anna: french facebook. macron and the penn's bar in the only one-on-one debate ahead of the french elections. the latest polls have macron winning with 67% of the vote. manus: some of europe's biggest companies report. we break the numbers down. anna: fed unperturbed. the central bank leaves rates on turn -- unchanged. table.is on the ♪ anna: a very warm welcome to

bloomberg daybreak: europe. i am anna edwards. manus: ims cranny. we had a slew of earnings before the start of the show. we have more as well. nus is women's -- lehman's mbers. they happen rising 11% to 12%. second quarter, sales profits rise. sales for the second quarter , 20 point 2 billion, the market was looking for 19.7. there is a comfortable bit coming through and confirming the full-year outlook. profits rose 18% to 2.4 9 billion. have the wind of business wrapped in and the health care business potentially being ipoed and the margins will be the

critical point. we'll have a conversation with ralph thomas joining us under 14 minutes time. we will talk margins. we have socgen. anna: the socgen bank reporting numbers. that is below the estimate of 863 million. -- if you added that back end it would be above the estimate but we will see if that is the way investors decide to look at these things. investor services revenue up by eight point -- 8.2%. they are making an additional digital investment of 250 million. the net income figure coming in above estimates. 1.8 billion versus an estimate. that is adding back in that legal provision. with,e that we're going

700 47 is below 863 as the estimate. a brief word, this is the global leader in equity deliverables. interestingly talked about the digital investment. that is what they're trying to do, build up their offering. it pushed unit revenues down and they happen cutting back on their branch network. about billtalked --il it he and the lack of volatility. some of the lines coming back on socgen. we have one of the world's biggest brewers. that is a nice, comfortable beat but when it comes to the ebitda, that is amiss. -- a miss. the earnings-per-share lower at $.74. the market penciled in $.96. when it comes to the volume, that is declining down .5 of 1%.

they still see acceleration in the organic revenue growth throughout the year, synergies and uppingthe cost the cost of sales will rise by low single digits and the tax rate is 24 percent to 26%. anna: they have reached a settlement with the libya thestment authority, details of that settlement are confidential, they said and they regret a lack of caution and the apologize to the libyan investment authority. taking a legal position. $656-quarter net income million shy of the 708 million that was estimated. missing estimates. of howus a breakdown they are doing in the various

businesses. this is the world's second-largest reinsurer. how with they do in the face of the australian cyclone? the investment rates had been hurting investment earnings. there is a number of issues, profits sweet -- squeezed by lower interest rates. there is a relatively quiet time of natural disasters. the cost ofwn premium so anything they say about the pricing will be interesting. -- have all talk conversation, a tenfold increase in terms of their profitability. $1.1 billion up from 122 million from this time last year. market penciled in 736 million. they are maintaining their view in terms of capital expenditure. they have broken trend and this is the important thing in terms of their adjusted numbers. three consecutive losses.

rise --production rising by some percent. that is above what the market had slated in there. the breakeven point -- the last $27we caught up with them, a barrel. is that the lowest point question mark we will continue that conversation with the ceo of statoil. we speak to him at 6:45 a.m. he is a good friend of the show. fores reopened for trade the session in hong kong just a few minutes ago. we should bring viewers up to speed. hsbc posting private -- prize profit increase. the finance director was positive with what they managed to do in the first quarter.

the market seems to be encouraged by what they heard on topline growth and they go in with that at the top line at least in the hong kong session. the stock is up by 2.2%. we have got these numbers during the lunch break. we will see whether people ask more questions about return of cash to shareholders, that is one of the key factors behind the story. the ceo was saying they would review returning cash. their capital ratio is strong, well above the 12 or 13% manus: target they had. had.% target that they manus: let's talk about [inaudible] probably the best lager in the world, i wasn't another one? -- or was it another one?

the danish krone, the market had penciled in 13.4 billion. they are going for full-year earnings. statoil, that is a tenfold increase. and karl. you're looking at this is -- initial suite. this is what drives the markets once get to the french elections risk out of the way. a comfortable day for carlsberg and they are sticking to their outlook. let's talk about where we are in the broader markets. put up the risk radar and show you where we are got to. have eight minutes into the program and we have not mentioned the fed. we were subsumed by the earnings story. .4 of 1%, this has a lot to do with what we are seeing in the middle space and iron ore down by 5.4%. pressure, one of the

egg stories of the day. manus: the center of gravity is moving in the iron ore market. seeing the actual steel index in china go back into contraction. let's have a look at the dollar because that is relevant to what happened. the federal reserve looking through the first quarter, staying the course and not changing their view. you have dollar rising a bit five .1 of 1%. june hike [inaudible] we have got another set of questionable numbers from the tech sector. concerned about cells busy andt will be a of the week. juliette: and the u.s., the fed

has stuck to its outlook for gradual monetary policy tightening after it left interest rates unchanged and showed no love over recent economic waste bess. officials were unusually explicit indicating that a difficult first quarter would not knock them off their path to raise rates to more times this year. the way the specter decision contained no concrete commitment for the timing of the next rate increase. investors increased bets on a move in june. the uk's prime minister has accused european union officials of interfering with britain's election. she unlaced her fury at unflattering account 7 april 2016 or with european commission president jean claude junker. bloc toughened its opening demands on money, trade and 70. e european commission's

stance has hardened. threats against britain have been issued by european politicians and officials. all of these have been deliberately timed to affect the result of the general election that will take place on the eighth of june. juliette: in the u.s. among house republicans plan to vote on their long stalled obamacare appeal measure. -- repeal measure. it comes after six weeks of agonizing how the gop would liver on years of promises to repeal obamacare as well as intense pressure the white house. republican moderates remain opposed are undecided. 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 . it has been a bit of a downbeat day across asian equity markets.

japan still closed, hong kong down .41% after the lunch break area that weakness and iron ore and copper weighing into the asx 200. also into the malaysian market. look at the tykes, they are getting close to the tight -- to the 10,000 point level. hitting a record high in intraday trading. we have been watching in the region fortescue metals group, one of the biggest decliners on that huge jump in iron ore, futures and china dropping over 7%, the biggest fall in three months. hsbc humming out of the lunch break looking quite good. there was concern we could see selling. investors have shied away from the fact it has not announced a third by back and looked at the fact that numbers were better than the market was looking for. and one of the best gainers, this is an interesting story because if you look at the technicals you can see a story on the bloomberg showing that

the kospi has quite a bit of room to run free in overall, the south korean index is still trending below the five-year index. looking quite good in terms of some of those south korean players. manus and anna. manus: thank you very much. a great market roundup. let's talk about marine le pen and emmanuel macron. not holdandidates did back. she portrayed her opponents as part of the global elite and refuted his claims. >> you have said it so often, i am the candidate of openness. you are the candidate of closure. the closure of factories, the closure of attorney warts, the closure of police stations, the" of hospitals. anything you do not want to

close its borders. anna: macron hit back. >> this great fear, who has been manipulating it since the beginning question market as you them a who plays with the fears of our services on terrorism, etc., it is you. the great priestess of fear is in for to me. great britain has nothing to do with us. it was not in the euro and had -- never has been. you suggest leaving the euro. that is a mortifying project and a dangerous project. manus: for more on the debate, let's go to carolyn, joining us from paris. the headlines are pretty spectacular. when were the biggest clashes, which area would you say were the biggest clashes in? caroline: it was brutal, it was feisty, it was a free-for-all where the moderators almost could not intervene. they question almost every europe,ubject,

terrorism, education, and, of course, the economy. comfortable on some subjects. ae told macron you have thirst for fundamentalism. she feels confused about the plan to leave the euro. she had a hard time to clarify saying that there are be two guarantees, the french would pay but the euro could still be used with international transactions. said this is nonsense. le pen arrived on set with a lot -- --es, macron, every time she sounded confused he said look into your notes. to appear to be the competent one. arrogant.sounding the penn said do not talk to me like a teacher to student. it was feisty, reading

some of the quotes. thank you. joining us from paris, quick word on the corporate spear -- sphere in france. we are getting numbers from air france. loss widening, versus a loss of 155 million. it is a time when the lines do tend to get losses. resilient start to the second quarter, they say. let's get back to the policies and get back to the story we were talking about with caroline and france. a very good morning to you. a testy debate, feisty language on both sides, did any of that stick to the euro, we will wait for monday or sunday night. there are layers of complexity regarding this branch election. right now the market is pretty relieved that the opinion polls are suggesting it will not be le pen and an anti-euro candidate.

phile almost certainly. we have a lot of relief in the -- it will be some time that macron does not have the support in parliament yet behind him. it will not necessarily be an easy ride but for the market it is a relief. manus: we had a couple of guests saved these are the risk reversals in the market as far as the euro's concerned. less specs than it was going into round one. to what extent has the recovery been done on the euro and that parity trade is off the table, you talk about support for macron, they would have to each.d 49 to 286

this is the latest poll we have in terms of the assembly. that is considerable, that is a lot more than i thought. i was quite shocked when i read that. he does not have a system a president or politician would have. it is unusual to have a candidate like this. we will see how that works you but it could be difficult for some ofet support for the reforms he has suggested. for the markets the french election would cap from the headlines, it would drop from the focus of tension and the euro has been interesting all year and i would suggest that the euro has seen [inaudible] since the end of last year. if you recall last year the markets had gone through that italian referendum and constitutional reform, it was concern because of the failure of that and renzi had to resign. they were concerned about how they would emerge this year in

europe and the french election, the dutch election has brought concerns to the fore. manus: thank you. jane foley stays with us. duffy forget, bloomberg tv and radio will ring you special coverage of the french presidential election. that hits your screens on sunday afternoon. six: it is 19 minutes past in london. siemens reported second-quarter sales of 22.2 euros. the company said it expects a business margin. joining us from munich to discuss the numbers is the siemens' cfo. the profit rises by 18%. you confirmed to the outlook. is there as we go through the years, you hope that you will be able to upgrade your outlook on those numbers? guest: thank you for having me this morning. and you're right, siemens is strong -- has another

quarter with continued profitable growth, 5% revenues increase, it is quite something in a challenging environment. the good thing all divisions affect contribute into the growth, eight out of nine being in or above the target margin range. that has been through momentum. have been -- we benefiting in the second quarter. we expect momentum to carry over into the second half of the year. from a cfo perspective, the best thing is that profits have been converting into cash with 2 billion of industrial business, billionh flow and 1.4 over and above the first half of the fiscal year compared to the higher your and free cash flow. we are very confident that we are successfully executing on our vision for 2020. manus: every, a hear a sea of

eight talk about free cash flow, -- a cfo talk about free cash flow, what is the confidence in forhat is the consequences dividends, do you hunker down on the cash, what are your expectations question mark -- expectations questio? what we see is cement has been substantially improving its pattern of generating cash. we were seasonally fairly late in the past and now we have been obviously breaking that pattern and more continuously electing cash, putting us into a strong position. anna: can i ask you about oil and gas in terms of how your business is doing, ge has opened up their oil and gas unit. how is yours doing at the moment? guest: oil and gas is very challenging place to be. we see many competitors and they are all competing for more or

less the same order. we happen making quite good progress on the top line and we feel encouraged by the efforts and the successes we have been accomplishing so far by business,g the rent forming a strong team and winning more against the competition. is goingur company through a great deal of change. read organization, folding businesses and but the one area that we have talked about here is you train business and we reported that is set to be mooting -- moving with somebody i -- bombardier. where are we on that potential merging? need to say that we are very happy with the business development of our mobility business. it has been creating leading

margins on the street and the topline momentum has been going up substantially compared to the prior quarters. you know and i know there is a lot of rumors out there in the market and we do not comment on speculation. on the other hand, we all do know the competitive landscape and since the megamerger took place between the number one and the number two in china, forming a real giant in rolling stock, it is obvious that there is a consolidation process going on and many people are speculating and waiting for further steps to come. i believe that also the antitrust authority should look at the global landscape when assessing on the questions arising. manus: you say things have improved, has the worst past? in that case for that mobility division in your view? the -- our mobility

division is working along a vertical integration strategy. we are not only in rolling stock, we are and automation and signaling. both being the parts of the market that will have substantial impact on driving digitalization which is in the focus of our portfolio. anna: can i ask you about the portfolio, talking about another section. how is the process around health progressing, can you give us an update on timing and is that going to be an ipo? guest: what we said in the past as we want to enable the [inaudible] closer to their customer base and allowing them to work and grow along the lines and paradigms of their specifics in their industry. that is why we have been creating the company and we are very well advanced in all the efforts it takes to allow this

beingy and the company separately managed and also allowing for listing. we have been preparing all the decisive steps and we are now following three very interesting alternatives at the moment. as soon as we come to a point to determine which one will be preferred from our end, we will share with you. anna: the digital factory business is performing well. it is a potential spinoff. could that also be a spinoff, that business within a business? guest: as i said before, we are looking at all the businesses and what will make them more competitive in their particular and specific business environment. -- with theital digital factory be one of the core pieces of digitalization? we are doing well with a

substantial contribution to growth. the short cycle business in the second quarter with tremendous growth rates i can china with and like the u.s. with 10% italy with 14%. we are very well positioned and this will also allow us to have other divisions contributing to the digital initiative and that is what we are driving as long as we do see opportunities to make best use of the strong brand of siemens and our global value chain and technologies as long as we see those opportunities to tap on four different divisions. this will definitely be a centerpiece of our unit. you so much, the ceo of siemens joining us from munich. while advanced on their separation. talking -- happy with their mobility division and a challenging place in the oil and gas business.

anna: a lot of change going on at siemens. planning for the future. let's tell you what is coming up. we will talk about the fed a little bit more. no change from the fed. we will digest all of what that means. this is bloomberg. ♪

>> 2:30 in tokyo. a glorious day over the emperor's palace. the dollar-yen on your screen. it has been rising six days in a row. we have not seen a run like this on the dollar since october 6, 2016. gdp,ed sees first-quarter and we trade that a little bit higher. : we will get an update on the markets right now. nejra: we have still got japan equity markets closed overall. no treasuries trading in japan. hong kong shares are dropping after the holiday. the shanghai composite, the

third day of declines. investors are weighing government efforts to limit the government impact. this has made chinese shares among the world's for his performances this month. meanwhile, bond yields have risen to the highest levels since 2015. the shanghai composite is sagging below the 200 day moving average on this chart. this is u.s. stocks against em stocks. the 120 correlation between the two has fallen to the lowest levels january 1995 when the fed was nearing the end of a tightening cycle. speaking of the fed, we have the dollar extending wednesday's gains, higher for the sixth straight day. the yen, a six week low, by the way. the bloomberg dollar index went above the 200 day moving average yesterday, covering after the fed viewed the recent soft economic data was transitory, boosting the possibility of a

june hike. we have got gold holding its biggest decline this year post the fed. extendingrial metals, the biggest daily drop this year. metals, being buffeted by signs of annual supplies in copper. this is l and a copper. there are bear signals and this is the downward trend. anna: let's get to breaking news. 7hey are confirming the 201 outlook. the net sales estimate comes ahead the estimates. are giving us details. the company, reiterating the forecast. sales growth will be between 11% and 13%. they are sticking with that. said he took over last autumn. 2016 was a strong period, and

they raise their outlook four times. of course, the trend towards idea.sure is not my kasparov will be joining bloomberg at 11:35 am. bmw, first quarter net income comes in at 2.1 5 billion euros. 2017are confirming the forecast. where is that forecast going to come from? the united states of america? luxury end of the market is doing a little bit better. they are banking on suv and electric cars. thec ceo is asking for a little patience on self driving cars. domler raised their outlook for

2017. 2017 as beingsee the sales record for them. the nuance in the language is interesting. a significant increase in 2017. anna: an ice contrast to the gloomy headlines from the sales in the united states. ben bernanke says the trump administration's plan for tax cuts comes at the wrong time for the economy and would do little to boost growth. yousef: the former fed chairman suggested it would be wise for president trump to reappoint his successor, janet yellen, to another term. take a listen. >> we don't know who he will appoint. he could conceivably appoint janet yellen -- >> to reappoint chair yellen? >> which would be a reasonable thing to do. she is competent and has done a good job and has the

confidence of the markets. whoever is appointed, i'm sure will work carefully with the rest of the fomc. there is a reason why there are so many people on the federal market committee making those decisions, including seven members of the board, and high quality staff, which provides a lot of guidance. idol think we are quite in the 1928 situation, by any means -- i don't think we are quite in the 1928 situation, by any means. i am hopeful if they don't appoint janet yellen, they will appoint some but a strong and confident. >> there was a sharp debate within the business media, and economics as well, if i pick gary cohn within the trump administration. you need to have a phd in economics? >> i think it would be presumptuous to say that. paul welker does not have a phd. he was familiar with the fed and monetary policy and obviously,

knew markets. bute is a range of skills, you have to be at least familiar with monetary policy and how it works and what the issues are. and there are important tactical components to it, but leadership is not constrained by a narrow set of skills there are i think, different types of backgrounds that could generate a good fed chair, but it is important to know a lot about monetary policy. tom: what do you envision our vice chair will do? this is a new position. feds not the romance of the that we cover at bloomberg. what do you envision that job to be for that new kind of vice chairman? >> it is a very important job because personnel is policy. even if the regulatory structure has only moderately changed, the

way it is executed will matter in practice. so, the people they have talked about are generally people who i think are highly qualified, have a background in financial regulation, but it is in port in port and who will take very seriously what i think we learned from the great crisis. it's not enough to be looking at and theal banks individual components of the system. somebody has to think about the stability of the system as a whole. that was brought home to us when the system as a whole went into shock in 2008. that person will have a very important role, coordinating with other regulators and agencies, trying to make sure not only are banks individually stable, but is the system as a whole resilient. anna: former fed chair ben bernanke, speaking with tom in the u.s. janet yellen and fed gradualkers start the

tightening after they left interest rates unchanged. there was no alarm over recent economic weakness. bill gross commented on the prospects of the central bank issuing a new ultra long bond. >> i would not give it more than 50% odds. because they listened to the streak. praise,e the they are goldman dominated. the private market wonders, much like when tips were introduced 15 or 20 years ago about the liquidity estimate in the early years. manus: bill gross, skeptical regarding the propensity of the treasury to issue ultralong bonds. let's bring james foley into the conversation. the fed is steady as she goes. looking through gdp numbers during the first quarter, they are not bothered by that and

some say they were remarkably explicit, in terms of batting that away. is the glass half full? how do you read this? >> i think there are politics here. the fed wants to get interest rates up in case there is another crisis in they have to cut interest rates again. now and june, we do have a lot of economic data. weou look back one month, had disappointing indications on retail. we have had disappointing data on inflation. so, i still think there is time for the fed to make up its mind. as we go into tomorrow, we have quite a few fed speakers, five, plus janet yellen. we should have a better idea, but if we go back over the last few months, we have had a number of the fed's speakers come out and suggest the time is right.

gives them a lot to play with because march is a free lunch. the markets did not move on the interest rate hike and i think the fed is hoping to do the same thing. anna: it is a glass half-full statement, downplaying the weakness. no comment on the balance sheet. they said they will hope to release a plan this year. they might start unwinding by the end of 2017. is that something that was glaringly missing for you? >> yes, because that is very political. given that janet yellen's job is up for renewal next year, they will want to have a firm plan in mind before hand. i think there was an expectation that there would be clues with respect to that today. idol think they will leave it for too long to give the markets some direction with respect to the balance sheet is you. manus: i am wondering if they will do a rerun of what they did

before the march hike. it's whether they use that rhetoric again to push towards, we are ready for june. anna: it really moved, didn't it? manus: and at 80% that is nearly a shoe in. this is the slightly longer-term perspective. you said the one thing that has been pushing back against the dollar is the border tax adjustment. theas reduced the risks to sluggish dollar forecasts. when you look at the fed and the swaps, they will try to bring another health bill to the floor this evening. pull that together forming me in terms of the dollar. our the roadblocks the higher dollar being knocked out of the way? >> our forecast figure is off. for quite a long time, it has been 110. we have had a weaker dollar view. the risks to this view are that trump will come through with a lot of stimulus, which we are

doubtful of. the other risk is he will announce a border deficit tax. indications are that this will probably not happen either. that removes some of the risk to the strong dollar view. certainly, if the fed had this june interest rate hike, clearly -- manus: why are you dubious if the market is at 80%? >> the skepticism about what trump can do. the one page cuts that wasx produced last week, that does not give you a lot of confidence that he has got the detail right and that he will have the support to push that through soon. anna: is that built into the dollar? if we see further signs he is not pushing through his agenda, the dollar weakens. some investors have said, the run-up in stocks has much more

to do with earnings coming in strongly and expectations about global growth, rather than an expectation of what trump delivers fiscally. >> global growth right now is good. at the beginning of japan, we had an upsurge in prices in japan and europe. in some perspective, that is good. but if you look at the stock market now, relative to what it was in november, you have to think that the election brought on a lot of inflation. there is a lot of tax expectations, regulation cuts, related to trump. and as we get a lot of disappointment and it is pushed back to next year, it is reasonable to assume will be disappointment in the dollar and the stock market, too. anna: inflation measured on a 12 month basis has been running close to the 2% longer run objective. when you look at this, i mean, i

just wonder about the validity of these inflation targets. you have core cpi month on month. it is not framing up well. this is the policy mistake issue people debate. anna: the fed says they are working through this temporary weakness. that is not convincing you, jane. >> i think it depends on what happens over the next six weeks and the data we get. it will be difficult for the fed to carry on being very gung ho if it carries on being weak. if it turns around, it plays into their hands and they can hike. i think they want to and they want to get those interest-rate hikes under their belt in case things turn sour down the road. anna: jane foley stays with us on the program from rob will abobank. we will be speaking to the governor of the south african reserve bank at 9:30 u.k. time. manus: let's talk about one of

the big oil majors, beating expectations. a tenfold increase in the adjusted numbers. phone. is on the a very good morning to you. well done in the numbers. a tenfold increase. capex plans. have we passed the bottom of the capex cycle? take us beyond 2018 in terms of your ambition? >> we still have the same program in place. .t is a very strong portfolio we have brought prices down as well. we are proceeding with the highest-quality projects. forecasting $11 billion for this year and this will give us a projection growth of 45%

until this year and around 3% in 2020. anna: let's talk about the oil price. we saw it last year down around $20. it is now $47.70. has the market worked out as you had expected? >> if i had taken a longer time than we expected, but we still see the same dynamics. i think we see volatility and uncertainty ahead of us, but we believe the rebalancing will take place during the second half of this year. but on top of that, we will see volatility uncertainty. been has the oil glut surprisingly resilient for you? >> yeah, i would say it has taken a longer time to get into a more balanced market, but the fundamentals are taking us in that direction.

we also see very low investment levels for the third consecutive see and we will eventually this in the market balance. manus: eldar, you talk about more efficiency to come in 2017, another $1 billion in 2017. can we expect more of this program to come through in 2018? are you in divestment mode, or are you still on efficiency mode from within the business? >> so, this industry has a lot of work to do on efficiency. we can simplify our industry. we can standardize our business. we can industrialize. i think there is a lot of opportunities for the industry, also in terms of technology, digitalization. when he to continue to work and focus on continuous improvement, like many other industries. we have to implement those

practices into our industry and pursue technological developments that can make our industry more lean in the future . manus: the other number you have used is $27 a barrel. that is your production cost. is that squeezing it the most? can you get it any lower than $27? what you need to do to get it below $27? >> we continue to improve every project we have at hand. project execution is also extremely important. we have improved on that as well. throughout projects we can improve. throughout projects and our execution phase. phase one coming below $20 u.s. per barrel. we can do more on efficiency, and expect there will be more heat in the industry as the commodity environment strengthens. we need to compensate for that and fight for continued

improvement and implement new technology. anna: in terms of the way you are expanding at the moment, i wanted to ask you about the expansion. will you be able to produce a production plan this year? and what is the breakeven for that particular project? >> i don't have a specific number, but there is significant improvement for that project. it has turned from basically a new facility to a subsidy project, which has improve the economics significantly. we are pursuing the same plans as we had before and i look forward to embarking on that project. manus: i want to ask you a question about the industry and your perspective. is preparing for the ipo this year. that will change the landscape of the oil industry. how do you think the saudi aramco ipo will impact the oil world?

they will have a license and a new mandate in terms of their objectives. give me your perspective. >> it is a starting point. they will have to accommodate the rules of the game of being an enlisted company. i think they will be able to do that. initially, it is a small stake being listed. i don't see a major impact into our markets. anna: eldar saetre joining us on the phone. manus: if you are a bloomberg customer, hop on tv to watch the tv streams. you can have a conversation with bri. well done. you can ask her a question at the bottom of the screen. bri is always prepared. reporter: hard-working members

of the "daybreak" team. morning meltdown. we look at what is driving the downturn with metals. we get analysis. this is bloomberg. ♪

manus: metals have extended the biggest daily plunge of the year after the china pmi fell to 51.5. jane foley is still with us. when you look at copper being themered, iron ore, center of gravity has changed and down goes the commodity index. is this relationship beginning to look stuck? this is a story about china. agoad trump a couple weeks targeting steel.

that is directed at china, clearly. iron ore had a big run up last year, too. we cannot forget that. the market is a little more concerned about china. two weeks ago, the imf pointed at the 200% gdp debt in china. the market is a little bit concerned about that. liquidity has just been tightened in china, too. this boils down to commodities looking a bit more honorable. -- bit more vulnerable. anna: does this mean yuan weakness, aussi-dollar weakness? >> there is a good correlation between the aussi-dollar and copper. manus: that is on the bloomberg commodity index. there is a near syncopation. jane: from that point of view come anything that suggests china could be slowing reflects on the aussi-dollar.

china is the biggest consumer of commodities in the world. currencydities related could be affected. anna: over the last 18 months, the typical dollar-oil relationship has broken down, with both on the rise because of reflation talk, and what opec is doing. has that broken down? sometimes that happens in the short-term, but if we look at they long-term chart and long-term fundamentals, they will fall back into place. often in the short-term, there are a number of microbe forces dragging them apart. manus: in 10 seconds, the sharks are smelling blood on canada's loony. >> i think it will weaken a little bit over the next six months or so. manus: she did that in 10 seconds. anna: jane foley from rabobank. 6:56 in london.

when we come back, we will be talking about earnings. manus: mark bristow joins anna and i, and we will be talking gold. what is the tolerance of the market for bristow? ♪

manus: french face-off. macron and le pen's pardon the only one to one debate ahead of the french election. the latest polls show macron waiting on sunday with 63% of the vote. anna: first quarter spotlight. some of europe's biggest companies report this morning. we are breaking down the numbers. manus: fed and. the central bank leaves rates unchanged holding its outlook. a june rate hike remains on the table.

this is daybreak europe, our flagship morning show here in the city of london. i am manus cranny. anna: more coming now. statoil, aeard from 10 fold increase. and adjusted profit for shale , for them it is a very comfortable beach. the downstream business delivered and adjusted profit of two point four 9 billion. you are seeing the first quarter for shall come in ahead of what the market had anticipated. and cash flow $9.51 billion coming through there. they are in the process of a

massive investment program, their two thirds of the way through. the target is for $30 billion by the end of next year. that is a nice couple of weeks for shale. go to next, first quarter retail sales changed down by 8.1%. this is a company that noted in march that it is asked about the outlook for the current year. first quarter directory sales changed, of 3.2%. the directory number looks to be ahead of estimates. the retail side coming down by -- 8.1%. that list be worse than was expected at -6%. in total -- terms of the brand sale that is down 3%. mixed against those targets. the retail sale number catching my eye, challenges in the

future. , glencorehave the ceo to their marketing at 2.2 2.5, they have raise that to 2.5 or $2.6 billion. that is coming through from glencore and their copper production, there's the top lines from shall and glencore. anna: we are the numbers coming them, golde from production coming up and the cash cost disgraced -- decreased by 4%. yearction is up 10% from a earlier. we will get the quarter on quarter and year on year numbers line. waiting patiently as we went your all about. -- randof rheingold

gold is hre -- is here. about it is all profitability. quarter.another good operation still ramping up so its is -- that gets to design capacity at the end of this quarter. forecastingled slightly improved. this is our best first quarter for about five years, usually we start off quite slowly and is encouraging we got out of the blocks early this time. manus: 52% of the shareholders have increased in the annual dividend at a buck a share. anything to see and dividend policy, we'll be cautious of the end of the first quarter? >> went to keep $500 million on the balance sheet and we will

pay off the rest. that has been a long-term plan, --got to 5 million at the 500 million at the end of last year. by the end of the first quarter we had 600 for dividends. we have always wanted to be and have planned to be up profitable gold-mining company. and sustainably profitable. the market is getting their head around that. anna: you're putting emphasis on profit rather than production. it is down 15% from the previous quarter. our investors putting on -- prescient -- pressure on you to demonstrate? >> the gold industry very quickly falls into these fads and tries to please investors in the short term but this is a long-term game and we have always focused on that.

the quarter on quarter comparison is not really valid because we had a tough year last year and we had already pulled out the stocks to deliver on the year guidance so quarter three -- quarter four was a record quarter. we said we would do that it would not be sustainable. manus: let's talk about the targets. 1.25 21.3 andget, a cost range of 530. are we sticking to those given it has in a good first quarter? could we squeeze anything more on the production side? guest: you sound like a shareholder. tracking that guidance. we are not one that builds fed into our guidance. anna: i am looking on the bloomberg saying a headline that the basic q1 is decreased but that is quarter on quarter.

and the profitability story. eps weif you look at our announced today, it is ahead of the consensus. all in all it is a good, steady, profitable business. manus: you have always come in and said it is about the efficiency in terms of production. just going back to the cost of production, 582 630. , are wetalking expecting you to squeeze below that bandwidth? >> we look to make a 20% return any thousand dollar gold price. that is what the industry can sustain. we plan long-term because when you commit capital, we have never sold anything, we have never cut gone expiration. we have demonstrated if you have a long-term plan in this long-term business and it is

focused on profitability, you get there. anna: at the risk of sounding like a shareholder, what about m&a opportunities, are they off the table as you see a recovery in the gold price, is the time pass to do m&a? feel the industry is a little undecided on where it is going. betweene joint ventures -- the new fad is joint ventures between large companies. a lot of upside in the gold price if you look out a little. invested in expiration. we are a big explorer, we are an organic focused growth company. that. more relaxed about we have a 10 year plan that is viable and delivers on [inaudible] at a $1000 gold price. we have some time to manage that.

we have outperformed our peers on a rails of aces. m&a is not off the table. it is difficult to make real returns in the gold industry if on are paying a premium premium to do m&a. then you are betting on the gold price. we like to control her assets. manus: it likes to control the board and the shareholders. let's talk about the gold prices. 1236 and offered in terms of the gold price. you used a phrase, we need to look into the longer-term so give me 2017, what do you think is achievable with the fed and politics. guest: the key drama and gold which i often get into a debate about is the supply and demand side. i do look at the supply side, it is shrinking rapidly because noah has replaced, the industry sincet replaced its mines

the turn-of-the-century. now with the lower grade, you get pressure on production. for the first time you're saying -- seeing analysts going to -- guiding to lower production. that shrinkage is definitely a pressure on the price. upward pressure. and then you have got all the shenanigans across the global economies. it is difficult to see, we have momentary moments of perceived stability like the last two days. with thed of the day outlook in the u.s. economy or andthreat of global visions the uncertainty in europe, and brexit and north korea and so a, it is difficult to paint

stable, global, geopolitical and economic outlook which is great for gold. not really a good story to tell but good for gold. anna: to focus on the supply and demand story. is that what you can control question mark >> of you tighten supply and you create an unsure future in the world's economy, that is a perfect storm for the gold price but you cannot run businesses on hoping that things are going to go pear-shaped. manus: you have taken your time frame down to two days, to hear ceo say relative calm for two days, your perspective on zuma, will he last the year in south africa for summer >> it is a tragedy watching the south africa political scene. it is not about zuma, it is about anc which took that

country to a point where it was inclusive and such a great event to liberate such a beautiful country. the politics destroy that very dna of the liberation movement and what brought nelson mandela out of jail into power. politics and constitution, it is not about one person. it is about political institutions and i think it is going to be a big challenge for the south african people to find a way out of this mess. much, aank you very fascinating conversation about the gold price and well beyond. thank you for joining us on set .n daybreak manus: let's do a recount. -- hsbc was up.

a one off inf there. we will talk banks next. this is bloomberg. ♪

manus: it has gone 7:16 a.m. in london, 2:16 p.m. in hong kong. juliette saly is standing by with the business flash. juliette: thank you. societe generale has settled the legal dispute with the libyan investment authority and posted lower than it acted first quarter net income. net income fell to 740 7 million euros missing analyst estimates. at the same time, the bank posted a rebound in its trading businesses while falling short of trend.

facebook executives tried to temper investor exuberance about sales growth prospects. on a conference call following its first-quarter earnings report the company said it expects revenue growth to be down thankfully after stocks increasing the frequency of marketing spots in the newsfeed eight or this year to avoid driving way users. shares fell as that message overshadowed first-quarter sales . the top estimates at a 17% jump in monthly users to 9.4 billion. --we track the impact of yet ads on the user experience, we have done that for several years. we have been able to do this by improving the quality and relevance of the ants. where we are focused is continuing to improve that and quality and relevance. tesla has showed investors it's anticipated sedan is on track. excluding some items, tesla lost

$1.33 a share, a bigger deficit than analysts estimated. cash burn was the most, behind the final period of last year. >> i am confident that [inaudible] i do not jump the gun on the tesla semitruck and -- announcement. it will be an incredible product. that is your lumber is the/. -- bloomberg business flash. first quarter adjusted pretax profit topped expectations. andoke with the banks cfo, asked whether 2017 will be the and of full-year revenue decline. iain: we guided at the end of

the year to see three of 4% revenue over the course of 2017 and notwithstanding a good start -- first quarter as we move into discussions with investors over the course of the next few days. anna: can i ask about share buybacks, there were those who were disappointed not to see another buyback. last time we talked you said you have a ratio target and if you are above that you will contemplate returning cash. you are well above that so why no more cash right now? guest: we have finished a one billion dire -- $1 billion buyback. i would not encourage investors to think we will do buybacks every quarter, beer -- we're happy with where we are from a capital position. right now at 14.8%. as we said at the end of the year, our principal focus is

taking our invest capital and putting it to work to grow the business is around the world. we are strongly focus on maintaining and delivering good dividends to our shareholders. last year we paid over $10 billion to our shareholders which i think made us the third largest dividend payer in the banking sector globally and we will consider buybacks as appropriate. we finished 1 billion and we will take some policy and reflect as the rest of the year develops. anna: last time we spoke and less time you are talking to investors around the last set of results, you mentioned $8 billion that could be freed up from the u.s. is this. guest: we are making good progress in working through the restructuring of our u.s. business. we completed [inaudible] successfully with no objection from the federal reserve. we have just along with the rest of the industry submitted see

r submissions. we're making that available for further deployment within the group three at a possible return to shareholders. the guidance that we provided at and how we intend to deploy are cash remains firm. anna: i want to return to brexit. there was no mention of exit in the release. you may need to relocate 1000 workers from london to paris. ,rom a management perspective when do you have to put the contingency plans into practice? guest: absolutely consistent story, what you have heard from douglas and stewart gulliver previously. we have a universal banking subsidiary east in france that has all the kids oldies of our banking operations based in the u.k. arises we willd

have to deploy somewhere in the region of up to 1000 employees, possibly into that french business to scale up support. brexit mayments that impose. we are at a early stage in this, we have the capacity to face this in overtime create given the platform we already have within the french operation area. that front change in from our standpoint. it is pretty early days for the brexit perspective. manus: that was the cs -- cfo at ain mckay.he k -- i we are joined by bloomberg's michael moore. a great and of you first of all -- interview first ball. -- first of all. anna's the point of

interview. she pushed him and pushed him at 10 -- again. the capital was 14%, are they going to look at this uplift in profit, where do you think the market will swing today? >> if you look at where the shares are trading the market seems to like the numbers, they seem to be focused on the revenue increase. part of that driven by trading. across three of the four major businesses, revenue was up. that may be turning the corner toward an actual revenue increased for the full year. anna: turning the corner. we had five years of declining revenues. -- top line growth scenes seems to spark interest in hong kong. they did declare this strong et one ratio. over 14%. expectuiding us not to

buybacks every quarter but investors will continue to expect more if that kind of ratio holds, wouldn't they? >> yes. there is not a ton of growth out there. the banks have turned into more of a capital returns story than a growth story. in goods that are capital position, investors are stunning to look for some more dividends and buybacks. u.s..tioned ccar in the that is coming up and perhaps that will drive some of the decision of how they look at that. manus: fx they saw drop but their credit is this doubled. level markets joining the u.s. sweep. >> yes, they were the third-best performer in the year over year bnp and morgan stanley. definitely outperformed a lot of the europeans, even some of the u.s. firms, you had credit suisse talking about asia being a tough market, they talk about

asia being strong for them. hong kong gain a center of the activity. manus: you said that pivoting and expanding the business by 2%. >> they happen eldin up there for a number of years, paying off this quarter. anna: socgen, let's turn our attention to that story. the libya headlines, what story is there because it was not expected we would get that today. notight, the market was expecting that much of a top up to the legal provisions. they were supposed to go to court this week. kind of a last middle -- last-minute settlement. i think it is little bit surprising. you had goldman had a similar issue with the libyan investing authority, that case got thrown out. but you see socgen settling when it was supposed to go to court shortly. manus: they missed it in terms

of the numbers. libya was a slight curveball to the market. another 334 provision of legal numbers were not spectacular, were they? >> know, and after bnp had such a good quarter yesterday, that may have raised expectations for socgen, they did not have quite the trading jump that bnp did. libya [inaudible] thank you for joining us for more on the banking sector. it is all about the guidance. we have a couple of big conversations coming up, we will be speaking to the governor of the south african reserve bank. anna: we just spoke to brand -- randgold. look out for that interview with

the south african reserve bank governor. guidance,rades to they did that a few times in 2016. we will be back shortly. 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. guy: may 4, good morning. your first trade of cash coming up on equities shortly. i have so many watching this -- somebody watching this morning. the fed said it will keep its gradual rate hike approach. is the door open, wide open for a june hike? a fierce encounter. macron comes out on top in the final french presidential debate. is there still time for the pen to close that 20 point gap?