♪ manus: good morning from the fab global financial markets in abu dhabi. these are your top stories. powell debut. extendacific markets global gains as investors await the fed chairman's first testimony in front of congress. the 100 page deal. the eu will challenge theresa may tomorrow when it publishes a paper. sticking to stimulus. mario draghi tells the european parliament that uncertainty remains and he's not ready to reduce support. later we bring you our interview with the president of the bundesbank.

♪ a very warm welcome from right here in our blood body. we have a great day ahead of you. many important figures speaking to the conference and they will speak to bloomberg. we have a real rally on our hands and a potential for more momentum. or do we? bitare looking at a little of a global risk on momentum. before the powell testimony is saying sustained growth is there but he doesn't want to kill it off with high rates. oil inventories could rise by 2 million barrels. in february. 1.5%

the best january in a decade for the oil market. this is dollar-yen. the worst quarter in dollar-yen in four years. still the market is hungry for a bit of en. of yen. 2018 special items will be slightly rising. this is a forward-looking statements. that missed the estimates given the growth that the imf and the world and the ceos talked about. about slighting sales growth for 2018. estimate.eat on the

would you have there is a green to measure -- manage -- merger their oil and gas unit. this is what the market is going to focus on most closely. a dividend of 3.1. what is he going to do with the oil and gas division? does it make it selling a little bit easier? the ceo will join us a little bit later. .his is important i want to show you a chart that is s&p volatility. triple the volatility in 2018 than what we had at this time in 2017. we had a daily range averaging 36 points in the past week. was the 90 point movement that we saw on february 9.

how does is all tied together? reaped $100s million on only four days of the year last year. since 2004.lowest about tying volatility back to the earnings of the market. slight sales, adjusted growth in 2018. let's get to juliette saly. she has your first word news. unionte: the european will tomorrow challenge theresa may when it publishes a draft of the treaty that ignores some of the u.k. prime minister's most important demands. according to a person familiar, they are planning to set out in detail how they expect britain to the part in just over one year.

german official added that the 27 members exposed -- oppose an extension of the. of transition. in the u.s., hope hicks is scheduled to be interviewed privately today by the house intelligence committee that is investigating russian interference in the 2016 election. her appearance is scheduled for today. democrat on the intelligence committee confirmed the panel does expect to have her appear soon but declined to specify a day. prosecutors are giving a 30 year jail term for the ex-president. he was indicted in april of last year on 18 counts of corruption. she stands accused of colluding with her long-term friend and confidant to stop more than $50

million from conglomerates including samsung, latte, and others. the unanimous decision to keep the seven-day repurchase rate at one point 5% -- one points of -- 1.5%. oft's against the cost raising borrowing costs for indebted households. south africa's new president has made sweeping changes to his finance bringing a minister -- finance minister back two years after he was fired and in the middle of the night. it's a dramatic comeback for the man that was dismissed by jacob zuma in december 2016.

china plans to reduce its deficit. the target will be set at 2.9%. thetarget was set at 3% in past two years and has them cut since 2012. meanwhile, early data shows the chinese economy remains robust. saudi arabia has replaced several top military commanders including the chief of staff and the heads of ground and air forces in the latest overhaul of traditional power centers in the oil-rich kingdom. no reasons were given for the changes. some civilian officials were also the -- replaced. this is bloomberg. you can find more stories on the bloomberg at top . the markets in

asia, we have the regional index up high about .4%. aheadg onto those highs of jerome powell's first speech. by overei closed higher 1%. still a couple of hours to go in hong kong. austria's market closed higher by .25%. we have beentocks, watching aia group shares rise in hong kong. business jumped 17% in the fourth quarter from a year earlier. also checking high in the hong kong session, stan chart. caltex australia says it's going to privatize a network by 2020

and analysts appear to like a piece of news. the equity markets have rallied as we showed you in the risk radar. to tokyo, traders expect continuity from jay powell. investors are looking ahead to how was congressional testimony. our guest joins us from our london studio. we are worlds apart we are mentally joined up. this is jerome powell's game to win. putting a putoid option but he wants to restore continuity and study the nerves. he has an interesting challenge in getting inflation at the 2% target. much talked about that rarely achieved. there are some signs it may well happen this year.

the real question is what will happen to wages. index,the wage specifically the nonsupervisory area that still has potential, it's higher than japan. it's higher than the united kingdom. that's the underbelly of the part of your call. ates: i look at the markets the moment having a reasonable ande-off between valuation earnings which are showing great gains. all bets are off the table if mr. powell takes a very hawkish stance on money rates. equally, if it becomes apparent that someone cannot stretch the earning numbers that analysts

are projecting, the market will be foggy. it will come down to the relationship between the bond market and the equity market. take me on your journey. real yield in the bond market, where is the inflection point? rising yields before it unseats the momentum in the equity rally. we all grew up with the that they should match 10 year yields because that's where governments are incentivized. we should be looking at a target of a 10 year yield of four. i think it would actually be calamitous to markets. i think 3.5% is sustainable. between 3.5 and four is, i think, the inflection point.

bring a chartto to your vision. ines dropped by 7.8% january. they dropped in december. the housing market is the torch taker of risk. if i look at supply, it is rising. sales are falling. mortgage rates are rising. i put it to you that there is a little bit of a shakedown coming in the housing market. james: i look at the broader consumer confidence numbers. the jobs market data is unequivocally strong. even wage data is highly supportive of a good economy and market. just enough strength to keep everyone health the -- everyone happy but not enough to worry. you have a call in terms

of cyclicals. you say they are expensive. a couple other things you've noted as well. you are looking at your exposure in terms of u.s. hotels, etc. good, whyentum is so would i not be more overweight? why would i not be more exposed to the middle class family going to decent hotels? it's a question of capital discipline. cycle threatens to undermine the possibility that is driving the investment in the first place. companies see profits and this is great. they end up destroying the profitability their investors are looking for. i am looking for all to growth. high return on equity.

they don't go out and shoot the goose that lays the golden bags. -- golden bigs. bigs -- eggs. the dollar had a moment of reprieve last week. the steepest reduction since november. in bothnear-term move these markets? james: i think that the bond market selloff has gone as far as is reasonable. i listened to mr. draghi and he is not exiting the market anytime soon. does that haveat to do with the u.s. dollar bond

market? the actions of the european central bank has driven european investors to become material players in the u.s. bond market. i think at the moment we have a floor under the pricing of u.s. treasuries. the dollar, i think there are grounds to anticipate we may see a stronger dollar relative to the trends of recent months. real yields in the u.s. can continue to rise. we will see reasonably strong bond yields. in europe, i think real yields will stay low. manus: we have more to get to. that is james bevan. coming up from abu dhabi and london and globally, we have one man you want to listen to. ray dalio joins us.

that is at 9:00. rise as the european union drafts a brexit treaty tomorrow. it drops some of the u.k. prime minister's most important demands. ad apple is said to release trio of smartphones including a bigger and cheaper iphone. this is bloomberg. ♪

♪ , excuse me, it's 2:19 in singapore. 6:19 in london.

let's give some of his time to juliette saly. a company has restored its dividend after a two-year suspension and came near analysts forecast for revenue and profit. they plan to increase the payouts over time. the move suggests that ceo bill winters is gaining ground in getting the company back on track. us after will join 10:30 a.m. u.k. time. apple is said to be preparing to release a trio of new smartphones this year. familiar to people with the products, that includes the biggest iphone ever, an upgraded handset the same size and aniphone x, inexpensive model that comes with some key features. it should appeal to those who

want the multitasking -- tasking aspects of pallets -- tablets. expected losses are said to be quite shocking. the equity restructuring deal, due to report earnings tomorrow. that's your bloomberg business flash. thank you very much. the european union will travel -- challenge theresa may tomorrow. they will publish a treaty that ignores some of the european union's -- the u.k. prime minister's demands. the terms of the transition. -- james joins me again. when you see the stories that replied tohe labor

brexit, your cherry picking. they say theresa may is delusional and wants to eat cake again. that if itide says smells like a snake, it looks like a snake, it it -- it is a snake. the next couple months are critically important. once the most important outcome for the market? is it about transition? the definition of what that transition might look like? james: if i had a magic wand and i could say what it would be, it's clarity with the endgame. it's very hard to have a transition without clarity to where you end up. that bankst basis will determine where they want to have their headquarters and what operations should look like. there is a considerable struggle

to decide what life in post-brexit world will look like. britain has some fabulous entrepreneurs and some great capacity to be innovative and imaginative in running businesses. the framework for trading with europe and how it can best work to both sides advantages is lacking in the conversation the team the u.k. and the eu. the political hubris that will go on, many people would say -- we will arrive at a solution. there will be a deal done in the late hours. perspective, it can be important for what the bank of england does with rates. i'm thinking about hsbc.

they are offering a dividend story. the hubris and look at the facts which are higher rates, what does that mean to you from a cio perspective? james: on the one hand i think it's not great news for the british economy in us because we have a highly leveraged sector. it is subject to the challenge of higher rates. banks, ihe british would identify barclays and lloyds as to craft -- two i think areples, well priced. they look almost outstandingly cheap. i would be looking to have leverage in both lloyds and barclays. but i think it's a global story not just a u.k. centric story. i think it's part of global positioning in banks.

it gets better and better. the u.s. story is somewhat mature. city -- citi is a business that is capable of growing strongly. over in japan, we have derided the japanese banks for an extended. body look at companies such as mitsubishi need bond -- mitsubishi nippon. it reverberates around the context of that. -- of debt. come -- some are dependent on government and our

leveraged. why are you concerned about those two? i worry aboutes: high debt relative to equity. i worry about low free cash yields. i worry about what analysts are doing. for me it's a tricky cocktail for the market to address. that's what i would expect share prices of both to languish at best and most likely fall back. manus: stay with me, there's a lot more to get through. global equity markets are set to open higher. he stated us. a new president has named his loyalists from the anc. for enemies. bring the people close to you.

keep those rating agencies at bay. what does it mean for the rand? this is bloomberg.

♪ just past 10:30 a.m. in abu dhabi. live shots of the emperor's palace. there's adrift in these markets. treasuries are drifting but dollar is drifting as well. dollar-yen is at 105. you have the worst quarter for dollar-yen. but get you set up for your day ahead. this is what you should be watching. you have the eu's chief brexit negotiator briefing ministers in

russell -- in brussels. later we have a trade secretary liam fox making a speech on the uk's exit from the eu. it's the new fed chairman's day to win. powell testifies before the house panel. can he makes -- can he make us believe steady as she goes? africa, the president has been naming his cabinet. he has been replacing them with his own loyalists. the return of several previous ministers. the rand surged to a three-year high. this is about establishing the tanner of this era.

what are people saying on the ground? are these for enemies or intelligent smart people? idea.t's certainly the important toost been africa's economy have taken over by some who have been deemed as trusted personnel. the former finance minister been surprisingly kicked out of office in 2015 makes a return as well. in with a man who had been staunchly against jacob zuma and his reign as president. enterprise, we have seen one person who has spoken outwardly a lot about that

department and how it has been run. south africa's public enterprises are in dire need of sufficient and proper governing. key areas have been taken over .y people being called trusted it seems like a good move for now. manus: it's going to be reassuring to the markets. how significant is these moves? is it a smart move, bringing people closer to you? >> he seems to be a great negotiator in some ways. he seems to be trying to tell of the party line and show that the party itself is not split. his reign as president did not come with him being an outright winner so he probably needs to adhere to some party lines.

getting that seat within the minister of the presidency has been ensure -- in charge of planning, monitoring, and evaluation is assigned to unify the ruling party. manus: in terms of markets, i'm looking at dollar rand. the direction of travel is about what they're saying in terms of taxation. the bond and the fx market are critical for stability. they certainly are. 11.50,gone up to around a lot of the continent -- a lot of confidence has come through since december.

it's something that hopes to continue. the rating agencies have said they will rate -- weight as well until they see reform. for now it seems to be some of the hard work in laying the foundation has been done. trusted personnel being put into the right portfolio. that will certainly have an effect on how the rand trains from here. trades from here. manus: thank you very much for the update. james has been listening to our conversation. a --is about rama post this is about confidence in markets and the man named

finance minister. these aren't gargantuan slumps. but in terms of south africa, what is the lead time for turnaround for investment? james: i think we have to inerve is some real change the fiscal conduct in south africa. there have been two challenges. the first is confidence in corruption in the rule of law. the second is the removal of cronyism. companies can go about the business in making money and protecting shares of value. i think that will take time to work through. we may see a initial move up in prices. getting in early will be worthwhile. other people will wait to see if

there is real change. in the broader definition of emerging markets, i see a lot of global investors now regarding offering some immense stock choices. global is in many portfolios. opposed to aay as play on emerging economies. yesterday, weory talked about market exposures. -- emerging-market exposures. emerging-market stocks versus developed markets stocks. i'm looking at this number. some 18.ading just

we are paying a little bit of a premium here. just sub 80.at we are paying a little bit of a premium here. that's sort of growth environment is inherently very attractive for emerging economies. in absolute terms, emerging-market stocks remained way to cheap. are we going to get the growth to justify the valuations? historically, stocks have been disappointing. now i think they have a much better outlook and we have observed in the last decade. you would also hold the view that there is this decoupling. there's an argument about where the dollar goes. you talk about this decoupling

in terms of emerging markets relative to the developed -- relative to the united states of america. what do you mean? a matter of history, emerging markets have been a pale imitation of developments in the united states. once the song and dance is over, in terms of the impact of top -- of tax cuts courtesy of mr. there willangement, be, in my view, a reconsideration of fundamental underlying growth trends and emerging markets will look rather well played. the biggest driver is going to be china. propensity to, drive the european growth story. india, we have an election coming up.

the markets have presumed that modi will gain there. ready priced in him winning in 2019. take me to that part of the world. modi looks like he will be the kingmaker again. that's entirely correct. i see huge opportunities in china if it is only able to reorganize itself for sustainable growth. the challenge that china has is continuing to deflate the bubbles in investment and credit and poverty best and property without derailing the growth miracle they have enjoyed. china clearly has people that are immensely capable but it is a huge economy. getting it to shift in the

corrector action is a substantial challenge. meanwhile, china has best china has some of the best companies. it's very capable of competing hands-on with the facebook's of the world and alibaba is capable of competing with amazon. there are a central positions in longtime global portfolios of people who are taking a 10 year point of view. india is more problematic. we don't yet, in my view, see the kind of governance and share of value protection requirements that we take for granted and develop markets. stay with me. we have a little bit more to get to. he stays with me. he's in london and i'm in out without a.

this is what we have for you. we will be in barcelona. caroline hyde is our special guest. this is bloomberg. ♪

♪ manus: welcome back. we are live in of a dobby. in abu dhabi.

we are waiting for jay powell's testimony in front of congress later on today. in 2017 it was risk on every day. let's get to juliette saly. standard chartered has restored its dividends after a two-year suspension and came close to analysts forecast for revenue and profit. they will pay a dividend of $.11 per share. they plan to increase the time as the group's performance improves. it suggests they are gaining ground in getting back on track. the cfo joins us after 10:30 a.m. u.k. time. basf has signaled the boom. in basic chemical earnings has passed. it will have to get more profit from oil, gas, and car materials . ernie's in 2018 will be buoyed by oil and gas.

they reported sales for the fourth quarter that met and missed estimates. analyst estimates. apple is said to be preparing to release a trio of new smartphones later in the year. that will include the biggest iphone ever, an upgraded handset the same size as the current iphone x, and a less expensive model was some of the flagship phone's key features. apple wants to appeal to the growing number of consumers who crave the multitasking attributes of so-called phablets while also looking for more affordable versions of the iphone x. noble is under attack from goldilocks investment. they say the earnings are shocking. push pressure on

shareholders to accept debt. that is your bloomberg business flash. juliette, thank you very much. are in europe and have our own figure. markets are rallying. looks like a little bit of risk on. the only game in town today is jerome powell. the newly minted fed chair making his first public speech. a mixed bag in asia. we have japanese stocks highest in three weeks. all the losses they lost in february but we do see china down. hans tsonga and hong kong also under pressure. -- hang seng get in hong kong also under pressure.

if we could look at the s&p 500 yesterday, they ended the day up hadhe same level that they before the selloff. just a little bit of a nice mindframe of where we were before the february selloff. it has been on a rally. good news for jerome powell as he takes the stand today. ahead of that speech, i wanted to look at what the dollar-yen is doing. you a bit unchanged but if dig deeper into the options market, you can see investors for the second day in a row are increasing their hedges. that's in case jerome powell says anything that spooks the market. the fx market, i want to look at the options on the euro. if you were looking at this chart, you wouldn't even know italian election is coming up. it's just five days away.

if you look at what happened in april and may during the french election, the volatility, you could tell people were freaked out. but this one, i don't even know if the markets are aware. very little movement. thank you very much, and marie. annemarie.h, we spoke you sicily to the director in tokyo and the u.s. growth would be beyond 2018. >> a couple of risk factors such stronger growth being than what is assumed. if the demand is bigger than what people have a stamped.

with opecagreement and opec countries wouldn't have the same level of compliance as we have seen in the past. things may go in a different direction. could create strong growth. from u.s. shale. we heard from saudi arabia's oil minister saying that now he doesn't see a rebalancing under 2018. he doesn't know when and how. how do you read that? there a thinking that a rebalancing could be much later? >> of course there are different views. the views of the people may well change throughout the time,

according to the changes in the market dynamics. think many observers are starting to understand the dynamics of the u.s. shale oil growth are strong. it has implications for the global markets for 2018. and i believe well beyond that. you talked about a possible explosive growth in u.s. supply. should opec still be concerned? opec's placese to evaluate what they think of explosive growth of shale oil from the united states. we should understand that

explosive growth is happening. ,t's very strong and once again i would like to remind everybody that this growth is not limited to 2018. it may well go beyond 2018 and may have implications in terms of covering a big chunk of the global oil demand by itself. that was the iea executive director speaking to bloomberg. when will that market rebalance? the central bank of europe told eu lawmakers that he is sticking to his plan on stimulus. toghi said he's not willing reduce support for the euro despite confidence that inflation will pick up. >> we are generally more confident that our inflation is proceeding towards our objective.

but we also have to be persistent and patient because the underlying inflation is not showing any convincing signs of an a protect. stimulus lives. long live stimulus is the cry from mario draghi. is it europe over the u.s. in the near term? we have very diversion paths in the snowy woods. james: i anticipate there are good grounds to believe the european equity markets can't outperform in a climate where boone yields are rising. the rising bund yield is part to the european economy moving forward on a sustainable rate. it will allow mr. draghi to remove some of the stimulus. how does one play this?

there are two big opportunities. the first is the luxury segment in europe where i think some of the companies are world class. lvmh should be a core holding. would be looking at agricole in france as an opportunity to play the expanding and improving french economy. i would be looking at the maturation of recovery in spain and latin america. apart from that, i would be quite wary of the nonfinancial sectors and i would be taking profits because they run quite fast on the optimism. i would redeploy back to stable companies. things such as unilever. those companies, is that

a story beyond the boundaries of europe? always that because they have a global reach? is it that or is it more? i think it is more than that. i think there is going to be a flow of funds into the equity market. low bond yields are toxic to investors. i think we will be pro-equity and the money will flow to the most dependable companies that can reasonably provide an assurance on free cash flow. thank you very much for being global and being patient. i'm in abu dhabi. we have a cracking lineup for

you. some guestsng for to join us. the markets are waiting for jay powell. ♪

manus: good morning from the financial form in abu dhabi. this is "bloomberg daybreak: europe." these are today's top stories. powell's debut come asia-pacific markets extend the global gains as investors await the chairman's first testimony in front of congress. 100 deals for the eu. will it challenge theresa may tomorrow? stimulus.o mario draghi tells the european parliament that uncertainty remains and he is not ready to reduce support. we will bring you our interview. ♪

manus: a warm welcome to "daybreak." we are in london, abu dhabi and singapore. where at the fat forum this morning. forum this morning. standard chartered brings back the dividend. that is a critical message. hsbc reshore the market on dividends. jes staley reinsured the institutions on dividends. standard chartered reinsurance the market on dividends. where they risk on mood in the market. -- we have a risk on mood in the market. rates will not run away to the upside. we have a risk on attitude to markets. let's have a look at the risk radar. asian stocks recruit -- recoup

their there were losses. are you paying a premium to hold asian-american markets? jay powell talking about sustained growth in the u.s. is required. rising.a the dollar drifts. this is dollar yen, 105. the worst quarter for the dollar yen in four years, 5.5%. three-day rally, up and down she goes. it was the best january in a decade. let's talk about the bond market . what will mr. powell do in terms of bond market? there is a little bit of skittishness in the european bond market at what happens with italy? do you want to take core risk is to mark -- core risk?

bloomberg tv go and look at that interview from yesterday morning. let me get you a little bit of results. we've got gkn what comes to supplying the big winemakers, boeing -- big playmakers, boeing. this is what they are telling us. miss.billion, that was a you begin to understand the reason why you have this hostile bid by melrose. -- they wantbuild to bid seven and a quarter billion. love the line from the ceo there. none of this is rocket science. i know a thing or two about rocket science. gkn, aerospace of state. sales at a dividend at 9.3 pence. 160e are set to deliver billion pounds, 3.4% above the

estimate. details of the strategy to generate value for decades to come. that is the ambition. will she be able to do that? the biggest hostile takeover in the united kingdom in a decade. juliette saly has a first word news. juliette: manus, the european union will tomorrow challenge theresa may when it publishes a treaty that ignores some of the u.k. prime minister's most important demands. the bloc is planning to thin out legal details how it expects britain to depart in over one years time. in terms of a transition, that will follow. -- inan official added the united states, what us can medications director is scheduled to be interviewed privately by the house intelligence committee which is investigating russia interference in the 2016 election.

according to two house officials, her appearance is scheduled for 10:00 a.m. washington time. adam schiff confirmed the panel does expect -- declined to specify a day. prosecutors are seeking a 30 year jail term for ex-president. -- on 18 counts of corruption including bribery, abuse of power and leaking state secrets. colluded to extort more than 55 billion in exchange for business favors. the bank of korea has left its benchmark rate unchanged. the decision to keep the seven-day repurchase rate at 1.5% was forecast all 17

analysts surveyed by bloomberg. that is as the central bank ways risks. president has new made sweeping changes to his a financeinging in minister almost two years after his late-night firing knocked the rand. backrked a dramatic come who was next in 2016 -- in 2015. china plans to reduce its annual budget deficit target to just under 3%. 2.9%.rget will be set at the target which was set at 3% in the last two years is subject to approval at the annual national congress opening on march 5. remainsws china economy

robust. has replace several top military commanders including the chief of staff. the latest overhaul in the oil-rich kingdom. no reason was given for the changes which were announced in a series of late-night royal decrees approved by king salman yesterday. deputy ministers also replaced. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . when you look at the roadmap function, you can see this red come through in china. large-cap stocks having their biggest got into weeks. we have seen weakness coming through in hong kong's market. the japanese index, the nikkei, closed higher by 1%. oesterle was up by .85% --

australia was up by .25%. a little bit of moment to come through in these asian markets today. much: thank you very breaking news when it comes to who is going to win the core shift of sky comcast. 13% premium for sky. 12 pounds, 50 on the table for sky. unsettling.g to be fox bidding for sky and trying to give assurances to the u.k. regulator that disney would protect the news flow. .omcast -- 13% premium the minimum accepted for the deal is 50%. flow in year one. they are offering a premium of 15% in the 21st century officers. premium to the offer that is on the table currently.

the cash proposal implies a value of 22.1 billion pounds per share. financing will come from 15 sources. there will be new third-party debts. comcast proptosis -- proposes a cash offer for sky. what can we expect from 21st century fox? will there be a push back? will there be a counter bid? 21.1 billion pounds. we will cover the story throughout the day today. what does it mean for the fox empire? what does it mean for march to murdoch just mean for mr. murdock? will the markets, equity markets, they rally at a four-week high. traders expect continuity from jay powell. treasury yields fell in the fourth straight day.

that is looking ahead to powell's first congressional testimony lives today. schmieding joins us. when you look at the story like central banks in the pathway. here we are. this is powell's moment. to reassure the market by trajectory, what do you think the important thing he can do for markets today? holger: the most important thing he can do is to be as boring as possible, to not change the tone very much. he will reassure markets that his taking office does not mark the huge to parch or from the fed course before. the economy is on track. the economy is neither excellent rating -- is neither accelerating or decelerating. inflation remains under control and wage inflation is up but not by very much.

he will likely reassure markets that things are on track which includes a rate hike in march. at thenow, just looking discussion pieces that you sent through. you talk about the global recovery. you are in the mind that we are in this stable. basf talked about a slight growth in the numbers. we talk about a stable recovery. the best over coming since the crisis of 2015-2016. that is not bad news. europe could shine this year. holger: well, there is a lot in europe that suggests that europe could shine. domestic is fairly firm. the recovery is fairly entrenched. labor markets, significant progress in france. there has been some physical progress. in the global picture, the focus may still be more on the u.s. which is where unlike in the

eurozone we get a significant fiscal stimulus. in a way, the u.s. will set the tone for the year. is there an acceleration and demand? in the u.s., the tax reform helping to expand capacities and supply which means more productivity, less inflation risk. that probably will be this year the more interesting story. in europe, things are doing fairly fine. justte some generation some generation, expect the eurozone to continue with growth close to 2.5% which is well above trend. manus: you mentioned the survey data and of course, we have had that surging. we have seen the cyclical peak in the soft eta. .- soft data

does that unsettle you? a littlehy you have more stable and the look that you give in terms of growth? holger: it is interesting if you look at the survey data in europe, until december, they toe been surging and surging 17 or 18 your peaks. they seem to be falling back a little. some falling back. however, that seems to be the normal correction after the huge surge. if i were to take the december data for surveys as -- at face value i would have to project a further acceleration of growth in the eurozone e.on this beyond 2.5% -- beyond 2.5%. it is good but it is not getting much better and hence growth

will likely state to the growth of last year rather than getting significantly stronger. anything else will be a surprise. degree -- myple apologies. degree of monetary stimulus. those are the words of mario draghi. he used the words "subdued inflation." this is a conundrum. it is the inability to make a target. but to see any dramatic change in the inflation story, will turn this year? beenr: koke inflation has close to 1% for almost four years now in the eurozone. there are some signs that it is edging up but this edging up is

not pronounced enough yet to reassure the ecb. the business cycle dynamics are working people we have growth above trend. the labor market is firm. wage inflation is edging up. behind.ion still likes one reason could be that with more business investment coming on stream. productivity growth gathers pace. we like ecb expect modest rise in: inflation over the course -- in: inflation. the ecb starting to raise rates. for now it is for the ecb, steady as she goes. purchasing assets under close to the end of this year. manus: usually markets -- they

do not get agitated until right before the storm arrives on the doorstep. italy counting down to the election. bond markets are pricing in a little bit of an inch. certainly not as dramatic as the french elections where we are looking at bond market risk indicators. an acceleration of those prints election, we are not seeing that in the italian election. what is the risk from italy in your eyes? is in the most important till risk for europe. the very negative scenario, namely of all the parties, the five stars are getting together and after the election having a majority say and having -- and trying to get out of the eurozone. this till risk is very small. maybe 2% but it is not zero. the much more likely scenario is .taly will get back to normal

the last two years, italy has been an exception with a government that had a majority that was able to do reform and that did reform and to some extent the banking sector. we will likely now get the very modest situation in italy, a coalition, a minority government. we'll get against the backdrop where if you people are still talking the talk of reform. the most likely result is modest backsliding on economic reforms in italy. austerity.sliding on as a result, a bit of tender between italy and brussels and its european partners. not to the extent to rock the markets. in a way, some tender between rome and brussels. for italy, it has been the norm.

manus: indeed. what is normality? some people crave normality. holger schmieding from berenberg . thank you for joining us in our london studio. we are going to travel from abu dhabi to london. she is back, caroline hyde. she is queen of tech. we speak to the telenor ceo. this is bloomberg. ♪

manus: welcome back to "bloomberg daybreak: europe." we are in abu dhabi, london. now we get to barcelona. caroline hyde is back in action. caroline, day to.

manusne: it is indeed, great to be with you again. great to be with the ceo of telenor. it is sigve brekke. good numbers out. 2 million subscribers added. i am interested in the competitive nature we are starting to see in home markets, particularly denmark. the company is unsustainable. what is the arch there? is it celebration question mark -- is it consolidation? get approval in the european authority. we said that eastern markets are more stable. makewe try to do is try to [indiscernible] i am happy to see the development. on term, this market needs to be consolidated.

caroline: are you talking to the regulators about that? sigve: we are not doing that right now. sure. focusing and making i am very proud of the way we have been to do that. caroline: focusing on your business, focusing on the business at large, you're starting to semper fi your portfolio and selling off assets. asia.ing into southeast is that really the focus now? sigve: the focus now is to make sure that we are focusing on the areas where we can integrate the most value. have butff assets we that is reason -- we think this is a great opportunity for us. to simplified the customer offering and at the same time --

caroline: when you say semper fi just simplified, what about the assets you are seeing in central europe? are you close to any further sales. offer we are gotten an and we are not an active seller. make an opinion on that. i have nothing more to say on that. caroline: when you look at beenand, an area you have traveling to, is it getting more expensive to invest their? -- invest there? markets, there is a tremendous amount for data. we see that even more so in thailand. in thailand, it is becoming more like a european market.

asking for data bundles and more service. demand -- we need understanding to continue to fill the demand for the customer, we need to make business. there are issues around regulations. there are issues around creditability going forward. and all the markets, we are doing that. -- in all the markets, we are doing that. and wek to ministers want to be a part of the agenda. inclusion,inancial capital inclusion, educational inclusion.

caroline: key talking points throughout the conference has been 5g. how much are you looking to invest? sigve: we see it as more of an evolution than a revolution. however, we are doing 5g test now. be ready to want to compete in the european -- in --a, there is a long caroline: a tale of two different markets. thank you for staying with us. , the ceo of telenor. manus. manus: thank you very much. , 54king news, comcast

skype. we have a stack agenda for you. we now have erik schatzker along with -- this is bloomberg from abu dhabi in london. ♪ 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. guy: welcome to "bloomberg markets: european open." i am guy johnson at our new london headquarters. the open is 30 minutes away. ♪ guy: the new fed chair speaks at 3:00 p.m. in washington. will he moved treasuries toward 3%? emojis tale. standard chartered stock trade higher in hong kong as the bank resumes its dividend and profit surges. we will talk