♪ boom, japan's experts -- exports surge. will consumer start spending again? rise, asian markets are high. they have for their first weekly gain in over a month. >> we get a gauge of consumer strength with two industry giant reports. we will hear from them in around 15 minutes. ♪

>> welcome to "bloomberg daybreak: europe." i am in the city of london and i am joined today by by meme matt miller. there is a lot going on in markets and i'm looking forward to seeing how this develops after yesterday straight or it -- yesterday's trade. anna: asian stocks might be getting a bit because of the japanese data on trade, but also because of the oil price. thettle bit of recovery in oil price. what we saw yesterday was significant. nymex showing the oil might be bouncing a 10th of a product -- a 10th of a percent this morning. the session was pretty significant. this is at 78, if you want to bring this one up on your screen. they were down by 3.1 percent.

u.s. stocks taking a bit of a hit as a result of that. inhave to put that oil story because we have stronger trade data out of japan. it is courting people's imagination over in the asian trading session. matt: i will take a look at some of the things on your risk radar or it take a look at the euro-dollar. saying,had an analyst if things go horribly in the french election first round, meeting la pen. jean-luc see -- melenchon is saying you could see the euro moving. hearingear yield we are on the mliv blog. i look at it every morning to get situated in the markets, but you could see a short term bounce in yields the for they come back down. right now we are down one basis

point. 2.2, pretty low level. a move down would be significant. i want to bring this up, i realize it is close. the i wanted to see was close of trade yesterday. it is a similar number. a gain of 2%. it was the biggest gain that we have saw since the beginning of the year, since january. even though futures are up, the percent missed price shows we could see it go up and down. i just want to point it out, it is such a big gain that it could be a loss today. let's get to the bloomberg first word news. japanese exports grew at the fastest rate in more than two years in march, supporting a moderate economic recovery in the base of domestic demand. most double expectations. at the same time in ports are just 1520%. the biggest gain in more than

three years, leaving a trade surplus of $5.64 billion. secretary of state has heavily criticized the 2015 nuclear deal with iran. rex tillerson says it's only delays the country's ambition for weapons of mass destruction's and did not take into account the destabilizing of other countries. it is the strongest signal to eight that president donald trump may walk away from the agreement or it -- agreement. >> the trump administration has no agreement with iran. evidence is clear, iran's actions threatened the united states, the region and the world. till let moreeeds participants trade on short. a market dominated by commercial banks before lifting capital control. a former director of the international payments china's state

administration of foreign exchange. he won't see any changes before china's party congress later this year. is the markets leave -- they need to maintain the stability of the rate. not attack the currency. recovery is becoming more solid. the dollar index is not so strongest the market expected or it -- expected. it could get support. debra: global news 24 hours a 2600owered by more than journalists and analysts in more than 120 countries. this is bloomberg. is five minutes after

6:00 here in london. let's see what is going on with equity sessions. five minutes past 1:00. sally has details of how the trading date -- juliette has details of how the trading day is shaping up. bars move backw into the market. it has been a good day across the asia-pacific region. by threethe nikkei up quarters of 1%, or a third of 1%. some good moves coming back in the cfi 300. shanghai has been on it for the last few sessions. the australian market is well supported. thoseound coming in material prices. but see what we are looking at stock wise in the region. this is on a report from the taipei economic, that it will supply apple for the iphone eight with a new touch panel lamination. this has been unconfirmed, but by listening to that report.

what -- rid ofng one of their popular features. apple users do not seem to mind this. we are seeing it higher. deutsche bank has put a total of 51 are still you and price tag on upgrading it to a buy. moody's coming through saying that they will lose its monopoly what the telecom coming into them market. that could way negatively on the stock. trade datajapan coming through. the blue is import rising. 16.8 percent, that was the biggest jump we have seen in three years. check out the exports, they were very strong in march. 12% well above estimates. you are seeing shipments to china very strong. it was moderating a little bit from europe and the u.s. this picture of japan trade, rebounding somewhat and looking very good in terms of the overall global economy. matt and anna. matt: juliette saly bear in hong

kong. days away from the first round of the french presidential elections, which take is on sunday. every poll for the past month has shown emmanuel macron and marine le pen taking the top two spots. a poll has emmanuel macron with 24% and marine le pen with 23%. andblican francois fillon jean-luc melenchon are tied for 19%. marine le pen held her latest rally in marseille last night, how did she try to galvanize her troops there? big rally the last before the first round on sunday. to where suspect to be rested.

marine le pen is trying to take advantage of the situation, directing her speech further throughout the far right. subjects of immigration and security. her rally gathered around 10,000 people. rivals justt her want to be in a gigantic crush. housempared trump to a and preventing it to getting burgled. she ripped pete it -- she repeated that she wants to -- and foreigners back home. the problem is that the two suspects arrested in marseille

were actually french citizens. the anti-immigration speech is helping her base, but also preventing her from extending it. macronow are emmanuel and jean-luc melenchon trying to secure their place? rallyheld his last big and tried to respond to the critics who don't really see him as a head of state by positioning himself as a military chief. he said thank you to the special police forces. they were there to protect his rallies. taking pictures with the police forces. leading them. -- tweeting. he was joined by the defense minister. meanwhile, the republicans also try to show some credit unity by

appearing side-by-side with the mayor and the former rivals in the republican primaries. candidates will give interviews 15 minutes each on national television. the debate was planned but jean-luc melenchon refused saying it was too close. thereshe had the latest from paris. let's talk about the french election. what kind of challenges this poses for investors? -- chief ofist economists joins us now in london. thank you for joining matt in berlin and me here in london. chart,d appear on this if anyone wanted terminal wants to get a hold of it heard just of how investors are

preparing for the french elections. they are using these contracts like never before. in terms of the amount of hedging they are doing. we speak to guest after guess who says the political structure of the election, we are not worried because marine le pen might do well in the first round but will not win in the second round. things will be pretty much like they were after the elections. how relax are you about the elections? >> i think it is an unprecedented -- unprecedented situation. i don't the get has ever happened before in france that we have had that kind of uncertainty. that is an issue for the markets in it of itself. to me, the big issue is the elections in june. of very fundamental question however gets elected in the presidential elections will be able to govern, and what kind of coalition that person might be able to put into place? it is a bit similar to the u.s. and many other countries around

the world where we see diminishing political majorities, therefore diminishing logistically capacities. i think that will be the outcome. anna: some countries seem to manage for a nicely with a parties, recommended or their of managed to go pretty nicely. it is hard to know how these people will be able to -- whoever wins, basically, what the coalition will look like. perhaps francois fillon on is the list uncertain person in that -- less uncertain person. we don't know what the jean-luc melenchon position will look like. they only have two deputies in the national assembly in france. they have 577 seats, that looks like an arduous task for then try to get them into place. senseit makes

longer-term. of course, if we had a surprise on sunday, and we got a marine melenchon intoc the second round, when it that spooked markets and throw everything off? i'm sure that would have a great impact on market volatility. nevertheless, whoever becomes president has to be able to form a government. that is where we will have the of the french system in the future. if we have difficulties with governments under any presidency, that is when the elements of this whole story is up there is a reasonably high probability that it will be a week government, therefore fewer structural reforms in the longer run than less gdp growth. that is how it is panning out. we talked about this as

unprecedented at the top of the show. do the french see it that way, especially consumers? is the uncertainty stopping them from going out and spending? seen any realnot support of that. on the contrary, the european economy in general, including france, in this case is holding up very well. private consumption has been driving the euro and french gdp growth the last couple of years. that is still holding up. surprisingly well, perhaps one could argue. anna: how does the ecb navigate this political party? whether the risks are still tilted to the downside. i think we definitely have a huge story coming to the markets going forward. meaning that, we know that -- not banks are

everybody at the same rhythm, but everybody is preparing for removing some of the liquidity that they have been so generous with since the 2008 crisis. become when this will withdrawal from the world economy, we do not know. sometime in 2019, this could actually happen. anna: marie, stay with us. we are hitting breaking news coming through from the world's biggest food company. organic growth, ignore any other numbers that might have flashed up earlier. growth, 2.3 organic percent. the estimate was for 2%. ones to be on that very single ledger. that is the headline we have so far about the target. nestle confirms 2017 forecast.

about how it would weigh on sales with the struggling u.s. chocolate business and the business in china. a contrast that with some expectations and espressos and other brands. 21 billion francs against an estimated 21.2. perhaps the movement of that easter had been feared. definitelyr is important for a company that focuses on chocolate. they have confirmed the 2017 forecast, the outlook of course is more important in most cases than the trailing early -- earning spirit we will continue to bring you a whole host of earnings today. , plus aother companies whole host of big names on bloomberg television. including dallas fed president robert kaplan and canadian prime

minister, justin trudeau. . big here -- a big day here coming up, the reflation trade deflates. will the u.s. fall below 2%? larry fink there is a good chance. we hear from the black rock's ceo, next. this is bloomberg. ♪

anna: welcome back, this is "bloomberg daybreak: europe." 121 in the -- 1:21 in the afternoon in hong kong. just shy of happy percent. but skip the blue bay business -- bloomberg business. bill o'reilly is leaving the network in the wake of a sexual-harassment scandal that has caused advertisers to flee his show. funny first country fox announced his exit in a one

sentence statement. the company and bill o'reilly have agreed that bill o'reilly will not be returning to the fox news channel. ebay shares have dipped an extended trade after investor enthusiasm and turnaround is working. they reported sales growth that reported to lag behind the e-commerce industry. they did not narrow the gap with amazon. just 3.7% in the first quarter, similar to the previous period. jpmorgan is planning to triple the size of its kind -- technology hub in new york city to increase space for coders -- coders and data engineers. the firm is in discussions with brookfield property to lease an additional 300,000 square-foot space in the upper levels of manhattan wesner hudson yard. a spokesperson declined to comment. that is your bloomberg.

the fed beige book was out last night, indicating the u.s. economy continued growing at a moderate pace in recent weeks. treasury yields have been marching lower as dow's begin to undo the reflation trade. bloomberg spoke to blackrock ceo about where he sees yields heading. in december, and generate, i said a few weeks ago, there is a 51% probability that the tenure treasure could go below 2%. i do believe there is no great uncertainty. matt: chief economist of wealth management is back with us. what do you think about the depth of the reflation trade? does it make sense that he gets unwound as may be legislation is more difficult to get through congress than investors would have thought? marie: yes, in any case we have

been more worried about the production is -- protectionist side of the agenda than the fiscal stimulus side of the agenda. if you putt -- fiscal stimulus into an economy that is almost a full employment, what we as economist seem to multiply, these are much smaller in that context. even if you do get fiscal stimulus, even if the size and timing of such a stimulus is still unknown, if it were to happen, its impact on growth will be smaller, i believe, than most people in the markets have been thinking. definitely, i see a lot of unwinding justified. matt: they looks like we are getting neither because we do not seem to be getting much on the protectionist side either. , though, already have if i may. the u.s. didn't find the transpacific partnership. that as a moderate,

0.3 percentage point but in a low modest growth environment. 0.3 additional growth would have been a good thing. we are not getting that because that agreement has not been signed. that is already an active protectionist measure. anna: i want to echo what matt is saying about 10 year treasury yields coming down from 2.6 percent down to 2.2%. the probability of a going below 2%, do you think that would make sense, given all the things that you said and that we would see a yield at less than 2%? that keepss the gift on giving. there is a bond rout -- bond rally at things that keep on giving. what happened to the 10 year yield is dependent on what the fed will do. i believe that the fed will shift its relative impact, in terms of what is used.

from the over focus on the federal rate, obviously balance sheets. anna: that is why you think there needs to be one more hike because then they focus on something else? marie: absolutely. the balance sheet has a greater impact on the 10 year yield. where the federal bond rate has an greater impact on the dollar. it is reducing the amounts that they have in the treasury. in yield at the moment. there should be upward pressure from the 10 year yield coming from this. matt: chief economist -- chief economist at indo, marie will stay with us here on "bloomberg daybreak." experts surge growing in the fastest at the last two years. we will break it down from the world's third-largest economy. this is bloomberg. ♪

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you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. the: it is too: 30 in afternoon in tokyo. you are looking at a live shot of the imperial palace there. it looks much less polluted than hong kong. 7:30 in berlin, 6:30 in london. that check out don't markets and go to my pal, guy johnson. guy: let's talk about what is happening with these markets are the first thing i want to talk about his fed fund features. this is the january 19 contract. it takes us -- and of next year. the market, as we continue to

trade off this reflation idea has taken us back 4.8. we are half of where we are on this dot plot currently. figuring that the market could the seeing to more rate experience we will wait -- two more rate hikes this year. the fed is pretty interesting. one thing that came out of it this morning was the oil move yesterday. what caught my eyes this morning was bouncing up this level, which i think is interesting. we expect these things to carry through, but it's a -- does seem to have found some support of these levels. see some moves on oil. we talked about this yesterday with the pound. we have been talking to traders. the fed seems to be getting back into their ranges. this is where the bulk of the price action is in this mid-27 level. we had some crude move through

the 129. we back into the range again. we are coming back down to this level here. i think this is where you may find some support around this 27 level. they attention as we walked through. politics will be taken away by the french elections over the next couple of days or at the pound story remains fascinating. we are going to respect those ranges. talking up the french election, this is continuing to be mine. i know mark cudmore, we have not priced much in for the french election. not enough risks against the for marine le pen. there are a lot of people in the markets trying to pay attention to jean-luc melenchon. we are seeing prices dip, but we have taken a step town -- a step down. round,ound and second taking us out of the extreme level. we do seem to be finding a base

year. nevertheless, the pulling over the 4-48 hours will -- where melen chon will be watch. people are watching to see if you will get through to the second round. let's talk about french food now. to sales organic growth. 3% high with the estimate at 0.9%. that is much stronger than what was expected. they have a recurring operating profit. sales coming in a touch above estimates as the topline sales numbers are 1.98 7 billion, a little above estimates. of theson behind some strength seems to be the american story for them. they have seen organic sales in the third quarter of 8% in the americas. that was an estimate of 2.8%. this is an area they are expanding in. they had jameson whiskey

expanding in the u.s. bourbon maker smooth ambler spirit. there are going some way to offset the stock they have seen in asia. asia down 2%. alcoholave the french story there and talk about what is on the front page of daybreak. a new addition of daybreak on your mobile. here are some of the stories that are in today's edition. we have to talk about what is happening with the oil price. very interesting moves in yesterday's session. opec cuts will be negated by the ministers meet next month to extend them. they will still be higher than when opec begin production in january. this is according to iea data. a complex picture there. we saw a big move yesterday, 3.8% down in one session. absolutely.

a lot of other asset classes follow where crude goes. very important to watch. the next story is pimco. are "kind of neutral on treasuries." the most overvalued markets pimco says her in japan. this according to the global credit cio of the company. anna: not a big fan their of japanese hans. we might talk about that any moment. daybreak focuses on inside the dealings beware. the u.k. embarks on 23 probes adding to the 70,000 over 16. that is more than double over any other year in the last decade. exports, speaking of japan, drove the fastest rate in more than two years, reporting a moderate economic recovery in the face of weak economic demand. exports rose 12% from a year earlier according to data

released by the ministry of finance. in porch jumped at 15.8%. its head to tokyo where henry is standing by. is the japanese economy editor for bloomberg news is henry. henry: it is certainly looking good at this point. we have had four straight months after a longwth string of measured numbers, almost a year. noted, mark's numbers were the strongest in two years. february numbers were strong as well, but there was some newtion about the lunar year holidays. in march, we saw a big jump in and as, exports to china strong growth to other asian markets as well. is goingmist see this

for a while, at least for the next couple of quarters. this is the japanese story toefiting from global growth what about the japanese domestic economy? will this be enough to get japan's economy going again or do we need something more domestic? henry: so far, the economy has been driven by exports. the export growth we are seeing now is certainly strong enough to keep it going at its current modest pace of expansion, which is around 1%, give or take. almost certain to see another quarter of expansion in the first quarter of this year. to, ifstion comes down the japanese economy is going to shift in the next year and gain .ome traction japanese consumers are going to have to start spending. we have seen some signs of

progress on wage gains, but not too much to get excited about. anna: bloomberg news henry joining us latest on the japanese story. marie is still with us here on set. i pulled this up on the bloomberg, it shows global trade flows. this is in the japanese perspective. what is telling us is that the big trade relationships of japan, china and the united states. what is interesting about the data is we have an insight into strength in china driving japanese exports, not the u.s. what does this tell us, this latest boom in japanese exports? is it about japan or the global story? marie: it is obviously doing to the chinese economy, but i think japan is an underappreciated economy in the eyes of investors. part of the problem is, the strong correlation we tend to have between the external value

of the japanese yen and the nikkei. that is justified to the extent that japanese firms are in the industries and export arian to forms -- firms. -- export oriented firms. there is more strength in the japanese economy than to just simplify it down to where the exchange rate is. matt: what you think about pimco's call? marie: balance sheets is like the catch phrase at the moment. this is also a balance sheet issue because we all know that 270%ese growth sets in japanese gdp. if they have assets that exceed their liabilities and is not an issue. i do believe this is the case. anna: the other thing interesting about the japanese story is targeting the yield curve. that is something pimco will reference. you see change in policy from the boj? tol better data be enough

cool the boj to stop and pick about what they are doing? central banks are starting to tighten or think about this. marie: i think the boj will be the last one in that case of removing liquidity from the market. at some point, it will, on the agenda regarding japan. probably after the fed and after the ecb. great chart here. it is 154 in the library. it is one of the earlier ones that we put into the #the library. it is a central bank library of the gdp. europe, in white you see the fed hovering around 25, 30 5%. japan.y see the bank of the balance sheet is so huge compared to their gdp. will that be a problem for them going forward? marie: another central bank that

has a huge balance sheet. indeed, what you are showing is definitely the case. central bank and swiss central bank are the two outliers and this content. sheets, we have to lick apple size. with your assets you need to .over the liabilities the demand for money and the money that commercial banks hold what the central banks are sort of the underlying trend that should determine what the size of the central banks balance sheets are. those have been increasing. what we think about reducing central bank balance sheets, there are definitely not going to be reduced to where they were in 2008 because the liability side has evolved or it just evolved. matt: there is a strong demand first with -- swiss banks. we have seen that pickup in the end down below 109 for the dollar. you see that continuing, how

does that strength affect japan's economy going forward? thee: i think that is problem, and why japan tends to be under owned because of the strong correlation between the equity market in japan and the , which isate partially justified but not wholly justified. i believe the japanese economy is doing better than most people think. you just see a slight appreciation in the exchange rate and the investors decide this is not an equity market to own. the valuation and other profit outlooks are quite positive for japan at this stage. anna: do you think investors make too much of that link? looking at the japanese trade story, this is where we started the story, we are talking about european growth. japan is a trade deficit with the eu. it has a strong trade surplus with the united states.

with that trade surplus in focus , we have heard a lot this week from mike pence about their friendship. japann understand why might think we will export a little more to europe. is that something they could get excited about the growth story in europe? marie: i think that holds out a certain promise. primarily, if you think the u.k. and the u.s. are going more protection is, there is a lot of scope for everybody else to try to fill the vacuum that these two anglo-saxon countries might lead an increase trade with everybody else. in japan's days, whether it is with europe or perhaps, more importantly, in asia with china and the other asian countries. shortly after mr. trump became president, abe went on the tour shortly after mr. trump became and i imagine what they discussed touched upon improving trade ties with the asian

neighbors. that is a winning strategy for japan. marie owens thompson will stay with us. she is chief economist at indo wealth management. if you get tired of our chat, we could use a little bit of help are a go to tv , we have a when youn here heard click into interactive tv, radio or even cover, you could see a blue link at the bottom of the screen that is going to allow you to produce a pay in this conversation. you can put your own questions for marie. just put the end to show producers there at the bottom of the screen. the guest a question, i believe is what the blue link says now. coming up, bitter will get it take of the first -- taste of the first quarter sales. plus, unilever is coming out. stay with us for a lot of consumer sales this morning. this is bloomberg.

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matt: welcome to "bloomberg daybreak: europe." 1:47 a.m. in new york city. obviously chart there. the empire state building lit up lou for the 150th anniversary. there is your unusual fact for the day. evan: 48 here in berlin. six: 48 in london. -- 6:48 in london. debra: bill o'reilly is leaving the network in the wake of a sexual harassment scandal that has cost advertisers to flee his show. 20th century fox announced his leaving in a statement. and bill o'reilly have agreed that bill o'reilly will not be returning to the fox

news channel. ebay shares have dipped in extended trade as it failed to enthusiasts -- sales growth continues to lag behind the e-commerce industry and did not narrow the gap of amazon. rapid new initiative sales rose by 3.7% in the first quarter, similar growth to the previous. jpmorgan is planning to do more than triple the size of its technology hub in new york city. forants to increase space the data engineers. according to a person with ynowledge of the matter, the are in discussion to least 300,000 square feet near hudson yard. a spokesman for brookfield declined to comment. that is your bloomberg. anna: let's talk about the consumer. reporte expected to

first-quarter revenues at 13 billion euros. unilever rejected a billion-dollar takeover. meanwhile, from the consumer story, they released its first quarter organic sales growth, which hit 2.3%, something analysts expectations. they confirmed it. joining us now to talk about these stories from bloomberg intelligence. great to have you on the program. heardg back to what we from nestle in the past hour, the numbers are looking ok. the expectations were a little shaky. hit. is about a 1% we all knew that. reasonably half of that. there are a couple of surprises within the numbers that are not quite so good.

being the one that is really poor. i don't think a couple of weeks will make that -2.9% number. anna: it is not a problem in the u.s.? duncan: it looks like the u.s., but i guess it is not particularly brilliant elsewhere either. the number in the u.s. was a little bit shaky but everything else seems pretty fine. how is their pricing power and are they able to pass --ough higher input? duncan: input? duncan: to be fair to nestle, they have internal growth that is pretty good. differenta slightly way of growing their business in the long term. the volume,rate on they recognize it is the best thing for long-term value. all of this passing through straightaway with increases over

the last year. i know you are focused on volume growth for unilever as pricing power more important than that of nestle because they have higher input costs? duncan: i think if you look at the raw materials that are unilever has got to pass and prices have risen sharp. from that point of view, i think unilever needs to pass through a little bit more aggressively than nestle. more withbably has nest breast so, etc.. nespreso,-- with etc.. i think every consumer company has come out with results. that is the result of what they

are saying. you cannot pass through pricing. anna: i guess unilever is under more investor pressure. has changed the way that .hey target or forecast we have something to prove in that sense. unilever is coming off that big expensive purchase, they said and returno a lot more cash to shares and improve the business in other ways. duncan: i think the key one numbers are almost irrelevant. it shows exactly the issues they have got on a longer-term payback for dividends and shareholders. how can they raise it? they do have to price that take it or they have to very aggressively. they will be pressed on that as we go through the year.

anna: thank you for your time this morning. let's bring back into the conversation the chief economist at indo of wealth management. we have been talking about pricing power and why that matters. it is because of the reflation story. we have been talking about a little bit since the end of last year. this is a slightly idiosyncratic story because of the weakness of the pound. u.k. inflation expected after a three-year high for companies that can pass on any increases in costs. ready see this inflation story headed from here? marie: i am a bit mystified to how the debates around information have -- inflation have flip-flopped the cup -- last couple of years. a couple years ago was the low

mantra that everybody subscribed to. now everybody wants higher inflation. understandt i do not that because higher inflation means lower real income for any given nominally. anna: does the kickstart the annual spirits. i think it confuse that with the depression era. of course during the depression we also had negative growth. low inflation and positive gdp growth, however marketed, is perfect. it is actually what we want. i am worried about higher inflation eroding real wage gains, and the eroding consumer power. it isnly in europe private consumption the has been underpinning this growth. i would still be in favor of lower inflation policies. matt: especially if the inflation does not impact wages. if we are not seeing wage

inflation, but we are seeing price inflation, it amplifies the problem. you see the reason strength in the pound continuing, because that could cap the problem to some extent? exactly, this is another mystifying thing. how lots of people in the market seem to see that depreciation is the right thing to do. people tend to be focus on the export side of the depreciation. of yourr external value currency drops, it means that your input build is that much higher. a real that has been fundamental threat to the u.k. economy in the current context. the u.k. already has a significant count deficit. the demand for imports and the u.k. is not sensitive to the price of those imports. they will continue to import the same volumes. anna: marie owens thompson chief economist of indo management.

we will bring you big names today, like the canadian prime minister justin trudeau. before all of that, with the french calling for an extreme foe, companies are going to plan b. this is bloomberg. ♪

matt: trade boom. japan's exports of search hitting the fastest rate in more than two years but will consumers start spending again there? stocks rise to my asian markets are higher after that beat from japan. headfirst biggest gain in a month. we get engaged in consumer strength as consumer reports -- report.nies will look at nestle and unilever numbers momentarily.

welcome to bloomberg daybreak: europe to miami at miller in berlin this morning. anna: i am anna edwards still here in london. it has gone 7:00 a.m. in london, 8:00 a.m. in berlin. we have german data breaking. have the ppi numbers. we were talking with our previous guest about this, coming in lower than expected. month over the month ever was 0.0 comparing to a survey and a prior reading of 0.2. the year-over-year number which is the headline that people will look at more closely, 3.1%, that compares to the same reading last time, 3.1 and a little bit less than the survey at 3.2. german ppi over the last five years and it is incredible to

see the takeoff we have experienced since the middle of 2016. tom keene might call this parabolic. has gone parabolic. anna: let's talk about breaking news. unilever reporting numbers and after fending off a takeover, that was made public in february. they are delivering what they can from this is this. they are delivering against estimates. quarter underlying sales growth has come in at 2.9%. that is reversing the estimate. that looks to be better than was estimated. the underlying volume down and an estimate was for that to drop further. on that level they do seem to be delivering, we will be looking for an update on the sale process and we will be looking for an update on returning cash

to shareholders. we heard a lot about that dividend. we already know a lot about that. any update on where they will headquarter the business, a bit ona now dead -- update underlying sales growth in the percent to 5% range. more breaking news. matt: we have sky earnings coming out as well. they are putting out some fairly dour forecasts for the year ahead saying that the consumer market and the u.k. is weak and the expect tougher advertising markets in the calendar year, 2017. they have reported a 250 million dollar multiyear producing or production partnership with hbo which is interesting. and they have come out with customer numbers, 100,000 new customers, more than 100,000 new customers join sky in their

fiscal third quarter. they have closed that out and closed out the first nine months of the year, nine-month operating profit a little bit more than one billion pounds. 1.1 billion pounds, nine-month revenue was 9.6 4 billion pounds. nine-monthwith their three-quarter numbers and also giving customer growth in the most recent quarter of more than 100,000. this they are saying that was relatively subdued. bloomberg intelligence was better performance in germany and italy may have offset some of the weakness ofewhere for an expansion services. we will have to dig in on what is going on in the italian story. they have their intentions in the u.s. business, the takeover talk there around 21st century

fox, that is the big story around sky. futures are down .3 of 1%. around .2 of 1%. the oil price part of the story. at 5058.e are we saw a big drop in oil prices yesterday down by 3.8%. matt: i am looking at a couple of closes right now, we are seeing the close of markets in japan and australia. take a look at the topix, keeping on the nikkei and the down for the year. the nikkei down about 4%. you have the s&p, asx 200, the us trillion index closing up .2 of 1% as well. poorlyties not doing too

even as oil has its big slide yesterday that hit the markets in the u.s. let's get the bloomberg first word news with juliette saly. thank you. japanese exports grew at the fastest rate in more than two years in march supporting a moderate economic recovery in the face of weak domestic demand. exports rose from a year earlier almost double expectations. , thets jumped 15.8% biggest gain in more than three years leaving a trade surplus of $5.64 billion. the u.s. secretary of state has heavily criticized the 20 15th nuclear do with the red. rex tillerson said it only delays the country's ambition to gain weapons of mass destruction and did not take into account its role in sponsoring terrorism and destabilizing other countries. the announcement is the strongest signal that president donald trump may walk away from the agreement. french companies are preparing

for the worst amid the growing prospect that marine -- marine platforms ofwin on raising trade barriers and exiting the euro currency bloc. one paris-based industrial company city will consider moving headquarters to london in the case of a melenchon win. managers are drying up a plan b should the pen win. 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 . we will be asking -- looking at the close-out at markets in japan industrial you. a little bit flat on the nikkei. the australian market holding higher by .2 of 1%. the topix was stronger and japanese equities on track. the first weekly win and a month. you have seen a bit of constriction in the hong kong

market. and under quite a lot of selling pressure. having a look at stocks, this is on a type a economic daily report that it will be a plan for the apple iphone eight. a --nt is getting rid of it is stronger in hong kong up by almost 2%. -- isutsche bank has closing higher. japan export data much stronger than expected. you can find this if you are eight terminal subscriber. because back all the way to april 2016 showing that the trend you're seeing in terms of trade picking up in japan, the up byine is the imports

15.8% and exports surging at their fastest pace in two years due to strong demand from china. match and anna. anna: thank you very much. juliette saly in hong kong. interesting japanese trade is market focused as is the oil price. it is days away from the french presidential election. every poll has shown independent candidate emmanuel macron and marine le pen taking the top two spots. at 20nt poll has macron 7% and the pen at 23%. melenchon tied for third place on 9% -- 19%. pen and lapel -- the book the lastthe days refer the first round? >> marine le pen was in marseille last night for his --

her last rally. this came a day after two suspects were arrested in suspected of targeting the presidential elections. this gave arguments for the anti-immigration speech of marine le pen. she said her rivals wanted to turn france into a gigantic [no audio] france to aared house that you should lock in order to prevent it from getting burgled. and the other favorite was in the west of france, he tried to position himself by appearing side-by-side with a positive figure and government, the defense minister. ofalso took some pictures some police officers who were protecting his rally.

camptrying to unite his appearing side-by-side with the mayor. his former rival in republican primaries. anna: thank you for the update. guest.et more with our great to see you this morning. i pulled up the latest polling, the french election tracker on the bloomberg. this shows the pan and macron out front as they have been during the campaign. you think the markets are not nervous enough about this election, why so? >> when we look at the polls they have converged and we are not far from the margin of error for the candidates. voters isof undecided very high. anything can happen after the fifth round. when we look at what the fx

market is pricing, the euro-dollar is at the lowest level since 2012. this reflects shedding of long positions. when we look at the flows this year, they are long euro-dollar and euro-dollar has gone nowhere ofs year because officials the central bank and corporate have been selling the euro-dollar. when you look at the overall euro-dollar position it does not [inaudible] investors are long euro-dollar despite the risk head of the french elections. matt: i have that risk reversal chart, guy johnson was using it earlier. bloomberg clients can get into the btv library and get this chart. the lowest since 2011. where do you think this chart

should be if you want to show risk aversion in these markets? guest: this specific chart is where it should be but to a large extent it reflects hedging of equity positions as well. when we look at positions into equity markets so far this year, the strongest flow has been in the eurozone. the market basically does not expect a negative outcome from the french election. it might be right but the risks are very high. we believe they are asymmetric. we get a positive scenario of macron winning and france, the euro-dollar can go one tenant most. this would be consistent with the data. euro-dollar -- the can go lower. as euro-dollar can go as low

.90 which is consistent with the move we saw after the brexit referendum. anna: after -- as we build up to the first round where do we get these kinds of moves coming and if they are going to happen? it depends whether the pen makes it into the second round. do you think if she makes it an, extreme, shef this probably will make it in so when do we get that extreme of, we have to wait until after the second round results or do we get something before then? >> it could be between the two rounds. if the pen makes it to the second round and if she does in the first round, [inaudible] or if melenchon makes it to the he is notnd, although directly against the euro zone, many of his policies are inconsistent with eurozone membership. oppositey were on the side of things from you and they

were relaxed about the outcome and they were saying that le pen would have to get something in the 40% range in the first round for him to be worried about her prospects in the second round. what are the worrying numbers for you? guest: it depends. the pen is well below for the second round. if she does better in the first round, it depends how much better. her chances for the second round could increase. macron is 20 percentage points behind. if she was running against alan chon or fillon,on it will be better. matt: there is a lot to talk about as far as g10 fx is concerned. next, sharing is caring. find out why one former top chinese executor says traders should get better access to onshore currency markets. we will discuss next.

this is bloomberg. ♪

matt: welcome back to bloomberg daybreak. it is 8:19 a.m. in berlin. let's get our bloomberg business flash from juliette saly. juliette: nestle has reported first quarter revenue growth that exceeded analyst estimates as it raised isis on nescafe in europe and asian sales accelerated. on an organic% basis. total sales gained .41% to 21 billion francs. the ceo is trying to revive as consumption weakens making it harder to raise prices. host elle o'reilly is leaving the network in the wake of a sexual harassment scandal that caused dozens of

advertisers to flee his top rated show. 20th century fox announced his exit saying after a thorough and careful review of the allegations, the company and bill o'reilly have agreed that bill o'reilly will not be returning to the fox news channel. extendedes have been trade as it failed to sustain investor enthusiasm but it's turnaround efforts are working. they reported sales growth that continue to lag behind the e-commerce industry and did not narrow the gap with amazon. despite a raft of new initiatives sales rose in the first quarter similar growth to the previous period. that is your bloomberg business flash. anna: china should open up the onshore you on. that is the view of a former regulator. speaking to tom mackenzie he allowhe government should

an appropriate amount of speculation on the chinese currency. scenario if the market -- [inaudible] to maintain the stability of the exchange rate. , is -- if scenario economic recovery is becoming more solid. the stability of the exchange rate [inaudible] there fornomy is whatever reason, the dollar is stronger and imposes downward pressure on the exchange rate.

how much [no audio] to takemuch they want control. >> let's move to capital controls. how long do you expect the controls to be in place? >> i do not expect capital withdrawal control. as a mentioned they are facing many [indiscernible] in domestic and foreign markets. in order to avoid the setback of policy. maintain policy. [indiscernible] making markets much more unstable. have at expect to

withdrawal of current capital control measures. gears and inshift a sense i will stick with currencies. coming from china back to the u.k.. great chart here from the bloomberg. it shows the pound crossing through its 200 day moving average for the first time since the june referendum, the brexit referendum. spurned by the snap elections that will be held at the beginning of june, june 8. does this make sense to you that the announcement gives the pound this much strength, does it change the situation the u.k. is in considering what is ahead from brexit? >> the market is right in this case area the reason is this

election pushes the next election two years later. fore is more time transition. that is important. before it was not enough time to get a long enough time and now she adds two more years so she could have a three-year transition. it is much longer than before. this increases the chances of a reasonable deal. this is why this is bullish for selling. balanced, themore negotiations would be difficult. because if selling are optimistic that logic will prevail and both sides will agree on a transition fairly early. anna: does the fx market folks -- focused on what appears in

the conservative party manifesto? the poll suggest she is going to increase her support in the u.k. as a result. does the fx market focus on the manifesto for more clues what she wants out of brexit or is that reading too much into the u.k. detail? >> there are some risks related to this issue. if she increases her power. most of the seats go to a relatively -- to relatively hawkish people on the issue of exit. this will make negotiations more difficult. this is an issue to watch for. what we have seen from theresa may is moving to a more pragmatic approach. realizing that this is going to take time. being willing to give up some things in order to have that. -- if they kick the can down the road on a number of issues, this is bullish for selling.

this -- we will continue supporting the data. matt: we have the short data here which most recently has come out on the fourth. i am looking at a ton of short positions on the british pound, this is 6578 and the btv library. where do you think this chart is , realistically? have a lot of shorts been covered? >> the market remains short but not as short as of the end of last year. the squeeze of the position we saw after the elections were announced is evidence that the market has been short. i will argue that the market remains short. i will expect his position to close. anna: thank you for your time this morning. ofwill bring you a host big-name interviews including

robert kaplan and justin trudeau. that is it for daybreak europe. lumber markets, the european open is up next. plenty more from matt and guy still to come. ♪

guy: you are watching bloomberg markets, this is the european open. cashrst trading -- trading session. brexit risk, should the markets ? welarmed by the late surge will the sky positioning ahead of the politics. a picks challenge. the outputs have to be lower for longer than originally planned?