever throughout the day. matt: great way to start your day. guy: yogi is going to stick around. we got plenty more. we're going to talk about credit suisse. could it ditch its swiss ipo? we're going to bring you that story. plus the latest on the race for the french presidency. a busy morning. fascinating morning. this is bloomberg. ♪

welcome back to the european market open. i am matt miller in london alongside guy johnson. want to check on the markets and how they are doing. we see only nine out of the 12 industry groups on the stoxx 600 down -- i should say only three gaining. nine are down. there's not a lot of movement because the market is waiting for the u.s. congress to vote on president trump's health-care overhaul. they see that as an indicator as to his strength in future and possibly more important for the

market issues like tax reform, deregulation, infrastructure spending. right now we don't see a lot of movement although the arrows are red. guy: lots to think about. maybe these markets are due for a correction. what is happening in the mid markets? here's the mid-cap movers with nejra cehic. nejra: quite a lot of news across the mid caps. we've seen quite a few stories. i'm starting with smith's, up 3.7% at the open. first half revenue beating estimates. 31%.ted pretax up it does see sterling depreciation to give a tailwind to revenue and operating profit. performance expected to be slightly weighted to the second half. the outlook for 2017 30 much unchanged. we are seeing the stock rise. it is one of the better performers on the stoxx 600. then looking to buy a test.

this is expected to have more of a downside, still down almost 5%. basically this is to do about a decision about late stage company development and it won't exercise a late stage option for the u.s. perhaps a barrier, a stumbling block for this drugmaker, which is why we are seeing the stock lower. more than declining expected. this is a holdings company. it seems to be moving on some numbers we've had today. indeed.nk you very much let's talk about some of the macro data. french, we're going to get german. let me show you a chart which i think is interesting and good shape some thinking. eurozone pmi, germany in yellow, france in blue, composite

numbers, france 57.6, some really solid data being posted. want is still with us. are we still underestimating europe? yogesh: i think we are. european valuations look far more reasonable than the u.s.. you've got good gdp growth now in europe at 1.8 -- matt: even with the disappointing number in france? yogesh: i think a lot of the french number is more to do with the elections. you've got strong pmi data, a weaker euro which will benefit and earnings going forward, and the elections will be over may 7. will be behind us. everyone will start to focus on brexit negotiations. the focus has to be on earnings. the economic environment in germany and france is looking quite reasonable bearing in mind such a weak euro. matt: you consider the

continental economic strength to be positive even for ftse stocks amidst brexit negotiations? yogesh: i think there's a negative sentiment that we have to take into account. but fundamentally, we are so focused at the moment on brexit talk and brexit negotiation, we are forgetting to think about the domestic economy. we need to focus on the u.k. improving,yment is gdp growth is looking reasonable, and earnings numbers look good, and we have a much weaker sterling in a fitting earnings going forward. brexit, in our view, is noise. the whole world has been able to trade and put agreements together for decades with a huge amount of success. we don't think it is something to focus on at the moment. guy: is the decent data down to two things, one, the u.k. consumer civility to continue

sterlingw,nd t which has come down a long way? yogesh: we don't see banks doing huge amounts of lending. there's not always had access to capital in the ways some of europe is now having. certainly on your second point, absolutely. the weaker sterling is great news for corporate profits and the domestic economy. the problem we've got when we look at the ftse 100 is that most of its constituents are quite international in nature. you're not really getting a good gauge of what is going on domestically. they are big, large cap companies, where most of their revenue streams seem to be coming from the u.s. guy: before we tease what we're going to talk about next, this performance of

the european markets. nice little panel here. year-to-date, the ftse is up 2.7% in local currency. the cac is up over 3%. is up 5%. london is underperforming. yogesh: it is underperforming and that will be sentiment around brexit and brexit negotiations. a lot of corporations are putting off big investment decisions in the u.k. because of brexit. guy: plenty more still to discuss. he's going to carry on the conversation with matt and i. credit suisse could ditch it swiss ipo in favor of a share sale. we bring you that exclusive bloomberg story. this is the open. this is bloomberg. ♪

welcome back to "bloomberg markets: european open." i'm matt miller in london. want to bring you an exclusive bloomberg story. credit suisse considering selling more than $3 billion worth of stock as an alternative to raising capital through listing part of its swiss unit. let's take to our managing editor for finance and investing, elisa martinuzzi. dewan.hat this is yogesh first off, let's get the details of this. you are going to ipo there swiss

unit. now they are thinking, after deutsche bank raised money, we can do the same thing. elisa: conditions have changed. when they set out this plan, it was a year-and-a-half ago. then, the capital buildup has been perhaps stronger than they would have anticipated. the shares have been holding off. this option is now realistic. it would not have been on the table maybe 18 months ago. guy: let's talk about bonuses. i thought he wanted to cut costs. please tell me what he's doing. elisa: he's pointing to their having been significant attrition first quarter of last year where they were paid the price of not rewarding their staff significantly. we have seen senior departures which they filled again, but this is what he's trying to avoid, losing his key people. you also need to retain revenue. matt: yogi, what do you think?

we've seen bonuses cut at other banks pretty much across the board until now credit suisse is raising them. does that mean they are able to attract better talent? yogesh: not necessarily. i'm not a big buyer of raising keep staff. they've raised bonuses by a low rate anyway. staff,em to be losing then hiring staff, then losing staff. they are managing the cost component rather than focusing on generating revenues. if you can grow revenues, you will attract good people and then everything plays out accordingly. they are dependent on interest rate hikes, again. higher interest rates means more lending, more revenues. guy: we will wrap it up there. elisa martinuzzi, great

reporting. thank you for joining us. stayh dewan is going to with us. still time to buy the peso. the mexican central bank governor think so. this is bloomberg. ♪ the biggest week in tv is back.

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something for everyone is awesome. find your awesome with the xfinity stream app. more to stream to every screen. matt: take it or leave it. the trump administration piles pressure on republicans to back his health care reform. the vote is expected today. is it too close to call? and credit suisse is sent to weigh eight $3 billion capital raise rather than listing part of its swiss unit to raise money. crude control. opec and non-opec producers meet in kuwait as record u.s. stockpiles counter the cartel's efforts to drain a global surplus, but can shale really be tamed? good morning and welcome to "bloomberg markets: european open." matt miller alongside guy

johnson at bloomberg european headquarters in london. guy: let's quickly show you what equities are doing. what we're looking at is a pop in euro-dollar, which has turned positive. that is happening on the equity markets. we are going somewhere on the euro, which has just gone into positive territory. i take you to my bloomberg. not my bloomberg. but it is an amazing number from germany. matt, this is your bailey rig. there is a pmi for manufacturing at 58.3, the services number. number -- but that 58.3, that is a solid number. matt: you know what the trump administration would say here. guy: except that the french have the same thing. matt: and they've got a big manufacturing base as well but

not nearly as big as germany. interesting to see that big expansion. it counters as yogi said the disappointing french gdp number we got this morning. guy: what does that tell you? yogesh: great number, very positive for europe. we can't help but think there will be massive outflows from the u.s. into europe. the markets are looking for this. matt: you think that people need to be buying european stocks right now because you think u.s. stocks are overpriced. yogesh: look at forward-looking in the u.s., in europe, maybe up to 15 -- these are great numbers. the weaker euro is helping, but also we got a strong domestic story. the banks are doing ok despite all the news we've seen around credit suisse. guy: let's talk about one of the other factors. the mexican peso is undervalued and still has room to run.

that is according to the country's central bank governor who spoke to bloomberg from the sidelines of a banking conference. >> even the other fundamentals of the mexican economy, i think the peso is still undervalued. >> by how much? >> it depends on different models. >> the one you like, let's say. >> i look into several models at the same time. >> are we talking about 5%, 10%? 10% but stilln undervalued. guy: in some ways, the ultimate trump indicator, the mexican peso. it has been an amazing round-trip in so many ways. let's talk about emerging markets. you talked about the impact that you think and overvalued dollar is going to have. the emerging markets in some ways should be the play on this. yogesh: we like emerging markets. they are of around 12%

year-to-date. they have benefited from volatility in the u.s. dollar. it is the domestic story. we've also got above trend gdp growth that we are seeing in the emerging markets too. if you are of the view the u.s. dollar is going to weaken, the biggest beneficiary is emerging markets and global commodities. matt: so you need the fed to play along. yogesh: absolutely. do you think there will be three more rate hikes or two more rate hikes the rest of this year? any news flow that supports three rate hikes will support a more stable and stronger dollar. dollar, hikes, a weaker which will benefit emerging markets. everything is down to what happens with the u.s. dollar. guy: talking about tax policy in the united states, were the administration to support a border tax, the expectation is

that would be dollar positive. were that to happen, how much of a wrench would that throw in the e.m. story? yogesh: it would throw a wrench into the e.m. story. it depends on whether it will be a short-term or long-term reaction. i go back to the dollar is massively overvalued. if you look at euro-dollar, around 1.11, and ppp levels are at 1.33. we've obviously got a much weaker yen. you look at cable, exactly the same story. around 1.25. the dollar is sort of 15 to 20% overvalued. remaining to see it so overvalued and becoming even more overvalued unless that is driven by momentum or sentiment. traders, speculators, fast money. the fundamental story is supportive of a stable u.s.

dollar which will weaken gradually. matt: if you buy into the trump trade, the idea that trump is going to get tax reform through, deregulate, invest in infrastructure, then you have to believe the dollar will gain strength. yogesh: a lot really depends on what happens in the rest of the world too. we saw the financing operation numbers in europe with banks participating in essentially free money from the ecb. billionke was some 250 with almost 500 participants. it goes back to europe. banks are accessing capital. if they are now going to lend capital out, this is great news for growth. i said early on, growth has to be financed. perhaps it happens in europe. then you have a balancing act between the u.s. and europe.

europe is growing at a much lower pace. i suspect the prognosis for europe is better than the u.s. you will see that follow through with equity markets. guy: thank you very much indeed for spending so much time with us. yogi dewan joining us. that is the pdp story. w crs is the function you need for that. .et's plug in tv as you can see, this is the landing page. you can check out the video streams, bloomberg radio as well. you can access the functions we .re using during the program you can also i.b. the team directly. let us know whether we are doing a good job or not. there have been some curious developments in the french election fight. francois fillon claims he's been the subject of a plot while marine le pen has arrived in russia. this is bloomberg. ♪

matt: welcome back to the european market open. i'm matt miller in london with guy johnson. nejra cehic. nejra: i'm starting with credit suisse. we got the annual report today, the bank increasing its bonus pool, going against the trend of a lot of its peers. people with knowledge of the matter say it is considering a share sale to raise more than 3

billion francs. raising would come after credit suisse tapped shareholders for 6 billion francs as the overall got underway in late 2015. credit suisse up 1%. merck gaining after a treatment for skin cancer got fda approval. merck and pfizer planning to sell this drug for $13,000 a month. that price for the average patient is in line with other drugs in its class. of the best performers on the stoxx 600 today. one of the worst performance is bollore. it sits on that line between a mid-cap and a large cap. it is a holding company. we are seeing the share price move on that. out theffered to buy minority shareholders of its blue solutions unit for 17 euros

a share. we are hearing it is going to file that offer by the end of the first half. matt: thanks very much. let's get to the bloomberg first word news with sebastian salek. sebastian: house republican leaders expected to vote today on their health care bill. that is under pressure from donald trump's administration to act now. gop leaders approached the vote without knowing they have support to pass it. of what aed as a test trump white house can get done in the legislature. paul ryan spoke about the bill's chances. >> we have been promising the american people that we will repeal and replace this broken law the cause it is collapsing and failing families. the terror attack on london has claimed a fourth victim with police saying a 75-year-old man has died. thousands of people

gathered to remember those killed. cities around the world are showing solidarity with london, including berlin's brandenburg gate being lit up with the union flag and the eiffel tower in paris going dark. china's central bank has stepped up measures to cool the property market by asking banks in beijing to scrutinize home loans to newly divorced couples. divorced home buyers will now be considered second time purchasers. [indiscernible] france's presidential race took an inflammatory term last month. francois fillon accused president hollande of directing a covert operation to meddle with the investigation against him and helping spread damaging revelations. the republican nominee is being investigated for allegedly giving family members fictitious jobs paid with public money. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries.

this is bloomberg. sebastian, thanks very much indeed. let's stick with france. macrondent emmanuel leading in many of the polls. francois fillon arguing he's the subject of a socialist plot. marine le pen is taking another tack. the front national leader arrived in moscow a short time ago. caroline connan has the details. these are curious developments. if i was trying to get elected in france, why would i go to russia? this is a surprise visit. it is not the first time marine le pen does not. remember back in january when she went to the trump tower in new york. this time she is not planning to meet the russian president, vladimir putin, either, but she is currently meeting the speaker of the lower house of russia,

the state duma. she just said before her meeting with him the sanctions against russia were counterproductive. in the past, she called the sanctions against russia completely stupid. it is not the first time she's visited russia. loanot a 9 million euro backing 2014 to finance her party and the russian government is clearly not hiding its endorsement. you had the foreign minister comparing her to donald trump yesterday, saying they were not populists, but realists. about the runoff between fillon and macron? could fillon turn this around and get into the next round? caroline: this is interesting.

he was kind of playing his last card last night. he blamed francois hollande directly, accusing him of leaking some information to the media. francois hollande quickly fired back, saying these were lies and the state was not interfering with the justice system. we will see whether this is helping francois fillon to get some of his popularity back. guy: thank you very much indeed. interesting times in france. the polls continue to point to a tight race in terms of the second round. point, it is macron and le pen looking like they are heading in that direction. stranger things have happened. that is where the polls are at the moment. le pen and macron up here. as we've been discussing here at bloomberg, the plus and minus important in this factor.

let's carry on the conversation. let's go to brussels. -- carsten nickel joins us from there. almost half of the french population haven't made up their mind. are the polls useful in any shape or form? dataen: they are the one point so to speak of that we have. as you say, i think the huge amount of undecided voters, that is clearly something to watch. the other point is that basically the leading centrist candidate enters this race without a real party organization, without a real party base backing him up. the question is how much turnout can he organized in the first round and probably in the crucial second round. this is a huge amount of unknown factors. matt: we had a horrific attack in london a couple days ago. en's that play into le p

base at all or is this all about the economy? the whole question of let's say identity politics, security, sovereignty, national identity, these are issues on which these far right parties across the continent are thriving. ,he risk of a terrorist attack something along the lines of what we've seen in london, i think that is always something that we've had a very close eye on. why is marine le pen in moscow? i think it boils down to boosting her antiestablishment standing. that is something i think you see from a lot of candidates here. if you look at the way in which fillon is trying to defend himself against these -- youions surrounding see centrist parties really

moving to the fringes. that opens up space in the middle where macron is trying to win that election. i think that is the broader story. matt: is this macron's election to lose? would he be better served just to make fewer statements and be less visible until the runoff vote? carsten: difficult to say. from the beginning, he's made a mess of that and so far it has played out in his favor. he's taking a centrist line here. the center-right has been moving to the right by nominating field. he has been lucky that the centerleft has moved to the left. all this is playing out in his favor so far. whether this lasts until the second round, that is the one thing to watch of course. guy: if you were on that left and you were trying to figure

out what your tactics are, melenchon did very well in that first debate. how do i take advantage of that? carsten: i think for the centerleft it is becoming clear that this is a lost election basically. the question for voters is whether they throw their support behind macron or whether they wait until the second round. i think that is the lesson. guy: stay with us. carsten nickel, senior vice president at tenniel intelligence. up next, merkel's test. we've got weekend regional elections and what we learn ahead of the big vote later this year. this is bloomberg. ♪

guy: welcome. this is the marine le pen press conference that will be starting very shortly. we thought it was unscheduled amatrice to moscow, certainly catching a lot of attention. interesting to see how she plays this one later on. we will return to this on bloomberg. let's focus on germany. matt: politics front and center in germany as well. we will see an early test on the road. voters heading to the polls. chancellor angela merkel has

warned against opening the door ina left-leaning government a state her christian democratic government has governed for 18 years. the dominance is at risk regionally and nationwide as polls suggest the spd has caught up with the cdu after naming martin schulz to run against merkel. rsten, does the spd stand a chance at winning? carsten: it looks much closer than it did a couple weeks ago. ever since the nomination of martin schultz, the spd has been doing very well in the polls. there is a real chance that the spd overtakes the cdu. even if it doesn't, it comes close enough that it has the chance of forging a left of center government. i think that would send a strong

signal to voters across germany that the spd is serious about winning the bundestag elections. guy: tell me why i care about the german election. schultz wins, merkel wins, what is going to change? carsten: true, it is a valid question in a way. if you assume that schultz wins, then you are looking at somebody who is very well plugged in with the political debate in brussels. i think that is what matters from a market perspective. somebody who knows where the debate stance on greece, on russia, on brexit, and so on. case, we probably heading for another coalition. it is a question of who is taking over the chancellery. and the christian democrats are probably set for another coalition. schultz-trump a meeting look a lot different than a merkel-trump meeting? can you imagine a schultz-putin

meeting? does he have the gravitas? carsten: i can imagine that meeting very well. there's no experience, that is something that schultz has been playing very well in germany. , he looks back at a very substantial career as the president of the european parliament with experience on the international stage. from a market perspective in terms of overall stability in the trajectory for germany and europe, i think a transition from merkel to schultz wouldn't be the worst possible outcome. guy: we're going to watch closely. thank you very much indeed, carsten nickel. we've got some live shots coming out of moscow. this is a marine le pen press conference that we are waiting for. i know that francine lacqua is going to be excited about that. matt: very interesting development. she wants to forge closer ties

with russia as congress has just finished looking into the ties that the u.s. may or may not have had with russia. we look forward to any breaking news. talking of francine lacqua, "surveillance" is next. ♪

♪ high stakes.

republican leaders get ready for a vote on the health care bill. the president still doesn't know if he has enough support. the u.k. needs to pay $60 billion when it leaves the european union. credit suisse increases its bonus pull. pool.us francine lacqua in london. tom keene in new york. we are looking at data out of the eu, political risk in france, and the credit suisse news with the health care bill. bridge is openr again. london will be open for tourism and business? francine: right. parliament opened the same time that they do every day 24 hours after the terror attack, tom. u.s., president trump says it is now or never.

he told house republicans vote today to approve the obama or reject itill and the president will move on to the rest of his agenda. toy made last-minute changes win support from conservatives, but it is not clear is there are enough votes to pass. a loss would be embarrassing to president trump rand paul ryan. the investigation into the london terror attack. attacker wasay the once investigated over concerns he was turning to extremism. khalid masood had minor convictions, but no terrorism. he was killed by a fourth victim died yesterday. john paul luker says the european union will have -- says the u.k. will have to pay 60

-- 6when they leave the european union. scrutinizing home loans were newly divorced couples in china. they will be treated as second home buyers, meaning they will have to make a larger down payment. global news, 24 hours a day, powered by 2600 journalists and analysts in 120 countries, i am taylor riggs, this is bloomberg. i turned to the market, i did one screen, futures green. the euro near 108. the curve steepening doesn't do much. i am watching oil. i know we will go to kuwait later. francine: i am excited, because it is one of the most

significant meetings and the next couple of days. of days. next couple faster job creation and higher inflation pressures is something the ecb and mario draghi will be looking at. not that much movement in stocks, the pound 124.19. guests. learn from your we learn from anthony dwyer do not look at the difference between the 10 year and t wo year, look shorter-term. here is the three-month to five years spread. three-month to five years. the election of mr. trump, the day after. here is the rollover and the leg down. we are not there yet, but you wonder about the trump

reflation. with all going on in washington, early morning briefing. what do speaker ryan need to do after the trump ultimatum? what does the speaker need to do to do his job and save his job? kevin: they have been working into the night trying to wrangle votes to get this legislation through. the rules committee could reconvene as early as 7:00 a.m. the sources i speak with on the rules committee say they are on 24 hour notice to set up a vote. they are not going to have a vote unless the republicans have the vote. now, they don't have it. dynamic ofe with a the conservatives versus the moderates. the moderates play a big part, don't they? kevin: if the moderates

breakaway, they are only going to go on board in the house and representatives. they are only going to get on board if they feel that the senate is going to move this bill back to the little when it goes from the house to the senate. trump meeting with the house freedom caucus and ensuring them that will not happen, he risks alienating key moderates in the house. he is walking that political tightrope. francine: what happens if the measure is blocked, will it be more embarrassing for president trump or paul ryan? kevin: both. clearly, with president trump being the top politician in the country it would be a devastating blow to his political agenda. every source says at some point in the next few days they anticipate of moat and they will get to some sort of deal.

again, should they not be able to reach a deal, or if this drags out, this backlogs everything, because the senate wants to take up health care before it gets to neil gorsuch's nomination. president trump cannot address tax reform until they address health care reform. , and weinal question will see you in the 6:00 hour, has there ever been an "ultimatum" this visible? kevin: we have seen tight deadlines, but not something of this magnitude where so much is riding to get to other parts of the agenda in quite some time. francine: kevin cirilli from bloomberg news. we also have the managing editor innews from bloomberg london.

he has followed every presidential move in the last 30 years. jim: i am not that old. francine: this seems high risk for president trump. no: high risk and now wi -- win. you look at any administration with health care legislation, in the 1990's, at obama with obamacare, even if he did not get their way, in any event it was extremely unpopular. they lost a lot of seats. the polling shows that this is an extremely unpopular bill. trump votersot of that will get hurt. that will lose coverage or their costs will go up. trump needs a legislative win. even if he gets the win --

francine: four people vote for this because they are intimidated by president trump? james: he has very little approval rating and is under investigation by the fbi. on the other hand, he is a newly elected republican president. that makes for a tense dynamic. moscow.ame le pen is in what is the response of the french public to this leading candidate going to russia this close to the election? james: le pen's vote is locked in. her polling numbers haven't moved much. she is trying to send a sick alter her base -- send a signal to her base. tom: what is the signal? james: that she will create a new dynamic for france in europe. of view inpoint

france that sees russia as a more natural ally in the european union. it is the flipside of the anti-euro argument. france needs and i -- needs an ally. it will be with russia. francine: madame le pen seems to be using similar language to trump during the campaign. does it work with the french public? james: her base are the people that feel as if they have been left behind by globalization, left behind by the european project. she is speaking their language, as trump spoke to disenchanted white voters in the u.s. and the rust belt. the managing editor of news from bloomberg. we have plenty more data checks.

quite a bit to talk about when it comes to brexit. six to seven days away from when theresa may said she would trigger article 50. that is when negotiation starts. they have 2 years to have a better deal or no deal with europe. this is bloomberg. ♪

♪ taylor: this is bloomberg surveillance. let's get to the bloomberg business flash. kong.ng 85% in hong the company says its largest shareholder misappropriated millions, that is untrue. dairy isthat huishan

worth close to zero. credit suisse increased its bonus pool by 6%. credit suisse is in the second year of a costly turnaround plan. the bank has been hampered by market turmoil, trading losses, and the legacy issues. there are considering a sale to raise $3 billion. that is your

brands in the u.k. with 1000 locations. martin,lcome tim chairman of weatherspoon. what worries you about the negotiation process? tim: that the negotiators will be over worried. that we have no trade agreement with the united states of america, it doesn't stop the united states from selling a lot of stuff here. with the trade surplus united states. most countries do not have a trading agreement with the eu, including the united states. we do not need one. we can trade under wto ru -- underworld trade -- under world trade organization rules.

francine: would you prefer a bad brexit deal to know deal -- to no deal? deal is good enough for the u.k.. tariffs: you could have for a lot of the country. tim: i don't think we would lose. the eu sells us more than we sell them. if they were tariffs, the u.k. would gain through that equation. fore should be a good races a good trade deal if the eu is sensible. president junker, zhang led to pay 62 billion, unlike president trump or president obama, he was not elected nor can we disenfranchise him. that will annoy the british

public. i am thrilled that you are importing devil's backbone, the pride of virginia. it is a great beer. tell me about the economy you see in your pubs and the move on brexit or no brexit. tim: the mood on brexit is good. the main thrust of the economic treasury, atr own the time president obama, was that we were going to go to hell in a handcart after the vote. there would have to be an emergency budget. none of that has happened and the economy shooting the lights out. the mood is good. the economy and financial world have been shown to be quite stupid. tom: if the chancellor goes to your birmingham pub and has a

devil's backbone, what is he going to hear from the guys next to him? tim: he might be flat on his back if he doesn't stop at one, beer.a strong but he will year in birmingham is democracy is the key to future prosperity. the eu is not democratic and being were fed up with boston around with people that had not been elected. bossed around by people that had not been elected. , theyrmingham lounge bars know that. francine: this goes back to the debate last summer. a lot of people were trying to bring both sides to our viewers, do you not worry about inflation from a company point of view? do other people in the street, they will be worse off, for at

least the medium-term. tim: the strange thing is that the disadvantage of brexit was supposed to be a falling pound. anyone in the world of economics knows that it is a double-edged sword. sometimes a currency can be overvalued and punish exporters. that was the situation in the u.k. before the referendum vote. the pound going down has helped exporters. inflation has risen modestly to the target of 2%. people were worried about deflation before. what happened was a good thing. francine: it is a little tricky for that deficit and how you repay, but am i going to buy ub?s pints in your pat tim: after the financial crisis, inflation went to 4%.

britain did quite well. there was not the level of unemployment we have seen in previous recessions. a floating currency is an automatic stabilizer for an economy. it has a painful side, but is better than the alternative. tom: we will giv continue with mr. martin. going to a neutral on macy's, onm a buy to a neutral macy's based on the structural challenges of retail. coming up, what a good time to speak with jeffrey rosenberg of black rock. the great distortion challenges with our fiscal policy. this is bloomberg. ♪

francine: bloomberg surveillance. and tom from london and new york. we have to talk about the pound ahead of the brexit negotiations. expectedhat are than retail sales for february, consumer spending is on course for its first negative quarter. it could be a trend or a blip. and derek tim martin markety, the head of research at in the usg. we were talking about the benefits of having a deal. a lot of people including boris czar, sayhe brexit

that exports will be fined. -- will be fine. talk to me about the pound. how much lower can it go? derek: the biggest adjustment has been done. we have had some further depreciation since then. there is a lot of anticipation with regard to the triggering of article 50. i am getting questions about what will happen to the pound after article 50 is triggered. nothing will happen. it is well documented. there are short positions in the could bes that liquidated in the aftermath in the triggering of article 50. is big surprise about brexit the resilience of the uk's economy. that is being borne out by the communications from the bank of england as well. think there you

needs to be assurance about their right to remain in the country? tim: it is only realistic here they come here illegally, they do a great job, they should be allowed to stay. i don't think it is a good thing to say you will give us the same rights as the eu here people will probably say no to that when they have no intention of removing british nationals from the eu it would look good to take the high moral ground. tom: help me brief mr. martin on how well weatherspoon's will do. with the sterling dynamics that you see, will the republic of britain feel wealthier and better off, or not? challenge is what happens with inflation and what happens to real incomes.

the comparison from a couple of beers ago from 2011-2013, we had steady inflation above wage growth. , personalt time consumption was just under 1% on average. the question going into the peri od ahead is where we get a repetition? yes.onsensus appears to be i am not so convinced. there are arguments to suggest the uptick may not be as considerable. francine: thank you for joining us and for staying with us. this is bloomberg. ♪ show me academy of country music awards.

thank you so much for that down home welcome. show me female vocalist of the year. thank you so much. thank you so much acm's, i appreciate it. show me acm best moments. i could never have wished for, asked for and dreamt of anything more than this. catch your favorite moments from the acm awards and an exclusive encore performance by kelsea ballerini following the show on xfinity x1. the acm awards. live on sunday, april 2nd 8/7 central on cbs. tom: it is a bloomberg surveillance altar made of -- ultimatum. if we go to our first word news,

riggs. taylor taylor: president trump has given house republicans an ultimatum on the republican replacement bill. he says he will move on to other legislative priorities if they don't ask today. trumpight, the administration made changes to the bill to appease health conservatives. it is not clear if that will win enough votes. a loss would be a blow to the president and house speaker paul ryan. mexico is expecting formal talks on the future of nafta to begin. bloomberg was told that mexico can live without the agreement. >> we have to prepare for all scenarios. the table is something that is not good for mexico, texaco will step away from nafta. taylor: president trump has threatened to scrap nafta.

in south america, it may be a signal that the ban on beef and chicken imports will not be over quickly. jbs suspended all operations. police are investigating whether brazilian inspectors were bribed to clear tainted meat for export. in europe, a new twist in the french presidential race. the french president has been accused of plotting to destroy a candidacy. the candidate -- news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. fed speakthe week of continues today as james bullard addresses an audience in

memphis. the debate continues over -- tightening this year. halpenny, head of global market research is still with us. i want to talk about fed because i am assuming that if you look yields, of european they trade on the back of the fed does. derek: we are looking at at least three hikes to be delivered this year. firstight be the fair -- year in which the fed delivers on the forecast of interest rate hikes it has been projecting for the first time in a number of years so we shared that opinion of the fed in the forecast. it is conditional on a steady progression of economic growth and less mishaps on the policy front in the u.s. or internationally. there is a bit of uncertainty around that, but the central

baseline is three hikes this year. francine: i don't know whether the place of future tightening will depend on how the economy reacts to the last hike in march and whether they look at inflation all a little bit more aan in the -- inflational little bit more than in the past or not of animal spirits. >> you are seeing the comments and i think the fed in comparison to the ecb, it takes infliction objective -- inflation objective or target -- there is room to have oversight -- overshooting for the upside. i think so long as the growth momentum in the economy is forthcoming, even if the inflationary numbers are shy below the central target, they will keep on with this exit toward normalization of policy rates. tom: you talk about the normalization of policy rates.

are you investing today for three years out, five years out, 10 years out assuming the great distortion continues? it is such an odd world. we will talk about this in the next hour, the basic idea of distortion in the bond market is at a permanent -- is that a permanent fixture? andrew: central banks have been very dominant in the fixed acome markets, so there is large element of distortion that monetary policy has been putting on this. as monetary policy globally pulls back to more of a neutral stance, i think we will see a rise in yields consistent with stronger and higher nominal growth globally. i thinkchair yellen -- she is in the 6:00 hour, if she was with us today she would tell us we could get to that glide path with stability and smoothness. the you believe we can normalize with stability or is instability in the future?

andrew: there is a lot of uncertainty around it. the fed alludes to uncertainty in the international environment so i think central banks are not going to normalize if there is unknown stock materializing or some other unknown event materializing to potentially push economies back into recession. conditional on a continuation of this nominal growth momentum, we are lucky to see this normalization of policy rates. what is normalization? i think in the 1970's or the 1980's blip on the super secular time -- that is the anomaly, we are going back to the range of interest rates we saw in the late 19th century and early 20th century. francine: let me come over to you and this fed rate hike against political risk in europe.

the first trade when it comes to political risk? we have a view that the euro is going to continue onling and part of that was european political risk. i have to say, i think that story is beginning to lose its edge and i think the lack of progress from marine le pen in the polls in the second round versus macron is really diminishing the risk of anything significant in terms of political risk being rebuilt into the market. we are beginning to have a more favorable view on the euro and perhaps she will advance in the polls, but i think time is running out and it does look like it is going to be a very tall order for her to win the presidency. winsine: if marine le pen the presidency, what is it mean

for the euro the next day? cap are down? -- up or down? derek: it would be a disaster for france, down. having the president call for renegotiations with europe would be to -- would be a complete disaster. she probably wouldn't be a would act on those without parliamentary consent, but i think it would be catastrophic for sentiment to have her as president. -- european multinationals are a value given the political unrest? is there opportunity there? andrew: i think the multinationals in europe have very diverse if i'd revenue streams and revit -- revenue streams. if some of those things onerialize as was just said elected, there will be short time volatility. many of these companies have been around for decades, if not

centuries, so they will get over whatever outcome of the french elections turns out to be. so: is the dollar strength visible and so apparent that you have to buy u.s. securities if you are domiciled in europe? derek: not so much the dollar strength, it is really the level of yields on u.s. bonds, treasuries in particular that are attractive in a global because thentext yields on for example, japanese government bonds, they are paid -- 10o in the 10-year air yield area. these can provide in a global .iversified portfolio therefore, given the level of interest rates in the u.s., their ability to provide diverse vacation given the --

diversification, we look at them favorably in their context. francine: what is your take on yields? are you buying anything? and there's a lot of things going on with greek bonds? andrew: we are actually a little bit more on the sidelines in europe. there are many things in motion at the moment. the ecb is in the throes of deciding which way to go, the elections are standing in front of us in france later on in italy early next year, so we are relatively neutral here in europe. there are a couple of opportunities in the bank capital space, but we are not putting a lot of our risk budget into this region. tom: we will come back. andrew boswell -- was a martha's with us -- andrew bosomworth is with us. we want to talk to traditional asset managers and the challenges they face. next week, it is full of federal

reserve speeches. mr. evans of chicago, another back from bali and james bullard, we will look at speakers next week. this is bloomberg. ♪ ♪

tom: good morning. "bloomberg surveillance" from london and new york. if you are on global wall street, there is no other topics than asset management and the struggles, whether it is abby johnston in fidelity, another in -- a legendary at the bangor, the throes -- vangard. us fromosomworth joins

pimco. the battle of active managers to to make money, how is back on to play out 2 to 5 years out? we are going to see more concentration in the industry. you really have 2 things at play. one is driven by regulation, it makes it harder for smaller institutions to make fixed cost inwe see consolidation m&a the industry. and also parallel and linked to that, this debate versus -- passive versus active and i think in that area, it is a little more nuance. there is a lot of data and studies that are showing, particularly in the equity market, it is very difficult for

the active strategies to outpace passive. that is different when he looks that fixed income. the implication is maybe there are more opportunities in the fixed income market for active managers to outperform. tom: if you get a normalization of interest rates, does that save the fixed income active management is this? i would think, first of all if you get higher yield, you get better justification of the fee. is the normalization of interest rates by central banks the savior for active management global wall street? an opportunity and maybe not so much an opportunity from the level to which interest rates would come from, but really in the credit markets ande the opportunity lies where active management has the ability. when we look at to 2008, we have had a period, a massive reflationary period where the

wall of money from the central banks have made investing in the credit markets, reasonably easy. you have had momentum and liquidity going in your waiver. -- in your favor. when the next turn in the credit markets, the next recession comes, that is where the difference between active and passive will look a lot more different because when you are investing in passive strategies, you are obliged to buy companies that might be facing the wall on insolvency and that is best will bee future to bet and where we see the opportunity going forward. francine: what is your favorite play right now? andrew: say again. francine: what is your favorite play, what would you be buying or putting in your portfolio? andrew: as i mentioned before, on a global rates perspective, we look at the u.s. quite attractively and we continue to look at securitized market here and in europe as well as in the

u.s. some external emerging-market parts of that complex look attractive on a risk return basis and some of the bank capital structures are also opportunities. when we mix those things into a portfolio, we can get a level of yield on portfolios that is comfortably outperforming our indices and at the same time, we can put some dry powder into those portfolios for potential volatility. francine: thank you so much andrew bosomworth, head of pimco portfolio management from munich, germany. at quebec to -- let's get back to derek. what is the one thing that markets don't get right? of a we be on the brink huge correction and markets looking at the wrong thing? derek: i think we are

potentially on the cusp of a turning part -- turning point in fx. the consensus is the dollar has further to go. if you look at monetary policy divergence, brexit, those are -- andro themes in for focus and i would argue that each and every one of those is beginning to shift and turn more favorable for other currencies versus the u.s. dollar and certainly on european politics, as i mentioned before, i think another big issue is that maybe the markets are missing the importance of central banks in the united states and what is happening there. the focus is on the fed because they are the most active, but we are beginning to sense a turning point outside of the states and that will be a big change for the markets and we see it as a potential negative for the dollar going forward. francine: how much room or

volatility do you see on yen? -- the first time in night nine trading sessions, it is weakening a touch. could it reversed quickly? derek: i think the big -- where we are in terms of valuation in the last big move, it is all about the trump reflation package and i think there is a high risk we are going to see a reversal of that. i think the whole health care bill focuses essentially a side issue -- focus is essentially a side issue. financeis, how do you such a fiscal stimulus tax cut program? there is no real answer to that question. the republicans and their attacks -- tax proposal use the border adjustment tax financing -- age portion -- over a trillion dollars over a 10 year

period, but congress is divided. it is only workable if you assume the theory behind the border adjustment tax, which is basically you get the fx adjustment equalizing to the level of tax increase and in reality, that is very unlike he to happen and therefore it there is a macroeconomic impact and that is what is dividing congress on implementing that. where do you get the finance of such attacks program? that will become a bigger issue going forward. francine: david halpenny, the head of global market research. if you are a bloomberg user and we hope you are, you should be using and looking at apps on tv . you can access all of our video streaming and you can also follow tom. to. of you may choose not you can see our data screens and checks and the headlines are no

longer buffering. this is bloomberg. ♪ ♪

francine: "bloomberg ."rveillance opec and allies discuss the

impact of oil cuts in kuwait. bloombergurveyed by say the oil cut will -- the impact will cause cuts. prices have sunk below $50 a barrel. from kuwait city. a lot of analysts say that when may 25 in bni, they will have to extend the deal to cut. what is the appetite for extending that deal on the ground? is the work that the monetary committee is going to start doing over the weekend. they are gathered here in kuwait city to evaluate the progress or lack thereof they had made considering where oil prices are right now, we're back at the same level we were late last year. what is also going to be front and center is compliance. .hat has been ok, 91%

the problem is not opec and russia, they haven't yet delivered on their pledges and your looking at a backdrop in terms of a global oil that is not really encouraging in terms of u.s. inventory, u.s. rigs targeting crude and libyan oil out returning as well. tom: what is the bodice -- body language? let me show how powerless it is for brent crude. boringarrel, that is a 200 day moving average. it is actually very elegant where you have these kisses where we come down and touch the 200-day moving average. what is the level of strength of the other opec countries versus saudi arabia? stands, there is a relative consensus that they need to get their act together.

there is a lot at stake here and saudi arabia has been shouldering most of those cuts which is why the conversation with russia is likely to happen in terms of delivering on those promises. some analysts point to russia and look at structural issues there that might be hampering or causing the delay in cuts. francine: thank you so much, from kuwait.g us this is all linked to currencies and for a lot of these middle eastern countries they also have to balance their books. derek: i think the opec production cut issue is not really the story. it is very much u.s. production and we have had another announcement of increased investment in the u.s. by a number of other companies and clearly at these prices, production is picking up and perhaps what saudi arabia feared years ago when they refused to cut production, that is what is

happening and playing out and the risks are certainly that we could see a correction lower from here. tom: derek halpenny, thank you so much as always. we look forward to see the mystery of where sterling heads over six months and a year. in the next hour, this will be a very timely friday interview. will join us from citigroup, global head of the transactions and combinations. there is a different phrase for that. peter tague on the spirit of m&a in a time of dirt cheap money. really looking forward to chew this. this is bloomberg. ♪

. .

called the trump care, game

of chicken, republicans say it is now or never on obamacare. this morning, speaker ryan does not have the votes. well into the 2017 investment call. should you invest in american or foreign stocks? the square,nce for westminster bridge is open this morning. good morning, everyone. this is "bloomberg surveillance" from our world headquarters in new york. i'm tom keene. with me, francine lacqua. london back in one piece this morning, and business as usual in their parliament. francine: right, tom, business as usual. the message from the prime minister is this will not get us down, terror attacks, we will dailyon and live our lives. some of the rates are ongoing, tom. tom: there have been a lot of arrests not only overnight but

in the last 24 hours. francine: yes. i believe there are about nine people in custody, again, one woman was released on bail. we have the name of the attacker, and it is an open investigation. we were briefed by the police on the head of counterterrorism about an hour ago. tom: right now to our first word news this friday, here is taylor riggs. taylor: tom, francine, we will get to london during the meantime, in the u.s., president trump says that is now or never. he told house republicans vote today to replace the obamacare rejected,t bill, or and the president will move on to the rest of his agenda. made toute changes were win support from conservatives. still, it is not clear if there are enough votes to pastor at a loss would be embarrassing for the president and house speaker paul ryan. british police made nine arrests, nine people remain in custody, one woman was released.

the attacker was investigated over concerns he was turning to extremism. khalid masood had never been convicted of terrorism. he was killed by a police officer. a fourth victim died yesterday. the bill for brexit will not be cheap. european commission president jean-claude juncker says u.k. will have to pay about $62 billion when it leaves the eu. he told the bbc there is no desire to punish the u.k. for leaving, but it must prevent other countries from following. the formal process begins next week. in asia, china central bank is trying to rain in soaring home prices in beijing. newly divorced couples will be treated as second home buyers and will have to make a larger down payment. anyone using leverage cannot get a mortgage. global news 20 for hours in a powered by more than 2600 journalists and analysts in more than 120 countries, i'll taylor

riggs. this is bloomberg. tom: thanks so much. to the data check right now, equities, bonds, currencies, commodities. we advance all three ugly days. , a euro really advances strong euro, not much to talk about, $1.0809. francine? francine: i also have wti, one of the stories from yousef gamal el-din, and kuwait. we have interesting euro area data. it moved euro quite a lot. and then the pound, $1.24. to washington, kevin's really come our chief washington correspondent was a great perspective of being out on the -- kevin cirilli, our chief washington correspondent, who has a great perspective of being out on the campaign trail. hours president

trump has had your how is this guy different than he was six or eight months ago? kevin: not much. i think the way he campaigned as the way he is governing. negotiations ongoing through the night and into this morning with house speaker paul ryan and president trump trying to wrangle the votes to get this health care legislation passed. he is faced, tom, with the reality of congress, which is yes, even though he was able to win over the distance of the house freedom congress, the house freedom caucus and the tea party are a contingency of voters who are not afraid to book this white house -- buck this white house. tom: help me here with how bad they screwed this up by doing health care first. that seems to be -- to guys like you -- that seems to be the zeitgeist at the trump bar this morning. who screwed up? for somebody else? kevin: if you look at the congressional leadership, the way they went to repeal the

formal care act, it obamacare, using it as a budgetary measure, and as a result of it -- they are trying to repeal at the same way democrats enacted it, and as a result of that mechanism, they are forcing it to be tied to tax reform, so they juxtaposed the two together, and as a result, you cannot split them up because of procedural rules, so no you have a situation where they have created a cliff, so to speak. if they did not get over this cliff, they cannot get the neil gorsuch confirmation, and they logjam congress. even though, tom, they have a republican majority. tom: francine, that is why kevin cirilli is so good here it i have no clue what he just said, but that is the miniature that the pros talk about. francine: it is called trade. you give me this, i give you that -- it is called politics. kevin, the stakes are very high to what happens if they cannot get this bill passed? kevin: if they cannot get this bill passed, two things, first,

the senate is going to have a russia hearing. this week, we have -- let's not forget the fbi director saying they are still investigating this campaign and this administration. that is going to happen in the and it next week. if the backdrop to all of that is not if the supreme court justice confirmed, in addition to that, the health care bill could pass today, but then it will go to the senate -- i mean come all of this is being logjams. there does not seem to be a rhythm yet for this white house or for this republican-controlled congress. tom: kevin, quickly, will the president play golf this weekend? kevin: maybe he will have a celebratory round if he gets health care past. i think it depends on this morning and health care vote. tom: kevin cirilli, thank you for your 24-hour, seven-day week work. brian levitt is a senior investment strategist. there is a little bit of oomph to the

international market. it horrific three days we have had. all in all, there is this feeling in international investment, right? : it is, and exultation got quite high. we are waiting to see more of the hard data come and perhaps with the progrowth policies that are now being tripped up. if you look cyclically in places like europe or the emerging markets, you are actually in a nice part of the cycle, and valuations were more reasonable because excitations were lower. tom: -- expectations were lower. tom: oppenheimer has been a great supporter bloomberg. take us inside oppenheimer. -- for twilioly managers were miserable two or three years ago but are feeling better about opportunities that are out there. brian: we are feeling very positive. 2015,e had in particularly when you are an international investor,

you have the rally in the u.s. dollar, and we opined at the time that this was a result of the federal reserve is attempting to raise interest rates in a slow growth disinflationary world when every other central bank was easing. 30%,r rallied everybody wanted out of the international market estimates the fomc backs off and says ok, just kidding, the economy significantly o improved in europe, policy is kept accommodative, real yields positive, so it is creating better opportunities in those parts of the market. francine: if you look at the troubled health bill, that this dampen animal spirit in the u.s. brian: it probably does. of all the indicators, very few get it right more often than the shape of the yield curve. in the aftermath of the election, we saw 10-year rates up to 260, and that was sort of the bond market trying to latch onto this reflation, progrowth trade. since then, we have seen bond yields come down.

yesterday we were in the 230's, i think we are slightly above 240 today while expectation of short-term rates have flight the yield curve a bit. that is important because -- have flattened the yield curve a little bit. that is important because if we do not get it, the federal reserve will have to back off. francine: i understand that, but as a senior investment strategist, how much do you look at politics? how much do you look at your president, he is under investigation by the fbi, the ceo's who start defecting because of what he has promised, who will probably hold back. brian: you certainly have to look at politics in this type of environment, particularly in the aftermath of the election. it was clear to investors the u.s. was the best game in town to we want to own. we want value because in a world where there is growth, that trade has reversed itself this year because markets are dealing

governingeality is of , and the reality of this administration having to work with congress. i think it is very important policy right now. francine: the only thing the president can do in the next two weeks to three weeks is actually get back on track. brian: well, we will see what the vote looks like in the house. that certainly does not guarantee passage in the senate on the health care bill. i think what investors want to see is a lot of what the campaign ran on, which is tax reform, lower taxes and fiscal spending. that is going to be difficult to do without passage of this health care bill. we: brian levitt with us, will talk investment, particularly the idea of a recovering u.s. and great diversions of interest rates and the challenge there of how to do it. folks, on "bloomberg daybreak," eli lilly's chief executive officer and at the same time, the indianapolis

governor, -- the indiana governor eric holcomb. this is bloomberg. ♪

francine that's taylor: this is "bloomberg surveillance." by as of chinese targeted short sell, plunged 85% in hong kong, wiping out $45 billion in market value for use in derry. dairy.han muddy waters capital said huishan dairy was worth "close to zero." the company rejected the report. -- the ceo of

credit suisse was pay $12 million for the first year on the job here it the bank has been hampered by trading losses and legacy issues. credit suisse is considering a of $3 billion third opec and its allies will discuss the impact of their oil cuts this weekend in kuwait. the market already has made it clear their work is far from done. analysts surveyed by bloomberg says the oil glut will force the cutback to the extent attack summer. and stockpiles set records, the price sunk below $50 a barrel. that is your bloomberg business flash. tom: taylor, thanks so much spirit we had a brilliant discussion on munich in our last hour on where we are linking investment to our central-bank theory. with us is brian levitt of oppenheimer fund. i really want to dive into this. what an oddity of an interest rate environment, you at

oppenheimer fund have to deal with this every day. -- has she caused this great distortion that in some way is leading to active management under performance? are the three dovetailed together -- central-bank, and then over -- to your world of asset management, are they all linked? brian: they are, but the first thing i will say when people talk about this active-passive debate, they are generally talking about large blend, large value, mid value. they are not necessarily talking about strategies all around the world. but when you think about within that large blank space, when you think about the environment wasre 2008, the s&p 500 typically a 50th percentile fund. would behe funds defeated, half would not. in the low rate environment, when everyone's returns can

exceed across the capital, there is no real cycle, the s&p 500 has been the real winner. tom: chair yellen does not know the risk-free rate, brian levitt is not know the risk-free rate, and president trump does not know the risk-free rate. when are we going to know it to bring normality to investment management? brian: well, we are slowly normalizing rates in this country. tom: slowly! what, 10 years? brian: webrian: have got to go slowly in all of this because in order for real rates to go up significantly, you need nominal activity, you need real economic activity and reflation, so the fed is going to move slowly. the bust you take where the 10-year is now, you will have a flight yield curve. tom: this is a tony dwyer, going five-yearee-month to

spread, it looks a lot the thinker here is the trump election come over here and blue the day afterwards, up, up we go, and we are rolling over. you are going to get your animal spirits to get that great distortion removed with this trend, are you? brian: i agree care you will not get the animal spirits to get the animal spirit see that trend removed unless we have the catalysts to get growth -- i agree. you will not get the animal spirits to get the trend removed unless the catalysts to get growth higher. it is becoming more difficult to do. that is not mean we do not look to active management at this point in the cycle. the fed will be slowly raising rates, which is a very different environment than and 0% environment, and you also have market cap indices, given the excitement around them, trading at something like two times price the sales, which is elevated from a historical perspective, and active rs who should be able

to help going forward. francine: how much consolidation will we see an asset managers? --an: i think you will find in some categories, there are a large number of funds, and that much choice is it difficult for investors, so you might see smaller businesses or smaller asset managers be purchased or cycle,d over the next but the reality is, in 15 years, we have gone from an environment where investors wanted to pay two and 20 from hedge funds because they want to be protected in down cycles and they wanted to be hedged to an environment where now investors do not want to pay fees and only want to own passive strategies. every time in this business we think we have something right and we think we have aligned, we usually find that the markets change on us. again, a zero interest rates world without an economic cycle makes it easy for most businesses to do ok. in a slowly rising interest rate world with a potential for a

flatter yield curve, with the potential for an economic cycle, a recession at some point in the next number of years, with valuations already high in market capitalization weighted and disease you will likely to see active win. francine: what would it look like? as violent as the financial crisis? --an: i did not mean to say i did not mean to put a timeline on it. i was just saying some years into it, i do not think bull markets die of old age. rudy's on bush told us bull when theltimately die fed murders them with rate hikes. this is not saying a recession is coming in 2018 -- that is not the headline -- it is just to say the fed is going to slowly raise rates, the long rates are not latching onto the reflation trade, so the fed is going to have to back off for the cycle to continue. as thed not be as bad financial crisis, obviously the

financial market, the banking institutions are far better capitalized then we were back center francine: brian, thank you -- back then. francine: brian, thank you. coming up, we have plenty to talk about, the federal reserve, and guests speaking exclusively with bloomberg. that is today and through the week. this is bloomberg. ♪

this is "bloomberg

surveillance." from london and new york. tom, of course we need to talk about the terror attacks in london. police made two more arrests overnight into the investigations. acting deputy commissioner mark rally told a news conference nine people remain in custody. joining us now is immemorial rothas -- emma roug thomas, also joining us is brian levitt from oppenheimer. what doing all of the prime minister? will she be on the timetable to trigger brexit? absolutely. nothing changes. business as usual, parliament opened the next day, and it would be totally the wrong message to change things. be some sort of

solidarity, sympathy,ma ros -- todayhy, we had juncker saying the brexit bill would probably be 50 billion pounds that we heard before. there was a softening of the attitude. a, help us here with your wonderful perspective as the bureau chief, with the state not about the terror attacks so to say, but about the mood of danger. i was reading a volume on france absolutely and it is stunning about france and belgium and the fear of terror. that fear is not there across the united kingdom, is it? emma: no. brits haveat in the, lived with terror for decades, and in fact in relative terms,

the number of deaths caused areerrorism in this decade far, far fewer than previous decades, and i think it is kind of important to keep that in mind. it is also true that i think people do have faith, to a certain extent, that the security services, mi5, they know what they are doing, they are well respected. and there have been so many thwarted attacks. there have been 13 thwarted attacks, and that makes people a bit more confident. francine: emma, take you so much, emma ross-thomas, our london bureau teeth. -- chief. this is bloomberg. ♪ live-stream your favorite sport

at the airport. binge dvr'd shows while painting your toes. on demand laughs during long bubble baths. tv everywhere is awesome. the all-new xfinity stream app. xfinity. the future of awesome. is looking at, of course, the place where the tragedy unfolded on wednesday. big ben and the london eye.

we understand that from today, westminster bridge right there on the left has reopened. now, we will have plenty more on that. we have plenty more updates also from scotland yard. let's get straight to the bloomberg first word news with taylor riggs. taylor: we are starting here in the u.s. president trump is giving house republicans and ultimatum on the obamacare replacement bill. he said that they do not have to bill, he will move on to other property spirit republicans have not been able to agree on the measure. last night, the trump administration make changes to the bill to appease house in service, but that is not clear if it will win enough votes. mexico is expecting formal talks on the future of nasa to begin this summer -- nafta to begin the summer. mexico can live without the agreement. >> we have to prepare for all what is on theif

table is something that is not good from its ago, mexico will step away from nafta. taylor: president trump has threatened to rework nafta, saying it is a bad deal for the u.s. in mexican foreign minister says a strong relationship with the president's son-in-law, jared kushner, is an asset for mexico. largest meatse the producer, brazil, has suspended almost all of its beef operations. want to see what other countries do with the restrictions on brazilian meat. police are investigating whether -- brazilian

inspectors were bribed to approve trying to destroy his candidacy. printing, tom? tom?ancine, francine: the fed has lowered rates -- the russian central bank has lowered its key rate -- 10% toints and 9.75%. it is something that we really need to keep an eye on. about four hours from now, the governor of the russian central bank will hold a news conference. the ruble -- 57.21. chart, thishe ruble goes back a good number of years, the putin failure one, putin failure to come and the here of russian stability. this is one of the great

unspoken stories of 2016, and we are really at the key 57 level, 56 handle on ruble would be a big deal, a stronger ruble would be something. i agree with francine, a surprise central-bank reduction in rates. this is a real pleasure. there are a number of ways to go here. we will talk with peter tague. this graphic alone would be painful, but to talk to peter tague of citigroup about mergers and acquisitions, joining us as well is brian levitt, strategist at oppenheimer as well. i want to rip up the script here. you are one of the leading experts on hand holding of hospitals, medical insurance companies, health care, all these different things, representation of edna. how does the health care world change inen the washington? are we going to end up with one hospital?

peter: i do not think we will end up with one hospital. depending on which way the legislation goes, there will be winners and losers. the extent to which those winners and losers will be defined simply because of the way the bill has moved around, and even as we have seen last night, changes are still being made -- it is hard to know what will ultimately have the president's desk and what goes through, if anything, at all. tom: on hospitals' income statement, on the balance sheets, when you are in meetings, where is the sweat point, their hot button when a look at the turmoil? peter: most of the hospitals are they are taking about -- how do we manage costs? how do we do live are a better product for less money to a consumer base that is increasingly demanding and a legislative process that will demand the same of them? -centricthat cost approach to thing is going to play out partly through m&a and partly through basic operating management doing a better job of running business. tom: let's get back on track

here. let me get the chart appear, folks. we were doing the russian ruble, francine, i have got to get my correct chart up here. 3100 here in the bloomberg. this is the price of money. peter, this is really where we are right now. , theive-year real yield green line here, like the normal yield in 1990, etc. cheap.s cheap, cheap, you just assume this continues? peter: it is a very low cost money environment, and for those of us who have been doing this for a long time, it is constantly surprising to me, honestly, how much capital is available and how low a cost. today, right now, the capital markets are white open. honestly, it is hard to imagine anything firing on all cylinders the way it is now. it is so supportive of transactional activity that it at backdrop,be which lets deals get done, and it tries to encourage deals to get done. francine: peter, taught me

through how or why ceo's -- why they want to go after another company. is it because it is cheap, is it is funding, or is it because they are desperate, or because they feel better about the future? ofer: it could be any one those, francine. the backdrop for transaction activity, we typically find, and the nature of the driver can vary from company to company, but we typically find you start with a strategic problem, most often these days, the problem has been growth and companies seeking ways that they can drive growth and drive bottom-line growth. it is difficult to continue to do that through cost reductions. it is often look to do that through organic investment. thatnds up being the told they use. francine: if there are real animal spirit coming back to the u.s. , does that lead to more m&a? peter: absolutely. i think as tom has just

indicated, there is an awful lot to speak of in terms of both capital market support for transactions, the valuation are getting done, premiums have actually been coming down a bit, and i think we will be seeing more m&a. francine: it is the type of m&a that feels a little bit desperate, i know you can't talk about individual companies or even industries, but there is a theing in europe that it is industries that don't do so well that want to merge to keep costs down. peter: i think, again, the driver can come from a number of different places. you look today at the bank or the finance companies, i think financial institutions are the place we will see more m&a, banks in particular in north america have been looking for consolidation for a while. i think an equity market backdrop, which has been supportive of valuation for banks, is one that is going to, for instance, cause a little more optimism and drive more m&a. tom: brian levitt, brief mr.

tague this morning. acquire, acquire, acquire, if that trend going to continue when they do u.s. transactions? brian: there is come and a lot of money is not only looking for higher yield but potential growth in the united states. the united states remains an attractive place to be invested, but that is not mean the u.s. is the only game in town. expectations are higher in the u.s., and there are attractive valuations around the world. help me -- there are 25 or 28 boring toothpaste companies. how do deals get done? are you out with incense, smoke and mirrors, to make this happen? got a robuste valuation for your own stock, your ability to pay a higher valuation for someone else is going to go up. the cost of money is very low. that drives your acquisition ant down for your we seen

environment today where right now a strong dollar is clearly helping deals get done and -- in a cross-border context. we're looking at record levels of m&a activity at the first part of this year. peter, how do quantify and qualify the mood in the united states at the moment? is it slightly protectionist? for the house is not block an attempt from a foreign company to try to come in and buy an american one? peter: i think economic nationalism, broadly speaking, is a phenomena we are seeing across the globe. it is not unique to the u.s. there is increasing scrutiny on national security, economic intensity, economic investment, amongst all nations. however, in the u.s., deals are getting done on cross-border basis into the u.s. all the time. in fact, there is a great deal the committee on foreign investment in the united

states, which is the regulatory body that is scrutinizing the spirit of the truth is, the vast majority of transactions that go through this process actually get approved and the deals go ahead. tom: peter tague of citigroup and brian levitt of oppenheimerfunds. a lot to talk about. this week,of washington, the tragedy we have seen in london, economics and finance. investment.hat on julian manual of the union bank of switzerland. they hate when i say that. ubs. el in the 9:00 hour. over a rises trump-driving ultimatum. this is bloomberg. ♪

taylor: this is "bloomberg

surveillance." i am taylor riggs gerd let's get to the bloomberg business flash. it is a first for italy's ieni. it is the first major oil producer to make an offer in mexico since the -- ended in 2013. eni struck oil in the gulf of mexico. president trump is about to to approveis promise the controversial keystone oil pipeline. still, the fight is far from over. the battle will shift to courtrooms and congressional townhall meetings. environment to activists and landowners are hoping to stop transcanada's pipeline there. it may take six months for the company to win approval just in nebraska. opec and allies will discuss the impact of the oil crisis this week ended kuwait. if the market has already made it clear the work is far from done. analysts surveyed by bloomberg

said the oil glut will force a cutback this summer. sunk below $50e a barrel. that is your bloomberg business flash. tom, francine? francine: thank you. coming up shortly is "bloomberg daybreak: americas" with jonathan ferro and alix steel. what you looking forward today? question for anyone in d.c. now is whether the administration's agenda is becoming unhinged or delayed. regardless, the big question from wall street is whether the deflation trade is becoming somewhat deflated, the reflation trade, that is, francine, that we've seen over the last week, down to 242 this morning. we will have a discussion with advisor mitch clarida. be: jon ferro, that is not interview of the day. the interview of the day is pop

pub master tim martin. what is the best that you see in the literature on sterling? needlee bottom line, the has a fine line, upside risk to inflation, downside risk to growth. the downside growth risks to growth has not materialized yet. one policymaker is voting for a rate hike. whether the others follow remains a big question at this point. what i will say, tom, with a cable rate around 125, you can have a pretty good day out. i think francine lacqua should take you are there is one around the corner as well. francine: yeah, tom is paying. i like weatherspoon's, for what it is worth. francine: we will report back. jon, thank you. credit suisse is considering 3

billion francs in stock as an alternative to raise capital. that is according to people with knowledge of the matter. the bank also reported second consecutive annual loss. that is what we heard from the agn. henry forrester, our finance manager. what does this mean? signals from the ceo, we spoke to them, that the credit suisse ipo, the swiss bank is not the only thing you can see? yes, exactly, and that is what we have been understanding. the ipo is not the only option anymore to raise credit suisse's capital gap. let's focus a little bit on what this has set in the past, when he started and laid out his strategy and said ok, we need 11 -- swiss francs,

they raise, and other is this thetal gap, and after settlement with the boj, a major uncertainty with the banks, think deutsche bank, they have more clarity and this provides the bank with more option alley for the future. now they are looking into the possibility of raising capital. rik, this isn-hen something we had david haro, who owns a big chunk of credit suisse, telling us two months ago that they may not have to do the ipo. will this be a good time to increase capital? -henrik: certainly if you look at deutsche bank, it seems like shareholders are ready again to provide banks with capital. i cannot tell you how they see it for credit suisse, but what david haro has said and told us , he even suggested

maybe the bank does not need the ipo or a capital rate, so if you go back to what the banker said, you have option alley now, maybe they don't need to do an ipo or the capital rate. i am sure he is not too happy about the dilution. here is a useful essay -- a beautiful essay from bloomberg gadfly on the issue, what credit suisse may be learned from that is french, thecase you were not aware, " the thing thiam needs is threat of competitive pressure from deutsche bank or capital questions from clients. the most compelling reason of all might be just to keep the deutsche bank wolf from his door." how does that play in zürich? are they terrified by a resurgent deutsche bank? jan-henrik: welcome the first of all, this capital rate raising

exercise would be much smaller. of course, if they do capital rates, there will be dilution to the start, but if you inc. about the ipo, let's say they go ahead with the ipo, the swiss business is a very profitable business, analysts, investors have raised this issue before. it is all part of this business to they also forgo some of the future revenue, future profitability in a time when the bank yield is in need of that, could be another type of dilution, so probably the market thinks the other way around. maybe dilution of the ipo would be bigger from a capital rate. jan-henrik, thank you so much, that is david calling you right now. peter tague, i know you do not want to call about -- comment about other banks, i know that is not the proper game, but you can talk about the game theory in transactions. it is not just about numbers, is it?

in any industry sector, you're looking at that guy, you are looking at that guy, and you are saying, "we have to do this because they did that." that is part of it. peter: absolutely. that game theory gets played out all the time. we see unexpected results from circumstances where that game theory has caused folks to move in unexpected ways. we talked a moment ago about the surprise that we had in terms of the level of cross-border activity, given the potential for border tax, etc. there are a number of things that might have been a headwind for that. it is surprising to us that we have seen so much cross-border 50. that said, unique -- cross-border activity. that said, unique assets are highly consolidated. tom: let me show you tv right now. there behind the chrysler building -- in front of the chrysler building, i should save your tv on the bloomberg is where you get all of the interviews, and you can get my charts. you can get them dragged over to your bloomberg terminal as well cured we will continue our

discussion from new york from london, this is bloomberg. ♪

tom: after the week with had, we need a thoughtful single best

chart. we do that with brian levitt of oppenheimerfunds. citigroup, weom will include you as well. this is a chart that is really cool. the amber line is a bloomberg faithy, sovereign, full return credit index, it is a beautiful, stable bond migration over 20 or spirit the white line is clearly the s&p 500. total return including dividend index. brian, this is the agony everyone feels because no one is on the white line. help me here with how i allocate between the white line and the amber line. brian: obviously it depends on your objective -- tom: oh, stop it, if that is not general counsel -- [laughter] brian: the problem is investors have been fighting this bull market the whole way, and the funny thing is when it began, we heard china's going to eat nch, the dollar is to

weak, i don't like this president, we have too much oil, and we still do like this president, investors always come up with reasons not to invest. i think famously more americans bought lottery tickets last year than participated in the equity market, but the reality is stocks are still relatively cheap to bonds, the yield curve generally steep enough, the u.s. economy, the economic data has been ok. it has not been fantastic. i think more importantly, it has been the composition of returns that have changed, and the big argument is -- do you want to be in size and value, because the growth is going to pick up, or do you want to be in growth in a slow-growth world? francine: peter, do you share this optimism? peter: i do share optimism in the broad sense here it i do think there will be changes, and look at the trump legislative agenda for that for her there will be potential changes at different points in time that could cause the m&a market to andly take a pause

slowdown. that is going to be situation-specific. the broad backdrop, francine, i think is positive. i think we will leave it there. peter tague, thank you for coming in, citigroup, brian levitt, thank you so much, with oppenheimer fund. we both continue on radio. "bloomberg surveillance" on radio. it will not be like yesterday, the power breakfast at the hotel. here is an exquisite foreign exchange report. deal.8 is a big and sterling, after promise or may's comments, sterling resilient this morning. it is a beautiful spring day in new york. have a great weekend. ♪ jonathan: a high-stakes vote as

wall street image. the president has given ultimatum to lawmakers. the 50 billion pound price tag for brexit before prime minister may triggers negotiations. the oil market keeps pressure on producers to maintain cuts. from new york city, good morning. welcome to "bloomberg daybreak. david westin is off today. futures are on the margin up 2%. the euro is up 2/10 -- .2%. we have some blowout data in the eurozone it. treasuries are unchanged. ekingthe dollar-yen is out again for the first time at about nine days, but just barely. it's well off the sessions. the yen had its longest rally since 2011. the fix is pretty moderate.