anna: good morning. from the new european headquarters in london, i'm anna edwards. manus: and i'm manus cranny in dubai. this is "bloomberg daybreak: europe." anna: china's power play. the communist party moves to allow xi to stay longer. meanwhile, the chairman becomes the top shareholder. manus: danger for many. in a speech today, beleaguered labor leader jeremy corbyn is expected to support a customs union with the eu, putting even more pressure on the prime minister. anna: and samsung strikes back against the iphone x as it unveils the galaxy s9. we are live from the mobile world congress in barcelona.

♪ anna: welcome to the program. this is "bloomberg daybreak: europe." manus is in dubai. a new headline, we will alert you to that before we jump into the markets. the weinstein company has filed for bankruptcy after sale collapses. let's move to what has been happening in the asian equity session. futures up by .8%, the dollar index down by .3%. we're in limbo waiting for jay powell to speak. he spaced tomorrow and on thursday. euro, and pound moving stronger against the retreat in the dollar. as to question jay powell,

we get our first real market introduction to him in this current role. what we have said about wages, asset prices, and where janet yellen has taken the fed. manus: yeah. and on that whole concept, what will you get for mr. powell? most say markets will simply yawn, but have a look at this. the bond market may not yawn. a stronger yen is helping the bond market this morning. this is too bearish, too far. bond yields have risen 22 times, to 2.94%. they are at a record high. the question is, will the bond traders step back from 3% as they wait for mr. powell to navigate? it will bring the congressional testimony from the new fed chairman. goldman sachs has an interesting play this morning as well, in terms of doing their worst-case

scenario, the disaster recover scenario, in the market. and theyds hit 4.25%, would see the stock market dropped by 25%, but no recession. a couple big interviews on "daybreak." we will be speaking to the deutsche telekom ceo. he joins the show at 6:30 a.m. u.k. time. let's get to juliette saly. she is standing by with the first word news. juliette: manus, china is describing terms to allow xi jingping to rule beyond the 2023. a current law bars the current president for serving longer, but the communist party wants to change it. there's a wave of reaction on social media in china. some comments were supportive,

others were critical and mocking. hash korea's kim jong-un indicated he may be willing to hold talks with the u.s., but the white house says it will see if the move represents the first denuclearization. it comes after north korean delegates attended the closing ceremony of the winter olympics, standing near ivanka trump, saying that ties to develop between them and pyongyang. a plan for mexican president enrique pinion yet tell, meeting donald trump at the white house, postponed indefinitely. that's according to two officials familiar with the plan. it comes after an "washington post" report that during a phone call last week, president trump refused to agree to publicly confirm mexico will not be paying for the border wall. says it labour party wants britain to seek a new customs agreement with the european union after brexit. leader jeremy corbyn is set to flush out the details of the decision in a speech today.

the move puts pressure on prime minister theresa may, by leaving her at the mercy of rebels in her own conservative party who also want such a deal, with the bloc. the hungarian prime minister has suffered a shock defeat in a closely watched mayoral race. his party ruled uninterrupted for the past two decades. it shows the premier's potential vulnerability in the otherwise fragmented opposition. the result may energize his opponents six-week before parliamentary ballot, but the ruling coalition had been expected to dominate. the former italian prime minister, matteo renzi, is urging politicians on all sides to combat violence ahead of next weekend's elections after street battles between far left and far right activists. he said the clashes cast a shadow over the campaign, and sparked unhappy memories of the 1970's and 1980's, when italy was scarred by politically motivated extremists. >> i think it is very important

for everyone, not for a single party to be here. it's a message against violence, against criminal violence, and all the time. i am happy because today is a good day for roma, for all italy. juliette: and this smash hit movie "black panther" has joined an exclusive group in hollywood, one of four films to earn at least $100 million in its second weekend in theater. it took $108 million at the north american box office, which beat disney's own forecast of $83 million to $90 million. the two week earnings are $400 million. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. stories on there bloomberg at top . asia, it hasre in been a great start of the trading week. the regional index is at a three-week high.

you can see they closed higher by 1.2%, despite the yen strength, strong movement coming through in hong kong and china today. the csi 300 up by 1.2% in late trade, surging in shanghai. the australian market has .7%. when we look at steel futures, it is on this proposed likelihood that president trump will put higher steel tariffs, potentially 24%. we spoke to the ceo of bluescope steel, operating the business in north america, saying it could boost profit. they also forecast the higher second half. geely auto, the chairman has become the top shareholder of germany's daimler, the company not ruling out cooperations between geely and daimler. and this is interesting, a cough medicine maker in hong kong was sold by as much as 55%. it's very popular, particularly

in new york. perhaps one for you, anna. anna: thank you. very appropriate story. juliette saly joining us with the latest on the markets overnight. treasury yields have retreated from multiyear highs as markets await the first key speech from the new fed governor, jerome powell. powell is due to speak before the house financial services committee tomorrow and the senate banking committee tuesday into thursday. sayshile, goldman sachs stocks could lose a quarter of their value at the 10 year treasury yield. 3.25%, thecase is assessment they are running. joining us now, prime partner's cio, here in london. manus is with us in dubai. let's talk about powell. this stage is set, the markets, investors getting to hear from him for the first time solidly in this new position. what are you looking out for? >> i am really looking for him

to confirm that he will be in the same line, or if he is moving towards something more hawkish. i think it will be very important to hear him speak about inflation threats and about the growth prospects for the u.s. manus: good morning, good to see you. of course, the debate is this, as well as the tolerance for the fed, predicted three hikes this year, not left behind the curve. are you a believer in the inflation story? are you one of the thomases, ready for pressure to take hol? >> i look at it differently. i think inflation uncertainty has rebounded over the last few months, and it is key for investors. does it mean inflation will make a strong comeback this year in the u.s.? i don't believe so. but the point is by the end of last year, people were not expecting any inflation anymore. the fact that there is more uncertainty is driving the fed

to think about what they need to do, and i think they will go with three rate hikes this year, and we could be on the pass for four in the current weeks, where we have the confirmation, wage inflation making a comeback. anna: and what is your expectation for what happens to treasury yields and stocks in that situation? goldman sachs has been testing what happened if we get 4.5%, 10 year treasury yields will lead to a 25% selloff. we have a chart that illustrates that, if you want to pull it up. what are your expectations with treasury yields? >> i think it will move about 3%, around 3.15% by the end of the year. is a joyful scenario. i think the interest rates depend on -- anna: that's the base case, losing 3.25%.

yields think if 10 year were that it would be lucky. >> because then you would have a recession. --on't see that 4.5% inflation in the recessional gloom. anna: manus? moment, there seems to be this syncopated move. for every day you saw this run quo, yields, the quid pro there was a mirror image -- there was an issue last week, but we saw stocks move in syncopation. the markets at the moment seem to have a tolerance level for higher rates. the where does that take over? >> what do you mean by that? if you get -- what is the tolerance for equity markets if you have rising markets every day?

equity markets go in syncopation. there comes a trigger point beyond which equity markets cannot tolerate a higher yield. you,certainly agree with and over the last few weeks you have seen movement of interest rates going up. i think it is telling you a lot about a changing of attitude with investors. before they used to have a kind of trade-off between equity and bonds, and what we experienced at the end of january, early february, does it mean that people believe there is a change of regime for financial markets? i tend to think so. clearing the last phase of these financial cycles, and that is what we experience in the course of the last few weeks. it is telling this change, from people in the goldilocks scenario, now that is over. we have entered a new phase. ame think it could maybe be

bias in the u.s. economy. i think we need to watch very carefully what's happening with the bond yields in the u.s., caret this is going to set the tune for the next month. you: how concerned are about the state of long-term finances for the u.s. government? do you think this is part of the story of high yields? >> i think with the tax cut in the u.s. will be huge, when people realize the consequences for finances in the u.s., especially with what happened with the budget. i think people have realized that things are going to deteriorate significantly. one of the signs that you can really consider as the proof that people are frightened off it is the dollar, because with raising yields you were supposed to see the dollar appreciate, and that was not the case.

people have realized that down the road, what mr. trump has done to the u.s. is a very bad development for public financing the u.s. to see the budget deficit going to 5.7% in 2019 and the u.s. is something the people were not expecting. manus: let's see what the market say as the year goes on in terms of the dollar. francois stays with anna and myself, from prime partners. coming up, xi is the one as china looks to keep him in power for longer by scrapping term limits. we are live in beijing. that's next. and the labor leader jeremy corbyn, his brexit policy in a key speech later today. he is expected to support a customs union with the eu. does this spell danger for the prime minister, theresa may? this is bloomberg. ♪

anna: this is "bloomberg daybreak: europe." this is the picture on the equity markets, the msci asia-pacific index taking a leap from the united states on friday. let's get the bloomberg business flash with juliette saly. juliette: anna, weinstein co. is set to file for our protections from creditors after sales collapsed. the company's board failed to revive a deal to sell the film studio.

the studio had been looking for buyers since its cofounder was fired in october and it allegations of sexual assault and harassment against dozens of women. sam's son has grabbed the -- samsung has grabbed the spotlight in barcelona with the launch of the new galaxy s9. the company is banking on features like augmented reality-based emojis, camera upgrades, and stereo speakers to take on the iphone x. samsung also wants to calm concerns about a slowdown of its component business, and j wiley's ability to manage the company following legal drama. $9 billions geely's stake in daimler is within regulation, with no need to invoke investment rules. the dealer makes the chairman and founder daimler's leading shareholder. it is also the largest investment by the chinese company in overseas automaking. warren buffett has a message for investors wondering when he will strike his next big deal, be patient.

after a year in which she was largely frustrated on the acquisition front and saw cash pile up at berkshire hathaway, he used his annual leverage to remark on the all-time high costs of dying businesses, and how the ample availability has fueled unwise deals. they will get opportunities to make large purchases at sensible prices. that is your bloomberg business flash. manus: thank you very much. china is set to repeal presidential term limits, in a move that would allow xi jingping to serve beyond the 2023. a constitutional provision that bars ahead of state firm serving fo more than two terms in office is in place, but the communist party wants to change it. our chinese correspondent joins us from beijing with the latest. good to see you. what does this say about xi jingping's ambitions? his thoughts are enshrined now or ever, only mao had that honor. this is truly an ascendant

leader. >> absolutely, manus, and it seems to confirm what many here have suspected, that he has ambitions to extend beyond his second term that ends in 2022. it's also a nail in the coffin for this collective leadership that was set up in china towards the end of the 1970's, that led to the peaceful succession of power between three generations of leaders. that was set up by deng xiaoping . it is significant in that respect, and it is significant to the degree to which this decision was made. anna: tom, good to see you. how significant is the timing? it is something that was muted at the end of last year. we saw this coming, didn't we? >> we did. it's not a big surprise that this has happened, it's a surprise the manner to which it has happened, the excited miss managed toesident xi

accumulate power and rewrite the constitution, to rewrite the barriers around the presidency. he has been able to do this right at the start of his second term. that's interesting. the state media say it ensures continuity and stability in the leadership, and that is why it is being supported, they say. manus: thank you very much. tom mackenzie with the latest in beijing. let's bring back in our guest, from prime partners. francois, good to have you with us. when you look at xi's tenure, if i look at what he has done and what it says in my mind -- rebounds the economy, liberated the yuan, hit down on graft. this story enshrined xi very firmly at the front and top of china. what does that bring to your thinking in terms of china as a destination for international investors?

more continuity? >> yes, i think more continuity, but there's one thing you did not mention. it has reintroduced controls and capital flows. there's a lot about the mission of xi jingping, he needs to take control in order to rule the economy with the export driven to consumer driven economy. he talks a lot about the challenges in terms of what is at stake in china. ability to move forward without creating too much pickup in the economy. to have somebody who is able to it for us as a world economy? you, youhe's key for clearly have thoughts on this. of course, we shouldn't just rate a leader on one metric . and is five years of xi

china. the red line is stock markets, shanghai composite on the top, currency on the bottom. this is the opening of the connect, and that was crucial, the opening of the hong kong connect. there have been big structural shifts on london's front, but this has been one that is key in terms of what it did for equity investors. >> i agree. but when you look at the charts, you can see that the economy was facing significant trouble, and that you have such a transition from an investment to consumer led economy is not that easy. you see the issue for china, if you really want to currency that is a substitute for the dollar, they can do that without free capital was. this is a key issue. we have seen that capital flows can be significant and impact investment. -- i think the

liberalization is going to be a key metric for us to judge if the economy is really able to move toward a different china over the course of the next few years. manus: and that different china is about sustaining growth. yuan is strengthening, the dollar is lower, but yuan strength has been quite dominant. what do you think the pboc's tolerance is for more yuan strength? rather than going after foreign-exchange, do they balance it fiscally? if you look at the report on saturday, they are saying china will continue to go proactive on fiscal policy, and in many ways that is one bill, one road in terms of accelerator. >> yes, and it is also key for the monetary policy. to put too much upward pressure is a key problem for the central bank, because they need to decide how they will adjust liquidity in the system.

if your currency is too strong, it is not something positive, and also it impacts the development of monetary policy. this is where there's a dilemma. do you really want to maintain your interest rates low, or do you want to increase them to make sure liquidity is not too big? i think this is a dilemma for the central bank right now. it will be interesting to see over the course of the next two months if the central bank of china is changing the renminbi, or if they mention the renminbi even further in their assessment of the economic situation. anna: thank you very much. prime partners cgil, stays with us. up next, tech giants to send on barcelona with the launch of new products in the next generation of smartphones. we are live at the mobile world congress, and will bring you the latest on deutsche telekom. they are speaking to bloomberg shortly. this is bloomberg. ♪ mom you called?

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manus: just gone 3:30 in the afternoon in tokyo. dollar-yen on the move. when a 6.53. coronaona say -- mr. saying there is no need for copperheads of reassessment. asset manager as long as long could be, but they are short and hanging on. let's get you set up for your week ahead. it is monday morning, what are you looking at? angela merkel's christian democratic union holds the convention today in berlin to discuss and vote on the proposed coalition pack of the social democrats. anna: on wednesday, fed chair jerome powell testifies before a house panel.

he will deliver his first semiannual monetary policy report, and discuss the state of the u.s. economy. on wednesday, eu chief brexit negotiator michel barnier briefs eu representatives on brexit. lots on the brexit story to come today. we hear from jeremy corbyn friday, and theresa may talking about her three basket strategy. let's check in on the broad market action. >> we have asian stocks in the green this morning, really taking that momentum from friday's u.s. close. a strong session on friday, and you can see it's up 1%, the big story out of china over the weekend, the communist party gets ready to repeal presidential term limits which can good -- which could give xi jingping the ability to rule beyond 2023. the main focus is political but we see stocks up in the u.s. let's talk about the u.s. -- i want to talk about treasuries,

cannot get away from the story with u.s. policy back in focus today and fed chair jerome powell will be speaking twice this week. goldman sachs put out a note that's getting a ton of news. they are saying stocks might plunge 25% if the 10 year yield stays over 4% -- we are nowhere near that yet, we are at 2.9%. but this is why they say they run the stress tests, their base case is that yields by year-end will be 3.25%. gettingnteresting note a lot of tension across social media and in the market. and let's talk about russia, betting big on the ruble. let's look at these net position's, ruble versus dollar, usually inverted. here we have the ruble strengthening. big news out of russia, the first upgrade from s&p global ratings since 2006 finally taking russia out of the junk

state. this brings them on par with the likes of cause extent, bulgaria, and indonesia. they say this could trickle more than $2 billion worth of fund inflows that track the main emerging-market eurobonds. duties says they are one notch below investment grade, but could be put on course to get them out. this is pretty big news for rush ahead of the elections and we will hear from president vladimir putin on his state of the union address. this is going to put a positive one ahead of that speech thursday and that russian economy. manus: thank you. breaking news on deutsche bank. we anticipated this, deutsche

bank confirming that the asset management part of the business will ipo in frankfurt. ,ohn cryan has been on the road a man trying to turn deutsche bank around. they met with over 100 potential investors in 10 countries. it remains to be seen how much of the company they ipo, the initial understanding was 25% would be but they confirm the asset management business will be ipo. they remain an important long-term investment in distributional partner. more on that throughout the morning. let's get to barcelona, and welcome back to the bloomberg family. it is caroline hyde, back on form, where she belongs at the mobile world congress. good morning, welcome back. caroline: it is so good to be back. it's another year of the great interview -- the chief executive

of deutsche telekom. thank you for spending time with us. the mobile network is the future. is the money you are investing good pay off? >> that is what we believe. opposite, it has a much better latency, much faster. and on top of that it is sometimes faster than the regular network. the allows us to go into consumers in the industry. caroline: a monster investment -- can you put a figure on it? how much is deutsche telekom putting in? we are investing into fiber, not only at home but even on the mobile side were neighbors are connected to fiber, this is a big part of the investment. on top of that we are adding

we are investing in deutsche telekom $12.5 billion. were at $9in 2013 we billion. it is almost 20% of their revenue, going into renew it infrastructure. caroline: talk to me about cash in terms of consolidation. you have been busy in the dutch areas. what about central and eastern europe? >> deutsche telekom is the biggest telecommunications operator, with 11 markets in europe. we are driving offshore where we have put mobile together. we are working in netherlands where we are bringing mobile operators together. there's nothing happening in europe, cross-border, we are positioned within the market.

and in the u.s., we are growing double-digit's, 19 quarters in a row. but more planned organic growth for the new area. caroline: what about m&a on your home turf? you don't like it, are the regulators listening? >> i think it is unacceptable, because it has created a new monopoly. market,minating the tv dominating the housing association, where they have a certain legal privilege. even domination the cable infrastructure, these guys are unregulated. andink it is totally unfair i'm asking for fair competition. caroline: janice think the deal will go through. >> it is too early to say. i just want to claim that if this deal is going to happen, we have to see a totally different landscape.

but we will see when the deal is coming and what the authorities say. caroline: what about the u.s.? we were talking about the fact that there was no deal. what is the future for the united states? have invented a negative perceived industry. created newcom has propositions and for 19 quarters in a row we have grown with more than one million customers caroline: but the growth is slowing. >> no. the only one gaining growth is us, and we have a balance of new customer growth in profits and free cash flow. last year, we bought more than -- we needspectrum it for getting deep coverage across the country and they are

opening now a lot of areas, we are going into $330 million, and this is a new era of mobile growth. caroline: you will buy more from that? >> i think now is a break. there will be spectrum coming at one point in time, but we have plenty of spectrum and we are growing organically in the market. caroline: tell me about the u.k. you have investments in bt. this brexit still a headache? >> it has been a headache. to be honest. we have brought eu business into shared -- the is digital pound-euro relation into to the tough regulations we are replacing. doing, how they

are taking the market, the convergence, of content on top of it, i think this is a recipe for success and i'm sure we will see a big recovery in the u.k.. caroline: optimistic as ever, always impassioned. the deutsche telekom ceo. we have more to come. anna: plus more to come from the mobile word, great to have you back. and great interviews from caroline throughout the day at the mobile world congress. a lovely segue into a brexit conversation. it has been a tough week for brexit talks. later today, jeremy corbyn will deliver his roadmap for a deal between the u.k. and european union. he is expected to say that labor will support a customs union. this may cause a rebellion by pro-eu conservatives that could derail brexit strategy. theresa may's speech is due by

the end of the week. our guest is still with us. your latest? we were hearing from the ceo of deutsche telekom that it's a headache,. how much of a headache is it for your investors? strategyd say that the is to stay away from you can't assets for time being, there's too much uncertainty not only because of jeremy corbyn but the future of theresa may. will she be the prime minister of england in the next six months? we believe that for the time being u.k. assets are not attractive. we don't know what developments are, we see that growth is slowing down, and then we have this date issued to negotiate at the end of the day, do they want one year before the end of the transition period -- we don't know if they want to stay in, half in, out, we don't know anything. there's too much uncertainty.

anna: not much fact that the moment, just a lot of negotiation. you mentioned inflation. this is the task of the bank of england. if we look at the deputy governor over the weekend, he seems to have shifted. there might be a need to raise rates, perhaps a bit of a change. back to your notes, you talk about a global inflation scenario. given the propensity of the bank of england to raise rates, what is stagflation in the u.s.? is it higher than the rest of the world? >> i would say yes, because you have this currency movement, coming due to the weak pound. it is setting into a process that leads to some kind of stagflation bias. let me be clear, i'm not saying stagflation is coming back like the 1970's, but we could have

some more at the margins in the system. we need to consider that as a economye u.s. and u.k. are the ones that could be affected. thank you so much for being around. prime partners cio. a reminder, if you are a bloomberg customer, tv -- you get everything, the conversations, the interviews. if you want to look back at that interview caroline just it. you can even ask questions at the bottom of the screen. coming up, what have we got? anna: the daimler deal. we will focus on the chinese billionaire who becomes the largest shareholder in the german automaker after a 7.3 billion euros stake. we will be live in hong kong. we will be speaking to the bank of ireland cio. that is at 7:00 a.m. u.k. time.

this is bloomberg. ♪

manus: it is the city that never sleeps, 1:47 a.m. in new york. if you are looking for a stress test, rates have hit 4.5% in the bond market.

that is the disaster scenario. the stress test scenario would give you 1121. saly, always deals with tense situations very well. juliette: manus. deutsche bank has confirmed it will float its asset management business. there isn lender says an earlier developer window, the ceo says the move for "give us the opportunity to unlock the full potential of the clients and employees while targeting attractive returns for shareholders." weinstein co. is set to file for court protection from creditors after sales talks collapsed. the board failed to revive a deal to sell the film studio. the studio has been looking for a buyer since the cofounder was fired in october amid

allegations of sexual assault and harassment against dozens of women. gone to parcel owner with the launch of the new galaxy s9. they are begging of features like augmented reality base emoji's, camera upgrades, and stereo speakers. they also want to calm concerns about a possible slowdown in the ceo'sent business and the ability to manage the company following legal drama. and that's your bloomberg business flash. anna: thank you. says the chinese billionaire is the top shareholder in the german carmaker. the industry contemplates a shift toward electric vehicles. they already owns volvo cars, and took a 3.5 billion euros stake in volvo last year. joining us is our asian deals

editor. good to have you. what do they hope to get out of this? and they-v holdings, seem to be distancing themselves. what was the investment intent? so basically they are already the largest private carmaker in china and what they are hoping to get his access to the advanced technology daimler has. it has the automotive industry go towards things like electric cars. they have a lot of technology they will need to tap that market. manus: and what overseas experience does geely have? this is what chinese companies really want to do, they want access to tech, they want access to these kinds of companies. >> yes. by all accounts, they have been

the kind of chinese investor that a lot of places. their success with volvo cars is the best example of that, where they have the management in place. there was a lot of fear when it first happened that this would disrupt this iconic company. and it has turned out well, they saved the company and the latest models have got rave reviews. they also own other things like the iconic maker of london black cabs. they have a lot of experience operating overseas and they know when to leave things running. anna: at a time when the united states is ramping up its scrutiny of chinese investors in is u.s., and even in china, their political opposition to this deal out of germany? >> so that remains to be seen. they seem to be trying to head off any potential opposition to

the deal. they have been going around, meeting of the important people, the daimler cfo was slated to meet the ceo, supposed to talk to merkel's top economic advisor tomorrow. stakeid a massive surprise all at once and are looking to head off opposition and let people know their philosophy and hopefully that will dissuade the fears. manus: ok. let's see what happens between the chairman and the corporate proper. our editor covering the story, tencent. by thejoined in london energy funds manager. good to see you. two big things for the world to deal with. i want to bring you the front of "daybreak," a beautiful picture. mario draghi with the hawk on his shoulder. this is about 2018 in the changing dynamics of central banks. is that overacting the

tightening talk? >> morning. i don't think it is. i think this is a legitimate question in the context of europe and i think to fully understand what's happening in the rates market you have to go back to 2016 where there was the apotheosis of all the negative interest rate speculation which caused a huge rally in the government bond market when you had brexit and when people capitulated about their long-term beliefs. i think the entire backdrop is starting to unravel stop we are starting to reinterpret the global economy, it is now one of stability and persistent growth. the better story of china, europe is surprising positively, so it is absolutely legitimate to talk about monetary timing. anna: what is the risk, then, about the monetary tightening in the eurozone question mark what makes you nervous >>

>> you have to be careful if you are exposed to the european bond market, because even these are poor implied returns. close to 2%iver inflation and there's no reason why it shouldn't which means it will have negative real returns unless you are willing to take it where the price is right. are is a fundamental outlook that is extremely poor for the government bond market. manus: the other big story in the past four hours is xi jingping's succession to power infinity. "the guardian" hasn't aggressive stance, saying the continued rise of the dictatorship. what do you think markets are going to make of more xi? he has, as it were, grasp the nettle. >> yeah. i don't think markets are too

focused on chinese politics. i mean it's a hugely complicated area, ultimately, and i inc. the test is the robustness of the political system. if you put issues of democratic legitimacy to one side, robustness is whether you can have leadership change. if you look at the political geographies as an investor and fundamentalist, places like turkey, like russia, if you think of the zimbabwean case, you haven't been able to transition power. the chinese have revealed within a single party state that they are able to transition power, and i don't really think anything that's happening changes that. like a pretty politically stable regime and environment. anna: do you think investors care more about from's aspirations toward china, for

his desire to temper the trade imbalances? for example, the steel tariffs he wants to impose? >> there has been a lot of sound and fury signifying very little, and i don't really change my view. he is a noise generator, the fiscal stimulus matters. that has been relevant to the bond market. ultimately.else, it's a lot of noise that generates a lot of speculation, but i don't think the market is significant. anna: share price is made up on friday. eric, thank you. he stays with us. up next, goldman is warning stocks could wipe out a quarter of their value if treasury yields at 4.5%. they don't think they will hit 4.5%, but they are testing the markets. what with that kind of rate to stocks? we bring you more on their analysis next. this is bloomberg. ♪ mom you called?

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seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. >> good morning. this is daybreak. live from the european headquarters in london, we have the top stories. >> a china power play. chairman with the top shareholder. in a speech today, jeremy corbyn is expected to support a customs union with the year, putting more pressure on the prime minister. >> striking back against the thene and we are live from world congress in barcelona.

a warm welcome to daybreak and let me set you up for the trading day with futures because you have a strong market and not is london up by detracting. this will -- the breakingyou news from ireland. 1000 78its come in at million euros for the bank in the republic of ireland and these are the full year numbers coming through their and we will

bring you that. keep an eye on the rest of these. you have breaking news. >> we are waiting on the breaking news and let's tell you what is on the radar. there is a decent session from friday and the dollar index is weaker across the range and the yen is a little stronger with the pound and the euro stronger. there are two appearances and what will he tell us about continuity and inflation. say about how much he cares about this and we are expecting to see more for risk assets. >> yes. with this on the

markets and you get this push and pull in the markets. driving force is the andte from goldman sachs and the base case scenario is still there. credit suisse would argue against this and say that stocks run at 3.5%. there is only one number that matters. this will hit the tape on friday. you have the bond market there. keep an eye on this. let me go back to the bank of ireland for just him moment.

we will speak to the ceo. 13.8% and there is the underlying profit. julie has your first word news. a constitutional provision bars the head of state with the communist party central committee. this has start a wave of andtion on social media others -- kim jong-un indicated he may be

willing to have talks of the u.s., but the white house says that it will only do happen if it's the first steps to de nuclearization. they sent ivanka trump and said that ties should develop between them and washington. visit toan president the white house has been postponed indefinitely, according to officials familiar with the reporting after president trump refused to publicly confirm that mexico will not pay for the border wall. the labour party says they will seek aid new customs agreement. jeremy corbyn is set to flesh out the details in a speech today. may ands is on theresa they also want such a deal.

the unexpected loss in the pro-government stronghold shows the premier having potential vulnerability if the opposition fans together. the ruling coalition has expected to dominate this. the former time prime minister says they will combat violence ahead of the election. clash cast a shadow over the and it really was doing with political issues. >> is important for everyone to be here to give the message

about this. day for all of italy. at least $100 million and they take the two weeks of earnings to $400 million. global news powered by 2700 journalists and analysts in more than 100 countries. you can have more on the bloomberg avenue. in asia, we have regional stocks at a high. some very strong running coming through mainland china today and

a delay with ipo and, in terms of stocks this is up and, they agreed to make electric minis with the chinese carmaker. been going in and out of positive and negative there is a high in thisecond half profit and could help boost the bottom line because they were in north america. >> thank you very much.

your markets and goldman sachs had an opinion with the 10 year treasury yield climbing and the bank scenario is three and a quarter and the stress test indicates that the move could cause stocks to stumble. >> a multi-year high. still with us. if we saw treasury yield of 4.5%, we could see a drop. not even a forecast. the truth is that we do not even really know and there was a move

in the bond market. this is now within positive territory and there is a positive-yield return and the market is now pricing in sensible, having been fixated on i would tell you that expectations are looking pretty reasonable and i don't have a quarrel with the market. we are to had a big move. >> did they have the market expectations. becomeink the market has pretty cynical and the fed looks like the movement in the fed has been revising down this. personally, i wanted to be more fruitful. this is positioning.

andhad extreme sentiment what we did with the market for disappearance had a linear extrapolation. extreme positions, have we topped out? that is the question. context, put this into when i talked to you, i have been very bearish for that and and is a change in the here the data is very similar to today. there was the treasury bond market and a real rate of

return. abrupt movepretty and i would not try to be too cute for this. this does not apply in a european context. andas deeply unattractive they were price to negative yield. >> the bank of england was are these not an in theive situation united kingdom this year? >> they are profoundly unattractive. >> why?

>> you are getting a negative real return and you are almost guaranteed to lose money. risky and the of session, whatever your view on brexit, it isn't relevant. error thatlassic economists make to focus on a this is the global economy and what is happening to animals. . the market is vulnerable and the same is true of the eurozone. >> does that mean it is ok to hike the rates into this political uncertainty? most human beings are ignoring brexit.

so, you simply don't know and thewait and see full of bank would then respond to it and it is a long way away and we don't know what the economy would do in the interim. a brexit-related shock in the future, there might be a run. like that. do you make of that? we travel to 1% in the bond market. higher.could go far >>, tire? >> we could see 1.5%. no problem.

it makes no sense to lose 1% on annual basis and the perception of risk is fundamentally shifting. if they maintain the momentum, which is likely and they could accelerate, you could see these assets with people becoming complacent about the need for properties in the bond market and they will have to put that in the politics with what happened with the bond yields and there will be a symmetry to it. >> thank you very much for being with us. the first dividend since 2008.

this is bloomberg.

>> this is bloomberg daybreak. we are 40 minutes away from the equity trading day and another trading day approach is there. we are expecting european equity session's to pick up from where the u.s. session left off and let's go to the bloomberg business flash.

a deutsche bank has announced plan to sell its shares and said the public offering will take place in the earliest available existingd they will so shares and do not plan to issue new ones. sales talks collapsed. the company failed to revive a deal around the small business administration and the studio has been looking for a buyer amid the allegations of sexual assault and harassment. that is your bloomberg business flash. >> thank you very much. the bank of ireland will pay a dividend as the underlying billion euros.

great to have you with us. pivotal for the bank. can we draw a line on the financials of the bank of ireland and is this the end of the crisis management in your bank? >> i am delighted to be reporting that we had a strong performance and we have weortant results and consider that pivotal for the bank. we have the bank of ireland as the largest lender to the economy for the fourth year in a row, reflecting strong support thehe business sector and significant increase in the

mortgage lending here with more than 9000 mortgages sold and it was very important for that segment and we have announced our intention to go back into that market in ireland and we could have a major focus on transformation and upgraded the and i aming systems committed to this program and think that this reflects the overall positive outlook for the economy in the banking sector that the bank of ireland is the bank of ireland. >> in terms of the broader interest rate picture and what that does to your bank and to your margins, do you see the and howtting higher pegged to are the margins to the

upward moving rate? customer abouta ourmortgage area and consumer lending is on a fixed-rate basis and that is sensible with the increases and you have seen the increase on the year and that reflects strong discipline with the commercial pricing in the u.k. expect that to during 2017. on that linefocus you least -- released before about not selling loans, but

your competition is getting in. what is putting you off? is there a lack of depth? >> we don't have plans to acquire non-performing assets or and the reason for that is our ability to manage a rate that is positive and we are down onng that we are the customer loans and that is important because we worked with the customers and the economy is customers having a low-level, relative to the we arey and we think

proficient in management and that is in the results today. thoughtsu tell me your on the customs union or a customs arrangement? much does that conversation matter to the bank? >> there is some caution. lost her.ed to have momentd it was a pivotal and was just about to answer you on what she wants, but that was critical. she is back? >> hello? ok. it seems that we have lost that for the moment. big moment.e --

let's see how that goes. watch.ig stocks to this is the chairman taking in the external stake and that will be one to watch with the bond and equity markets. areet's have a look and we expecting the markets will follow. keep your eyes on those steelmakers here. tariffs and asian equities. >> yes. oryou believe goldman sachs morgan stanley? this takes 20% off of the equities market and they said that rates could rise. debate and i am

having a lovely time. actually, it rained yesterday. >> you have taken my voice with you. we will see you tomorrow.

manus: monday morning. welcome to "bloomberg markets," i'm guy johnson at the new london headquarters. cash trades less than 30 minutes away. ♪ guy: the equity rally rolls on into asia, but stocks and bonds investors are testing. jay powell's first appearance as fed chair. china's flags in the german heartland. a chinese conglomerate becomes a