♪ u.s. president donald trump revs up rhetoric against china. how will beijing respond? spotify, the music streaming service, files for a direct ipo instead of the traditional listing process. ♪ francine: good morning and welcome. i'm francine lacqua in london.

its check on your markets and the data we had from the euro area. .anufacturing falling that's in line with expectations . we also have the unemployment figures out of italy. that rate rising more than expected. we expected 10.8%, we got 11.1%. we are two days away from that all-important italian election. european stops are following asia lower. , and the biggest industry moves were in euro-dollar. the show, we talk markets and we talk the fed. a little bit later we also have an exclusive conversation with the south african central bank governor. later we talk treasuries with john norman the from jpmorgan.

thes get straight to bloomberg first world news. nejra: u.s. president donald trump is expected to announce the tariffs on steel and aluminium imports today. he wants to announce tariffs of 25% on steel and 10% on aluminium on -- from all countries. trade terms moves on a agenda that risks alienating friends and foes. than 30 aides to president donald trump have been stripped of access to top-secret intelligence according to people familiar with the move. they have been notified they will be downgraded to lower levels of security clearance. meanwhile, hope hicks is stepping down. her departure came a day after she testified to the house got herence panel that

to admit her job requires her to tell white lies. according to people familiar with the matter, the state department of financial services sent letters to a german lender regarding jared kushner and his family. kushner's financial and business ties have come under scrutiny. the u.k. prime minister is set to meet european council president donald tusk and london later. she said she would never accept the agreement published by the european union. speculation that exit from europe is headed from a big -- breakdown. cold air hits austria. geneva avenue hurt will be shut down. in the u.k., delays and cancellations were expected at london city airport.

meanwhile, paddington station including heathrow, is closed. demand for fine art is nothing new but one international advisory firm has been on a spending spree, topping $155 million on 13 work's in three days. whether thear company was buying for a single client or several and the auction houses are keeping a mom. -- keeping mum. i'm nejra cehic. this is bloomberg. francine: thank you so much, nejra cehic. the worst month for u.s. stocks in two years. the s&p 500 ended february down almost 4%. jitters about rising rates are still hanging around and investors will be watching the second appearance this week from fed chair jay powell later. where are global markets headed?

join us now is christian nolte. thank you for joining us. good morning. where do you see markets going from here? we have had quite a lot of ups and downs. a selloff yesterday from anxious investors looking at interest rates. think we have seen a quiet or modest february. we have seen 15 months of positive gains in the s&p and this is the first negative. the question is, where do we go from here. at the average volatility, it's probably higher because markets need to digest the turnaround. i think yesterday, what we saw , are some fears that the u.s. economy is too strong and the central banks, especially the fed, need to be

done just the markets. however, they said they don't need to change strategy. and they think inflation is coming back very quickly. do you worry that the economy is overheating? janet yellen had a very similar blueprint for the future but the markets reacted a couple weeks after that. christian: i think there is a risk that the economy is overheating because there are additional pushes like tax reform and the infrastructure program coming in and we need to watch that. markett is key for the is interest rates and inflation. if you look at inflation, it's driven by wages. if you see what we see on the productivity side, we see increasing productivity not as fast as in the past.

we need to watch it but we don't need to completely change the picture. francine: what does it mean for emerging markets? >> they have been weathering the storm quite well. for emerging-market valuations and real yield, it's relatively high. local yield curves are relatively flat. they are pricing in quite a lot of hikes relative to what the market is expected to do. countries looky more attractive in this environment? i think south africa looks very attractive from a duration perspective and a fixed .ncome currencies perspective and brazil and mexico are turning the corner you have a lot of this priced in already. go up to fourd he or even a little bit more? christian: i think three for the time being. if there what happens

are four or more? i think of emerging markets are more or less prepared for quite and the of rate hikesce even though our expectation is three hikes. what the fed hiking cycle means for emerging markets is that the central banks have to be a lot more cautious in terms of cutting rates. francine: what does this mean for dollar? is this dollar strength oh weakness? what does it mean for the emerging markets? fundamentals and interest rate differential would point to a stronger dollar but we have not seen this in the last month or the last week. if you look at the euro-dollar, as we have seen, a lot of upset surprises in europe. there is more upside surprise in the u.s..

i think they are in a much better position than in previous cycles. if it's not super fast i think they can do just this. francine: you could argue that would be heard steve mnuchin say is the u.s. going for a weaker dollar policy. it will behink relatively waged trading. although you have a hike in fed, and the growth bounce, you need higher real rates for the dollar to be relatively strong. theus, we think that combination of both the trade risks and the trump risks along with the midterms means the dollar has a lot more balance risks in the near term. this is positive for em. it means select emerging-market currencies will continue to appreciate versus the dollar. francine: are you concerned

about tariffs and trade? a trade war between china and the u.s.? lupin: i think the prospects of increasing trade fixes is in the cards. increased tariffs. i think, however, a trade war as such in terms of what we have seen in the past is probably off the cards. one thing people forget is there is a very important relationship needed to work between china and the u.s. in regards to north korea. given that, at all out trade war which is disruptive for both economies is probably off the cards. francine: thank you both for being with us. both of you will stay with us. in the meantime, we are getting a little bit of breaking news from vladimir putin. he has started his state of the union address which usually lasts a couple of hours. we will have plenty of news

throughout the morning. he says there needs to be a breakthrough to improve people's well-being. he says there is a stable macroeconomic situation which opens the door to growth. this is a peculiar time because it's not only a state of the union address but it's almost like a election campaign for vladimir putin. we are a couple weeks away from that election. coming up, spotify is planning a it be listing but will music to investor ears? we also talk about trade tensions as president trump ratchets up his position against china. we will bring you the details of that next. this is bloomberg. ♪

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francine: economics, finance, politics. this is bloomberg. president trump is said to have told confidants he wants to put harsh terrorists on steel and aluminum. china has said it will take proper measures to safeguard its rights and interests. join us now from hong kong is indo. -- endo. endo: there is some risk but the timing is interesting. the top chinese advisor is in washington dc right now. he might make some concessions to try to calm things down right now.

china has already launched an investigation under the feeling to worsennsions were from here, not necessarily just because of the steel move, they could retaliate in other sectors and cause pain to the u.s.. we are not at a trade war but tensions do seem to be increasing. francine: what about president xi? does this give him a stronger hand on how to deal with president trump? enda: it does in some respects. week, parliament is expected to cement the rule changes allowing him to stay in office well beyond his term. that would embolden him on a world stage to some extent and give him, of course, the mandate to stare down those hoax in washington dc. time,eless, at the same it kind of undercuts china's

stance on the global stage. are protecting him by a rule basis but there also it carried up their own internal rules. it could be a double-edged sword for china. thank is so much. from hong kong. where should investors be positioning themselves? lupin and christian are still with us. we were talking about the specter of something going wrong between the u.s. and china. down fromade slows the u.s. to other countries, can emerging markets increase trade amongst themselves? lupin: yes. that's the trend we have been seeing increase. for em as a whole, the two main of engines of trade are china and the u.s..

if anything affects the u.s. in terms of restrictions coming end and imports to the u.s., that will affect em trade as a whole. he are seeing china recovering. the latest pmi readings notwithstanding, you are seeing an increase in momentum in china . that will be positive for em trade. francine: what is your take? christian: i think it's not surprising. i think something will be coming up and we expect this. globales it mean for trade? if we are talking about overheating of the economy, maybe it brings down the economy a little bit and could be seen as a positive. we have to make sure it's not a full-blown trade war. --re will be disruptions discussions and china will retaliate. few months ago they did tariffs in small areas.

it's a warning sign. we don't go forward from a trade war, though. francine: let's not say it's a full-blown trade war. but if it turns quite ugly, does the u.s. lose more than china? christian: i think it will be more balanced. the u.s. is not as export/import focused as china. the other thing is inflation. prices go uptch if because of tariffs, what does that mean for inflation? francine: that goes back to the fed. who loses most in a scenario when is retaliation by china? we see on the terra front is not the end game. it's the beginning of a long, drawn out negotiation. i think the u.s. has a lot to gain in terms of what china can offer in other areas. intellectual property, investment, so to think about it

in net loss terms is not the right framework. i think there's a lot that can be gained from this and the u.s. knows it. from the negative headline risks. i think they would be gaining a lot of more on the intellectual property front. china may be willing to acquiesce. they might also gain some axes for u.s. corporations onshore, it's the chinese have been reluctant to do. once your biggest risk for china? how they deal with all of that leveraging and how to deleverage? or is in the facts that the currency needs to be stable? lupin: i'm pretty constructive on china for the next 12 to 24 months. i think the risks have come to a consolidation. . i think it's much more marginal. it's one of the potential for a negative trade war or negative

headline risk in the murder neil term -- very near term. there's a consolidation of power that makes it easier to put through policies on the macro side. greater potential for mistakes because relying on one person to make all the decisions. we think there are grosses coming down in the first half little bit but then moving back to normal, high numbers. we are constructive on china. francine: thank you both. both of you will stay with us. up next, losing hope. hope hicks resigns. details next. ♪

♪ francine: i'm francine lacqua in london. the latest out of washington. within 30 aides to president trump will be stripped from their access to stop -- two top-secret intelligence. this includes his son-in-law, jared. also, the white house to medications director, has resigned. this is the day after she intelligence

officers that she told white lies to the president but that did not include intelligence matters. we have our guests back with us. where do we start? hicks?tart with hope this is yet another indication director having to leave. i think it reflects a chaos in the white house. we have seen an unprecedented number of departures, particularly amongst communication staff. kushner's spokesman is also resigning this week. if you had looked at the list of white house staffers and guest which one would be next, hope hicks would be at the bottom of my list. it appears that she had been contemplating this for a while. the job had taken its toll. i think the reason why so many have left is because trump is very difficult to manage.

at least in terms of getting on messages -- getting on message and coordinating a single message out of the white house. it does reflect -- she was so personally close to trump, it does raise questions about how he will cope without her. francine: is the timing on because it was day after the testimony? questions had also been raised as to what that means. white lies lines -- but nothing sensitive. we have no idea what she's talking about. stephanie: i think it would be wrong to put too much emphasis on that. she was thinking about it for a while. eight hours of testimony in front of the house does take its toll. been some speculation that perhaps she has legal bills as well. they be she's to exit for a couple years and make money to pay her legal bills. that is one possibility. it could be a number of factors.

rememberer there, i speaking with hope hicks back in early 2016, she had been there since the very beginning. it will be a real change and shift for the white house and trump. francine: what is next for jared kushner? askedwere questions being about a transaction through deutsche bank. stephanie: that is not related to the molar probe, that was a new or banking regulator. the molar -- -- mueller probe, that was a new york banking regulator. there is some questions about the financial transactions his companies have engaged in. francine: will this change investor psyche? market could use

a little more volatility in the white house. i think that's why you see that quite muted -- the market is used to a little volatility in the white house. i think that's why you see the muted reaction. it does not change a global market strategy, to be honest. francine: does it change the america first rhetoric from donald trump? does he tried to distract? enter models, how do you model what he does next with emerging markets, because he is so much political pressure at home? the way we think about this is with trade and geopolitics and there is not -- thinking about trade volumes, there's no real model for predicting how trump will behave. the tales know is around our baseline are much wider than before. fact with that e.m. fundamentals are very

strong and we are seeing china a much greater role for e.m., i think the risk of the usd railing the em story because of geopolitics through or trade, is a lot lower than it was. francine: when you go back to what we are expecting, there will be a fight for infrastructure spending. with that heaven and flak -- impact on inflation or the market? really 1.5if it's trillion in a short. of time, it could push the economy higher and have an application on growth and inflation. however, it's probably much lower. from that perspective, from an investment perspective, it makes sense to look at this for we don't think it's moving inflation massively higher. the infrastructure problem doesn't change productivity at all. francine: thank you all.

stephanie, christian, and lupin. we will talk about brexit. we have some breaking news out of the u.k.. i'm looking at pound. quite a lot of analysts are not looking at cable, they are looking at euro pound. it still a little bit had estim. it is a lower number than the previous month. the pound at 1.35. let's get to the bloomberg. tora: donald trump is set announce tariffs on aluminum imports. he wants to announce terraces 25% on steel and -- on aluminum.

antagonizing friends and foes alike. 30 aides to donald trump have been stripped of access to top-secret intelligence. they will be downgraded to lower-level security clearances. is stepping down. her departure came after she a panel heardling job required her to tell white lies. the state department of financial services set letters to a german lender and a new york community bank last week. kushner's financial ties have come under scrutiny.

the u.k. prime minister is set -- and london perl it -- in london. prospect that negotiations from the block are heading for a breakdown. europe is facing travel disruptions as cold air hits the region. geneva airport will remain closed until 11:00 a.m. local time. in the u k, delays and cancellations were expected. paddington station, including isthrow express services closed. one art advisory firm is on a oneding spree, dropping hundred $55 million on 13 works in four days. it is not clear whether the company was buying for a single

client or several. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. is quite ahat conversation. what a day on saturday. i am buying picasso. is going public. they are not filing for a traditional ipo. they are listing on the new york stock exchange. as part of its filing, they relieved it's holding on the top spot of streaming services. webb ands now, alex christian nolting is still with us. how does this work? they don'tbankers, know anything, they are not going to tell me how i am

valued. a test case. people are working out the semantics. others suggest if it proves successful, it could model uber and airbnb. essentially, there is no classic announcement of the price as far as we know. francine: i know you are not involved in this, but it could mean they are cutting banks out. alex: exactly. i love your piece today. check it out on social media or our website. spotify is special, but not mark zuckerberg special. what does that mean? alex: they are trying to compare themselves to netflix. are saying, netflix is content, we are as well.

its revenues 70% of and gives it to the label because they have to license content. netflix will pay a flat fee, so it's bases lower. look at the tech giants, google and facebook, it is above 50% of revenue. the notion of them having classic profits is disingenuous. people will have to buy into the growth story. is considerable. there are more people who might want to buy a subscription service. francine: do they need hardware to make money? can they contend with amazon and google? less hardware is far profitable than software.

people are wondering if you have to take a hit on hardware to sell the software. amazon, for instance with the speakers. they make no money on that. they make the money on being able to sell your products through amazon as a consequence. the question. with spotify, the consideration is people talk about owning the interaction with the customer. you have a phone and you can they -- you can say hey, siri, hey, alexa. do you try to get the next trend about the speaker. yesterday we were talking about laying, a doorbell that lets you open to third parties. do you look at that in advance or do you say it is expensive but i want part of it?

it is interesting to look at what happened february. tech came down. the story is not over. you need to be specific now. look at artificial intelligence, smart mobility. those are the areas we need to -- a little more. francine: emerging markets. a lot of chips are found in some of these indices. how do you play tack? marketsn: it is large on one hand. if you look at the emerging markets, the amount of tech , it is also now tech. does the ipon happen? when do we know about price? alex: i am not sure. it will come clear. francine: there are a lot of

these tech companies. i don't know if you would look to buy into an ipo like that. massive companies could go the same road as spotify. alex: they don't want to publish ofbers, but they have a lot employees who have paid with stock. they are waiting for their ipo day and they cannot wait forever. they have to have a promise on the horizon. francine: would you buy into something like that? i have never seen a potentially large company offering it this way. christian: this is the first test case, we need to get used to it. it is important to understand what they are doing and look at the numbers, otherwise, we are not gambling here. francine: thank you. alex webb from bloomberg gadfly.

christian nolting from deutsche bank wealth management. about the brexit with matthew elliott next. this is bloomberg. ♪

francine: welcome to our weekly brexit show. theresa may meets with donald tusk in london today.

tensions between britain and brussels rose after the u.k. prime minister said she would never accept a draft agreement published by the eu. speaking earlier, donald tusk warned of the consequences of britain going alone. friction lefte no .utside the customs union friction is an inevitable side effect. where do we go from here? welcome to the program.

david, let's kick it off with you. gives theresa may a big speech tomorrow. she refuses the draft agreement. does she come out with a compromise that she will lay out in her speech? outd: really rolling signing off on this draft proposal. we don't know the detail in that. we have a about 10 tory withkers prepared to vote this amendment, allying labourves with corbyn's party. issue able to come up with something? it may not be a customs union, is it going to be some kind of for that to happen

or to lose a vote? the other question is the irish border. that is the main stumbling block that blew up this argument that the european union refused to put in the draft. it caused theresa may to say we have to reject this deal. there some other solution she can pull forward that means that no longer becomes a stumbling block. a very tall order. mr. tusk has come out with strong words. our reporters showing this is a deliberate strategy by the european union to play hardball, to try to provoke britain to stay close to the european union.

do we know whether the prime minister survives? this is like a game of chicken. right, is that the only way she survives? been here before. is this the last chance she has got? on she goes. she seems to survive. there isn't a leading candidate who could potentially succeed unitingo that trick of the parties. let's see what she says tomorrow. francine: is the prime minister the right person for the job? matthew: she is. we have reached a crucial turning point in negotiations. until now, people took what the european commission or barnier said as gospel truth.

he went so far beyond the pale in terms of weaponize ing a sensitive issue. people see his mission as a negotiating --. seeinglic will start that position and realize the eu is going through the negotiation motions. on the conservative side, we should see a party more united for many months. things are on track. care abouto people brexit? media does, politicians do, tories do, labour party does, if you speak to someone in middle england, do they care or are they board? matthew: they are bored about process. they want the government to get on with it. they would be confused if there were a halfway house in terms of customs houses.

francine: is their concern theresa may will be forced to resign because she is too tough on the eu and does not have the party behind her, and who comes after theresa may? matthew: theresa may is here to stay. ahead of crucial moments in negotiations, how the government will water down its position, how theresa may is about to be ousted. this will not happen. she will carry on. news,ne: i have breaking but i have to ask you a question. forecasts for the future that were not taken well for the markets. that company trading shares have been halted after it has fallen some 14.8%. it is a mechanism by the ftse it falls above 15%, they

stop it for the moment. i don't know when it will resume trading, but we are trying to get answers. back to brexit. iskeep hearing that there the remain and program exit and the sides are at loggerheads. about 10 potential rebels support a rebels amendment. one, kengine it being clarke, possibly one more. the idea of getting to 10, i do not see that happening. francine: what does it mean for your investment? it is where the european union puts something on the table and they need to be tough, because if it is easy for the u.k. to leave and other countries want to follow, that is -- to the eu.

march 19 is coming. if it is a hard brexit without a solution, that will be negative for markets. it is good we talk and find a solution. there will be a transition period. we go for brexit and we don't see a massive change in the referendum. we are seeing these talks hit another logjam, or is that just the positioning in the course of the negotiation? not surprisedm the european union is playing hardball. i am happy it is happening. the play you need to do. they are moving and i think it is late in the game. the probability of hard brexit is higher than a year ago. everyone knows this. the pound took a bit of a hit on this. it is still up a lot.

christian: eventually, it is -- what is the economy doing? if it is going into recession, the mood will be different. it is still positive. francine: do you think the conservative party, you think would theyited, jeopardize having a second election, giving it to jeremy corbyn? a second election or second referendum, there is no appetite for that. can i address northern ireland? it is interesting the european parliament produced a report where they talked about how they wanted the border to be an example of how they want to do the rest of the borders across the eu. they want to use technology to help it be frictionless.

this plays into the idea that this is a negotiating ploy by and the commission to weaponize this as an issue. francine: it is a solution the government has difficulty putting on paper. it.hew: they have outlined it will come out during the negotiations. francine: thank you for joining us today. matthew, and, christian nolting. we will bring you our interview with a chief financial officer about how the bank is dealing with uncertainty. this is bloomberg. ♪

francine:francine: rbs reported its first quarter-year profit for the first time in almost a decade. the chief financial officer spoke to us about how rbs is dealing with the uncertainty surrounding britain's relationship. >> we are doing be sensible

plans you expect us to do. we have talked about needing to set up a subsidiary in amsterdam. we are progressing those plans. we have a big bank in ireland. border iswith the important to us. we are focused about the impact on our customers. a lot of smaller companies are underprepared for that turntable . >> how many people might you moves out of london in the event of no transitional deal? we have talked about needing 150 people in our dutch operations. pace as slow that as we can until we understand what the transitional arrangements are or not. nejra: would you move them in one go or in increments? ewen: it will be slow over time. francine: that was ewen

stevenson speaking to nejra cehic. european stocks dropping after declines in the u.s. and asia. treasuries are unchanged. surveillance continues in the next hour. tom keene joins me. we will talk to the governor of the south african reserve bank. i am looking forward to that interview. we will talk politics and rand. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. >> investors are still sweating

the prospect of rising interest rates. market prepares for another day of jay powell's testimony. we will hear from the central bank governor on the new president and central bank independence in south africa. president trump ranks of rhetoric against china. how will beijing respond? good morning everyone. this is "bloomberg surveillance ." wppu was actually halted about 10 minutes ago. tom: the news flow is extraordinary this morning. i think this really filters into the dynamics of technology. it comes on the back of the bombshell yesterday that nbc across all of their platforms in america are going to reduce the advertisements that they show in prime time.

i don't know how that translates in europe and the united kingdom, but that is a huge change for advertising in america. francine: you're right tom. i think everything is tied together. the advertising is very global, but when you speak to some media analysts say reading the statement from wpp, there's a little shocked and all -- there's a little shocked and awe. in the meantime, let's get straight to the bloomberg first word news. here's taylor riggs. taylor: it is a crucial two days of brexit diplomacy for british prime minister theresa may. she meets today with the european council president the day after rejecting parts of the european union draft arousal of the brexit deal. tomorrow -- draft proposal of the brexit deal. white house chief of staff john kelly is cracking down on security clearances. according to people familiar with the matter, more than 30 aides to president trump have

been stripped of access to top-secret intelligence. best theem is resident president's son-in-law jared kushner -- the president's son-in-law jared kushner. as you were mentioning, president trump is preparing to steelriffs on imported and aluminum that is likely to upset friends and adversaries. the president was to slap a 25% duty on steel and 10% on aluminum from all countries. that may provoke retaliation from china. severe weather is causing travel problems throughout europe. the airport in geneva was closed for several hours due to heavy snow. arrivals will resume and about our. hour.about an global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: thanks so much.

markets. equities curve flattening, five.s at negative that's the dynamic of a relatively high two-year yield against a flat 10 year yield. is back up with some of the tension yesterday in the markets. 130.12. the pullback in the market --terday was because we will talk about this in a second. looking at european shares, they

are down. down some 1%, dropping at the sharp declines in the u.s. we also some pretty big declines in asia. treasuries rose. s i amof the market picking up as on jay powell. tom: let me go over to the bloomberg right now. we are just going to frame this with a big move. chart ande 10 year the performance of the vpp -- wpp from the london shares. this puts in perspective the drop-down that we have seen this week, really bringing it back to 2014 levels. nevertheless, advertising we will talk about across all of bloomberg today. francine: this is my chart, and aboutided to do something

the italian elections. we are in a blackout period and cannot talk about the elections at all. you can see credit yields are below the sovereign, which is the -- which is very rare. our top market started, the global in that's the tumble in global stocks. -- the tumble in global stocks. traders awaiting a second appearance by fed chair jay powell. we welcome to the program jordan rochester. great to speak to you this morning in the studio. when you look at jay powell and what we've heard so far, he's pretty optimistic about the u.s. growth. are we in danger of overheating? guest: i don't think we are in danger just yet.

of all the central banks globally, they are furthest along that way. what does surprise me is how positive he was in the points you made in his previous testimony about how the tax plan and spending plan wasn't really in their projections, and even the discussion in january. that's what made the market go, this was really hawkish compared to what they expected. i expect today to be very similar. similar to what janet yellen has done the past, very little difference. i think the short-term you are dollar a minute outflow thanks to people trying to price in more hikes. it is amazing how far we've shifted. we were talking about four shifts on the rest of the cycle, now it is sick. the market is pretty much pricing -- now it is six. the market is pretty much three, andund one of

you got risks -- 103, and you got risks. i think the u.s. dollar curve is fairly well priced on the front and. monitors backend that -- the front end. it is the back end that matters now. tom: christian keller with barclays. are we going to switch in the coming months -- excuse me jordan, i'm sorry. we going to switch in the coming months to a discussion on trade in dollar dynamics? bring up this chart if you would. this is the trade exports of the united states. i'm sorry, jordan. .hat is a stunning freefall is that the story for july 4? is that the story for labor day in america?

guest: it is already the story. today we got trump looking and suggesting to go in on those steel tariffs. the irony is this trade balance deterioration, since trump won the election, has got worse. the u.s. doesn't really employee steel from china in the first place. those measures alone will be enough. when you have the tax plan and spending plan to increase u.s. consumption, it is going to get worse because the consumer in the u.s. are going to continue to buy foreign products. tom: it is not intuitive. why is it a bad thing that morecans get a tax cut, by bmw's or whatever. is that good for jay carney --

for germany, for the united states in general? the amount of spare capacity is actually quite limited. it is why the fed is on a hiking cycle. ,ou got your foreign partners europe especially. quickly, this is the theme of the day. the president's scheduled to come out today, according to many sources, and dropped a bombshell on american trade dynamics not only with china, but with other nations. that is why we are doing this today. deal.ne, it is a huge francine: it is a huge deal. first of all, i loved your chart yesterday looking at trades for the u.s., global trade. you have to see whether this

pushes a lot of the emerging markets to do even more trait amongst themselves. i was speaking to an emerging markets specialist saying they by pushing soages hard on china, opening up the emerging markets for financials. tom: let's come back and drive this conversation forward. stephanie baker joining us, and katie stockton. the news flow extraordinary today. francine had to go through, extraordinary. ♪

♪ francine: this is -- taylor: this is "bloomberg surveillance ." the world's largest beer maker is seeing consumer goods and the sales growth. anheuser-busch says third-quarter revenue was better salesxpected, fueled by growth that the nestle, -- that ,l -- l'orealore and procter & gamble. tillerson'srex crowning achievement in exons -- as exxon's ceo. he is now secretary of state. the vpp reported a slow start to 2018 -- wpp reported a slow

start to 2018. they are speeding up a strategy reset. that is your bloomberg business flash. tom: thank you so much. let me bring up a morning must read here to have an adult conversation with stephanie baker about something besides the gossip of the white house. there are two camps in the white house on trade. peter navarro, tax university of and "the losvine, angeles times" writing two years ago trump will impose 45% tariff american trade partner .hat sheets on its trade deals for theon to say

president, steep tariffs are a strategic negotiating strategy. we are going to get this from the president's day. who is winning the battle in the white house, 70, right now on free trade -- stephanie, right now free trade versus navarro trade? guest: it looks like if this announcement comes through that gary cohn has lost this battle and that navarro and wilbur ross have won. i think it is remarkable they are able to push this forward given the chaos that has enveloped the white house with all these departures, hope hicks and the kushner spokesperson. that they are able to proceed with such impactful decisions despite all of the departures and a people -- and upheaval. tom: the impact will have to

have support in all of washington. is there a ross navarro constituency on capitol hill? guest: i think this will be a big fight. there are divisions on this in both parties. i don't think there is a consensus that this is the right way to go. i don't think anyone knows what the impact will be and what the countervailing measures will be. will the usb hit with similar tariffs in steel and aluminum from other countries or other sectors? we just don't know how this is going to play out. francine: this quite a lot going on in the white house. we talked about jared kushner and 30 other people getting their security clearance downgraded, and then hope hicks. francine: i think -- guest: i think it is incredible that just over a year after entering the white house he had so many people operating without a security clearance. a request the difficulty trump

has had in recruiting people, that he wasn't prepared when he entered the white house, and at his own son-in-law, after more than a year in the white house, still can't get a security clearance and had to have it downgraded despite the sensitive nature of his portfolio, all the diplomacy he was involved in in the middle east, accompanying trump on trips to asia and saudi arabia and the like. hicks, who was his trusted communications advisor from the very beginning of the trump campaign, her leaving, he looks increasingly isolated without the kind of crutches he had to rely on to keep them going. orncine: can you lately two would that -- can you link the two, or would that be wrong? could you say that because of what is happening in the white

house trump is more isolationist or proceeding with more gusto? guest: he's doing something he promised to do, and this internal fight in the white house on one hand is winning. there have been also reports that rob porter, the staff secretary who was forced to leave because of his own security clearance problems, had been an advocate with tone -- h tan against these riffs. it is certainly having an impact on white house policy. tom: with your expertise on all of mr. manafort and mr. gates and all the rest, can you explain our audience any linkage mr. kushner has with mr. manafort and mr. gates? theyn the zeitgeist, are separate or is there some form of linkage there? guest: they worked together on

the trump campaign. there was a meeting in trump tower that is being examined by the special counsel's office identify paul manafort and jared with russian operatives that have offered to her on hillary clinton. after paul manafort left the trump campaign in august and, rick gates stayed on worked very closely, as i understand come with jared , anothernd others issue we think the special counsel is examining. there is certainly a crossover. what i can say for sure is we don't know what robert mueller has on this. francine: stephanie, thank you so much. we will be back with our guest jordan rochester and kristen taylor of barclays. we are also hearing from russian president vladimir putin, giving his state of the nation speech at the federal assembly in

moscow. this is very interesting because we have the russian elections march 18. he was talking about the strength of the economy and inclusive growth. we will delve into that little deeper. this is bloomberg. ♪

♪ tom: good morning everyone. today.c news flow we have jordan rochester and kristen keller with us.

come along weer talk about china, we need to talk about the tripod, the international economic tripod. one of the founding ideas is an independent central bank. is there central bank even remotely independent? guest: i guess you would argue that the entire chinese regime has zero independent institutions. the wayif you look at decisions are made i think it is hard to argue for that. on the other hand you could argue that in recent years, even in some of the western central banks, there has been some political influence. i'm not sure how strong that point would be in the discussion. tom: i look at this and i guess it comes back from a synthesis on the news we have seen on politics. where does barclays assess china will be in five years, where it

really matters to president xi in his policies and leadership? guest: we do think the economy is slowing down. in extending his term potentially is probably a good thing just really economy because it means one can focus on the -- on rebalancing the economy. it has leveraged up over the past two years in order to generate that cap of growth. it is unlikely to continue. and the at the basics development of the demographics, the labor market developments, very unlikely that one achieves this type of growth over a long period, so they have to adjust. that may be easy under leadership where you know who is in charge, but it will be difficult. francine: jordan, what does it mean for dollar dynamics?

if you see a more protectionist america, does this also mean they are going for a weaker dollar? jordan: indeed. what it has done is has seen euro strengthening against the dollar. you see stronger currencies elsewhere, not just china. i think it means brought dollar because across the board. ,rancine: thank you so much christian keller of barclays, jordan rochester of nomura. coming up, a conversation with the south african central bank governor. that is coming up shortly. this is bloomberg.

>> series a market update brought to you by etf securities -- here is a market update brought to you by etf securities.

♪ francine: good morning everyone. "bloomberg surveillance." tom and francine from london and new york. let's focus on u.k. banks. cforoyal bank of scotland's

has signaled further cuts are imminent. speaking with bloomberg's nejraive -- bloomberg's cehic -- >> i think it is inevitable that there will be job cuts, but we are not going to talk about figures. i think within those restructuring charges he will see a lot of that relates to office buildings we are in today, some legacy technology costs like data centers that we are planning to get out of, and there's also some of that related to things like brexit planning. reporter: will there be more branch closures? guest: i think we are comfortable with the shape of the branch network as we have announced it, but again, i think

we've been very public if we are going to shut branches. there were be up to six months notice and we will talk very quickly about it. reporter: if the u.k. and the eu don't reach a transitional deal by the end of march, what are your contingency plans? guest: we are doing all of the sensible contingency plans you would think we would do. it is a conflict process. we talked about the need to set up subsidiary in amsterdam. we have a very big bank in ireland and northern ireland, so the issue of the northern irish republic of ireland border -- northern irish-public of ireland border is something that is very important to us. reporter: how many people might you move out of london in the event of no transitional deal? talked publicly about 8150 people in our dutch

operation. i think some of those will come locally. some will be transferred from london. we are taking that as slow as we can until we understand what the transition arrangements are or not. reporter: would you move them all in one go are increments? guest: it will be a very slow movement of people overtime. reporter: still no updates on the u.s. government of justice probe. the you expect to settle that in the first half of this year? guest: we've got no update on timing. we would like to get it settled. the doj is aware of that, but nothing further to say at this point. reporter: could it be the first half, or the expected to be more in the second half? guest: a year ago i would have expected it to be last year, so we are not making predictions as to when it make it settled. reporter: i understand it is somewhat out of your control. you said you may take further provisions. when might you set aside for provisions? guest: i think it depends on the nature of discussions with the doj as to when and if it is

appropriate to take additional provisions. reporter: what would be the worst case scenario you are comparing for in terms of the amount? guest: we've run multiple scenarios. as you saw the results the other day, week been very focused over the last three years on building up capital buffers. we can continue to run long capital and liquidity. reporter: the dividend depends on the settlement of the doj probe. when is the earliest the dividend could be reinstated? guest: it is very linked to the earlier discussion. i take when he to get a result of the doj, and once it is to get back into a discussion on dividends. reporter: 2019 likely? guest: again, we don't want to make predictions, but we are very keen to start paying dividends again. tom: spectacular.

right now, to convey yesterday the fire of debate as the president spoke on guns. here's taylor riggs. taylor: president trump left democratic lawmakers surprised and optimistic after a meeting on gun control. the president praised broader and tougher background checks, and rebuffed a republican proposal that would require all states to honor concealed weapons permits. a new report today on presidential son-in-law jared kushner's family business. the kushner company has received more than $500 million in loans from citigroup and apollo global management after the kushners met at the white house with representatives from the firm. his lawyers say he has not played a role in the business since starting at the white house. communications director hope hicks will resign.

her resignation was announced a day after she testified for the house committee investigating russian interference in the election. she told several white house aides of her plans before she testified. in europe there are signs that factory output growth may have peaked. the pmi for manufacturing less month fell less than expected. 2017 was the largest in two years exports across the region slowdown. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. much.ne: thank you so we just want to bring you back to the russian president vladimir putin's state of the nation speech at the federal assembly in moscow. i have to correct myself because this is not the speech that lasts three to four hours. in previous years this has been about an hour long. he's laid out his political intentions.

we are about 17 days away from the president to election. mr. putin says he intends to , laying out key policies for his fourth presidential term. he is facing seven challengers on march 18, although no one at the moment is actually expected to have any widespread support. putinruton -- mr. was also talking about nuclear weapons, saying russia will develop a new long range nuclear powered missile taylor:. let's -- missile. let's talk a little bit about russia and the emerging-market currencies since we will be speaking shortly to the central bank governor of south africa. joining us are jordan rochester and christian keller. thank you both for sticking around. do you have any calls on ruble? does it move on politics? jordan: it is a trade story.

we've got rising oil prices it tends to perform quite well. politics does come into it. sanctions from the u.s. was a bit of a worry. if you rising commodity prices, no strong view in the commodity cycle. christian: i agree. it is probably one of the few central banks that has something left to cut. some people are wondering with another -- whether they may intervene. francine: when you look at russian specifics, the president saying so far we are still for more campaigning. can the president really steer a course for this economy? christian: it looks like the

decision has been taken a few years back. there was some hope up until about 2013, 2014. i think we have an economy that is firmly controlled in all the crucial sectors. it really is refocusing commodities and trying to build other parts of the economy. it is doing relatively well with this kind of strategy. it is stable. we seem to percent growth are so that's we've seen 2% of growth rcep -- we've seen 2% of growth rcep. -- of growth or so. or ais russia an em regime economy? >> we have some oddities. we call it an em economy.

for the liquidity of the market still in the way institutions work, i would say em. i know where you are coming from. it has some features that you would maybe what to rather call frontier. tom: to a large extent of the united states, russia is still perceived as a very much larger economy. thank you for that observation. we see of laws in moscow for mr. putin. speaking of emerging markets, it has been a very political economy, and that of course is south africa. coming up, important and timely conversation with regime change in south africa the head of their central bank. this is bloomberg. ♪

♪ francine: good morning everyone. tom, we've been looking forward to this conversation all week. sentiment is high and south africa following jacob zuma's resignation and the inauguration of the new president. even so, the rent has slid for a third day as the seneca and security declines -- south currency declines. the central bank governor is in london. welcome. you've artie done some great work most is why you will -- you are receiving an award.

you said you were pretty confident if there was a new president cover credit rating agencies would stay away from downgrading south africa. a lyricalittle bit of machinations, a new president, new finance minister. is that enough to keep credit agencies away? guest: we are very confident this will take south africa to work. with the possible credit rating downgrade, it is not the real issue. what is important is that some have got is ticking decisive steps to correct the shortcomings that we have had, and i think that getting into we were not sure what kind of political leadership would emerge out of the governing party. were not clear about the policy trajectory. we now know who that leadership is

the minister of finance has brought his credibility to their. tom: is his -- francine: is his credibility enough that you can avoid a junk rating by moody's at the end of the month? guest: it is going to take more than the finance minister. i've previously said that the future of south africa's credit rating is in the hands of south policy. a very credible budget was .abled some divisions might be politically unpopular but are absolutely correct things to do for the south african economy to

be back on a better directory. tom: let me show you your favorite shark -- better trajectory. tom: let me show you your favorite chart. really great optimism of 12 to one on the dollar. what can you do for big business? francine and i spoke with the leadership of debeers a few days ago. what does the central bank me to do to assist big business towards a more stable south africa. guest: our contribution to a stable south africa is to resonate with our mandate. i think that our job and what we can do for the business community is made so much easier now because we have got a policyal leadership and trajectory we believe is

-- policy trajectory we believe is credible. we want south african businesses to have investment going once again. francine: the brand has big gains.- the rand has big does it create more room for raising interest rates? does this mean interest rates are going to go up? the message is the same. the movement of the currency does feed into inflation.

what we watch is whether the rant now has strengthened. rand would sustain a lower say, with the to kind inflation outlook we have, then we can adjust policing. it does not work the other way. level it isom the at now, do you see it going further? guest: it is difficult to say. suffice to say that the move on the rand starting last year was a welcome correction. it was correction trying to price in the prospects of a change in policy of leadership.

south africa was seen as vulnerable. accounta current deficit of 2.3%. we have inflation now firmly within the target range. south africa now has a net positive international position. what was really bringing sentiment in south africa was the political uncertainty, and with that behind us it gives us an opportunity to get working. the tone set by the president is actually very positive. francine: we are avoiding the rand currency strengthen in question. tom: very quickly here, within your independence within south africa, i think all of your nation and all of global wall street would have -- would like to know how south africa

reinstitute and reaffirm rule of law in south africa and move away from the timeless corruption that is in so many nations. how does seth africa -- how do south africa get to a better rule of law? guest: south africans could not have hoped for a better leader in the president now. he has feared the corruption of south africa's constitution. the rule of law is at the forefront of those rules. think as i said before on this channel, the strength of south africa live in the institutions of democracy. those have been undermined before.

we can see the results of reclaiming that constitutional space. we came under significant attack. we use the law to fight for our independent, and won that space and took the battle to the court of public opinion. francine: given all these changes, would you continue -- would you consider going back to the national treasury or finance ministry is asked by the president? guest: i've done 15 and a half years for the national treasury. the most technical job you can do is that of the director general of the treasury. i don't think i would like to do that. the biggest honor that a country could give any of its son or ask them to be

the governor of the central bank. there is no need for me to go to -- treasury, and no francine: thank you so much. coming up on "bloomberg markets," a conversation with the under secretary of the treasury. for that interview at 12:00 p.m. in new york. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance." still with us, christian keller of barclays and jordan rochester of nomura. where a couple of days away from the italian elections. this the spread between the italian 10 year and german ten-year. what we can talk about is market disruption. will of the ugly come monday morning are not? >> likely because if you think about the outcome, it looks as coalition.a grand we could have some kind of

bigger heterogenous coalition that probably would not do too much either. it could me more left-leaning or right-leaning. anything shocking to the market, there may be some preferences, but nothing would change the picture too much. francine: is the outcome much more fluid or because there seems to be overwhelming favor for euro currency by italian population? >> your chart showed a widening around the italian referendum in 2016. i think like you just summarize, you're not going to have the same reaction in the markets. think when it is time for the election, we are more focused .bout the early meeting

we could see some alteration. i think the hawks will start with an argument about whether qe is to be increased again. i think it is a step we will see next week. francine: thank you so much. jordan rochester and christian keller joining us today. coming up, a conversation with ,ohn normand about jay powell head of cross asset fundamental strategy. we have that interview in just a few minutes. being well that's meanwhile, moscow is looking at equities stocks. this is bloomberg. mom, dad, can we talk?

sure. what's up, son? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us."

that's a good one. 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. ♪ this morning, day two of powell's testimony.

markets quiet with renewed curve flattening. a critical day for president trump, a critical day for china. will america take the ross navarro pass to a unilateral trade policy? both wpp and nbci debt and i just to the creative destruction demanded by millennials in advertising. good morning everyone. this is "bloomberg surveillance" waiting to go down to the river thames in the boat, francine lacqqua. at this point, given the snow in the wind on either side of the country, a very big assertion. i will try to get to rome this afternoon. onre are the elections sunday. we can't talk about the polls,

but what we can talk about is market anxiousness. i'm just not seeing it. it is not like the french elections or brexit vote. i think it may be because investors interpret this one little differently. it is also very likely that it is some kind of coalition just given the new electoral system, and maybe it is much more difficult to price in. tom: with the first word news this morning, a very busy newsday, here is taylor riggs. taylor: president trump is onparing to impose tariffs imported steel and aluminum, likely to upset friends and adversaries. the president wants to slap a 25% duty on steel and 10% on aluminum from all countries. that may provoke retaliation from china. white house chief of staff john kelly is cracking down on security clearances.

according to people familiar with the matter, more than 30 aides to president trump been stripped of access to top-secret intelligence. one of them is presidential son-in-law jared kushner. none of the officials has been asked to leave the administration. a surprise announcement from russia's president alamo group -- president vladimir putin, that they are testing a new array of nuclear weapons vulnerable to -- to enemynvulnerable interference. severe weather causing travel problems throughout europe. the airport and geneva was closed for several hours, scheduled to resume departures right about now. arrivals will resume in about an hour. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg.

let's look quickly before we get to mr. normand. -62.utures yesterday curve flattening 1.60% . 59 is the spread basis points. note yen strength versus the euro, francine. francine: i'm looking at a very similar data board, a little more at some of the european stocks. media and retail is the biggest loser in today's trading session, partly due to wpp because of their forward guidance, but it does seem like they are amongst the biggest losers. we also had manufacturing data showing mounting signs that growth momentum may have pete in the u.k. tom: let's go to the bloomberg.

wpp.is a 10 year chart of the role over here is that mystery in advertising. we saw that yesterday as well. let's get to john normand with jpmorgan. you write a beautiful research assetsnthesizing across and looking at other areas as well. you nailed it this week with what i've seen in the last 48 'yeah, but'on the idea of economic growth. guest: there's a lot of uncertainty now, but i think the extrapolation in the market is a bit excessive. tom: this is a brutal chart, of petroleum is off a

cliff. if we partition growth for the president, we've got domestic growth and net export dynamic. that is your area. are you calling for a drag in that export that pulls down some of the economic growth? guest: net exports has been attracting from u.s. grows over the past quarter, and i imagine this is only going to get worse because of the fiscal easing's that have been approved in the past few months. 100% the trade deficit is going to get worse. it is just unfortunately the solutions that is not tariffs. it is less fiscal spending. tom: what does that do for treasuries? guest: i think in the short term this is not a huge issue for treasuries. not the trade balance, per se.

we still have a bear market in fixed income and treasuries in particular, but that is a function much more of fed policy. it is not so much a consequence of foreign demand per se from treasuries and a rising trade deficit environment. francine: looking at the u.s. 10 year treasury yields at 2.84, when does it touch 3%? guest: i think it depends on a couple of things. what happens to the next round of inflation in march and when up its rate guidance. i am not sure we are going to get another round of inflation's president across the board. tom: it is so important today with the president says about

trade. it may be a big deal, it may not. ross goes down the wilbur peter navarro pass, what will be the ramifications within markets not next week, but over the next year, the next five years? outt: if you up to trace it this is really a currency issue, not equity or credit issue. i think it is going to weaken the dollar further as the fed is tightening. they say they need some sort of , and that tends to be reflected in reserve currencies as long as the economy continues to do pretty well, and i think i can -- i think it can even with trade sanctions. tom: we will continue here this morning. coming up later on bloomberg television and bloomberg radio, and exceptionally timely

interview given the challenges of california pension accounting. christopher ellman will join us from counselors on the realities of the state of california. this is bloomberg. ♪ this market update is -- market update is brought to you by etf securities.

♪ francine: -- taylor: this is "bloomberg surveillance." the world's largest beer maker is seeing consumer goods sales growth. anheuser-busch says fourth-quarter growth was greater than expected, fueled by corona andexports of stella artois. abandoning joint ventures with russia's rosneft

because of international sanctions. the move will result in an after-tax loss of $200 million. exxon had agreed with rosneft to drill millions of acres from the arctic to the black sea. it was rex tillerson's crowning achievement as exxon ceo. he is now secretary of state. the world's largest advertising companies are falling. wpp reported a slow start to 2018 and no growth on the year after a tough 2017. it is speeding up the strategy reset to cope with continued -- continued weak ad spending. tom: a morning must read for those of you, whatever your political outlook come whether you don't know whether to laugh or cry. let me explain this. "the president isn't hiring enough friends and family.

he does this was a light tongue placed somewhere in the vicinity of cheek. he has lined up was unreliable professionals. " then he lists a whole bunch of people, most of whom i don't know. that he says the first lady's florist will run the agriculture department. our kevin cirilli joins us. there's a real anti-professional tone to this administration. is that going to continue? reporter: good morning. yesterday the surprising report that the communications director hope hicks is going to be leaving the white house, i think that that is surprising a lot of folks in town.

she was very well respected inside the white house. she has been a gatekeeper of sorts to president trump's political and business universe, someone who really served as the hubei aberdeen, for those of you edin, for those of you familiar with the democrats. tom: do you see any change in president toward letting selected professionals in unless they have three or four stars upon the shoulders? reporter: i think president trump's supporters would argue there are folks there. obviously his detractors would say that they don't have the experience. chief of staff general john kelly is someone who was largely perceived as having the experience needed. in terms of who the president is surrounding himself with, i think that general kelly is still someone running the show. clearly there is a back-and-forth going on, but i

will leave it there. francine: talk to me about jared kushner. how much of the talk in washington is surrounding him? he also lost one of his spokespeople and there was an investigation not related to the mueller investigation, but they comesking deutsche bank to out with some transactions his family made. reporter: mr. kushner's communication director stepping down. jared kushner has not received security clearance. i think quite honestly that surprised a lot of people come of a public statement says it is not going to impact the work he is doing. it is interesting to note how slow the process has been to get people approved in the administration both at the senior level, which are kushner, -- with jared kushner, and the junior level. there's also ambassadorship that have not been filled as well. it is very different than

previous republican and democratic administrations. tom: i want to tease forward to the next half hour. we will dive in on trade discussions. michael mckee will join us. they are not going to be in the rose garden today, are they? reporter: i think we could have the situation where the president and the white house .re set to release the tariffs there's nothing on the schedule in terms of timing for the tariffs. releasing one of many gun proposal bills set to come out today. like i said, there's a ton of proposals that will be put forth. senator rubio just has most of the best just has one of them -- just has one of them. tom: john normand with us with jpmorgan.

how hard is it to make a dollar? when you put it together with the trade mr. surly is talking about, can you make a cogent call or is there a mystery to it? guest: i think it depends on the pair. betrayed index has been decoupling from interest rate differentials moses been a standard drive of the currency for decades, but if you think about what is happening in terms , irelative monetary policy think it is pretty easy to make a call on the yen and the euro that they will be higher by the end of the year. tom: you mean stronger? guest: yes. francine: how much stronger, john? guest: i think the euro goes into the high one 20's, not hugely different from now but higher than some would have expected. i think the yen to go up maybe

5% by year-end. tom: john normand with jpmorgan this morning. we are going to come back and look at trade in the next half hour. this is an exceptionally important interview coming up. i am sure he will have something to say about a ross navarro unilateral trade policy. stay with us. this is bloomberg. ♪

♪ "om: "bloomberg surveillance from new york and london. francine? francine: we are looking at wpp, having the worst stock slump since 1999. tom got a nice chart. out, but it is just a straight line down, down the most since 1999 after the chief executive flush the profit outlook and predicted a year of no growth. this had to do with millennials, but also just symptomatic of an industry undergoing its most germanic of people probably in decades -- dramatic upheaval probably in decades. we are joined by bloomberg's tech, columnist.

is this a concern about what markets are trying to do with the company, or is it difficult for all of these big advertising companies to get the revenue in? >> it is both. we've known for a while that advertising industry is basically headwinds. adamante very much been that these are cyclical and that the tide would turn eventually. the fact they have changed the martin -- the long-term margin outlook production suggests they are more structural, and this debate is the question, what is he doing to respond? it seems wpp is only just getting started. francine: exactly what are the changes?

is it that millennials shop differently or the way that advertising is structured? guest: it is to do with the digital shift, essentially. that is a return on marketing investment through things like apps and other digital products which can draw the line more tightly in a way that classic blanket advertising has been less able to do. perhaps they have been less quick to shift to that. tom: i see one massive rationalization here. and the nbc universal bombshell yesterday that they are just going to throw in the towel and cut back prime time television ads in america, would you please explain to fossils like me why young people like you just say we are not going to pay for it? that is the heart of the matter, right? guest: fundamentally yes. iam a big hypocrite because

am a journalist but i have very few media subscriptions. we all see the likes of amazon prime and video are pushing more ads into their service as a way of getting married more revenue on top of it, so it is not dead. tom: it is not dead, but come on, we are all using ad blockers. you can take it over to spotify and you are getting music delivered completely free come for a -- free, except token fee. pushing --s francine: who is benefiting from this? spend?millennials how will it change in the advertising world?

their must become is that thrive on it. is moving away from branded products and trying to introduce their own products. increasingly millennials are focusing on quality of the product and how it looks and appears rather than the brand. that is a huge shift which people are still trying to come to terms with. tom: you mentioned millennials, but come on. whether it isory, video or whatever, people don't want to pay for the product like they used to. mr. burke of comcast said the olympics were profitable, the super bowl are profitable. find those are just two events. where will the rest of the industry be in five years? guest: if i do the entity that question i probably wouldn't be sitting here. i think ultimately that is why they really have a too focused on cost -- they really have to focus on cost. a really have to shift to the margin element in the ability to

squeeze every last profit out of the revenue they do generate. tom: i would really like to dress like alex, coming more casual. francine: he just moved from san francisco. i will send a couple checkered shirts. john normand of jpmorgan. stay with us. we will talk a little more about treasuries and trends. be sure to pick up the latest issue of "bloomberg businessweek." this week we feature wells fargo. do they have a plan? this is bloomberg. ♪

♪ tom: francine lacqua in london, i'm tom keene in new york. here is taylor riggs. leftr: president trump

democratic lawmaker surprised and optimistic after a meeting on gun control. the president praised broader and tougher background checks. he rebuffed a republican proposal that would require all states to honor concealed weapon permits. a new report today on presidential son-in-law jared kushner's family business. receiveder company more than $500 million in loans from citigroup and apollo global management. i spokesman for kushner's lawyer says he is not played a role in the business since joining the white house. one of president trump longest-serving advisors is calling it quits. hickstions director hope will resign. it came a day after she testified in the committee invest getting russian interference in the election. in russia, vladimir putin has

also raised living standards. he has promised to cut the country's poverty level in half within six years. the russian president delivered his state of the nation address in moscow. base of everything is our human capital of russia and the well-being of citizens. this is where we have to achieve a major breakthrough and we have a foundation for that. we have good experience in grand scale social project and our economy has proved stability. a stable macroeconomic situation so we have opportunities for breakthrough. taylor: the speech was putin's first since he kicked off his campaign for the march 18 presidential election. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs, this is bloomberg. tom: thanks so much. .ohn norman with us of jpmorgan as we look at the equity markets

and the charts, john norman's research riddled with charts. is other technical analysts, you all use the same phrases. distribution, consolidation and , the 200 dayhrase moving average captured. bring up the chart here. this is great. down we go on the chart that is a little less clear. it touches the 200 day moving average. what do you mean by a moving average capturing the series? >> it on was became self-fulfilling as reports for the s&p 500. the port needs an area of buying pressure on the chart. the average is widely followed by investors and it was almost on point where that correction held. the 200 day moving average is initial support for the s&p 500. this could be -- funds may have

contributed to that. -- the realthis issue here is this is normal and we have forgotten what normal is. does your technical analysis volatility orew do you still go on the same run? katie: it is all about what indicators you get -- give more weight to in a different environment. last year it was all about momentum. year, it is probably more of a digestion year where we will get a bit more weight on pot oversold measures. tom: what she just said their francine is the number one mistake technical amateurs make when they become slaves to a certain model. when the facts change, katie stockton changes with her setup of analysis. francine: i know you wanted us

to pull some great charts which we made for you. the spike in volatility in the last three to four weeks change the way the market functions. orl algorithms take a bigger smaller place in the market the next 18 months? katie: volatility has shifted and i think we will -- it will stay with us and that makes it more challenging. it also makes it more challenging -- and -- h on the environment. investors may become more short-term and focus. taking advantage of the swings the market lends itself to and really being able to position and take advantage of those. francine: how has technical analysis changed over the next 10 to 15 years? there is so much political upheaval that even the trader on the floor has -- struggles to understand and price. what does it mean if there is a big event that freaks the market

out that is not on your technical levels? katie: the technicals never really drive the moves, but we are there to identify what is going on. we are listening to tapes and by doing so we can get a take away and understand where there may be opportunities. it is about listening to the market. over the past 15 years, the most dramatic changes how many more eyes there are on these technical tools. the huge double digits we have seen in the emerging markets. what is the call right now? john: emerging markets will be the best performer with fixed income and probably best performer within equities over the next year. relative performance is still good. we are going to see higher volatility. tom: let's go to the chart.

very simple here. what i love about this is it is always a symmetric. you have terrific rigor here. a little less rigorous on the support. how do you know when a breakout is a breakout? katie: it needs confirmation in price and time. i look for consecutive closes. in this case we are looking at a monthly bar chart. what is the breakout. tom: this is classic george kleinman. days, weeks, months, you need to days, two weeks or does months before you get a break. katie: we saw that followthrough and that continues for long-term momentum. it is not like last year. tom: i don't do momentum like katie stockton does momentum. do you have to treat momentum dynamics differently for

international markets than you do for domestic spx or dow multinationals? katie: not in this case. if you look at the correlations right now, if you look at benchmarks and emerging-market benchmarks, they all look similar. even crude oil is similar to the s&p 500. i think we can rely on the same tools. there may be environments where there are more -- there is more divergence. francine: talk to me about correlations. we used to have them and then they broke apart. maybe 2018 is when correlations come back. john: i think it's tens on the market and correlations. -- i think what's more important is understanding a macro policy environment causes markets to move. difference in 2018 versus previous years is you have more upside risk on

inflation. that inverts some typical correlations, particularly between fixed income and macro equities. are we back to correlation or cross-sections when treasuries hit 3, 3 .5? you saw aink if treasury at 3.5% it is probably because the fed is moving quickly to restrictive monetary policy. that means you will have a correlation where bond yields go up and risky markets go down. tom: surveillance audible. katie stockton and john norman, this is the be dxy -- this is bbdxy. what does that chart tell you about dollar weakness dollar strength? katie: you would expect dollar strength to break out of the moving averages and that moving

average crossover from the momentum perspective. you can see it is very short-term in nature. to trend is still lower. there is no breakout except over the moving averages. expect some resistance to come into play. tom: mr. norman, what do you think here? i don't know whether i motivated on double bottoms. should you be low on dollars versus currencies of countries whose central bank will not be tracking the fed? that to me means australia, new zealand goes down. i think there will be a lot of differentiation. tom: two important perspectives. katie stockton, thank you so much from fairfield strategy. with jpmorgan. coast-to-coast, worldwide,

radio london good morning. you are briefing with -- and bob moon. worldwide from london and new york, this is bloomberg. ♪

♪ taylor: let's get the bloomberg business flash. is trying to get investors to buy into its unusual listing strategy. the company is touting the way it uses data to help subscribers find music. spotify is skipping the initial ipo process. the opening public price of its shares will be determined by buy and sell orders. there are national security .oncerns for qualcom

the proposed deal has drawn the attention of a panel that reviews whether acquisitions could cause security issues. those people say the pentagon runs the panel -- wants the panel to review the deal. pay thein the u.s. will most for gasoline in three years. the auto club says prices may climb to an average $2.7 -- $2.70 a gallon. the reason, growing demand and higher oil prices. that is your bloomberg business flash. years ago i interviewed peter navarro at irvine. and theck to 2016 navarro essay for candidate trump before the election and what we may see today at the white house. the -- he said mr. trump will impose countervailing tariffs not just on china, but on any trade partner that cheats on a

trade deal. china has been waging an unfair trade war on the you looked undeclared trade war on the u.s. since joining the world trade organization in 20 -- 2001. for trump, steep tariffs are a strategic negotiating strategy. is that what we are going to see today from the president of the united states? forget multi-route desk multilateral, block, bilateral. >> according to our white house correspondent, the white house is going to announce blanket sanctions on imports of steel and aluminum from around the world. those are very big numbers. we are talking about $185 billion worth of tariffs that will be paste on desk placed on steel imports if you use the average over the last 10 years. that gets passed along. it will maybe help the u.s. steel producers some, but it will hurt the downstream producers a lot and that is what a lot of people are worried

about. all of the republicans oppose this. when you look at the itroeconomics of tariffs, does not work if there is leakages to other countries. the major message here is it's not u.s. china, but other nations are involved. michael: we have been putting sanctions on china for years. in 2016, president obama put shenzhen's desk sanctions on steel and imports dropped off. the problem is you say leakage. china is the one with the overcapacity and their steel is going all over the world. we are importing much more canadian. our biggest supplier, south korean, brazilian, mexican steel. china is depressing prices worldwide because they have so much overcapacity. the problem is how do you get china to cut down on capacity.

it would have to be a global coordinated effort and this will be a unilateral effort. francine: can any good combat of the tariffs desk, out of the terror --, out of the tariffs? tariffs?ut of the know what then't chinese will do but they have suggested they will retaliate. put some sanctions already on u.s. sorghum imports and they are threatened u.s. solely imports. you would not want to be a soybean farmer today in the u.s. because it looks like that's one of the areas they will go to. others are proposing sanctions to retaliate against the u.s., including the eu. you may be paying more for bourbon whiskey coming up soon

if the u.s. goes through with it. tom: really? francine: don't touch the bourbon. although i've been looking into this and one of the things with whiskey that has made in scotland. if brexit were to go harsh on the eu, they could have a special agreement with india. it is unclear where the whiskey prices go here. john normand, you put out a brilliant some asian -- summatu ion. in michael's conversation, what part of the market will react? john: it will probably affect every market because it is seen as new information. it is round five of u.s. actions against other countries that began last january against canada. then we had another follow-up.

today's reaction will be negative. thisd today, i think mainly a currency issue, not a stock market issue. i don't think opposing tariffs on a fraction of 1% of u.s. imports will affect the economy. francine: what if you don't know the reality that the retaliation on the china side? likely ofmake it more retaliation or less likely? john: i think it is more likely this escalates. for thebig priority administration, especially with tax reform having been inked. you being a new priority can only expect the number of enforcement actions to increase. i think it is a different discussion from saying you are 100% confident it will increase or have an impact on corporate , all the kinds of things you would need to move the macro markets. tom: time of day when we know

this will happen? michael: we do not know yet. jay powell is testifying today this -- and this at the new layer of questioning. tom: mike mckee, thank you so much as well. tv , it is really good. what you can do is come on over here, you can see us live even better and you can steal the andts from katie stockton you cannot only see the blocks, you can steal the chart and dazzle john normand with katie's work. this is bloomberg. ♪

♪ single best chart, let's do it. a chart that i showed 20 years ago or so. here it is again. it is a little busy. we will get this out. deficits. add the -- add the fiscal deficits to come.

jpmorgan publishing this morning a long note on twin deficits. we will does will we have twin deficits? it is guaranteed. the only question is how large will twin deficits be. fed rates aret going up, i'm not sure they're going up enough to plug the deficit. in 1985 when this was ancient news. will we get back to that level? john: i don't think you get to that level partly because the economy will provide demand on exports. to current account only goes 3% or 4%. i think this will get more worrisome when the u.s. is in a recession in the next couple of years. what kind of recession? is it a financial led recession or something that will be different to what we have seen?

john: my guess is it will be different because the source of leverage rotates from cycle to cycle so we no longer have the leverage and the banking sector, but we haven't in the corporate sector and potentially among the investor base as well. somethingg to be that's comparable to the global financial crisis, probably not. is it going to be a recession that is hard to exit from because of the lack of fiscal space and policy space on the monetary side? i think yes. francine: if it is more protracted, how important is it that the fed raises interest rates despite the movements on the markets as quickly as possible? john: i don't think the fed should be acting prematurely. i think because the u.s. is going to have so much momentum thanks to the twin fiscal easing's, you may have a final level of fed funds around 3.5,

4%. tom: one final question. you have been a jpmorgan way out front to subdue potential gdp. reaffirm that sustain 3% gdp is a tough thing to accomplish. the capital't think deepening that's going to happen as a consequent of tax reform will lead to much greater worker productivity. no one has a good model for forecasting productivity, but our base case is long-term growth doesn't deserve to be higher than 2%. tom: very good, john normand with jpmorgan. stay with bloomberg radio, bloomberg television. i know the president tweeting out. a lot more going on as well. foreign exchanges do this so jonathan normand can go back to

jpmorgan. dollar-yen 1.069. euro-yen 130. bitcoin really trading around the 10,000 level. that is pretty elegant as well. francine, safe travels as you go through this strait of gibraltar to rome. at the at better weather chrysler building in new york. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ alix: president trump said to

announce large tariffs on steel and aluminum imports. facing theay powell senate after taking stock of his hawkish outlook at the house. does he soften his message? the month where nothing works. traders say goodbye as global stocks and the most in two years. the best trade finished. david: welcome to bloomberg daybreak on march 1. it is march. thank goodness. those are the three traits that did well. hours on this first trading day of march. s&p futures grind lower in the red by about 12 points. it was the worst month for the dow and s&p in two years. the dow closed at its low for two days in a row. decidedly risk off day in the market where the