matt: good morning from london, i'm matt miller. manus: this is "bloomberg daybreak: europe." these are today's top stories. stocks in asia are mixed as volatility surges and a selloff shows no sign of letting up in the u.s.. softbank moves closer to buying a stake in swiss three. asy could reenter as much $39 billion. nod,d saudi arabia gets a rinse of dollars of conditional -- additional investment can outflow into the country.

manus: a warm welcome to "bloomberg daybreak: europe." holding the line against volatility is the thing for the market. this is putting together volatility in the s&p de niro stoxx 50 and the msci. can see it is bleeding, it's creeping higher. as long as the s&p 500 holds that line, the 200 day moving average, that's when you want to brace yourself. this volatility can turn particularly ugly. like,lmost recession breaking the 2600 line to bleed the volatility back to pretty horrendous times. back in 2001 and you had the dot-com bubble. so that's 2001, when the u.s.

volatility is erupting and others cometo the that's when you want to be concerned, according to the charts i read at the moment. at the moment the fed perhaps volatility. we are all over the globe today, all over the region. don mckenzie is in beijing to talk trade with the u.s. ambassador. anne-marie is in jerusalem, what an amazing backdrop. an interview to come with the bank of israel governor. this is a treat for me. matt: it's wonderful to be here with you. you are in dubai so we are truly global. that were going to talk to the u.s. ambassador to china. he will join us live from beijing at half past six london time. right now want to get the first word news with debra mao from hong kong.

thanks, matt. in the u.k., detectives investigating the poisoning of a former russians by and his daughter believe they first came into contact with the nerve agent at their home. bint jbeil to police that specialist identify the highest concentration of the highly toxic substance on their front door. who weres as friends -- prince of the couple who are in a coma and hospital said they should be allowed to die. an upcoming summit between kim korean and the south president. the talks could set the stage for a similar meeting between kim and u.s. president donald trump. meanwhile one newspaper has reported that a summit between japanese may take place as soon as early june.

u.s. president donald trump has said he will replace veteran affairs secretary david shulkin with rear admiral romney johnson. it follows the departure this month of gary cohn. national security adviser h.r. mcmaster, and secretary of state rex tillerson. meanwhile saudi arabia has one secondary emerging market status from next march. it's the first time the kingdom has secured classification from a major index compiler. the ceo spoke to bloomberg in his first interview after the announcement. this is just a recognition by the international investment over the reforms that the saudi stock exchange has months tohe past 18 address the requirements of

opening up the saudi stock exchange and pursuing a more attractive platform for international investors. >> the back of israel's governor has warned that the possibility of a full-blown trade war between the u.s. and china is worrisome for global economies. he made a comment during an exclusive interview with bloomberg. i think the potential developments, reducing free trade and sort of making higher barriers to trade, i think this is something that should worry everybody. i think that if we sort of go back from free trade, this is bad news for the global economy smalld news for economies.

least 68ezuela, at people have died after a fire erupted during a riot at a jail in the northern city of valencia. gunfire was reported as the riot again, although the source and the reasons were unclear. the fire erected during that unrest. the facility, which is attached to a police station, had a capacity of about 60 detainees, although prison overcrowding is country'son in the facilities. today marks exactly one year until britney scheduled to leave the european union. u.k. promised her theresa may the day touring the country to gain the boot of the nation. but you may not like what cheers. a bloomberg investigation that included 133 interviews of britons, found that divisions have only hardened since it 2015 referendum. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top .

manus: thank you very much. stocks in asia were mixed, volatility giving markets reason to pause and reflect. u.s. markets heather were stay in three years. amazon is the groups biggest loser, one detail to note, the -- the chart u.s. number on that is 2350. let's bring in our guest host this morning, alongside matt miller. great to get your reflective miss. i started to show with a bit of a punch, the last time this volatility led, it brings me back in time. 2008 or 2001. we have bleeding volatility. how concerned are you?

>> i'm worried, because let's not forget this year started with the great consensus trade off.were building global growth is still strong, financial conditions have eased universally. we have adjusted interest-rate debut -- everywhere across the markets. that brings us closer to the peak of the crisis, long gone now. what has gone wrong with global finance today? it looks like there are three things at least, the unsettled geopolitical environment, the lingering risk about a retrenchment of international trade and were still at the beginning of the central bank normalization trade. that means bond yields have higher to go. the era of easy money is coming

to an end. that is a regime change for the market and they are finding it difficult to digest that. yields haveid bond hired to go. are you looking at the 10 year here? level bridge to the downside that has held for two days in a row. do you think we will see that reversed? >> there are more than one factor. the goal is to hedge the equity volatility that manus was talking about. one way to do that is to try to go with long duration. have risend yields by more than 75 basis points in the last three quarters september last year we were 2% when the economy was rising at 3% gdp, running a close to full capacity for the labor market. the still halfway through tightening cycle. i think if the fed does continue

, by the end of this year, while investors want to be holding a when you canor 3% find security in yields elsewhere? manus: it's all about the short end of the curve. have gold, yen, swiss franc. the rogue credentials have strengthened through this particularly tough time. this is the spread of swiss payments for the euro against the u.s.. they are narrowing. this is a great debate, even a tiny movement in terms of where central-bank put their money as reserves has very significant density for a currency. mind, is the euro now a teenager in terms of payment status globally, or is it turning into a young adult? into i think it is turning

a young adult. you always have a colorful way to explain the markets at this time of the morning. there are two stories here in your question. thisf them is how long is going to last? the question is, are trade frictions really going to disappear and his geopolitical risk going to diminish? is the relationship between global growth and eastern central-bank money going to get better, or have we reached the peak of the cycle? if you take the view that we are at the time where the great globalization trend is at the beginning of its in, where political alliances, global supply chains, these are changing. the euro of the last decade is over. whatever comes out of the china u.s. meeting, whatever comes out

of the next fomc meeting over the next quarter, we are in a new regime environment. little senses made when we look at the traditional textbook ways to think about currents -- currency rates. it tells us that the correlation here is about the risk cycle. the weak dollar in recent years has been linked with easing global financial conditions and the rising asset risk environment. it's become disrupted because the return of volatility. that means the euro is stronger as result. up for thee this u.s. right now but you can see that financial conditions are all of a sudden really starting to get weaker and weaker after a different at the beginning of

the year and a little bit of a recovery in february and march. i want to quickly break some headlines coming across the terminal on a company and related to this discussion, but synnex so is cutting its 2018 exo says it isd reviewing its cost base but cutting its guidance going forward for earnings. that doesn't typically mean it will be a good day trading for that stock. the's get back to volatility and the safe haven discussion that manus kicked off. i look at the end and wonder why it's not stronger against the u.s. dollar, especially. why are investors going therefore safe haven rather than to u.s. treasury's? lena: that's a very good question. treasuries have the benefit of liquidity. in a week like this week, where it is clear that the markets are struggling come even know we are

probably having at the margins and improvement somewhat in the geopolitical picture in the u.s.-china dialogue, that ofgests the group causes market volatility, it's probably accommodation of inflated liquidity and market conditions. that will pull in haven seeking investors. with respect to the yen, there's that geopolitical premium just mentioned. one of the key stories of the clearly what us the status quo is in terms of the power balance. the big price for the u.s. is clearly there for the taking if the u.s. was prepared to ease on

trade aggression toward china and get in a more constructive dialogue. matt: that would be a good deal. lena: there's a familiar pattern , thecalation of rhetoric escalation of volatility. that we have the four weeks before the may 1 deadline whereby the the level of political choreography tells the markets there is some constructive discussions happening. manus: this one will rattle your brain at this time of the morning, but i will give it a go. justtrategy is dead, it's ill. this is the deutsche bank carry trade your today, down nearly 1%. is it dead, ill, or does it need resuscitation? if you did that trade come he absolutely got smacked.

where would you use the carry trade? lena: i don't think you would want to be using the yen per carry trade right now. there are major things driving volatility, which is a key antidote to the viability of any carry trade. the key question is, can markets really live with the uncertainty , where global political networks and supply chains and cross-border central-bank remains intertwined, but they are no longer driven by political objectives. this is really where the geopolitical risk premium is going to stay beyond the next meeting, beyond the next quarter. that means the yen will continue to remain supported, even if we are in a strong global growth environment. matt: we have a lot more to talk about and we will hold you for a

little longer. chief economist. brexit town down, today marks exactly a year until the u.k. is scheduled to leave the e.u.. we are live in westminster. in terry branstad, the u.s. ambassador to china joins us live from beijing on a day we are expecting to hear which chinese products america is going to slap tariffs on. this is bloomberg. ♪

matt: it's 6:20 in the morning here in london, 1:20 in the afternoon in zynga or. tech stocks took another died yesterday in the u.s., and that move carried through in asia. we didn't see the kind of blood on the screen in asia are really in the broader u.s. indexes that we did the day before. not quite as bad as it was.

today, the year from u.k. is due to leave the e.u.. before that, prime minister theresa may will be faced with fierce battles at home and itsad to define relationship with a block. how is the u.k. economy doing right now? has brexit been the economic catastrophe that everyone was predicting? good morning, matt and manus. catastrophe, not really, but it certainly has had an impact. initially the u.k. economy shrugged off brexit. the boe was criticized for its overly gloomy outlook but now the effects of brexit are certainly being seen, first of all with rising inflation on a weakening pound. growth has slowed as well. what we've seen is inflation slowing a little bit.

it's still well above the target of 2.7%. wages have been slowly picking up but at the same time, the bank of england has been market thatd started pricing in tighter monetary policy. it's still an open question what impact that will have on the economy. it could be anything but a smooth brexit. good morning to you. even though the u.k. and e.u. have agreed on a transition deal, there's a lot of uncertainty in terms of how businesses will deal with this. we've seen some shift already from the car industry. with heard real movement put down by the banks. there are huge amounts of uncertainty for some key tax generating areas. nejra: certainly the biggest banks are not waiting around to see what the e.u. relationship with the u.k. is going to look like.

theirave started making relocation plans even though the bank of england yesterday said theyransition deal recently agreed would be business as usual for banks, a lot of them have already started making and acting on their contingent plants. branford so far looks to be one of the biggest beneficiaries in the e.u. from possible relocation of jobs. the biggest banking regulators saying a 10,000 british banking jobs could be at risk on day one of brexit. it's not just the banking industry. we've seen nonfood retailers

and some food retailer saying there could be the risk of a food crisis, unprecedented in the u.k. if we have issues with the trading relationship between the u.k. and the e.u.. you have aerospace manufacturer showing concerns over any kind of delays due to customs rules. you've heard from international broadcasters and were going into a long -- long weekend. were all thinking what we might eat, even the cost of eating out can go up as a result of brexit. the hard work is only just beginning for theresa may. she still has to work out the issue of the irish border and she's fighting off some talk of a potential second referendum as well. we are not intractable, we're just looking for a good deal. lena.bring in i have a lovely chart to share. i'm not sure how resilient consumer confidence has been. it's not the trauma it suffered that it was said it would be. we're at the halfway mark. are we halfway through the misery? are we on the foot heels of a good brexit? lena: there has been so much ambiguity about what brexit actually will mean eventually that consumers have been pragmatic. it's quite visible from the

supply side of the story that the consumer sector has been the worst hit so far. retailers have really struggle, particularly small and medium-sized companies across the country with the rise of imports due to sterling's decline and the pressure that creates on companies. that means investment is being governors are closing down in that will openly translate into creeping up higher in consumer prices but also reduce choices in a less diversified system in terms of future supply chains. worried about my hot cross buns over the easter weekend, but two years ahead when the transition is coming to an end, i think we will see the kind of behavior that will be commensurate to regime change. let's not forget this transition, wall very much a

short-term policy in terms of business confidence, is ultimately just delaying the inevitable. as time goes by, the in game result here is going to have to come home. financial services that have to rely on long-term investment plans are already making their decisions. matt: what about investors? we won't really understand how the negotiations have gone until they are finally decided. these two years, what do you do with your money? lena: this is the beauty about the u.k. market. it's a small economy with a large -- it's home of the biggest european financial sector. that tells us the markets should be more democratic. there's no politics when you have this kind of interplay. -- that tells us

that the power of the equity market is here to stay. manus: i think we hear -- matt: lena will stay with us. this is bloomberg. ♪ retail.

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matt: it's 6:30 in the morning here in london, 2:30 in the afternoon in tokyo. there you see the u.s. dollar and japanese yen, a little bit of dollar weakness. whyt of people are asking the yen is not stronger during these turbulent times in markets. over to dani burger right now for a check of what is going on. >> we have a bit of a big picture so far here this morning. the strongest market we're looking at is china, up about .6%. otherwise, not much of a clear direction. bit, hong kong

of a bit, but essentially unchanged. remember where paying to a holiday shortened week for a lot of markets. we might get some strange moves, not too much of a clear picture. japan perhaps going down as the yen is showing somewhere movement. more what i mean by that. here i have the yen versus the dollar for you. the nbc weakening over the past three days. you can see over here with this red arrow. this is unusual because of the pain we've seen in equities. typically when you see equities decline because the yen is a safe haven, you will see this strengthen. instead we see it breaking through the level yesterday, coming back of it this morning but still this is a sign some strategists are saying this is mostly a portfolio rebound thing. i have a chart on energy and oil

prices, diverging in a strange way this past month. analysts say there's room for energy stocks to pick up here. this comes after wti crude dropped yesterday all reports that u.s. stockpiles were indeed higher than expected. however, this gap may seem close, something to keep an eye on. manus: thank you very much for the roundup. our guest host is the chief economist. , goingook at the week into a short week in europe as well as here in the middle east. what was more important for you, was at the words of hope from mnuchin or the visit of kim jong-un to china, getting ready for talks? never what i thought we would see this. or is it trade exemptions? it's a trifecta of risk on an risk off. what is it look like for you? there is the imagery from the great hall of china.

right, there potential for the escalation of tensions between the u.s. and china, particularly through the rhetoric we've seen this week from the u.s. and of course visit to china tells the market that the risk can now be scaled down. i think that means there's a potential for de-escalation in the short-term, which is it is back at levels that we saw at the beginning of the month. that's extent to which yen weakness is being justified at the moment. but when we look at the potential for a trade resolution here, let's not forget this is a very high level dialogue and the interests are very deeply embedded on both sides.

particularly the constituency of the white house where policy is now being advised by a number of china hulks, bolton and the others. that suggests the potential for resolution is weak. matt: it looked like donald trump sort of aggressive trade talk was a negotiating tactic that was working, but now i think markets may be worried he has poked that they are a little too much. it started with the steel tariffs, then came the announcement of tariffs on other goods and now the announcement that there may be a new law stopping the chinese from making takeovers in certain industries. is it possible that he goes too far and pushes xi and kim jong-un poster together than they already were? right, the white house is good at berating the

terms of the discussion by being proactive in calling for china to face up to this or open up domestic markets. it seems like those aggressive tactics are working because there is a dialogue so there is a negotiation taking place. for the markets, will this have an impact on earnings expectations? probably unlikely. i suppose the economic risks associated with this strategy are probably less and that gives it longevity. in other words, china will have to step up to the plate because the intent in turn of market shock in the short-term at least appears to be subdued. that said, i think it's clear from the north korea visit to china this week that this is a three dimensional chess game, and the big prize for the

administration ahead of the very muchections depends on china's brokering of that piece. that will require the u.s. to step back from where it is take a more conciliatory tone with china. manus: we will see what that actually comes out as terms of conciliation are stepping back. the one other thing that came across, the libor ois spread is said to be the focus of , but itly deutsche bank is blowing up, and it is. i want to get your opinion. the trifecta of issues i just identified for you i -- as to the story. is there declining pie of liquidity, and there's a dramatic increase of supply, why

is libor ois blowing out, and when this happened before, is nowhere near the magnitude of what happened before, but when it started to erupt before, people got very, very worried. lena: think this is actually the narrate here that will the market being for the second half of 2018. we're clearly at a turning point of a mega financial cycle, which started a decade ago. that it was not just a credit event, it was the beginning of a new regime of monetary dominus which inflated asset prices across the world. we're at the beginning of the end of that story, the beginning of the indices he money. it's no surprise to me that the

rise of libor to the highest since 2009 is coinciding with the rise of mention of a bear market. in other words we're at a time, theibor rises, that means discounted future earnings will be weaker even if growth is as strong as it was before. even if the economic news doesn't change as the margins. it's clear the excess growth recent enjoyed in quarters is not sustainable. discountedng at earnings and production going a biggerhe possibly risk cycle, and that's what libor is telling us. lena. thank you so much,

that's get to beijing. tom mackenzie is standing by with a very special guest who can help with the problems around the trade conversation. tom, good morning. >> thank you very much. i'm joined by the u.s. ambassador to china, terry branstad. thank you for your time. maybe we can just kick off by asking about the status of talks between china and the u.s. around these trade sanctions. where are we at with these talks, and who is leading them? the big concern after talking and talking for decades, the trade deficit has gotten worse and worse. representative has put together a 200 page report to document the unfairness and things like , wherectual property

american companies are required to have a joint venture and turn over their technology to chinese companies, and where restrictions have prevented us in the area of insurance and financial services and many other areas from doing business here. you can't do facebook here in china. tariff on american automobiles and only a 2.5% on chinese automobiles. these are the kind of issues that i think the administration feels needs to be corrected so the american workers get a fair shake. >> specifically there are talks ongoing now between the two sides, are they happening every day? >> that's really something you would have to ask robert lighthizer. i'm the ambassador here in china ini'm dealing with things

china in helping american companies here. and all those kind of things. dealing with the chinese on issues that we have, but the administration has people that are responsible for negotiations and certainly, they just recently reached a new free trade agreement with north korea. i know he has also been working on improving the north american free trade agreement. and yet the 301 actions are because china has promised and promised and promised to improve the trade situation and to eliminate some of these unfair nontrade barriers, and hasn't happened. that's the reason why were moving forward with the 301. >> that's a trade agreement with south korea. the chinese officials we speak to point to a lack of clarity. they say they are still confused about what the demands are from

the u.s. side. maybe you can add clarity. whether asked what of the top three demands from the u.s. side on china at this point? >> is a 200 page document that has been put together by mr. light hazard that spells out the unfairness that it should be corrected -- by robert lighthizer. there have been discussions through many administrations on these issues. funding is pretty clear. i've talked about some of them, certainly the lack of enforcement of intellectual property rights. the fact that they don't have transparency. oecd rates china as the least transparent of all of the g20 countries. these are the kind of things that need to change. he asked about oil and gas. with that possibly that might be in the mix. you pressuring the chinese to import more oil and gas? what amounts and timeframe are

we looking at? lena: president trump visited for, there were mou's sign major deals on liquid natural that from alaska and from other places as well. they a big pollution problem here. we can help improve the air quality for the chinese through that. another area is ethanol. in tvrica we eliminated years ago because it pollutes the groundwater, and there are still using it here in china. is that they want to be 10% ethanol by the year 2020. those are just a couple of examples where we can help improve the only of life and air polity and groundwater polity in china at the same time reducing the trade deficit.

these of the kind of things to me that make a lot of sense. next there are reports that soybeans are being discussed to ensure they are included in chinese retaliatory measures. are there talks about soybeans going on? lena: i can terry that china -- terry: i can tell you that china imports more soybeans than the rest of the world. we supply a safe, reliable source of food, whether soybeans, pork, beef. it took us 14 years to get the the market reopened. we still haven't reopened for eggs and chickens. there is a lot that needs to be done but we need to continue to aggressively work to convince the chinese that some of these barriers need to go down, that we need to have more fairness and reciprocity in the whole trade relationship. >> what are the economic costs should china put measures in place to reduce its import of

soybeans from states like iowa? terry: he doesn't make sense, and it would hurt to chinese consumers. the have a growing middle class. they need more protein, and a great source of protein, whether you feed or poor, and the soybeans to chickens and pigs and things like that. it just doesn't make sense, so hopefully the chinese will realize that we need to work together on these issues and retaliation is not the answer, but instead, collaboration and cooperation to address the issues that have been around for a long time. beenple, boeing, have they in contact to address their concerns to you? terry: yes, i've been working with all these american comedies and they do significant business here. we also have a number of other companies that feel they cannot do business here because of some of the barriers.

we try to represent all of american businesses but were also trying to represent american workers who feel that the chinese have seen great improvements of their standard of living over the last couple of decades and the american workers have not. reducing regulations and taxes will help, but we also need improvement and a more balanced trade situation. >> are there any concerns that im andeting between k president xi will weaken the case for maximum pressure, that the chinese will start to reduce the pressure on north korea? is that a concern? terry: i've seen china work with the united states and work through the united nations to put all these sanctions in place. i think the president strong stand, making the possibility of me -- military action and strengthening the sanctions is really convinced north korea that the direction they been

going doesn't make a lot of sense. they been going that way for decades. i think now we are starting to see at least an interest and willingness to meet with president trump, to meet with south korea. the fact that they came here and of course president trump and president xi have a good relationship. president trump has been informed about the discussions they had. i think china's enforcement of the sanctions is one of the reasons we've got to where we are. we need to keep the pressure on with sanctions because that is what has got us to where we are. >> have you been assured buyer -- by your chinese counterparts -- counterparts, had they assured you they will continue to put pressure on north korea? informedinese official they are enforcing the sanctions. been to the border and in

both cases i talked to local chinese officials who informed me all the things they are doing to enforce the sanctions and the impact it's having in north korea. i think that is the reason why we have seen a change of attitude on the part of kim jong-un. i'm hopeful that we will see some progress. >> ambassador, thank you very indeed. your time u.s. ambassador terry branstad giving his thoughts on the trade sanctions and the recent meeting kimeen president xi and here this week. .att: tom mackenzie there quickly breaking news on something very close to that discussion. south korea's moon and north korea's kim will hold a summit on april 27. kim was just in china, as they

were discussing. yesterday we heard that president xi sent a representative south korea today. now we know that the south and the north will hold a summit on april 27. we knew they were planning it, now we know the actual date. that will be all ahead of kim's plan meeting with u.s. president donald trump bank of israel's governor has warned the government's policy of spending more and taxing less could backfire. came in an annual report that true and usually harsh response from the finance ministry. toe-marie spoke exclusively her and started by asking about the exchange rate with the euro. >> the trade is quite substantial. we look at our currency, the basket of currencies that represent their way in our trade

with the world. that's how we view the relative strength of our currency. >> begin of trade, there's a lot of talk internationally but tensions escalating to a trade war. reports are read recently said the u.s. could exempt itself from high customs on aluminum and steel. duties tariffs worry you -- do these tariffs worry you? think the potential development in reducing free trade and certain of making higher barriers to trade, this is something that should worry everybody. i think that if we sort of go back from free trade, this is bad news for the global economy and certainly bad news for other

economies such as israel because i think we all benefit from free trade. certainly israel has benefited a lot from free trade. >> are you think this was a mistake for the u.s. government? the actionsudging by other governments, but i think globally, free trade has served the global economy and all economies well and i hope we continue in that direction. that you feel like israel is pretty insulated with these tariffs? >> what is heaven so far has relatively a small effect generally, but i think again, it's more the threat of trade that a war on is a threat for the global economy in israel as well. manus: the reality of tariffs

there put forward by the bank of israel governor. moving elsewhere in the middle east, saudi arabia has been added to the emerging-market indices. it could lead to $5 billion -- the ceo has welcomed the decision. he spoke to bloomberg's betty liu. >> this is just a recognition by the international investment reforms the saudi stock exchange has taken in the past 18 months. to address the requirements of opening up the saudi stock exchange to pursue a more attractive platform for international investors.

there you confident that msci will deliver a similar outcome in june? it seems like the momentum is behind you now. what are you doing to make that a reality? with ftrk very closely se and msci as well as international investors to achieve the requirements. there very optimistic about positive reaction of the international investors. we have been very closely in andact with msci international investors to address any gaps that saudi market has had in the past and we believe we are in a very strong state as we speak today. we are hoping for another milestone to achieve next june. manus: that was the ceo of the

saudi stock exchange. ,till with us is my co-anchor he's on the ground in riyadh. good to see you this morning. the flavor in terms of the decision, have you seen this before? do you think it is a different playbook for saudi? yousef: this is an important step for the kingdom as the ceo of the stock is change made clear. the emerging-market index will be affected march 2019 and joins the likes of china and russia. off the back of what has been very aggressive capital markets reform. in terms of what additional momentum the kingdom can have around it, it will be a question trying to get further on with the advance emerging markets and in the conversation we had, a couple of hours ago, in terms of

what a saudi aramco deal would do to disrupt things. that crunched the numbers and they say the weighting shift from 2.7% to 4.6%. interesting, they are assuming the valuation of 100 billion dollars. maybe they know something we don't. but the playbook as you pointed , intends to be by rumors anticipation, the market has been rallying. the saudi stock exchanges up 10% so far this year but has been under pressure. some of the blue chips that are likely to benefit from inclusion. the second part of this is the -- msci conversation in june. ultimately more ipos, it could yield over $100 billion a influence over the next three or four years. that's the feedback were getting from the investors on the ground. .att: thanks for that

na, how should investors feel about saudi arabia right now? of mayhand they claim to reforms. they claim to of taking care of corruption issues. on the other hand, they did it by imprisoning a number of billionaires in a way that was so opaque you cannot be sure it was a local procedure. lena: what we do know is the market news, and that is the inclusion of the biggest stock market in the region and a major index. increasedects participation, it's a great positive for global markets. the arrival of private capital from abroad will inevitably provide the kind of capitalist development that we've seen before in asia, latin america, and parts of africa.

it's a very exciting story. matt: very positive. .hanks very much, lena 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.

manus: good morning. i am manus cranny. matt: these are today's top stories. asia are mixedn as the selloff in tech shares shows no signs of letting up in the u.s. matt: softbank moves closer to ri that stake in swiss would value the insurer at three $9 billion. manus: the kingdom is added to the emerging markets list. billions of dollars of additional investment could now flow into the country.

a very warm welcome to "bloomberg daybreak: europe." we are global. equity markets are pausing. it is a train wreck in tech that is for sure. the question for the vix, that inthe precursor, bleeding the u.s., the vix finished the day at the bottom of the screen at 22.87. is that of risk indicator? it is per meeting across the european complex. the dax futures are up by 15 pips. london, we are counting down a year in theory until we leave the eu. what would that look like? volatility in the u.s. the last

few times we saw this level was a precursor to 2008 at a precursor to lehmans and the dot-com bubble. you're seeing a temperate mood in the equity markets. driving be important the bond market. let's have a look. miller has new shirts. matt miller has the spending numbers. expected to rise by .2 of 1%. let's talk about the bond markets. futures are unchanged in the u.s., we are that are often the european complex. treasury auction, seven your paper is the weakest demand in two years. the horses are frightened. the short end, why would you go all the way up the curve when you could get the same recompense at the short end of the care of and get yourself a little bit of return? deutsche bank are warning, they

were not talking about [indiscernible] ois spread is something that is a big topic of conversation in the market. how is your shirts, matt miller? matt: no comment on the shirts but interesting that the story on deutsche bank says they were talking about mainly the ois libor spread. i am guessing the sea suite was part of the conversation. take a look at my risk radar. index. the fang it is the 10 of the biggest tech companies in the u.s. asterday it fell 2.4%, not that is the 5% and change drop we saw the day before but this blood that continues to flow out of tech stocks. this is the yen, interesting to see a little bit of u.s. dollar weakness but not too much. treasuriesgoing into

, not so much in the end. one of six .50. why isn't the yen stronger amid the volatility? we do see investors buying the 10 year my holding the yield a low 2.8% so yesterday we fell below 2.8% or the day before in the u.s., for the first time since 2018. we are holding at that level and the question is does the 10 year yield bounce back up as a lot of people have speculated. analyst saying there is no reason for the yield to stay this low for investors. you have some breaking news. manus: we're talking about doing sharen and issuance. this is mr. spencer's company and you have the cme and the next group have come to an agreement.

that is the bottom line. you have shareholders are entitled to 500 pence or five pounds and new shares. agreed they have ought to be in title -- entitled to a final dividend. this was speculative in the market but we have cme group in cash. this is all everything that happens after the trade. this is about the technology. and this is consolidation. a red headline on the bloomberg. deborah: the leaders of north and south korea have agreed to meet face-to-face on april 27. today's announcement comes after officials from the countries held talks on their heavily

militarized border. kim jong-unetween and president moon could set the stage for similar meeting between kim and u.s. president donald trump. the asahi newspaper reported take place asmay early as june. investigationhe of a former russian spy, the metropolitan police said specialists have identified that highest concentration of the toxic substance on their front door. that comes as friends of the two who are in a coma in the hospital said they should be allowed to die. u.s. president donald trump has said he will replace veterans affairs secretary david shulkin with rear admiral ronnie jackson. the presidential physician. of outing comes amid a wave

resignations and dismissals in the senior ranks following the departures of gary cohn. h.r. mcmaster, and secretary of state rex tillerson. saudi arabia has one secondary emergency -- emerging market status. it is the first time they have secured classification from a major index compiler. >> this is a recognition by the international investment community for the reforms that the saudi stock exchange has taken in the past 18 months to ofress the requirements opening the saudi stock exchange and pursue a more attractive platform for international investors.

>> the bank of israel's governor has warned that the possibility of a full-blown trade war between the u.s. and china is worrisome for global economies. he made the comments during an exclusive interview with bloomberg. >> attention development seen reducing the free trade and making higher barriers to trade. this is something that should worry everybody. we go back from free trade, this is bad news for the global smally and bad news for open economies. >> 68 people have died in venezuela after a fire erected during a riot at a jail in the north and city of valencia. gunfire was reported as the right began although the source and the reasons were not clear. the fire erected during that

unrest. which is attached to a police station had a capacity of 60 detainees although there's an overcrowding is not uncommon in the country's detention facilities. untilmarks one year britain is scheduled to leave the european union. theresa mayd are will spend the day touring the country to gauge the mood of the nation. she may not like what she hears area a bloomberg investigation that included 133 interviews found divisions have only hardened since the 2016 referendum. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. it can find more stories on the bloomberg at top . : i will pick it up from there. that is what the cma are buying,

this is what they are telling us. will joinl spencer the board. there is adjusted cash flow immediately. be $200 million worth of synergies to come from the deal. giving you the five pounds as the top value. that is the equivalent of 3.9 billion pounds and you -- it will be a close in the second half of 2018. $200 million of synergy so from fx broking and swaps broking to technology, he built to massive empires. ast: stocks are mixed heightened volatility has given markets reason to pause. it u.s. tech stocks are not mixed, sliding down again after their worst days in three years with amazon replacing facebook as the group's biggest loser. is the negative trade sentiment still weighing on equities or

are investors starting to see any light at the end of the tunnel? joining us now is the chief , thanks forfficer spending time with us. what do you make of this shakeout, the momentum stocks which had been the sure bet last year just got crushed here. james: we are continuing to see substantial falling technology shares and that is having an impact on the broader market. we are seeing the vix in territory we did not see it, almost through the whole of 2017. during 2017ome calm we are seeing escalated volatility in 2018. that is going to unnerve investors not just in the technology space but also beyond that. the key thing is what the applications are for companies. does this mean companies are finding it more difficult to trade and the simple answer outside the technology space is no. companies are trading well.

manus: good morning. you mentioned volatility and that is the frame. it goes back to the debt crisis of 2008, it takes you all the way back. 2011, the late 1990's. ofare not at some kind amazingly high level in volatility. thisne thing that was said morning's volatility cannot stay up here but it is starting to look like a recession level volatility. that is a very aggressive call. would you agree or disagree that we are that close to turning over in the markets in the u.s. to recession? chris: you're right. we are not in a position where the vix is telling us that there is sustained volatility in global markets.

we are nowhere near where we were in 1987 or 2008. we are seeing more elevated levels that we saw last year. it is an indicator of a recession? we are looking at the spread between treasury two years and 10 years where the spread between the two has declined substantially. that seems to be an indicator of potential future trouble in the u.s. economy. as i was saying, what we are saying is very strong performance from u.s. companies. they were helped by the tax reforms at the end of last year. we have had a very extended cycle in the u.s. economy. at some stage that is going to tail off. the comments i am reading is we should expect to see some rolling over of the u.s. economy in the end of 2018 or the beginning of 2019 and that is what we have to keep an eye on. the: what do you think of

different valuations we are seeing on markets? they have all come down substantially but if you take a look at this chart, 585, i have it right here. you can see u.s. valuations on the s&p 500 come down from 20 to 16. in blue you see europe down to 14 in red, japan down to 13. is this a buying opportunity? chris: if you were to put the u.k. up there as well, the u.k. , managers areing saying that they are rotating some of their ideas out of u.s. equities into european equities, japanese equities, and u.k. equities. they are seeing more value there. it is a case-by-case basis where ratings and -- in the markets come down and profit rising substantially. ityou look at the forward p

is lower. there are more attractive .pportunities for managers who may have been holding cash in reserve fund markets dip as we see during the end of generate, beginning of february and a bit in march, that is an opportunity to buy shares. mentioned the japanese situation, politics is an play as well as debt. one of our clients sent me this. go blue investors have liquidated japanese stocks must selling $50 billion worth of japanese stocks at a level that we are seeing two years ago in march 2016. in termseing a shift of japan. if you think of tech trade and politics, it seems it is boiling up there. client who said that in. what do you reckon on that? chris: i was talking to an experienced manager about this

and he was saying that he gets incredibly frustrated when he sees companies in japan performing really well, the economy is in better shape that has been in for some time. japan has got despite the recent political uncertainty, it has more political stability than a lot of other countries in the world and yet the moment there is any alarm in global markets, money flows out of japan. it seems anomalous to what the underlying data should be telling us. i do find it surprising that money is coming out of japan and through moreo stability and markets the money will return. japan has always been used as a way of global investors adapting accommodateflows to different situations they find themselves in. manus: we have a lot more to get through. the chief investment officer at

st. james place. at john cryan's time up deutsche bank? what did they talk about at the dinner in new york? the ceo says he is committed to serving the bank as germany's largest lender considers more cuts. we are live in frankfurt with matt. matt: we will hear an exclusive interview with the euronext ceo and you are looking now at a live shot of jerusalem. as we interview and bring you the interview of the israel central bank governor. this is bloomberg. ♪

manus: it has gone 10:20 a.m. in dubai, it has just gone 820 a.m. in frankfurt where the deutsche bank ceo john cryan said he is

absolutely committed, he continued -- to continue to serve the company. rumors circulated that he may be replaced. the bank is conducting a fresh review of its trading business. the lender to profitability. restarting deutsche bank. we have our german banks reporter. a great deal of her verification before we got the statement in terms of commitment from cryan. too little too late? this is pretty late area came two days after the rumors exploded into the open that the bank is looking for a replacement for him. that is a long time, a lot of for merson speculation. more importantly is the fact it came for him himself. he has to write his own defense while the chairman of the board who is in charge of replacing

cryan remained silent and has been ever since those rumors have surfaced. matt: is cryan looking to cut reply to these rumors? i do not think it is a reply. it is something cryan is doing to restore profitability. he is constantly looking at the a wide-ranging review of the investment bank. they have realized they have lost so much market share and it would be so expensive to rebuild it in all areas that they need to focus on a few and forget about the others. it is not a reply. the question is now that he is damaged, he is a lame duck, can this review go on or do they wait for a new ceo before the review can come to a conclusion?

matt: thanks her much, steven arons. -- very much, steven arons. manus: the other story we are ceo spokethe euronext to bloomberg and the completed [indiscernible] the acquisition is a fundamental decision about the isdamental quality of the this. because of the great quality of the company, because of the great global position. than 5000 etf's, it is a great business. located in it is ireland which is a great country with booming prospects.

it is a bet on ireland and the quality and it is a bet on the potential things to come from the consequences of brexit. unknown certainty. we are [indiscernible] it is great addition to the euronext model. >> were you move step -- a stocks -- will you move stocks from london to dublin? moving staff. we have significant operations in london. a large group of [indiscernible] london.ased in we stay close to our clients and as long as a group of clients are in london we have large operations in london. manus: speaking to the euronext ceo and you can watch the full

interview if you are tuned in 8:00 p.m. tomorrow evening right here on bloomberg markets. with us is our guest. i want to reflect to the john cryan story. i am looking at the price of the value of deutsche bank. third of trading at a one. barclays forinst citigroup, it is getting annihilated. this is one of the big beast stories. what -- where does the tentacle of this go where -- if cryan moves on? chris: this is difficult to compete in water even more highly regulated, even more challenging markets. the expansion which cryan led in

terms of improving market share of the investment bank is to be taken away, they are having to circle the wagons and protect businesses and the core strength they have got and make sure they can make those parts of the business profitable. takingrld where mifid ii it harder for investment banks to obtain the levels of trade and volumes and profitability they have seen in the past, i do not think it is surprising that a man like cryan is being put under pressure. matt: a pleasure having you in. we are not run with you yet. you can catch more from him on , bloomberg radio shortly. you can use our bloomberg plus radio app or tune into london dab radio.

or radio . there is more ways to get more from chris. the european open is next. 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.

matt: welcome to bloomberg markets, the european open. guy johnson is off this week. the cash trade is less than 30 minutes away. ♪ matt: nervous being tested. asian trading mixed, investors sell some of the biggest winners the third --et as first quarter draws to a close. -- c g giant jimmy to