♪ >> good morning from bloomberg's new european headquarters in london. i am anna edwards. this is "bloomberg: daybreak europe." the u.s. treasury secretary says will raiseolicies wages but will not cause broader increases. upheaval at anbang. the temporary control of the insurance company. alleged fraud. no cherry picking. the european commission preempts the brie exit meet -- the brexit meeting. the plan will not work. ♪

anna: good morning, everyone. this is "bloomberg: daybreak europe." breaking headlines from switzerland. newing authorization of a share buyback program. the backward looking numbers netting. this comes in ahead of estimates. this is a year where we have heard from many of the insurance the backward lookingcompanies py natural disasters including forest fires in california and earthquakes and mexico. the only positive from the business perspective from all of that for the insurance sector is willthere is hope this

lead to falling prices. that is one thing we are watching out for when we hear lead to falling prices. from swiss re. regarding softbank, they have confirmed that they do have some interest in it. it is trying to turn it into a technology investor. it wants to purchase as much as a third of the swiss re business. they say they are in discussion softbank on a potential minority investment. we will continue to watch those headlines. let us get an update on the markets overall. let us get up-to-date on the asian equity session. the u.s. session closed just in positive session. a slight lack of guidance going into the asian trading day.

let us get up-to-date on the asian equity session. as if he futures up by 0.27%. in thee movement higher dollar. the dollar positive and euro pound weakness justifying that. a littleds edging higher, 2.9%. and we have the comments from steve mnuchin around how he sees wages going up without creating general inflation. also see the euro and the pound falling a little bit. we will talk to jeremy stretch about that. and also joining us, speaking on the mining industry, we are joined by the portfolio manager at blackrock. he wants the mining companies to show the money. and we will ask them if he is pleased with the dividend payments. to the co-ceopeak

at a standard life aberdeen about the earnings of the company and will there be any issues around m&a. u.k. prime minister theresa may help an eight hour brexit session with her top ministers yesterday in an attempt to win unanimous backing for her eu divorce plan. they are divisive. sharingg and data topics or issues. the meeting was preempted. has emerged that the ceo of airbus promised the u.k. government the british operations. in a turnaround from a staunch brexit critic, he wrote to greg clark. in a nod to the company's 15,000 u.k. employees, he wrote that

airbus would continue to see the u.k. as a competitive place to invest. regrets not he reporting the hint of a ride in the past. he says he never accepted a bribe nor had been offered what explicitly. in and exclusive interview, guy johnson asked him if he considered stepping aside. >> once you step down, you step down and that is it. >> could you not step down on a temporary basis? >> that is impossible. -- in latvia -- i have decided for the moment that the criminal charges will not be presented and i have the possibility to protect myself. u.s. treasury secretary

steven mnuchin and says the administration's policies will raise wages without triggering broader input -- broader inflation. he brushed aside signs that investors are concerned about rising prices saying wages can grow without inflation being problematic. former trumpcare main chairman paul manafort has been indicted for a second time on new charges that include failure to report correctly to the tax authorities. robert mueller used a new 32 count indictment to raise the legal stakes against manafort and robert gates. a spokesman for manafort says he is innocent of the allegations and is confident he will be acquitted of all charges. green, a hired tom criminal defense lawyer. both men pleaded not guilty to the original charges. japan's key inflation gauge

stalled last month. core consumer prices which exclude volatile fresh foods rose 0.9 percent in january from a year earlier. stripping out fresh food and energy, prices climbed 0.4%, slightly ahead of estimates. global news 24 hours a day powered by our 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . >> let me pick up there and have a look across equity markets in the region. thatll talk about the bid caught jgb. have a look at the equity space. shop.is closing up australia has been closed about 30 minutes. we are up across the region. moderate track for a

weekly gain. volumes. holiday mood is still a cross the region. depending on the market, we are at about two thirds to about half in terms of how light turnover is compared to what we are used to seeing this late in the session. hang seng index. its new target for the index. australia closing just shy of 6000. that asia hasdate essentially retraced about 40% back if you take the peak back in january before the selloff. let us look at the bond market. interesting narratives. we know about the push on the 10 year yield. cell of about 1.2.

inflation is not so far away from target. so far away from where it sustainably needs to be for the boj. the yield premium. that essentially disappeared could be newn line zealand, three basis points from that. that would take you back 24 years. that is a wrap of your markets so far from asia. anna: david, thank you. our attention to what has been happening in the u.s. moves higher in the interest rates. for a weekly heads advance as steven mnuchin and says trump's policies will raise wages without raising

inflation. great to have you with us, jeremy. give us your thoughts on the general link between wages and inflation. treasuries secretary mnuchin and suggesting that there may not be such a direct link all of the time. what are your thoughts? hope that youuld can raise wages without inflation which would hope incre people's personal wealth and would drive the economy through spending. for productivity and productivity growth. you can argue the u.s. policies espoused by donald trump can increase materially u.s. productivity growth that will allow wages to go out. -- to go up. it comes back to the idea that

when we are seeing money flowing back into the u.s. whether it be from apple or other companies and they are deemed to be investing in the us, if they are raising the productivity growth that the worker, perhaps you can get some wage growth without a becoming obviously inflationary. anna: we had this chart here on the screen. 9647. where does this leave the dollar? it is up about 0.2% broadly. a wages conversation pushing the dollar up from here? what is guiding the move? jeremy: we are seeking u.s. yields moving higher. the crossover in australian yields versus the yes and almost new zealand as well. we are seeing them driving higher and that has provided

some support for the dollar. regardinge question inflation and inflation expectations are the critical concerns. that underlines one of the obvious headwinds for the u.s. dollar. to see amy is likely fiscal deterioration suggesting that any dollar rallies will be --rt and consolidate of consolidative. if you want to make america great again, which of course mr. trump often espouse, then having having aate dollar -- stronger dollar will help. as we see positive statements about the u.s. economy, bringing forward expectations, why is it that the u.s. dollar does not stretch further when we get that kind of move?

jeremy: we are looking for three said rate hikes this year and three more next year. in terms of the tightness of the economy and the potential uptick in inflation, you could argue that is a low level of tightening. that is part of the problem. the fed guidance is contained. mr. powell will have an interesting period in office because one suspects that the white house does not want the policy to tighten too much. compared to the metrics in the economy. that does suggest an issue in terms of the impact on real yields. the other side of the equation is that the dollar does not trade in isolation. when we think of other markets, we are starting to see much more interest in what is happening in monetary policy elsewhere. the fed guidance is contained. it is in the price already.

, iterms of the limitations suggests that the dollar will struggle. anna: who is mr. dollar at the moment? powell,sten to jerome president trump? jeremy: notionally you would expect that power to reside in the u.s. treasury. much thebeen very mantra. going back to rubin in the mid-1990's. davosw shins comments in -- steven mnuchin and's comments in davos were matted down. even if they were consistent with the policy aims. ultimately, i think we are

looking at the u.s. treasury being mindful. anna: jeremy, thank you very much. getting your friday morning started here on bloomberg. you have to switch off bloomberg television, you can find the bloomberg radio live on your device or on your digital radio in the london area. , upheaval at anbang. chinese government seizes the insurance company and will charge the founder with a alleged fraud. we had to beijing. and japanese inflation stalled highlighting the challenge ahead for corrode as he prepares for another term at the boj. this is bloomberg. ♪

anna: good morning from london. six: 18. stormy skies above singapore. that is not going to lift anyone's friday mood. us get a bloomberg business flash. here is deborah. phoenix group holdings is said to be in advanced talks to buy standard life aberdeen's insurance unit for about 3 million pounds according to people with knowledge of the matter. phoenix plans to raise one billion pounds of capital to pay for the deal which could be announced as early as today. representatives from both firms declined to comment. bloomberg tv will speak to martin gilbert, the cofounder of aberdeen. the flagship that form of u.s. tech company snap has lost some luster according to one social

media influencer. shares of the parent company sank 6% yesterday. jenner tweet from kylie who says she does not open the app anymore. and that is your bloomberg business flash. anna: let us get back to the chinese story. taking control of anbang insurance, removing the chairman and prosecuting him for alleged fraud cementing the downfall of a politically connected did dealmaker. his expansion came to symbolize the debt laden conglomerate. good morning to you, tom. from the move is this anbang?regulators on tom: this is the most aggressive mood by the chinese government

-- move by the chinese government. anbang? they are taking on anbang. taking control. their regulators have been in the business since june of last year since the chairman was to change. has been pushed out of his position. he will face prosecution for economic crimes. as a reminder, and bank was one of the most aggressive acquirers amongst china's conglomerates. they have assets worth about $320 billion including strategic and resorts and insurance companies in the netherlands and korea. they say the financial risks have been built up in anbang. companies in the netherlands and korea. commerzbank economist say they are creating a systemic risk. thets will be sold off in

future preventing any buying opportunities. anna: this leads the wider risk story. will this have any impact on the annual meeting in march? tom: it puts it squarely in people's the national congress kicking off in march. we expect new officials for thes for example at insurance regulator as well as the new committee being set up to oversee financial risks in the country. we will get a clearer direction on where this financial crackdown is headed. pressure continues on companies .ike hna bay have been selling off assets and hong like london kong. wonder group, another conglomerate facing pressure and also continuing to restructure. political potential

ramifications because anbang, like many chinese corporate's, has big political connections in the chairman was once married to of dengddaughter xiaoping. potentially domestically political implications as well and anbang was a company in discussions of deng xiaoping. with jared kushner at one point last year around potential discussions last year. anna: a story with many threads. you very much. tom mackenzie joining us. let us move to japan. kuroda.es for the acceleration in inflation is outlook thathe boj the market outlook was looking

more normal. jeremy stretch is still with us. let me show you this chart. this is 7942 on the bloomberg. you can point the white -- to the white line which has stalled. excludingpanese cpi fresh fruit. looking back to the middle of 2016. you can sense a general upward trajectory. jeremy: i think it is a little harsh. i think we have moved away from . discussion of disinflation we are no longer talking about the downside risks. the fundamental story in japan does look more supportive. i think the key question here comes back to the debate about the u.s., the wages. that is the missing link. we need to start to see wage growth coming through. we will watch at the upcoming

whichegotiations particular interest. i think the fundamental story and japan is very good because if you look at the labor market, it is very much a case of the japanese economy showing signs of recovery. is cognizant of that and mr. corrode us second kuroda's secondrod term will be better. anna: he is a continuity candidate. a move away from extraordinary stimulus from the boj over the course of his second term. we are the protest getting from the boj at the moment. jeremy: one always has to make sure that you do not preempt the change. i think in the context of the fundamental story, it will be baby steps at first. allowing a slack in terms of the

control targets. allowing the 10 year yield levels to start to rise. those are the baby steps. i think the boj will have less necessity to be quite so expansive through the course of his second term. the market has been complacent. there was an assumption that when we had abe reelected, the success of abenomics was expected. anna: the yen strength is a bit of a headache. jeremy: it is a headache if it comes through to quickly. quickly. ining strength in a currency itself is not worrisome as long as it is slow and progressive. when happens to quickly, the moves are one-sided, that is when the officials become more concerned.

anna: it is the size of the move and the speed. jeremy stretch will stay with us. up next, we bring you an exclusive interview with the egyptian oil minister. that is coming up next. this is bloomberg. ♪ retail.

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♪ anna: the dollar against at the yen. you can see the dollar on the rise broadly up by 0.2%. a little dollar, euro, and pound weakness. later this morning, we will get an update on the german economy with the release of the final gdp data which is expected to show expansion of 0.6% in the last three months of 2017. and european union leaders hold an informal summit in brussels to discuss the formation of the

--. conversations around whether certain top jobs at that you level should be merged and how to they should be appointed in the first place. and the fcc will publish an order rolling back obama net neutrality rules tomorrow. said to like asia is definitely close up in the green on a positive note. asia-pacific index up about 0.9% tokyo ands climbed in hong kong. you can see this ocean of green. the moment did not -- the momentum did not come from the u.s. the s&p 500 closing just barely in the green. gains it sawf the in the afternoon session. we got some data overnight. japanese cpi came out with inflation that failed to pick up last month.

gauge rising at the same pace in january that we saw in december. seeing that the bank of japan -- the outlook is improving and the central bank may be considering dialing back qe. if you add to that the recent pullback in oil prices and the yen and, there will be less pressure on the prices to rice which could give more headwinds to the inflationary efforts. global markets and the treasury market. 10 year yield hitting before your high. thery long-term chart of 10-year spread, the upside may be limited. the curve flattened during the fed tightening in the last decade or so. the question remains whether history will repeat itself, now. anna: anne marie, thank you so much. let us turn our attention to the united kingdom. topesa may gathered her

ministers to get them to back her strategy. the plan is decisive. it forces keeping eu rules in many areas like data sharing breaking away partially in others. hereu commission preempted plan saying it will not work. jeremy stretch is still with us. let us talk about the pound within the context of brexit. happening -- fascinating conversations from the political perspective. we see conversations around the three baskets. up into the indices three treatments. the eu is calling it cherry picking. we are no closer to understanding where the trade arrangement lies in the future. jeremy: probably not. in a sense we had this period where the two sides have been talking at each other for a prolonged time without resolving

the differences. we have to remember that we are talking about this two-year exit period or implementation period. that puts an increasing onus on this.k. to resolve scenario correctly. as far as industry is concerned, there are issues because contingency measures need to be enacted. the longer the process of division exists, the greater the risk that markets will become frustrated with the u.k. outlook and it has implications for monetary policy. markets have been happy to the bank of england. the context of the relatively benign nature of the labor market and the pressure on the me that suggest to sterling still has a degree of vulnerability about it. anna: the chances of a rate hike

in may have gone up to 83%. the market is coming around to that thinking. are you bullish on the pound or pessimistic about the pound? you can talk about any cross you like. credit agricole is talking about the swiss franc being a lingard -- being a laggard. how do you play the pound? jeremy: you have to look at the time parameters. the context of the u.k., i think you need to be mindful of the time parameters. if we are going to get any deal agreed to two i think it will be brits the end of the profile of the time horizon. if the european union is talking about october, i think it will only be about october that any

outline agreement will be formed. up to then, there is a degree of political vulnerability in sterling. the market is overpricing the probability of the bank of england hiking in may as well. if you look at the consumer spending element over the course pre-brexit,stretch, the consumer expenditure has dropped by about 0.5% or 0.25%. we should not underestimate that. does -- doal risks leave sterling vulnerable. it is only as we get to the autumn that we will see political pragmatism. anna: do you think the bank of england does not see the weakness in the consumer as a reason to hold off on policy? variable iskey wages.

the issue that is impacting almost all the central banks. the bank of england is unassuming that wage growth will pick back up north of 3%. i think that is debatable. in the absence of that, i think it is a very challenging environment to be looking to tighten policy when there are these inherent political and/or macro economic uncertainties. it could change materially depending on the resolution of the trade negotiations between the u.k. and europe. anna: let us talk about the ecb. we have a great piece on the bloomberg about how there was not quite so much volatility in markets this time around. as there had been in december. in december, markets were spooked by the changes in language. this time the changes in the language did not seem to spook

the market quite somewhat. how quickly do you see the ecb moving towards the exit door? jeremy: we thought the hawks would be increasingly ascendant in the ecb. to the have an upgrade ecb forecast and even with a slight fall back in the survey data this week, the underlying metrics are better than what we saw in the third and fourth quarter last year. if we see that demonstrated in the forecast, i think we will start to see the language changing. the debate about keeping rates well past qe -- i think that language will be moderated. and that is when markets will start to get more interested. the presumption that bond buying will continue into september and then a tapering and then only continued -- bank consider changing the profile, i slow of a is too

parameter. will bethe language changed more demonstrably in march providing more stimulus for europe. anna: that moves nicely into my next question. where do you see the euro? volatility rising but still lower than yen. on the bloomberg, we were talking about the minutes from the ecb talking about euro volatility. and he was looking at the volatility relative to other currencies and it was not off the charts. where do you see the euro heading? jeremy: i think we will see it heading higher. we were looking at the estimate yesterday. the level is now north of 130. around 131. at a slowerit move

pace relative to last year. upper one 30's. 30s.pper 1 i think the volatility has diminished substantially. maybe a little too aggressively with the upcoming italian vote and some uncertainties from the german perspective. us ahe ecb will provide steady rate of a depreciation in terms of currency and therefor volatility should remain relatively contained. anna: thank you, jeremy for joining us. jeremy stretch joining us here on tv and he will continue the conversation with us on bloomberg radio. egypt's oil minister says $60 is a fair price for crude. speaking exclusively to bloomberg, he also discusses egypt's relationship with opec leaving the door open for a future full membership. >> we were invited to join the

producing companies. -- producing countries. but we are not at this stage of cutting production. however, we are of course supporting, and this was in my openingt the non-opec meeting when i was talking about our complete and full support of solidarity to the efforts and the accord that was done in ther to really balance supply and demand. and this is what we need. country, we have of afaced some challenges lack of investments due to the low price of brent.

therefor, we do not want to see this again. see a balancedo price and a fair price between consumers and producers. presence with the opec and non-opec was important. and we will continue to participate as observers and i think the day will, and my fellow colleagues, the ministers of opec, especially this year, now the president, and his excellency, is really after having egypt as a member in the opec are in a station which is something we are very happy to have happen. we will see how it goes. we are very interested. >> you would be open to joining? min. el-molla: the day will definitely happen but we cannot tell when.

>> you would be a member of opec. would you be a part of the cooperation framework they are talking about, the supergroup? min. el-molla: this is the minimum that we could have but so far, we have been part of the a sign ofnd we signed solidarity and agreement with the accord. we stand together with the organization. and we are looking into how we would join the forum. cooperationould be and maximum would be joining. you can see that happening in 2018? min. el-molla: i don't think so. we have a significant production

. the other side that is really important to us is when we complete our reformed journey of subsidies. this is another challenge that we do have. government is committed to reforms and subsidies are number one on our priority. we would to our plan, be able to complete this by 2019. so far, more or less, therefor, perhaps afterwards we can talk about -- >> 2019 and on. that -- anna: that was sarah speaking exclusively with minister tarek el-molla. remember, if you are a bloomberg customer, you can watch the tv programming on a regular tv or you can use the tv function on your bloomberg as well is getting the video stream. you can follow the charts and the functions we are using.

and you can influence the conversation i clicking on the "ask the guest" question at the bottom of your screen. cash-rich mining companies are aiming for fact evidence and shooting to pay down debt. and later, martin gilbert from aberdeen joins us after the report of full-year earnings. we will speak to martin shortly after. this is bloomberg. ♪

♪ this is bloomberg: daybreak euro. in the morning open in new york. futures will be a little higher at the start of u.s. trade. about 0.5% or so. they lost some momentum at the end of the trading day. we are seeing that a lot. other u.s. assets of note.

the dollar is stronger against the basket of currencies. up about 0.2%. that is get a bloomberg business flash. phoenix group holdings is said to be in advanced talks to purchase aberdeen for about 3 billion pounds. according to people with knowledge of the matter, phoenix plans to raise about one billion pounds of capital to pay for the deal which could be announced as early as today. representatives for both firms declined to comment. bloomberg pb will be speaking to -- bloomberg tv will be speaking to martin gilbert at 7:00 a.m. u.k. time. swiss re expects to benefit from rising prices. the desert-based company reported a slump in net income $3.631 million, down from billion a year earlier. that follows one of the most

costly hurricane seasons in history. it will raise its dividend and authorize a new share buyback program. the flagship platform of a snap has lost some luster according to one social media influencer. shares of snapchat parent company sank 6% yesterday wiping in when play $3 billion market value after a tweet from kylie jenner who says she does not open the app anymore. wall street analysts have also cited recent engagement trends since the platform was redesigned. anna: thank you. cash, they are now looking at paying down debt and rewarding investors. we spoke with the ceos of bhp billiton. >> debt is the most important priority. 93% reduction last year. >> what we have been able to do

is take our debt within safe haven territory. we are just below 15. we will continue to pay it down to the lower level of that range. >> secondly, paying dividends, we have delivered on that promise six months early. we have a 13% increase. expect a significant proportion to find its way back to shareholders relatively quickly. the: the view on debt and payoff to shareholders from the mining sector. by eddie from blackrock. let us talk about this earnings season and what you have made of it so far. we heard those comments are around the return of cash to shareholders. you said that was quite the priority. >> good morning and thank you

for having us on again. the results have been exactly what we needed. the last time we spoke we spoke of the need of the companies to come out and continue to rebuild trust with the investor base and in doing so, they had to stick with the messages they had been giving the last 12-18 months. some results have been better than expected, some worst but the general rhetoric around the results has been what i have been most pleased with. anna: have you met expectations? >> i think we have exceeded expectations. if you read between the lines, i think we are set for more exceeding expectations in cash returns. anna: where does that leave you in terms of the value of the sector? this is asking the question whether the sector is cheap? given these earnings statements, is the sector still cheap?

clientse investors, our at theyou look valuations today and you compare them to history, you see significant discounts relative to historic multiples. whether it is pe multiples, dividend yields, price-to-book -- all of these metrics point to value in this space. we have three areas of pushback. one is around china. they still think china is a significant risk and they have missed the reform agenda. the still do not trust management teams and that is a question of time to resolve that in terms of meeting the promises and keeping their commitments. and the third is the threats to the cash flow and the margins which make the company's look like good value. prices around commodity versus cost. all companies talk about cost inflation. commodityk at the

fundamentals, the threat to the cash flows in our review is low. anna: and in looking at the price of these commodities, you made the point that these companies were not being priced for higher commodity pricing. that an understandable discount, if investors feel the describe, that is an understandable discount test what closes that discount? >> time is the biggest factor. we look at the survey that comes out regularly and we were surprised to see the data which points to a reversal that towards neutral. of 2015.he lows to us, that is a fantastic value opportunity. you look at global growth. we were speaking to some of the goldman sachs analysts yesterday.

they are forecasting 3.9%. and 4.1%. goldman says their indicators are pointing to 5%. with that kind of environment, into look at history, and you have economic growth, and you have had commodity bull market -- five years of significant under investment. all of the results say we are not seeing a pick up in. it does not look like the supply side will be a threat. demand is strong. that is what we are planning in our funds. find as these companies themselves with more cash to play with, decisions have to be made about what to do with it. are you impressed with the way that they are paying down debt? >> debt is disappearing. look at the debt multiples. looking at the dead.

--se are down to -- these looking at net debt. has friended significantly lower across the space. the use of cash -- you have the debate about whether to reinvest it or pass it back to shareholders. most of the companies have it coming back. projectnot have readiness to deploy capital into. with&a has been ridden value destruction. this trend is reassuring. anna: that memory is fresh in the memory of management. hambro will stay with us. coming up shortly on the program, martin gilbert from aberdeen, the co-ceo joins us.

a lot to talk about after the a week or so ago around the lloyds banking group and what does the future in m&a and asset sales show. that is up next. this is bloomberg. ♪ we use our phones and computers the same way these days.

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anna: good morning. this is "bloomberg daybreak: europe." these are today's top stories. steve mnuchin's take on inflation. he says come policies will raise wages but won't cause broader price increases. the dollar strengthens. upheaval at anbang insurance group. china's government to the temporary control of the company. no cherry picking. the european commission preempts the outcome of that you keep a ministers record meeting, saying what it heard of her plan so far won't work. ♪

anna: welcome to the program, everybody. we are getting breaking news. let's get to the banking sector and to all bs it reports a full year attributable profit. they are giving us the full-year net interest income. it is exactly in line with the estimate. the next total income for the billionuarter, 3.0 6 pounds full-year, adjusted returned at 8.8%. the big question is, what they make a profit? --would they make a profit? profit after nine years of losses seems to be what we are getting from the bank, which is still owned by the u.k.

government. we will get news on the settlement over the issues. will there be any commentary there? will we get anymore provisioning from the doj? will there be any other carillion effect? those are also big questions we are getting. that is the top line. let's get to standard life. we are getting m&a news. standard life to sell its insurance unit to phoenix for 3.2 billion pounds. deal at standard life at aberdeen, and they are selling that insurance unit. that price has been much talked about, whether standard life would then take a stake in phoenix. we will get further details of that. in terms of the underlying performance of the business, they are making this transaction

announcement, giving us details around phoenix, and i am waiting for those numbers around the performance of the business. standard life aberdeen, 1.0 4ear adjusted at billion. the asset under match and meant -- the asset under management, waiting for the number two pop up. they will start their search for a successor. these headlines still coming through. we will be speaking to martin gilbert. he will be joining us shortly. we will get more details on how the business underlying this m&a talk is performing. let's move to the airlines sector. they're getting numbers for iag. statement also. they are announcing a share buyback of 500 million euros during 2018. they are expecting improved operating profit for 2019.

looking at the backward looking numbers, full-year adjusted operating profit, 3.02 billion euros. numberquarter revenue coming in a little bit shy of the estimate. interesting to see this coming through on the 2018 and 2019 period. interesting to see the share buyback coming through. let's get to the german gdp number. we are expecting an update on the german economy this morning. let's see if we can get that for you. the german gdp number for the fourth quarter, imports and exports number here. , 2.3%-quarter gdp group year on year. fourth-quarter adjusted number, 2.9% year on year.

rising .6% quarter on quarter. on the germanate growth story. let's get to the market and where we are performing. the asian equities session getting a boost from somewhere, not necessarily from the u.s. equity session. we saw you was equities rising and then falling. it is a pattern we have seen a number of times recently. we did see the asian equity session performing strongly. this is the futures, the european futures. it is a mixed bag. we have a lot of corporate supporting in london today. that could mean the fiscal 100 goes its own way. the discrepancy is not that enormous, either side of the flatline for the european futures. risk radar, equities -- asian equities session pretty strong.

s&p futures suggest we will continue that upward momentum. a little bit of movement coming through on the dollar, up .3%. yields edging higher a little bit in the united states. taking a little bit of a new direction on the dollar. we see euro weakness and pound weakness. the net result is dollar strength. let's get a bloomberg first word news update. his -- here is debra mao. : you keep prime minister theresa may have an eight hour brexit session with her top ministers yesterday. it is an attempt to win unanimous backing for her divorce plan. foresee keeping european roles in many areas.

the european commission preempted the meeting by saying that it has heard of her plan won't work. ceo of airbusthe personally promised u.k. government. the company plans to retain it's a british operations long into the future. in a turnaround from a staunch brexit credit, they made they guarantee this month. -- made they guarantee this month. to see thed continue country as a competitive place to invest. chiefs central bank agreed this week on they'll after being detained in a corruption case. reiterated that he never accepted a bribe nor had been offered one exclusively. hean exclusive interview, said if he would consider stepping aside. you step down, you step

down, and that is it. guy: could you not step down on a temporary basis? >> this is impossible. , theudicial process shortest i know a seven to 10 years. i have decided, for the moment, although criminal charges will not be presented. i have a possibility to prove it -- to protect myself. debra: global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg on top . anna: thank you very much. joining us now, martin gilbert. standard life aberdeen just reporting numbers and reporting a deal and some director level changes. very good distinct you this morning. that's -- very good to speak to

you this morning. let's have a deal -- let's have a conversation on the deal. martin: we felt phoenix was a more natural owner of the life company. it is a capital heavy business. our model is more capital like. -- capital light. i think it is a great news for the people at standard life, the customers, and of course our shareholders, we thought this was a better route to go for our people. anna: tell me about the underlying business. i see you have reported full-year net outflows come 31 billion pounds for standard life aberdeen. tell us about the most recent trend in outflows. we have seen the lloyds banking group news, but what is the underlying outperformance at the moment? martin: it is better. than 2016.tter

we feel we are making progress. theof the advantages of transaction with phoenix is we are keeping the very high growth platforms, and out you have seen, the flows there were good last year. they have been growing at a competent annual growth rate of -- growth rate of 35% a year. we see huge growth in the future. anna: apart from the news around the lloyd's, the other outflow trend, is 2018 looking better than last year? martin: it is too early to tell. we are just a month in. the lloyd's amount, it is looking better. the twointegrated distribution teams, so they are 10ng forward, starting from

worry one of halfway through the year. we are definitely seeing better trends. a globally, understand you either need to be big in this business or small. certainly, the structure lends itself more to a modern capital lighjt investment coming. anna: you have said you were not interested in doing m&a deals. you are busy enough, which i understand, with standard life in aberdeen integration. but we heard about lloyd's, does what wenge that -- heard about lloyd's, does that change that? martin: i don't think so. we have more than enough on our plate. the integration of these two asset management businesses now, the separation of the platforms from the life company, we have a lot going on.

clearly, lloyd's was unfortunate, but not all is lost there. let's wait and see. i think we have been working nonstop for the last year, i think, and really working on restructuring the group. the sale of standard life to the merger, i would say standard life into phoenix was probably the final step in the transformation. anna: you say not all is lost on the lloyd's side of things. is that because you hope to win the business back or you have other options? why'd you make that comment? we still have a very good relationship with lloyd's, the two businesses are deeply embedded within each other. good,mance has been very as they said in their press release.

say, let's just see what happens. they gave forsons serving notice on the contract .s competing let's just see what happens in the future. it is in their hands, not our hands. we hope the good performance might help us in the future. will haveou think you to revisit any of the synergy targets you talked about when you did your recent standard life deal? billion --about $200 pounds worth of synergy benefits within three years. the lloyd's news, to those need to be revisited? martin: no. a lot of the synergies were already in the system. we havee announced revisited the 200 million pounds and raised it to 250 million

pounds. were naturally looking at that business and whether there was overlap. -- and where there was overlap. these convictions are not about cost-cutting but about building businesses. a standard life is concerned, the merger with phoenix creates europe's largest back but consolidator. peopleery good for our and customers of both businesses. in terms of markets and what we are seeing, the move from active management into passive management by some investors is something we talked about. that wern of volatility have seen in february, is that coin to change that assessment for investors? beyou think investors will more interested and active management after the return of volatility? martin: we are seeing that.

volatility really helps active management, because it gets you are -- it gets you a better chance of outperforming. outperforming the benchmark. that has been the problem over the last few years. it has been better to be in the benchmark event a large number of active managers. certainly, i am pleased to see the return of volatility. it has rid us of the complacency that i was so boring about -- i was so worried about. it feels a better market for active fund managers. anna: is that volatility here to say -- here tuesday? --is that volatility here tuesday? martin: i have no idea. what we don't want is that would very low volatility we saw the last period. a bit more volatility definitely helps active fund managers. anna: thank you.

, standard life aberdeen co-ceo. coming up, the focus turns to banks and their share buybacks. this is bloomberg. ♪ ♪

anna: this is "bloomberg daybreak: europe." 40 minutes to go until the cash equity session opens. let's get a bloomberg business flash. here is debra mao. the royal bank of scotland has swung to its first full-year profit in a decade, but the delay in settling a u.s. mortgage securities probe is casting a shadow on any celebration. reported a full-year

adjusted operating profit of 4.8 2 billion pounds. the bank expects restructuring charges. re says it expects to benefit from adjusted prices. reported a slump in net income to $331 million, down from $3.6 billion a year earlier. that followed one of the most costly hurricanes event in history. the company says it will raise its dividend and author is a new share buyback program. snap has lost luster, at least according to one social media influencer. shares of bp. company sank 6% yesterday.

kylie jenner said she doesn't open the app anymore. wall street analysts have cited recent user engagement trends since the platform redesigned. -- since the platforms redesign. anna: thank you very much. is still with us. we need to finish the conversation we were having around mining and mining companies. let's put the focus to gold. during the period of market turmoil, specifically in equities, you might have expected gold to benefit more than it did. the volatility didn't spread to haven assets in the way you might have expected. how did it play out for you? evy: we saw gold react last year to the weakness in the dollar. been trending higher this year. $1400 anwards towards

ounce range during the pope or volatility, giving some of that back recently. in history, you look at the rate tightening cycles we have -- rate tightening cycles we have seen. well,s. economy is doing the rest of the world is also doing well, normally because u.s. being a large net importer of goods and services. you also have the prospect of inflation coming back. we are seeing interest pickup in this area. a disappointing factor as of the gold companies not delivering on what they are meant to. hedge ist inflation interesting. i pulled up this chart. the top right shows a big fall in one day in the gold price. day whereided with a we saw interest rate expectations -- inflation expectations talked about and

going north in the united states, and yet we saw gold fall. how do you see that inflation hedge? evy: quality it is a short -- inflation hedge quality? evy: it is a short data set. will loseink gold that in time. we are seeing some of the cryptocurrencies unwind in terms of the prospect of that taking market share away. gold was held back a bit by the fashion attached to that area. gold is having a recovery in that trend. i have no doubt in my mind. i still have gold bars at home to make sure i am preserved for the future. you don't think gold companies are delivering. he separate out the gold company performance from the other mining companies. what is your strategy around gold companies? is that main challenges the asset life tends to be shorter, so they do to reinvest

over a shorter time in much greater-- time and much than other companies. the gold projects tend to be shorter life, especially as they are optimized. when you see those cash flows coming through, you don't have a rest period from, which we are seeing in the broader mining sector. we are seeing some of the larger companies in these declining production profiles coming through. investors are starting to increase their awareness of that. that is being reflected in the equity valuations. we have seen that in the last results. i would like to get update on electric vehicles. where are you looking at the moment, how do you see the pricing of the commodities related to electric vehicles? evy: the big news has been the news coming out of the end

customers, the automotive customers looking to design -- this is becoming mainstream. we were very early a few years ago. we have been backing this for a while now. to see bigstarting companies with huge balance sheets for about supply security. when you see that coming through, it raises the attention from media. we might see more interest coming through. in january, we saw the lithiumment from a big producer that they did a deal with a government to extend a deal, plus room for expansion. that took heat out of the lithium market. just recently, we have seen uncertainty about whether plans will come through. prices haven't retreated,

despite this, and the most recent results we have seen, results have been strong. excited and we will have these holdings for a while. debra: where are we in the cycle, structural movement upwards in the cobalt prices? we have seen a significant rebate of prices to a higher level. the uncertainty around the supply growth, mining companies have a great track record of promising things will happen, and it normally takes a little bit longer and cost more. if you're expecting the supply growth to come to rapidly, you might be disappointed. anna: sounds like any construction project. thank you very much. evy hambro from blackrock, thank you. that is it for daybreak europe.

the european open is up next. the president and ceo of the institute of international finance will be joining manus and the team, coming up shortly. this is bloomberg. ♪

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