anna: security dominates. theresa may says she's willing to scrap human rights laws to deport more terror suspects. stop our human rights laws us from doing it, we will change the laws so we can do it. santander to the rescue. the spanish lender said to be considering a share sale as it weighs its bid for the trouble banker with eyes on madrid. countdown to call me. the fired fbi director prepares to testify tomorrow. it is said he won't -- countdown .o comey meanwhile the u.s. president is set to outline his trillion

dollar infrastructure plan today, boosting spending in rural areas. ♪ manus: welcome to "bloomberg daybreak: europe." right here in the city of london. i manus cranny area anna: and i'm and edwards. out at westminster, the polls keep coming in. more polling data this morning. we will talk about the strength ofthe strength or weakness the u.k. economy as we head toward tomorrow's general election. security continues to be the dominant domestic theme, of course. we will get analysis from neil williams who is joining us. let's check how the markets are doing over in asia. manus: we have a lovely chart in you, but anna is rooted

westminster. our election coverage goes through the day. will catch up with the managing mori.or at ipsos that's right here on daybreak. it's go to china, this moment of reprieve in the market. we'll talk about that and the risk radar. china had cut their holdings of bonds by the most since the year 2000. this was a drop in their terms of holdings of bonds at the big boys are back. stability in the yuan, that's one of the critical issues in the market. it's up by 2% in 2017. the chinese are prepared, if the situation is right, to consider buying more u.s. treasury's. increase at the start of the year since 2013.

were trying to understand just exactly what this means. this is china holdings in u.s. treasuries and this is the yuan. it's a triple whammy at risk for the markets. temporarilyve just step back from being slowed by the ecb, the election, and james comey's testimony. the topics turning green again. we had drops for three straight days but we've turned it around. , just anhtly better indication of the term in the market. by aussie economy expanded .3%. the shorts are quite wrongfooted. essentially what you've got is the 200 day moving average -- keep an eye on the yuan. the fx reserves come out today. that is the linchpin with everything to do with what the chinese might be doing in regard to the u.s. treasury market.

a lot to be cautious about in the markets. a busy day tomorrow. the u.k. election and all the other issues of the ecb. a lot to talk about it tomorrow show and here in westminster. bloomberg first word news. >> theresa may has said she would be willing to tear up human rights legislation in the battle against terrorists. labor leader jeremy corbyn set the correct response to the terror attack is to invest in the lease and security services while protecting democratic out use including the human rights act. security continues to dominate .he general elections u.s. attorney general jeff sessions suggested in the past several weeks that he might resign amid a widening rift with president donald trump. familiar,to a person

session has come under fire from the president over his recusal from investigation into the russian meddling of the election. fired fbi director james comey will publicly describe conversations with donald trump but stop short of saying if he obstruct tried to justice. mueller is now special counsel in charge of the russian investigation. midlands, the biggest oil and container ports have banned all vessels sailing to and from qatar omitted diplomatic crisis gripping the world's main energy exporting region. saudi arabia and and bahrain authorities have closed off all their ports to qatari flagged

vessels traveling to or coming from the persian gulf states. terminals in the uae bar traffic to any stick -- any ships touching caught her. ar.qat the rba signal yesterday that it would look through slower third-quarter growth when it left its benchmark rate on hold, saying it still expected to pay to accelerate about 3% in the next couple of years. 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 .loomberg at top given what we're expecting on thursday, the so-called super thursday, a little bit of caution once again in the asian markets. the nikkei turning things around, up by .2% and hong kong fairly flat at 2015. we are waiting to see what the short seller call will be.

having a look at some of the stocks we've been watching in kkr up 21.5%. the biggest jump we've seen in seven years. aap technology coming online for the first time in years. manus: thank you very much for the roundup there, juliette saly. anna is down in westminster ahead of the election. front and center as we go into these last 24 hours of polling. big: indeed, this is a theme here in the u.k. as you would expect. theresa may has-beens begin about what she would be prepared to do and wants to do in terms of legislation and changes to

all us if she wins this election. she said she is willing to terra human rights legislation in the battle against terrorists. two is campaigning an event in the west of london. she said she would make it easy for authorities to arrest terror suspects. she speaks with quite laudable authority on the subject but with that also comes a level of responsibility. as you heard the labour party say, perhaps you bears the responsibility for any failure to make changes to policy in the past. that remains one of the key debates. the latest polling, no change for the conservative level of support, which is interesting in itself. labor at 36%, that puts seven points between them. the overall trend has been tightening. some interesting dynamics, if you look at the conservative party is campaigning, they are campaigning in labor leave

constituencies. that perhaps suggest that maybe the conservative party can win some of the seats. we will have to see if that comes to pass. a party eight has been speaking to one of my colleagues who suggested that labor is preparing for some -- for defeat in some constituencies. there are 30 districts a say they have no hope of holding onto. manus: theresa may has been campaigning along with boris johnson. let's talk about the economy, sometimes it's all about the economy and all about the numbers. in terms of the inheritance of whoever works are that door at number 10, the have a slowing economy. the challenges are there in terms of real wages and our proclivity to spend. anna: i colleagues have been doing some of the numbers,

drawing together all the latest data to put together a state of the union on where we are in the u.k. economy. slower growth, that's not something to gloat about. in fact the weakest quarter in four years. tepid wage growth made worse by the fact that inflation has been on the rise. the depressed level of the pound adding to that inflation problem. ,roductivity remains a problem not just under conservative government but a problem that's been existent for quite some time. the weaker economy leading to decreased money going into the treasury, making it harder to pay down the deficit. we will talk about that later in the program. unemployment at its lowest in 10 years. that's welcome our guest host for the next hour and a half, neil williams, hermes fund manager. let's outline some of the

economic challenges for whoever walks back in through the door. you quantify the slowdown and economic challenges in the u.k. right now, even before brexit begins? again, andat time security in terms of the election is about the economy. it will remain pivotal once the dust settles. not least of course because the brexit process has yet to start on the 19th of june. should we get a return of the conservatives, once the dust settles, that will be eight so what in terms of market reaction. coalition, they look out. i say that because it seems the whole process is going to take longer than the two years forecast. i'm expecting about seven years. in which case we have a long process to come. let's hope it leads to a clear

political mandate. yearswhy do you say seven and not two years? there's a big difference and there's a lot of territory could have landed on between. neil: absolutely. what occurs to me is that we probably could not have chosen a brexitime to hold this negotiation politically, because obviously we still have the elections to come in the rest of europe, germany potentially is another, and we have to get it through parliament, and added to that, the only precedents we have really about a country leaving the eu is greenland in the mid-1980's. it took them three years, based on one main issue, which was fishing rights. last year we had canada, who signed a deal with the eu which took seven years and was almost derailed by a small state in belgium.

this time around it's going to be more difficult politically. canada's deal didn't include things like regulations for financial services. we will need to have something that's even more ambitious than the candidate deal. this election probably is not something we needed in terms of starting up the process. there was a great column this morning, don't give may a blank check. could shave 7.5% off the gdp of the u.k. in the next number of years on a hard brexit. could it be as aggressive as that, given the services number you just outlined? neil: it could be, and we simply don't know. for what it's worth, the bank of england believes that brexit could take up to two percentage

points off the level of gdp during the whole process. the other estimate you mentioned, if it's right, the bank no that would have to be revising down sharply is growth forecast looking forward in putting even more on the back burner the first rate hike. but certainly what's probably not going to help or may not help is if we get some sort of messy co-elect -- coalition to work out. anna: do you draw a line between the size of any mandate that sizesa may g, between the of a mandate for the prime minister and the hard or soft nature of exit? some do, and others say whatever the mandate, it's going to look pretty much like a hard brexit right any definition you would've put up 12 months ago. neil: that's a good point, because of course in order to get what music may is hoping

for, she's going to have to inevitably give concessions. but also the leader of the other main party, the labour party, have indicated they still want to have access to the single market. as i gather, most of the other parties also want that. it does seleka case of cherry picking from the u.k. point of view. we do see the best bits of the eu deal but trying to push away what it deems to be not good bits. if there's no clear mandate post thursday, it seems to me it will be difficult for mrs. made to give concessions to the other eu countries. in which case it simply adds to the confusion and lengthens the whole brexit process. theess going back to previous point about estimates for gdp, the obvious pressure release probably would be ultimately the pound and also despite that, probably a weaker equity market. i say the pound because either

way you look at it, the pound in the medium-term vince to be driven more by the extent to which the u.k. has loosened or tightened its policy. country hasno big loosened its policy more than we have. even if you believe the worse of brexit has been priced in, it seems to me they're still a fairly limited upside in the next year or so or sterling, even with a good outcome on thursday. will have more as we go through the daybreak show. we are building up to the election polls opening tomorrow in the united kingdom. we have coverage all week on tv , right here on bloomberg television. we have a one-hour special thursday night at 10:00 p.m., as the exit polls hit the tape, we bring them to you. plenty of great programming through the night on

thursday coming here on bloomberg. let's take you what's coming up on your day ahead agenda. here are some of the highlights. a.m.ndian economy at 10:00 u.k. time, we get a rate decision out from india. trump is due to make an address in ohio on overhauling america's infrastructure. that's where we start a conversation next, coming up on "bloomberg daybreak: europe." president trump is due to outline his infrastructure plans today. we will discuss what it means for the u.s. economy. that's next. this is bloomberg. ♪

anna: welcome back, this is "bloomberg daybreak: europe." london.ward -- 6:20 in that's big to juliette saly,

she's got the bloomberg business flash. juliette: considering a capital increase of more than 5 billion euros as part of potential offer for a smaller rubber -- smaller rival. begin about potential underwriting commitments for a share sale if it decides to go ahead with an offer for the troubled spanish lender. santander declined to comment. china has told the u.s. to mind its own business. investigating a factory that made shoes for the evoke a trump brand. the ivanka trump brand. beijing says no country has the right to interfere. forhas offered to buy group $1.6 billion after the stock price collapsed in the past year. but the stock jumped the most in

seven years. ofigroup trying to get hold underperforming assets on the cheap and his bid was too low. that is your bloomberg business flash. manus: u.s. president donald trump will outline his infrastructure plan which and additional funding for projects, according to a preview of the speech provided by the white house. the aim is to deliver a trillion dollars in infrastructure to fix america's crumbling roads, bridges and other assets. the trump to save train, a trillion dollars, i can hear the rhetoric. any, for usin, does

to believe and reconnect with the trump train. it is looking a bit stale. i say that because yes, he can get through his infrastructure's bending ultimately and maybe in the autumn he can get through tax reform, but the part that markets are turning their back on is the dark cloud of protectionism. he said nothing to suggest he's reversing his plans to step on tariffs and trade rigid -- trade restrictions. it's one reason why the fed cannot go as hard as markets expect and not close to the 3% heat rate they had. anna: you mentioned protectionism and what he has not said since the election. some voices would suggest that maybe what we heard from the administration is more about enforcement to existing policy

rather than ripping up existing policy. thinking about nafta, maybe. neil: that's right. tried to carry through on other proposals thus far, but the piece behind the scene, although he cannot control congress, he can control trade policies. if you like, it is his trump card. he has section 301 of the 1974 trade act. that means that he can impose trade restrictions on any country he deems to be acting against the interest of the u.s., and that's without congressional or deputy a approval. if things get tough for him on the tax cutting front, i wonder if he will save face by imposing some trait restrictions later in the year. as you say, were starting the day with the hope for infrastructure. you have doubts in your mind on the capacity, but where it is most manifest, the dollar is

down, treasuries are down. this dollar in the absence of the great trump reflation trade, we are back in november levels. what does it do to the underlying economy? it's not a bad thing. if the dollar weakens it gives the fed a bit more inflation to justify the june rate hike and call others into the line for future months. growingight about this and it is not an overnight process but a growing process toward protectionism, that surely would be dollar positive it leads to repatriation of capital back into the u.s.. that spread because we've never really known trade protectionism without retaliatory action elsewhere. i'm thinking of other countries that see their currencies weaker against it leads to the dollar e they get cost inflation.

happens, it feeds back to the u.s.. if that is the case, the fed may continue to nudge the button on interest rates that have to peek at a much lower rate than we are expecting. anna: so where does it peak out? do you think we get june and further to september after that? neil: i have two more hikes in mind. june is pretty much baked in, and one around september or december. then it is back to wait in see because the fed will always tell you that a rate hike takes roughly 18 months to feed through into consumption. any to get the ill winds of protectionism or the tax cuts not coming through past autumn, that's probably an additional reason for the fed to hold pat on 1.5%. manus: hold that thought, it

doesn't auger well. will talk to bill gross a little later on. stay with daybreak, more to come. ♪

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which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver. anna: welcome back, this is "bloomberg daybreak: europe." you're looking at a live shot of tokyo. gold remaining near a seven-month high. let's get an update on the markets. >> what are we expecting in this session? changing, one day before the u.k. general election, it looks like the ftse is going to tread water. probably similar things elsewhere in europe as well. yesterday european equity down

by around 1%. the aussie dollar, the bloomberg dollar index is marginally better as well today. politics in the u.s. becoming absolutely fascinating at the moment. the market i can sense wants to price it in, cannot quite get there yet. north fork is that is more focused on what is happening at the fed. recent evidence would seem to suggest that politics has less of an effect than you would first think it would. at the moment you not seeing much of a reaction on the qatari currency but take a look at the 12 month forward where were seeing it being priced in and you can see the story, the isolation being priced into the forward market which gives a little better ability to price the story positively.

i think this is the chart you want to watch out for right now. this just continues to drift lower and lower in the curve continues to flatten. back to you. ofus: there's a new edition daybreak on your terminal. russian hackers are set to have helped inflame the gulf crisis by planting fake stories in qatar state media according to people familiar with the matter. anna: second story we focus on talking about the isolation of qatar with president trump taking credit for the move. calling it just punishment for the country's financial support

of islamic extremists, saying his trip to the region last month was already paying off. interesting that sean spicer game a slightly softer description of what the president is trying to achieve, saying the u.s. still wants to see the issue de-escalated and resolved immediately. he was heartened by qatar's pledge and will see if diplomacy can work on this one. manus: we will hear from the qatar foreign minister. saying in the past couple days at everything has been done. qatar and to vilify accuse them of fabricating stories. talking about institutions on terrorist funding being at the margins. finally, daybreak focuses on jeff sessions. this is one that is beefing up in terms of story. he is said to have offered to resign being the u.s. attorney

general in recent weeks over the ongoing russian investigation. that's according to a person familiar with the matter. that administration of donald trump being held up in appointments and ongoing discussions of those people want to be advisory council or otherwise. the concerns about china's debt driven growth. take a listen. growth in china would banking assets of 15%, twice the gdp last year because they are deleveraging. still production is still rising 5% year, something like that. china says deleveraging or ply side reform, we're going to cut capacity, they been saying these things as long as i've been following china, which is

over seven years. ,hen you look at the numbers and remember we are comparing bad apples to bad apples, i admit that. there is still substantial growth and credit in capacity and all the things they claim they're trying to rate in doesn't happen. gotarticular, when you've bank read it, banking assets, forgetting the shadow banking system for a second, the model is every bit the same model of .een worried about for years it is just a debt driven model. last year they added about $5 trillion or so in new credit to the system, which is somewhere between 40%-50% of gdp. i daresay in the u.s. economy, credit, we in new would be growing at 5% or 6%

also. there is not a lot to that. people asked me, do you believe the numbers in china? when it comes to gdp, i do, and that's the problem. even the model, you stick a shovel in the ground, borrow money and put up another building, it will add to gdp. economiche current political investing environment remind you of anything we have seen before, is it reminiscent of any other time? and wealked about china are a lot less short china than we were a handful of years ago. we are more bearish on opportunities in the states. that does have to do with the fact that the debt driven bubble here, there are some similarities in certain sectors. clearly there are some issues going on in auto credit.

we've been talking about it for about a year now. it seems to be happening. we're seeing equity cash out financing in used cars, and we've never seen that before. i've been following credit to ask credit stuff since the early 1980's. you see the.com 2.0, going back to early 2000. that was jim chanos there. the chiefams is economist at hermes find. china, a house of cards, the u.s. is a house of cards and auto debt is rising. it's difficult to find

someone who is more downbeat than i am, but it sounds like you found somebody. china has just to economic mandates. one is to maximize growth and the other is to maximize employment. if only the countries in europe had as many buttons as china has. the problem for china is it wants to preserve growth close to 6.5%. on the other hand, the housing market, if you want to see house prices to incomes at 30 times, go to shenzhen and some of the other cities. when they need to boost growth, they will have to find a way to do it other than cutting interest rates. they are also struggling to limit the currencies, so the reserve numbers today are round 3 trillion. it suggest they are trying hard to maintain those reserves. the commonest party congress approaches.

it's coming up later on this year. some suggest that ahead of that, there's a dilemma about whether the chinese economy keeps doing as it is doing, but they will do they can torything stop it below the 6.5% target. not for thet reserve level and the fact that this you're china, politically it is huge. politics is pretty much everywhere around there right now. the people's bank no doubt or try to limit any downside this year. it flies in the face of accusations especially from the u.s. that there are downsized currency manipulators. , going back to the protection thing, is that the only way they will have less to retaliate if we do get something from the states is to then push the currency down.

in china, corporate's and banks have a lot of dollars there, and they will thereby be shooting themselves in the foot by doing the. their economy will slow back to the u.s.. let's hope that simply doesn't happen. manus: let's talk about this, treasury holdings dropping like a stone. the chinese are getting ready to consider boosting their u.s. treasury holdings because the yuan has stabilized. there is a risk with that policy leader. just encapsulate that for me. china is the biggest foreign holder of u.s. treasuries and the u.s. realizes that. china holds about 15% of the total pot. i wonder if china's announcement on treasury holdings is a way of pushing further off concerns about protectionism.

the last thing the u.s. will want if china devalues the sensecy is a signal that that china has questioning its own commitment to holding currencies. manus: so think message that they are there with donald trump -- so a succinic message. neil williams, thank you so much for joining us today. coming up, santander considers a stock sale. we will break down the best possible bid for the struggling lender, that's next. this is bloomberg. ♪

anna: welcome back, 6:44 here in london. your listening and watching to "bloomberg daybreak: europe." let's bring you back to

westminster where were counting down to the general election that take place tomorrow here in london. we will get to our guests who brings us some insight on the latest polling data. us.page joins great to have you on the program. tell us about what you can glean from the latest polling data. we haven't had very much since the dreadful events from saturday. >> it showing not much movement. although terror attacks in western countries often benefit the governor today, in britain, we're just getting used to them, unfortunately and sadly. it seems to be sort of try stint. people have formed their views of jeremy corbyn and theresa may and they are sticking where they the before, which suggests race has tightened, but theresa may should probably increase her

majority in the house of commons tomorrow. anna: how much should she increase it by? be a smalluess might increase to a large one. the reason for that agnes is that there is no simple relationship -- for that past, tonyand the blair got 36% of the vote and managed a 64 seat majority. one-timed david cameron got 37% of the vote and was 20 seats short of a majority. it really depends where they are. the big question is what has been happening in the marginals. looking at where they are campaigning gives you some thoughts about the private polling. campaigninga may very much in the labor heartland of those -- trying to tap into some of that brexit support.

was atd boris johnson one of places yesterday. maybe things they are hearing lead them to believe the polls are not so tight in those crucial states. haven't industry and representing labor maybe the conservatives are slightly further ahead than the polls are suggesting, particularly in the marginals that matter. s are in theervative places that matter, the places are perhaps voted exit but quite working class, not traditional conservative areas. then we may be surprised on thursday night when the exit polls come out. most of it goes back to the conservatives. that's one of the reasons you can see that despite labor rising a bit in the polls, they been flying alone at in

altitude. in conventional british politics, the non-resurgent of that live dems would've been seen as the majority. is turnout going to be one of the crucial factors here, particularly with young voters? maybe that's one of the differences we are seeing. there is a big range of polling at the moment. the conservative lead of one percentage point to 12. maybe some of that has to do with some of that turnout. >> the question is, do you believe the young people you're speaking to? the young in general elections in britain in recent years tended not to bother voting. in 2014.bother to vote what we've seen over the last 2017,of elections, now in polls are seeing a rise in young

people telling us they are going to vote. whether they will or not is a $16 million question. depending on how you decide to treat them. you can wait them out and get a much closer result. if you think they are enthusiastic but they're confusing facebook and instagram in and going on twitter with actually voting, then we will see. anna: is it different this time in the sense that young people who are saying they will vote, that in itself is different than previous rounds? >> that is part of a surgeon jeremy corbyn ratings and it may rise but mrs. a may still winning handily. anna: the battle in scotland is doing extremely rise well.

battle for second place, which is fascinating. >> the evidence there at the moment is, they are going to lose seats and at the moment if the polling is to be believed, and i like to believe it, as a pollster, there's a problem. mrs. may should pick up some conservative seats. in living memory, the inservatives have lost seats scotland. the labor and conservatives are at second base but probably the conservatives will pick up more seats than labor. anna: thank you so much for joining us this morning, ben page. manus: very interesting there. instahe young get off graham and twitter and get into the polling booths? that's a $60 million question. we will get a global perspective withr programming

catherine mann at 1:30 u.k. time. anna edwards is on election watch at westminster. watch it all on tv . we have a one-hour special for you with brexit polls as they come, 10 :00 p.m. tomorrow evening. analysis across the market with guy johnson and jonathan ferro who is there for the week. breaking news coming in on michael popular, the spanish bank which will have its stock suspended from trading today. our lead story from spain is consideringer is raising $5 billion -- 5 billion to bid forshare sale banco popular. as if the story is

beginning to heat up. more than 35 million euros of nonperforming loans on the balance sheet. let's get to our madrid bureau chief, great to see you this morning. santa -- santander on the grind there. who has the bigger half to potentially do a deal to buy banco popular are if that is the road were going? >> it's a huge lindner, more than a trillion dollars worth of assets. it's a huge bank that has the have two absorbed popular. very much a competitor of santander, they are close rivals. it thing about popular is needs a big cleanup. it has 37 billion euros of nonperforming assets. hence the news last night that

santander, if it were to make a bid for popular, would seek to raise capital. of mimicking terms some of the deals we seen, i'm reflecting back to lloyd's, this is in the eye of the liquidity storm in terms of global financial markets. thatrms of the scale santander would increase its dominance in the market, could it deal with those nonperforming loans? srv adopts a resolution decision popular. if you could just deal with the issue i put to you, can they absorbed the nonperforming loans? >> what do they get? they get a healthy, functioning business of lending to small and

medium time companies which all spanish banks covet. the other side of popular is kind of it jekyll and hyde character that it has. it's the legacy of the real estate lending it was doing a decade ago which has now kind of blown up in its face. as i mentioned the nonperforming assets that have to be performed to take coverage levels up to what would be considered to be reasonable levels. says bancoecb popular was failing, likely to fail. these are the lines coming from the ecb. we will see how this lays out through the rest of the trading day. our man in the trip, thank you very much. back at the white house. let's talk about the president throwing his weight behind the isolation of qatar.

he described it as just punishment for the countries extremist groups. qatar says the relations with the u.s. are still strong. days, andlast few following everything we have seen lately, there's a campaign that was being led by regional ambassadors to vilify qatar and to accuse and fabricate stories, especially regarding terrorist funding which comes from marginal institutions. however, our relations with the u.s. are made through official institutions and are strong. we have a strategic partnership with the u.s. in the fight against terrorism. manus: let's bring in mohammed doha. in good to see you. stocks are down, there's a report that shoppers are

hoarding food. put that in context for me. given what we've heard there, what is the mood like they're in doha? >> the mood drifted dramatically -- shifted dramatically after the tweets from donald trumpian would they were already under siege and now they see the weight of the white house moving against them. some way they have to acquiesce to the demands at some point, but right now there is no clarity on that. there was some panic buying by shoppers in the last couple of days. -- eggs flew add off the shelves, but were seen a mixed act of that. i don't think anyone will go hungry and what is the richest country in the world. manus: let's see how this political story builds. thank you so much for joining us. we will bring you more of these

lines from the ecb saying that they go popular was failing are likely to fail and that it needs a review. more on that story when we return. ♪

manus: security dominates. one day before the polls of an theresa may said she is willing .o depart more terror suspect >> if our human rights laws stop us from doing it, we will change the laws so we can do it. manus: the spanish lender said to be considering a 5 billion euro share sale as it weighs a bid for the troubled bank though bank.ar -- addressy will not

whether trump obstructed justice. the u.s. president is set to outline his trained dollar infrastructure plan, boosting spending in rural areas. welcome to "bloomberg daybreak: flagship morning show in the city of london. i am manus cranny. am at a -- anna edwards. outrecent polling data are three at a more reassuring poll for the conservatives. we covered this at the last hour, it has been developing

through the hour. no doubt we want to get back to that end check out the markets and how they have been performing. the sib, the single resolution fund in europe has 's shares andopular capital to santander. depositors, itts says that popular will operate under normal circumstances. the most important line there are about rejection of depositors, this is around the santander so acquires popular. it may consider and it is correct. it is a bigger share sale than anticipated. santander might consider an 8.5 billion share sale. they are going for 7 billion euros worth of capital to fund

the acquisition of banco popular. srb, the purchase price, the single resolution fund for banco popular is one euro. will get back to madrid. the size and scale of santander's capital entries. -- increase. a bit ofew chairman, news for anglo american. we have stuart chambers coming in as the new chairman at anglo american. that is a little bit of breaking news. german april manufacturing orders, this is going to grip the markets from that perspective. fell manufacturing orders and the estimate for was a decline of .2 of 1%.

you are seeing the april factory orders rise by 3.5%. the estimate was for 4.7%. month on month we are down and hear an year under pressure. let me take you over to my futures screen, london slightly higher. show -- sure i have filled -- have the right screen. the yen wentround, and you saw a slight improvement in terms of the risk momentum but it is not transferring itself into the equity story. it, youu think about have three major risks in market. nevermind super thursday. you have the european central bank, you have comey testifying in front of committee and you will also -- you also have the u.k. election so there is a lot

of risk. that's get across to juliette saly standing by with your first word. you keep a minister theresa may has said she would be willing to tear up human rights legislation in the battle against terrorists. correct response was to invest in the police and security services while protecting democratic values including the human rights act, another minister said. beforee day to go polling day. jeff sessions and suggested he might resign amid a widening trump. donald according to a person familiar with the matter, sessions has come under fire from the president over his recusal from investigation of the russian meddling in the twice 16 election. were not sean spicer say whether trump still has confidence in sessions. fired fbi director james comey will publicly describe

conversations with donald trump but stop short of saying if he thinks the president sought to obstruct a probe of russia's role in the 2016 election. a coding to a person familiar with comey's thinking he has coordinated his testimony to the senate intelligence committee. in the middle east the biggest oil and container ports have and to and from qatar. arabia and bahraini authorities have closed off all for ships ors vessels coming from the persian gulf state. container and oil terminals also banned traffic to any ships touching qatar. jumped,an dollar first-quarter gdp came in and expectations. the economy expanded 1.7% from a year earlier and 3% on the

quarter. the obvious signal it would look through slower first court of growth when it left its benchmark rate on hold think the parise is accelerating in the next couple of years. 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 have seen things turn around in asian trade. we have got japan and australia closing at the moment and the u.k. is -- nikkei is flat. the asx 200 also closing marginally higher. we have chinese stocks today, the csi 300 up and hong kong has switched out by .2 of 1%. let's have a look at the stocks that have been in focus. ly. rising sharp this on a $1.6 billion offer them kkr for the aussie tech company.

asc technologies, coming online since the first time since mid-may and quashing comments about shortselling from gotham city. 1%, icicig good at bank. and we are expecting an interest rate decision from the reserve bank of india today. lieuchart shows you this line which is the headline four india.mber it is still pretty healthy when you look at the core cpi and the banks repurchase rate policy agreement. no expection -- expectation but we are four india. it is still pretty healthy when you look at looking and listenig closely to what the governor has to say. very much.k you juliette saly in hong kong. let's turn a back to the u.k.

and go to frankfurt for part of this conversation. our next guest says there is no risk of a u.k. rating cut. the future of brexit negotiations may have an impact, he said. joining us from frankfurt is lawrence cramer, from s&p. great have you on the program. explain this comment that there is no risk of a u.k. rating cut from the outcome and this week's general election. what does that mean exactly question mark it is one thing to look at the manifesto of what various sites are planning but we do not know what kind of policies might get in the end. guest: good morning and thank you. yes indeed, we would not in this case or others endorse one party or candidate over another. we are neutral when it comes to who should win the election or who will win the election. we are interested in policies because policies determine the economic and financial outcomes and depending on electoral

outcome you might have different policy choices ahead of you. what we are watching in the u.k. general election tomorrow is whether there is a majority or not and we have reason to believe that the conservative majority will hold and quite possibly be expanded. this will take some uncertainty away because we have been updating with this government now for almost a year. we have roughly known where they want to go on the all-important brexit question which appears to be a hard brexit. manus: good morning to you. let's take the conversation forward, that is the base case scenario for s&p. thatve a bloomberg case says in the brexit scenario he expects seven point 5% participation in the u.k. economy over the coming year. 100 40 billion pounds worth to be shaved off the economy. would you share as negative view

on that on a hard brexit scenario, what qualification can the potentialout contracts into the u.k. economy? moritz: this is a has to this game to estimate by pound and penny how much the cost of a hard brexit would be. for the simple reason that we -- noow comparison comparison, no precedent of anything similar attempted in any country. ask you, what is the recession risk in the u.k. in your view on hard brexit? z: it is rising. if you look at what you have seen last year because of the surprisingly strong growth, this has been underpinned only -- i must exclusively by household consumption. household had -- households had higher disposable income. interest rates have been

falling. that will be seen this year with inflation picking up after the depreciation of sterling. there is a reduction in disposable incomes or stagnation. the driver of growth that we enjoyed last year will be much weaker. on top of that you should assume that investment activity is cautiousbe rather while the uncertainties about which brexit will continue. the two important engines of growth will be rather weak and on top of that, we might have further consolidation down the road in the government's finances. would this all up, it depend on whether the export performance is positive in order to secure good growth momentum. all things considered, the downside risk to growth are on the increase. a: if recession risk is

growing, if the downside risks to growth are going, should paying off the deficit be a priority for the next government or not? moritz: that is for the government. the balances stretched so the debt ratio has gone down since the great financial crisis. we should keep that in context. the u.k. has a lot of policy flexibility on the fiscal side as well as on the monetary side. this is the harvest of decades and decades of prudent policymaking. we should be careful to not just compare the debt ratio of one country with the other without actually looking at what kind of flexibilities they have. we have seen in the crisis that the u.k. has a lot of flexibility on the fiscal side and the bank of england is able to comment that flexibility. concernwe see this as a

that the debt ratio remains high and might rise further and this might in the and contribute to further pressure on the sovereign rating. but this is not the key battleground. the real problem in terms of try toity now is to guess what the uk's future relationship with the eu might all the implications for investment, for growth, employment that this carries. then the fiscal side is a consequence of this. than thee detailed dog. you have voiced your concern about homogenate he. thanonger stand for them u.k.'s position. do you think that is another issue for us here in the u.k. in

terms of the election outcome, the risks to the currency? flexible turn's he is a good thing. it affords some of the >> ability and policy just compare how the u.k. or other countries outside the eurozone, poland or others are able to go through the financial crisis compared to some of the seven european countries which had a text exchange rate. it is a good thing. but of course, you do not want to much volatility. when the uncertainty is high, you could have an undershooting puts mying and that feet into the expectations and that could curtail further the growth and disposable incomes off households in the u.k. and feed in itself in terms of

negativity. having a currency that reacts to , otherernal shocks things being equal is a good thing and the u.k. has been benefiting from it. anna: you said in the past that you think a decent majority, a big majority for theresa may will help her domestically but it may not strengthen her hand in brexit negotiations, why do you not think there is a link between her domestic dominance and the future brexit negotiations? some have been thinking that if there is a larger maturity gives her more room to maneuver vis-a-vis more hard-core back benches which one with a with no deal. that is far from certain because we do not know what the larger majority would look like. who are the new mps that would billy -- that would be coming in question mark those who may be coming from brexit constituencies that were

previously held by the labour party. whether they are softer than the is not college of mps certain at all but more importantly, whatever the majority is that you might enjoy after tomorrow's vote, it does not change the situation for the eu negotiation team which will continue to negotiate in what they think is the interest of the eu 27 and not the interest of the u.k. population. all in all, i think this is not really changing the dynamics very much and the negotiations that better start soon because we have very little time for concluding those negotiations. what exit difference if you had an upset and the conservatives were to lose the majority and we have seen a hung parliament. the uncertainty among who is negotiating, what is the objective of the u.k.'s side in the negotiations would be thrown open again. -- timegiven the times

is of the essence, the loss of time this would entail before the negotiation can start in earnest which is greatly increasing the risk of a hard brexit and a no deal in the end. manus: thank you. jordan rochester has been listening to moritz kraemer. the test case scenario is the tories will take the same number of seats, possibly increase their position. we have been listening to the risks from moritz kraemer. a hung parliament. jordan: if there is anything markets do not like it is uncertainty. in 2010 we had the conservative

government. a hungcase where it is parliament, is jeremy corbyn and the s&p and the lib dems. that takes two days, up to one week. this happened in 1974, the last hung parliament where you did fail to pull together a coalition government. the market will not like that because you have in two weeks time, you have the first brexit negotiations on june 19. if we have not got a leader in , that is the same timetable as the queen's speech, negotiations will be on the table. anna: we do not know yet if the conversation will be domestic on friday trade we do not know if we will talk more about brexit and the relationship with europe . it depends on the results of who is going to be leading the charge thereafter. in terms of the run-up to the ipsos mori.spoke to

you have been doing some research about how the different turn out. interestinge is an difference between the poles and their assumptions. if you assume the election will be more like 2015 you are telling the people that you have large conservative lead. if you're thinking this could be more in terms of demographics, more people -- young people voting, we had a 60% turnout. it is a bit guess if you think it is more like that then you do have a tighter race. there is a shift in the actual polling numbers among demographics all over. conservatives versus labor. did you know that the approval ratings of jeremy corbyn are in line with theresa may? that is a huge seachange in public

sentiment toward jeremy corbyn. there is a big reason for these tightening and one of these are women are switching toward labor in the polls. the other, we talk about , anna is on the green, and hope she comes back soon. i hope we do get a clear debate -- decision. comey is big issue is testifying and the european is meeting tomorrow. those are other risks for the markets. you say that a hawkish surprise from the ecb is probably unlikely. the consensusg track because there are a lot of people hoping and praying. jordan: you had a medication from mario draghi down playing these hawkish expectations. two weeks ago i would have thought they market was getting

overbought. all the talking about is mario draghi removing the words all lower from his statements, talking about whether rates can here.er from most people expect that. if he keeps that in that would be a dovish surprise. it would slow down the tapering that people do expect. interestingly enough, i thought consensus, of a dovish outcome. survey data tells me everyone is short euro and our clients think there will be a dovish surprise. ifo might have a little bit mario draghi does not hawk out. everyone it -- if everyone agrees he is not going to do anything material. anna: lovely phraseology. it is amazing to see this fuss around two worlds -- words. we have seen this as people pour

over every detail. could they decide that assets will give their guidance on growth in one breath and give separate guidance on inflation and take us in a different direction? vigilanceichet said and in terms of what you're asking in terms of forecast we think perhaps they might have some changes in the gdp forecast, a slight uptick that given that oil is lower and you have had a higher euro as well, it is unlikely the forecast will change. there is a downward bias, it might not change at all or it might revise it slightly lower. you had those offsetting factors . it is a meeting where most people expect the words all lower taken out in that language. manus: it is interesting you talk about the client side and the data side and the other day i was showing a chart that had ftc positions, the net long.

there is a shorter idiosyncratic position versus a slightly broader context of what the ftc data is. currency theman union has a lot to account. that is why the euro should be stronger and it is artificially lower thanks to the qe policy. you remove that alter easy policy slowly and we will see term premium kick in and high heels and that should bring the euro higher against the dollar. anna: where does that leave your forecast, you're talking about your medium run forecast or euro-dollar approaching 115i think, jordan. jordan: that is right. it could overshoot what this rally in euro we have seen and most of the feedback i have had from clients as i did not have enough in it.

it might be that the market chases it a little too far but 115 is the initial target for sure. from there there's upside still perhaps. manus: it is interesting that clients say they did not have enough in it. some great phrases, thank you so much for being patient with us this morning. fromis jordan rogers number out foreign-exchange tragedy. european regulators determined the bank was [inaudible] and a plan to raise 7 billion euros of capital to do the deal. here.rigo really popular will be folded into santander.

>> it was something the market was expecting on and was keen on. this is what they had from the eurocrisis. santander will be raising money to do this, how is the market going to respond, or money than was expected? seems quite a bit more money than was expected and there is a lot of questions people may have on whether this makes sense or not. popular is a story where there is two different stories. one is a great bank, very strong, it is a retail banker. portfolio of real estate which is not good at all and which is the big concern. bothnder will be taking on things and people will want to know what they are going to do with that real estate business which nobody wanted. manus: that will be the key question the markets will ask. santander am a thank you very

much. joining us there from spain. 7 billion euros to be raised by ancoander as they take on b popular. that story on the european market open. ♪\

guy: good morning and welcome to bloomberg markets. your first trade of the cash session coming up. it is going to be an interesting day. i am gone to -- i am guy johnson alongside matt miller. it's talk about the u.k.. will the young vote? it looks to be a key factor in the election. the pound could go to 120 is the -- if the result is a hung parliament. one euro, that is the price that santander will pay