grexit u.k. gives details of how the eu will be moved into u.k. law. the boston fed president r hikes in 2017 may be needed to protect the economy from overheating. anna: vanishing banking blues. the italy finance minister said banking problems have been solved. >> the problem with the banks is being solved in the sense that there are some critical points but now we're finding the solution within the european context.

context. ♪ very warm welcome. our flagship morning ship from here in the city of london. i am anna edwards. manus: i am manus cranny. if you are long the ftse perhaps you have never had it so good. that is the news since we voted for brexit this time last year. the ftse had hit record highs. oryou are a dollar investor euro investor, there is a fundamentally different story. the deliberations begin, 5246 is what gives you the defining line of when brexit was called. there is a numbers story. raising the prices here in the u.k.. bp and shell, big questions about their ability to sustain the dividend. the market is show it -- short

and there is a crowded trade. impact on the ftse 100. anna: here is the risk radar. just to track where we are. sell from 126 to 124 earlier this week. it has been stable yesterday and there was not a great deal of market reaction to what we heard. perhaps the important part was the tenor and the tone of what we heard. most of the oil pricing was a big market moving story. gainsg on to wednesday's and today another point for heading back toward 50. oil stockpile increases came in below estimates. bit abouttalked a the pound and the msci pacific index. global equity markets are nearly with 70 12 in dollars and we are going for close up to the fifth

straight month. the s&p in australia up right three of 1%. a relief rally in the aussie section -- session. the asx 200, we are positive. here is deborah mao. the offer for open >> a deal has been into immediate opposition from eu leaders. the eu is challenging her attempts to tie trade deals to security operations. she is set to publish plans of her appeal bill. the italian finance minister says the country has solved its banking problems in conjunction with the european commission. speaking in an exclusive interview. >> the problem with the banks is being solved in the sense that there are some critical points but now we find the solution

within a european rule context. thoseutions will address problems which are the legacy of a prolonged and deep recession in the economy. a: president donald trump will be briefed on areas ways to implement comprehensive tax code changes. presented with possible options by a group of officials including gary cal. the board-checks. trumps revised travel been remains blocked. hallway judge has extended the temporary help pointing to the president's campaign rhetoric as signs of discriminatory intention. trump is facing a lengthy court battle to enforce the policy. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the

bloomberg at top . i am deborah mao. manus: let's see what is driving these markets. are you doing to contribute to the big value trade? >> not much but we are heading into the final day or final few days, a month and a quarter. there has been a bit of month and positioning coming through on what has been a solid quarter. some people are taking money off the table particularly in china, the csi 300 beating the losses and we had some weakness in hong kong and the nikkei. at the share market closing a two-year high today. having a look at some of the stocks we have been watching in the region. years,g the most in four goldman saying that it cannot maintain topline growth particularly with some of its retail players in the u.s. bell, focus after the

toshiba. is proving the sale of its memory chip division to try and pay for some of that debt. and another one to watch in the session of 251 6%. it had some quite positive reactions to the latest vaccine -- for the dengue vaccine. sales have been down since 2014 we saw the crackdown. expecting six point 1% in february. that will take the annual loss to about 1.1%. still seeing the hong kong retailers coming under significant pressure considering what we saw a few years ago. flockingourists were to hong kong and spending. anna: thank you. brexit begins. the u.k. trigger -- triggered

article 50 of the treaty. here are some of the highlights from that historic day. burnett does permit representative handed a letter to the president the european council on my behalf concerning their government's decision to invoke article 50 of the treaty on european union. also duringetermine the difficult association -- negotiations ahead. >> we will never accept -- that the u.k. is starting trade negotiations with other countries before the withdrawal. >> mike's vacations of the european side will want to negotiate in sequence. first the divorce settlement and then they want to talk about future status. member of. is a full the european union.

with all the rights but also with the obligations. >> the reality is that there is some uncertainty in the or four or for three five years at the least. >> when this country you leaves the european union we will have control of our budgets and we .ill decide how to spend catastrophe. be a but especially for the united kingdom. x no deal is a bad deal. it will be the worst deal of all. >> the hard brexit has been chosen by the british side. it is a mistake, mistake for the united kingdom and certainly bad for i would say the european and global economy. that is simply unacceptable. >> now is not the time to talk about a settlement. >> there is no reason to pretend that this is a happy day. not in brussels nor in london.

>> we should be coming together as a united kingdom. manus: a host of forces here in the u.k. that was part of our brexit day coverage. let's bring in john rate. her letter talked about a deep in special relationship but she prodded the situation putting security in their 11 times. some say it was a conciliatory letter. others see it as provocation. guest: it was as expected. there was some fairly logical and rational thoughts but they were the ones reflecting the u.k. side of the argument. when we heard back from the eu swiftly afterwards it were also sounding fairly conciliatory and putting their side of the argument. when you look through the warm words it is clear that there

were -- was a wide gulf between the two sides. we -- you think the difference will be hard to reconcile. many have pointed out and even in the letter the party out the challenges in reconciling and achieving what is needed in two years. the questions remain unanswered until close to the deadline. >> that is the biggest worry to us. the differences are very marked. because of that and because from the eu side, there is a logic behind negotiation tactics, to wait until late in the day before giving ground on some of these things. it seems likely to us we have a day to be set in stone and the closer we get to it the more businesses, consumers, markets worried that we have a lack of clarity about what lies beyond. manus: it is a most like we are

tethered to two years of deep uncertainty. from a bond market perspective for you, what are the consequences? matchingpro quo is the -- are ratcheting in inflation. this is what your world looks like. these are the issues for markets which is the propensity for further inflation. have we peaked in terms of the move? asked: we think so in terms of market inflation expectations. not in terms of the headline inflation. the following sterling started in late 2015. it accelerated after the referendum last year and that is feeding through into the headline numbers. whereas we were suggesting the u.s. were getting close to the peak in this current uptick in inflation. we are not there he at in the u.k.. the bond markets have a lot to wrestle with. they are saying headline inflation accelerate.

that would cause bonds to sell off but they have these much greater and more persistent worries about what is going on in terms of negotiations and for the real economy. it is not in the headline or the numbers but it is in the bond market expectations, you think. guest: the following sterling has been going on from most 18 months. the rise and energy prices and so on which has corrected a bit recently, it is well-established and people can see what that is through two in terms of year on your inflation. the question is whether the it will prove sticky or whether after a time it used to be a temporary flareup and falls away. 15th: the minutes from the of march, some members noted that it would take relatively little further upside news on the prospect of activity or inflation. morehave to consider

immediate policy. we talked about it several times, that is not screaming from me that we are at a point, this is from brexit last year, that we are at a point where conditions are fading. de it out for two years? >> we only have one of nine members voting for a hike. it is open to interpretation. emergency, they did a qe. could they unwind that without much hassle? guest: arguably. we would suggest not. the problem is or the issue would be as you are seeing once you take a step down that road of tightening monetary policy the markets are trying to interpret when you're going to move next. you do not just guess unless you

commit to one move and then the market assuming nothing will happen again. might need it you in the future. >> arguably. anna: there is a weakness in the data that you foresee. guest: exactly. although growth has been strong that does not mean it was necessary. you can argue that some of that strengthening growth is because of what they did. i do not buy the argument that it was totally unnecessary. it does seem counterintuitive to me. we do think that the data is going to soften potentially materially. this will be how they respond to that weather than how they respond to the current picture on inflation. message.at is the some highlights ahead.

anna: there is the german inflation at 1 p.m., that is where we are now. half an hour later is the u.s. gdp. manus: mexico's central bank also makes a policy statement. coming up on daybreak. hawkish on hikes. boston fed president eric rosengren said for rate hikes in 2017 should be the fed's base case. that is next. this is bloomberg. ♪

anna: welcome back. it is 1:18 p.m. in hong kong with a hang send trade is down. australian market is outperforming because of the energy exposure. let's get the bloomberg business

flash. deborah: the galaxy s8 represents the biggest prospect for a turnaround after the note 7 debacle. besides new features like encrypted facial recognition, samsung is touting the safety of the phones that are a. -- phone's battery. the billionaire called the investment i huge mistake. causing his fund that's costing his fund $4 billion in losses. southernwner of company flew to toshiba to look them in the eye. his remarks came less than 20 for hours after toshiba's westinghouse electric unit which is contracted to build the unit

filed for bankruptcy. >> we will evaluate the data in terms of schedule and make whatever decisions we need to make but i am here to look the ceo of toshiba in the eye and work in a constructive way to get the work done. debra: that is your bloomberg business flash. eric rosengren has -- said the central bank could raise rates four times. anna: he called for a hike every of the meeting. >> that would be much less that we did when we were coming out of a recession. we were raising it every single meaning. it is twice as fast. relative to that this is much more gradual even if we did it every other meeting. sitting out his case for the federal reserve.

our guest is still with us. rosengren channeling greenspan in 2004 2 2000 610 17 hikes in a row. 2004 through 2006. hadt: more members who thought it was the right night -- number of hikes. the debate is moving in that direction. lots of moving parts to consider. they do have issues about inflation getting up toward they need toand respond. they do believe the recovery is on track and strengthening. they expect some fiscal stimulus and other measures to boost growth. they are trying to respond to that. ruby is uncertain about what could be achievable.

janet yellen noting that only some policymakers had so far factored into their forecast a potential fiscal stimulus. depending on what policy you get you could see others joining that or some darling back. firmerfor want of a ground to stand on we think that three is the right number of hikes. that is the message as the median consensus forecast the fed is sending out and there are dovish and hawkish leanings around that. it seems to be the main message and the front end of the curve has been relatively stable. spread, we is the peaked out at christmas and we have been flattening ever since.

blue.s in the can that sustain? this is as much to do with what happens and what the perception is at the long end for these curves. guest: there are different factors driving this. what we have seen since that is the resumption of a previous trend and that is related to the rate hiking cycle. what you tend to see is hikes seem to be timely and keeping inflation expectations under control as front and yields rise and high rates are priced in. there is nothing to react to. the view of the fed is timing this correctly means the 10 year treasury is relatively subdued. you see is the flattening of the curve. the debate continues about the number of hikes and they keep stepping down that road moving the front and to higher levels. this would be more gradual from

here. anna: do you think the fed is trying to guide the market to something that looks less like gradual hiking and more like a measured pace? is the fed trying to guide the market into considering that or is that overstated? for central banks starting so loath the main priority is to get rates to a materially higher level without rocking the boat. in moving to early or shocking the markets and creating a bigger reaction at the front and, you can almost undo your ability to get them that much higher. they are seeing some better data, signs of fiscal stimulus and seeing inflation pick up. they do not want the markets to be caught by surprise. they intend -- that is why the keep talking about the hikes. manus: the giants we had before was on message. here's a little bit, tell the word.

it is coming. here we are and to get a sense of a much more fractious fed. we have had a for id of speakers. -- i think we will get lots of dissent. that will rock the bond boat. guest: it might do. if we get to dissent and there is a lack of clarity that is something the bond market will not enjoy very much. what that tells you is that. they are tumbling in the dark especially about what the new president may or may not be able to deliver. as you had from central banks trying to sit monetary policy, it can be done in the context of what fiscal policy has been. they are somewhat feeling their way as they go. different members with different weights and probabilities on things and that is what you get different messages. as soon as we get clarity on the fiscal side from the point of

view on the monetary side, the better. anna: i guess what matters from your perspective is how much stimulus will be created by a suite of tax cuts and how much is that going to be paid for by the tax outside the u.s. >> for the treasury market there is a question of how much they will be borrowing as a mechanical presence in the market. there is the nature of any changes to taxation and what that will do in the markets to economic growth, whether it will boost it or would -- or to what degree. are wider repercussions as well. manus: tomorrow we will bring you to more exclusive fed interviews. we will be talking to williams dudley and jim bullard. anna: the u.s. secretary of state meets with president under

one at a crucial time for relations between the two countries. we'll go live to ankara for an analysis next. this is bloomberg. ♪

manus: it has gone to 3 p.m. p.m. 0 global equity markets are worth 71 trillion and counting. let's put some perspective in these markets. perspective,f global equity markets might be marching higher. europe and the u.s. closed higher yesterday but asia not quite following. the index is a little bit lower, the shanghai composite heading for its do -- biggest decline since december. austria doing all right on the

commodity producers moving higher. in terms of the dollar we are seeing a little bit of a stronger dollar driven by the ericsh comments from rosengren and john williams. one10 year yield up about basis point. a little bit of weakness in metals coming through. copper and nickel down there. you mentioned dollar-yen, a spot price worth 111.0. this shows the option market is sending a signal that currency traders may not like which is that the dollar and dollar-yen may be stuck in a range for quite a while. volatility has dropped to the lowest since 2009. you are looking at the white line there and that is against realized swings showing that investors are normally sanguine about the future. real volatility should decline if option traders are right when he perhaps to a newer range in

that spot market. something to keep an eye on here. we are talking frexit big-time this morning. you have talked a lot about sterling, i want to show you the u.s.-new kid 10 years spread. -- this was the day lookre saying that gilts expensive. markets opening at 8:00 a.m. u.k. time. at $49 a barrel. branch at 52. futures are holding the gains after rising more than 2% wednesday when u.s. government data shows gasoline inventories dropping more than expected. you can see as well on this chart what has happened to the stockpiles paid quite a significant stock there. anna: thank you.

a new edition of daybreak is available. let's look at the top stories that have made it into today's edition. cover here, the great untangle. theresa may's government will outline its plan for converting thousands of eu law into british legislation. broader rule-making powers to help plug holes and something you might want to be aware of his we might be hearing a bit about henry viii towers which sounds daunting. it scared the opposition. we were talking about that yesterday. it is to do with how much power is given to the government to make the necessary changes to legislation as they are brought into and off the u.k. books. manus: next story app is the fed.

three hikes in 2017 should --tainly be considered as should be considered. reporting the profitability shrank to an eight year low. millionthreaded $38 during that time. manus: the u.s. secretary of state rex tillerson has sent out --ks in anchorage with his with president erdogan. they all are sure to be on the agenda. the: joining us now on phone. how contentious will be the discussion? give will be to contentious. this is a certify gets know you

conversation for the new secretary of state. ally -- theal challenge is that the u.s. relationship is in flux. an iffy ally. sometimes there are some what the u.s. sees as concerning trendlines in terms of the closing of political states and the arrest of opponents of president carter one. manus: what can we expect tell us into tell everyone -- telleson to tell erdogan? they believe that kurdish fighters are in large part of the way to defeat the islamic state. this is definitely something does not wanthat the kurds to participate in this campaign.

what we are hearing now is that it is a situation where tillerson said this is how we are going to win this fight. where going to have to deal with these guys for now and try to smooth over any intention over that issue later on. anna: thank you for joining us. joining us from ankara in turkey. let's move on. finance minister of closer integration and cooperation is necessary and it will benefit italy. she also weighs in on risking nothing. >> if there is stronger support for the european project not just italy will benefit. it is not just about winning elections. it is about using the political mandate that hopefully will get

to change her up for the better on with integration. this has been a success story for 60 years. we have line -- signed and an important result. let's translate the principles into policy actions and fact. >> what happens if the -- if marine le pen wins? >> it would be generating negative contention. let's not forget that the temptation to leave europe is widely spread in a number of countries. >> with that hurt yields, or the spread between italian and german yields and with that hurt a lot of your financial institutions? pricingts are aggressively political risk. the victory of marine le pen could be of permit political risk to europe. i expect we reflected in

potential markets. manus: let's talk about political risks in europe. interesting comment at the very end. the markets have begun to price political risk. is that we have focused in, that way away. nine were like lasers and marine le pen. do political risks go away of the pen does not exceed the power? guest: this affects the eurozone and sovereign bond valuations as the probability ebbs and flows. if that is navigated in a way that keeps a relatively mainstream candidate in power, there will be some really for affected -- reflected. it will not be the last. the effect -- elections have come quick and fast. then we move on to

germany. not quite the same story. talking about the imports and -- importance of carrying on with the integration project calling that a big success story. assumption because this has a bearing on perhaps -- convergent you see france coming around here. >> we are reasonably up the on the outlook for growth. it continues to take over around trend rates. the ecb can carefully start reducing accommodations but when it does it takes away if you like the cover it has put over a potential factors. -- leaves bond markets much more able to reflect what they see as the genuine risk. as we get to that point it is important, debt metrics seem to be under control and eurozone

politicians and policies are moving in that right, harmonious direction. manus: the question is the directionality. just a couple of lines coming here. fillon. anna: calling for firmness in talks.xit -- brexit saying the eu should not seek to punish the u.k. fillon is not leading the pack in terms of polling. we are mindful of that condit debt -- of the comments he gets. guest: punish is the wrong word. the message has been there is clearly an imperative for the eu project. and that side of the equation as they also acknowledge not to

leave the u.k. in a position where not being in is the same ofbeing in and -- in terms the advantage rent -- advantages. manus: i have got the bund curve, which is steepening. because there is this whole discussion on timing, if they are on hold from now to the end of the year. we are speaking of [inaudible] flattening in treasuries. do you see the ecb doing anything rhetorically? guest: this is a cycle that tends to flatten the curve. we have seen better growth. we have seen yields rising if you go back to last summer, that steepening of the german curve -- been about higher, lori

longer and yields rather than anything happening in the front and. there has been a more active debate about the rates question and does the [inaudible] we do not think they do. they need to get out of qe. they need to start tapering. from some members of the ecb. when you look at the metrics of the underlying bond market the need to stop tapering rather than stick with their current roles or they are going to run into issues with a lack of bonds in the market. for us, the tapering debate will gather stream. they will not start tapering until the beginning of next year. once everything rented cores we might talk about -- runs its course we might talk about rate hikes. we have had a number of discussions and some people are saying this swaps market is tore is a 50% possibility

possibly zero by q1 of next year. guest: you have to be careful. what we do think is going to happen in the next meeting or two as the ecb is they will change the language about the [inaudible] and start talking about rates being at these levels or lower. -- you are noe longer pricing in any significant chance. when you look at the balanced probability it gives you a slightly higher level. some people may think that there is a 50% chance or whatever it might be. anna: there is expectations on medications. , as the ecb is looking in some way at some

point to get away from the policies that you say have held in some cases the eurozone together in terms of the rate story, are the eurobonds back on the radar? maybe it is another time for a show of support or solidarity. questions about the longer-term direction of travel and whether there is any sort of moved toward a fiscal young and one that remains unanswered. arguably from a fundamental point of view it has to move in that direction to keep all of those spreads and relationships stable over time. manus: thank you for being with us. you can watch everything that we do hear it live on your terminal at tv . anna: you get the video stream but you get charts and the other functions we have been using.

you can call this up and get in touch with the producers of our show with the button at the bottom of your screen. manus: wechat looks west. sights on europe. we speak to the social network director for the region next on bloomberg. ♪

anna: welcome back. this is new york where it is 1:48 a.m. s&p futures suggesting we are flat at the start of the trading day. the general tenor has been negative in asia with some exception -- exceptions around the energy sector. let's get the bloomberg business flash. while samsung has

unveiled its new smartphone to presenting the biggest prospect for a turnaround after the note seven debacle last year which had a tendency to catch fire and exploded. it has encrypted facial recognition. it is touting the safety of the phones that are a. saying he iss deeply and profoundly sorry for his investment in valeant. the investment cost his fund about $4 billion in losses. southern company flew to tokyo to look the head of to sheba in the eye. thomas manning wanted to finishing a nuclear project in the state of georgia. his remarks came from -- less than 20 for hours after feltba's westinghouse unit for bankruptcy. >> we will evaluate all the data in terms of scheduling and make whatever decisions we need to

make. i am here today to look the ceo of toshiba in the eye and work in a constructive way to get the work done. receivedlkswagen has sellval by the epa to repaired diesels. that is your bloomberg business flash. you.: thank let's talk about messaging. chinese messaging at we chat, more than 700 million users. unlike whatsapp and snapchat it is raking in the advertising dollars. add revenue at a record high in the third quarter. anna: can the company repeat that success in other parts of the world. wechat's director.

there are plenty of other messaging services. this is not about going after european consumers, it is going after european business that want to operate in china. that is right. a lot of western brands are keen on serving chinese customers. direct access point to those people. what we are realizing is it was not easy for those brands to understand how to best leverage. directlying to talk with them to give them information and support to do this. in london, started it is a strange time to start u.k.,sses in the

are you following the chinese tourist, is that the ambition of wechat? , this was as success in italy and we thought the u.k. was another important step in doing this. france, central europe, germany will be next. we will see. was an important step here. tencent have the intention of rolling out payment services, you can imagine the affluent chinese tourist in europe. that might be a way to go after them. guest: that is the plan, we are working on it. the endpoint of the marketing journey that they can offer to their clients. we were -- we wanted to find the

most way to put all the pieces in line. it is in the plan. targetwhich is your next country, as it france and what size can the business scale up to, is this a billion dollar business you will build? guest: probably, the plan is concerning italy, starting u.k. and look into other opportunities across europe. chasing the big brands and big clients we can find and we will know where to focus. it is driven by two elements. anna: this is a big clinical issue in some of these western markets you are trying to do more business and. -- business in.

about a been talked lot. platformxtent is your encrypted versus the rivals? privacye got the security certification in 2014. it is something that is managed by our chinese office because this is a service delivered in china. cooperate with local enforcement agencies. manus: the other dynamic around that is one of the great issues with china, it is fake, it is imitation, it is getting caught up in that world. there is the robustness of wechat.

already signede up. manus: it is about the robustness of the system from encryption and from keeping my brand clean and sacred. is that one of the big hurdles that you are facing on the market? a marketplace.ot we are a kind of internet. we allow brands to have their we official accounts and certify them, we verify them. we ask them for verification. the: you can be sure that brands do not appear against adverts or fake products. guest: they manage their own channel. kind of in them as a thewest, the website is apps. companies are of

you targeting? are you -- is it luxury? the made inave italy, made in britain brands. you have all the travel related chains, travell airlines. is it half a billion businesses or half $1 billion? e $21 billion company. it needs to be scalable. manus: thank you for journey as. anna: we are hearing that belgium is saying that lloyd's of london is planning a new unit in brussels coming after comments yesterday, the news thatrday from reporting lloyd's of london is going to name a new eu have. we are getting the results from

lloyd's of london. we will speak to the company later. manus: we continue the brexit discussion as we move forward. this is bloomberg. ♪

lives today the u.k. details of how eu a lot will be moved into u.k. law. eu leaders challenge may's bid to tie free trade to security. anna: eric rosengren argan -- argues that four hikes will be needed to protect the economy from overheating. manus: italy's finance minister says the country's banking problems have been solved. banks isoblem with the being solved in the sense that there are some critical points but now we find the solution within a european rule context.

manus: you're welcome to bloomberg daybreak europe, our flagship program. anna: very warm welcome. it has gone 7:00 a.m. in london. have you been on the high street question mark sales have risen 7%. first quarter gross margins, 52.1%. the estimate was 1.4%. margins are rising. first-quarter net income is comfortable, 2.4 6 billion krone. the new brand will be launched,

[inaudible]alled profit,comes to pretax bit abovecomfortable the pencil number. state of play in clothing. quoting the been belgian finance minister. lloyd's of london plans to set up of european unit in brussels. that brussels has been picked by lloyd's of london as their new outside of the u.k. headquarters. we do not have confirmation.

the one in london due to report numbers. ares: more corporate's giving information about where there -- they are moving to. to include wanted financial institutions in her negotiations. london up by .6 of 1%. the cac is dying flicking between green and red. european equity futures, month five of a global equity rally. the paris market is deciding whether he wants to rise or fall. anna: let's have a look at the risk radar. andalked about the pound how you doing on the ftse or other currencies. keeping an eye on the pound given the selloff, we saw it this week. at one point -- 124.

that in as well. in66 heading up by 2.4% yesterday's session and we're holding onto the gains. oil stockpiles increased but less than had been estimated. that was the headline story in yesterday's session around oil. manus: we are using more oil than the u.s. the gasoline inventory dropped more than expected. exports from opec dropped at last week. that is bolstering oil. mcdown.ific is -- we are waiting for the next wave of the equity story in terms of tax. do onwhat can trump capitol hill? the topix closed at 9%.

juliette: prime minister theresa may's open offer ran into immediate opposition from eu leaders. the eu is challenging her attempt to tie a free-trade trade deal to security cooperation. -- the greater appeal bill is intended to adopt eu rules and to british law. the italian finance minister said the country has solved its banking problem in conjunction with the european commission. the problem with the banks is being solved in the sense that there are some critical points but now we are finding the solution within a european rule context. address thoseill problems which are the legacy of a very prolonged and deep recession in the economy. trumpte: president donald

will be briefed on various ways to implement comprehensive tax code changes. according to people familiar, trump will be presented with possible options by a group of officials including gary cohn. one of the proposals is the border adjusted tax. staying in the u.s., trumps revised travel ban remains blocked. a hawaii judge had extended the saying thealt campaign had signs of discriminatory intention. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . having a look at asian markets as they close, you have -- seen asx 300, japan and hong kong

taking away from some of the gains. sot also got dollar strength a load of asian currency weakness. we are getting toward the end of the month. of moneyeing a bit coming off the table in these last couple of sessions. in terms of stocks that we have been watching today, plunging the most in hong kong the most in four years, it did miss with sayingnings and goldman the top line growth in 2017 would remain a bit challenging. to coming back online after we heard that confirmation yesterday that its nuclear business westinghouse have filed for bankruptcy. it will sell its memory chip business as approved by the shareholders to pay that debt. and having a good run with dengueental vaccines for fever. the share price of 4% in the tokyo session. hong kong retail sales coming through in an hour and a half and they are expected to be in the red. you can see there is weakness in

hong kong retail sales in twice 14 when the club -- clampdown came down on spending from china. europe -- year on year. applicationsthe playing into their retail space in hong kong. thank you. we are getting breaking news from lloyd's of london that they opening an eu insurance company in brussels and trying to get ahead of the brexit process. also giving us their numbers, pretax profit 2.1 billion pounds. this is a market for risk coverage. the questions around the 11% or less of their business, that is the market value that comes from

eu companies -- countries. they are making this move as a result in brussels. bloomberg will be speaking to john nelson at 10 past nine u.k. time. that conversation later on. manus: frexit against. the u.k. triggered article 50 of the lisbon treaty setting the stage for two years of negotiations that lead to britain's breakup with the european union. here are some of the highlights from but was a historic day. u.k.'s permanent representative's to the eu handed a letter to the president mythe european council on behalf confirming the government's decision to invoke article 50 the treaty on european union. >> we will remain united also in the future during the difficult negotiation to head. >> we will never accept for example that behind [inaudible]

that the u.k. is starting trade negotiations with other the withdrawal. >> my from expectations of the european side will want to negotiate the secrets of the divorce -- sequence of the divorce settlements and then future status. >> the u.k. is a full member of the european union with all the rights but with all the obligations. >> there is going to be some uncertainty in the marketplace for another three or four or five years at the least. >> when this country leaves the european union, we will have control of our budgets and we will decide how much money to spend. >> the scenario would be a catastrophe. especially for the united kingdom. >> as far as i'm concerned, no deal is a bad deal. >> the hard brexit has been chosen by the british side. it is a mistake. it is a mistake for the united kingdom and certainly bad for i

would say the european economy. that is simply unacceptable. >> now is not the time. pretend is no reason to that this is a happy day. not in brussels are in london. >> we should be coming together as a united kingdom. joining us now in the studio to talk about this is mike bell. i guess the challenge for everybody and markets over the next three years is going to be leading between the posturing and the noise, reading between that and the facts of what we know where progress has been made. that will be a bit challenging.

>> it will be almost impossible to do. if you are an investor over the the two years you have starting of an incredible time of uncertainty. if you are trying to pick what sectors will outperform, our clients have large over weights to mid and small caps. big bets is increasingly not that good an idea. it would be better to take the risk in a little bit. closer to benchmark. still taking small bets on what notanies can outperform but those that have not worked out. the uncertainty will be nine possible to predict what is not -- what is going to happen. manus: we were talking an hour ago about the ftse 100. pounds. highs in you need to be selective

now, oil is under pressure and people are raising prices, shrinkflation, there are many issues at play in the ftse 100. do you scale back aggressively on that and look elsewhere for value? guest: an argument is you should be rightly neutral on the u.k.. there are plenty of opportunities elsewhere. when we look around the world we see that most of the global emerging markets, you see this synchronized upswing and growth. there are opportunities to be overweight in the u.s. and european equities which is where we are adding risk at the moment. in the u.k. the uncertainty is too high to make it worth betting the house either way. anna: in terms of how central banks react, the bank of england taking action that it did after the brexit vote. the question is now how long do they stay with this loose

monetary policy? bloomberg intelligence said they will hold for the next two years through this uncertain negotiating process, is that your view? guess: it is. it seems ago strange backdrop to be raising rates. they will cut rates so the question is on the going to put rates up? there is a small possibility that you could see a removal of that emergency 25 basis point cut that came after the referendum. we think that is not the core scenario. the rates stay where they are for the next couple of years. u.k. inflation will head up to around 3% in the near-term and come back down relatively quickly. manus: these are the break evens. 100 basis points in a year. i asked the same question to john rate. how do you work with that? are we at peak inflation or is

that linked to oil and the pound. how do you look at that, how do you trade around that? guest: we do not think that inflation makes bonds attractive. breakevens look too high to us. long break even inflation and the u.s. where we think that can move higher. in the u.k., inflation can go to 3% in the short term but the likelihood of getting off the average of 3% over the next decade seems pretty low given it is a decent chance of getting a recession in the next few years downwardyou will see pressures on inflation. and a: a decent chance of a recession, you said. >> we had eight years now since the last recession. the has not been a time in the post where -- postwar where recession's have not come in 10 years. this may be the longest recovery because we had a steep decline in the economy post 2008.

to say there will be a recession in the next five years seems almost inevitable. anna: thank you very much. staying with us here on the program. tax.: trump tends to his economic- with advisers to consider his tax overhaul options. will he be successful when health care has foiled him? this is bloomberg. ♪

anna: welcome back. 7:19 a.m. in london. let's get a bloomberg business flash. unveiled samsung has its new flagship smartphone, the galaxy s eight represents the biggest aspect for a after the note 7 debacle last year which showed a tendency to catch fire and exploded. besides new features like encrypted facial recognition

they tout the safety of the phone's battery. bill ackman said he is deeply and profoundly sorry that he and -- invested in valeant. he called it a huge mistake in a letter to investors. it cost his fund about $4 billion in losses. that is your bloomberg business flash. manus: thank you. today, donald trump meets with the head of the national [inaudible] gary cohn. they will talk about tax on the overhaul options. anna: joining us now is jacqueline simmons. jpe bell also with us from morgan asset management. where companies divided around it border adjustment tax, depends on what you do over that border essentially. are applyingns you a 20% levy on imported goods. theywill drive up prices,

will pass it on to consumers, it will have a huge impact for retailers who rely on imported goods. net exporters a different story. saidney has come out and it is not good. anybody, walmart, this is bad for. other companies, nike are against it. there is a growing crescendo around not having the adjusted tax. manus: a number of voices have acknowledged they do not want mr. and mrs. walmart shopper to be penalized. but it is irreconcilable in my mind which is what are you doing, is a corporate tax for business, middle-class taxes, how do we expect this tax reform to play out? it -- will it be business tax unique?r will it be guest: this process is getting kick started today. -- in thession

discussion they are throwing things out there. there are other proposals that will be put forth. another idea that is being floated is why don't we lower to 25% and getax rid of certain deductions and benefits two health -- to help offset. that is important they do not drive up prices. anna: thank you. ike, stay with us. we will talk about this and bring in the fed angle. eric rosengren said the central bank should be prepared to raise in 20 72 gotmes against overheating the u.s. economy. non-voting fomc member called for a hike. we were raising

at every single meeting. this is much work gradual even if we did it every other meeting. anna: mike bell is still with us. what you make of the latest comments, does that sound like agile, every other meeting, does that sound like a gradual rate hiking cycle or are they appearing for something different? guest: it sounds about right. we thought the price is too low, we thought at least 50-50. is a possibility and four next year is a base. bond yields are going to go higher and this pullback we have seen does not have legs and the trend for bond yields in the next 12 months will be higher. the u.s. tenure could hit 3%. -- 10 year could hit 3%. thes: this was one of

national broadcasters talking about security. is saying that security has to be renegotiated in this exit talks. that he -- the u.k. would not withdraw from security cooperation. anna: this is not that kind of security. idea thatloating the they take that information with them. there were yields going higher. consumer number. how much higher to rates go in your view even without factoring in a great deal of fiscal stimulus from the trump administration? guest: there has been a lot of focus on the trump administration and potential tax policy.

what you are seeing is the data is picking up almost irrespective. you have one of the strongest readings in a long time and shootingconfidence is lights out. the has justified the rally that we have seen in equities even if you do not get this kind of movement. you look at the tax and what could happen. a large corporate tax cut could be positive and we do not think that is fully priced. we start to think about concerns around the border adjustment tax. we want to focus on the companies that will be least someed area if things like of the tech companies that have large exposure to imported goods, stocks like financials have next to no exposure and they also benefit from the high yield. manus: you just talked about high stocks. is lookingtion here rather interesting. you have got both moving in opposite directions 80% of the time.

the inverse correlation is the lowest levels from april 2005, we are in for a fatal shock. would you agree? i would agree with is the probability of a relatively small pullback in markets is probably building. just because we have had this [inaudible] where markets have marched upward and every year you get a 10% range. the we were not argue that you will see that this year. the cards say what the catalyst will be ended can imagine various things. we would be buyers. given the strength of the economy, the probability of recession is as is -- as low as 10%. anna: thank you for joining us. 7:26 a.m. in london, a 20 6 a.m. if you're in berlin or paris. we will bring you to more exclusive fed interviews. william dudley and jim bullard.

manus: equity markets are set for a slightly lower opening. can the oil companies maintain there'd dividends? the european open is next. ♪ live-stream your favorite sport

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season one of... show me house of cards. xfinity watchathon week starts april 3. get unlimited access to all of netflix and more, free with xfinity on demand. ♪ guy: good morning. this is the european open. i'm guy johnson in london. matt miller is back from brussels and firmly in berlin. offense to defense. u.k. prime minister rhodes opposition from eu leaders in her bid to tie retraced to security. pimco's perspective and positioning on brexit.