>> these are today's top stories. is rejoining the asia-pacific trade pact but only he gets a good deal. china posts its first trade deficit in more than a year. v w names a new ceo in its sweeping overhaul. we are live.

welcome to the program. we are seeing gains in asian equities. it is not risk on rise. today we are down to basis points. still trading above 2.8% on that. a touch of softness coming into the crude price. wti is heading to its best gain in three months. it is rising on those geopolitical tensions in the middle east. a bit of a different picture in the u.s. open. rate -- in asia it is risk on. u.s. futures pointing a little bit lower. let us which over and take a and to deeperart look on the weekly performance for the s&p 500. this showing that the s&p 500, despite any losses we might see poised for its

biggest weekly gain since march. we are 0.4% away from a racing the losses for the year. the january high by about 7% for u.s. stocks. coming up later, we will be talking to a ceo at ubs. he joins us for an exclusive interview at 7:00 a.m. u.k. time. first let us get the first word news. >> thank you. donald met with his national security team yesterday to discuss america's response to an apparent chemical attack in syria. that came as theresa may's cabinet said it is partial to respond to the incident. china's overseas shipments posted a decline on seasonal effects around the chinese new year holiday.

fell 2.7 percent in march after a 44.5% gain the last month. that left a surprise did -- surprise trade deficit, the first since february last year. aluminum is heading for its best 1987 as investors in the global industry battle with supply disruptions after the u.s. imposed sanctions on russia's imports. sanctions have rocked the market with all parts of the supply chain rushing to assess the risk and handling the company's metal. that surpasses its strange neighbor saudi arabia. this comes as the middle east after donald trump

tented military action in syria. russia has toned down his rhetoric. slovakia's prime minister has said his country is ready to contribute more money to the european union budget following the uk's departure. the comments are made in an exclusive interview with bloomberg. statevakia is a member and is prepared to contribute more to the u.s. -- european union if necessary. we are prepared to increase our contributes and -- contribution from 1% to 1.1% or 1.2%. it depends on what will be the position of other member states. global news 24 hours a day powered by was in 2700 journalists and analysts in more than hundred 20 companies -- countries. on in these markets in asia following all of that turnaround entrance rhetoric.

the u.k. up by 7/10 of 1%. hong kong and chinese markets a little. these are markets that have done incredibly well so far this week. a stroke is market also boosted up by 4/10 of 1%. in terms of stocks, fletcher building in new zealand rising the most since april 2000. it is taken mistake of around 3%. you have seen it rise in the tokyo session. and a pal maker in hong kong falling by around 15.5% today, an interesting piece from

bloomberg intelligence, saying it does face new shoe when you factoring work from nike and adidas. thank you so much. president trump has directed officials to explore rejoining the transpacific partnership, a trade deal he withdrew from shortly taking after -- office. is brought operas and. why would trump want to rejoin the tpp? "daybreak: europe this would -- reporter: this would be a stunning reversal. this was one of the first actions he took after becoming president. he did in a week after coming into office. what is driving this is domestic politics. elected bywhelmingly the rural vote. farmers are big exporters. the support big trade. with the upcoming midterm elections, trump wants to shore

up his political base. he has had over 25 republican senators pressure to reengage. not part of the tpp and trump has said he would help the american farmers, make it up to american farmers if they got hurt in a trade war with china. this would fit the bill. host: what was the reaction from leaders in asia? both japan and vietnam have been very supportive of it. they have been very welcoming of it. they have also expressed some skepticism. trump says he wants to renegotiate the tpp but the initial agreement took years of multilateral talks to set up the framework. or anxioust willing to go back in and start over from scratch. made a veryster pointed remark that because trump is so temperamental, even though he says one thing today

tomorrow might be another. japan is the biggest proponent by far of the tpp because it sees it as a counterweight to china's economic might. host: what is the future of the tpp from here, with or without trump? winrter: it did not die trump withdrew. going,er nations kept including japan and australia, canada and mexico. nations that were negotiating the tpp -- it is a substantial trading block. the agreement that they came up with was much more than a traditional trade agreement. on the touched environment, labor issues, government securement. it still has not come into effect.

it would have to be ratified by six of the countries that signed it, japan is hoping that will happen next year. japan is also really pushing to expand it. they would like to see south korea, indonesia, the philippines, and thailand joined. if the united states were to reengage, that would be a lot more likely. he is in tokyo, thank you so much. joining us now is global cio at state street global advisors. good morning. great to have you. we heard the latest on a possible rejoining of the tpp. concerns easing slightly over the tensions in the middle east and the trade tensions with china. trade is going to remain a key theme for 2018. >> is certainly showed. we should not overreact when news first comes out. there is a risk of being jerked around by new stories. we are good entree, we are bad entree.

the administration is more risk-taking in relation to trade than we have seen before. that has created challenges for investors because the long-term risk of trade protections are significant for equity investors. it seems like we are backing away from the worst outcome. host: you are seeing it is significant for equity investors. do you think equity volatility might come down as the year progresses or will fx and bond volatility rise to make it -- meet at? >> equity volatility at these levels is here to say -- stay. we went through a very unusual. of low volatility. that is a puzzle for market participants. currency volatility will rise because it is often the area that takes the strain. where you have these big geopolitical shifts, we should expect currencies to be risky.

thinking about prudent edging alicies and trying to match long-term policy with short-term protections is very important, particularly in currency. host: let me take you to a chart showing that despite the trade tips and tensions around the middle east, the market risk indicator remaining fairly low if you look at the bank of america market risk. this comes with a bit of a lag, 48 hours or so. you get the picture. when it comes to risk, is it time to take risk off the table? i spoke to dan iversen on a panel yesterday and it was one of the things he pointed to, perhaps it is time to do risk a little bit. ? -- is it time for that? >> you have to be dynamic with risk. wheezing indicator to measure the environment across all asset classes. , not from a useful

timing sequence, but as a budgeting signal. we are going to be risk off. we are using a prudent approach when it comes to how much we are going to spend in our risk budget. there may be better times. better times may be better violation or risk environment. we have seen a normalization of risk environment. when it comes to central banks and the reaction to this, we heard the minutes from the fed and ecb. trade tensions are weighing on policymakers minds. do you see them perhaps stepping back a little bit from the normalization or is this going to fuel inflation in the u.s.? in the u.s. the momentum in real activity is strong enough that central banks are likely to stick to their original course. i think they are concerned. everything i have heard suggest they are at least concerned as

market participants. therefore they will not--- want -- they want to have a little bit in reserve. same category of market evaluators as we are. they don't want to overreact. host: the other thing about volatility is, there are different types of volatility. how do you play those different types? >> it is not like good cholesterol and that cholesterol. low volatility, back and be dangerous for many reasons. mostly excesses we have in credit markets, they're caused by people feeling relaxed. you have to ask as an investor, am i getting rewarded for the volatility? volatility is broadly based. it is not narrowly focused in a few clusters from a statistical

perspective. we should feel much more comfortable. if you look at the equity market, which is a better an area wheret is rewards will come from risk-taking. we are moving into a slightly better environment from a fundamentally active perspective than we have in the past. host: out of all the risks out ande in terms of political geopolitical risk, are there any you are finding easier or more difficult to price? >> inflation risk is a bit of a puzzle. u.s., wet cycle in the are nowhere your it in the -- near it in the rest of the world. picking apart what is cyclical versus a permit affect his heart. a strong protective some -- we're seeing a bit of a pickup and maybe inflation becomes more of a talking point in 2019.

host: interesting. some people are saying it is not about if inflation is coming, it is win. are you of that view to? >> when is the normalization? we have spent the last six years talking about disinflation. we are in a re-normalizing world. host: he stays with us. s&png up, mojo rising as 500 profits face a test. a new ceo as part of an overhaul. this is bloomberg. ♪

host: it is 6:18 a.m. here in london. equities as some of these

trade tensions in the middle east seem to be easing a little bit. the asian pacific index up. let us get the bloomberg business flash. reporter: volkswagen has picked a new leader in a management shakeup as the world's biggest carmaker attempt to draw a line under the diesel scandal. the new ceo will oversee technology across the organization. they prepare for a wage of -- wave of technological change. we are expecting a news vw'srence from bw's -- headquarters. chinese approval for the general electric power conversion of its the object by the end of this month. the ceo says final specifications are a minute.

that signals the end of the standoff between european and asian regulation. has built agement position in micro focus international and plans to push for changes at the u.k. software company. size of elliott's holding and the changes it would be seeking are not share. elliott andves for micro focus declined to comment. bitcoin has had its biggest surge since december, climbing as much as 17% at one point. possible reasons include the end of tax related selling and speculative short investors being squeezed out. some backers of the kleptocracy -- cryptocurrency. that is your bloomberg business flash. so much.nk you

three of america's biggest banks are due to report later today with earnings from j.p. morgan, citigroup, and wells fargo. s&p 500 gains have come during earnings seasons. in februaryended with the most spectacular equity meltdown. this quarter could be big for profit goes -- growth. that is the fastest growth in seven years. our guest is still with us. you saw the chart their showing s&p 500 ending 20 climbers -- quarters of climbing. how important is earning season going to be for continued gains? duringe could be signals management commentary them might the reassuring for market participants. goodee a pretty

environment getting better. we are there for expecting earnings seasons to be delivering online -- in line with expectations. what matters is the total picture. how companies might deal with the tax changes in the u.s.. how they will benefit from the gains and reinvest in technology. positive,ignals are in the sense that investors have the idea that national focus is on the long-term again, that will be a positive signal. host: will earnings be enough for those who tactically pulled out of u.s. equity? are those earnings going to occur it's this kind of people to get back into the market? >> there have been people discouraged by volatility. maybe the marginal investor should not have been investing in equities and they should've held into safer assets. those were thinking about -- you have a rising

interest rate environment to deal with. unless you really think that we are right at the end of the earnings and about the deal downturn, that is fair value. host: some people i speak to say that that is undervalued when you look at the growth picture. >> it depends how long the growth is going to carry on. if we are midcycle or near the bottom of the earnings cycle, that will be true. after so much in terms of earnings games -- games, you have to ask, how close are we? areren't at the peak but we closer to it than we have been for some time, in the u.s.. different story elsewhere in the world. host: we will talk more about europe next. i want to focus in on the banks. this chart showing u.s. banks net interest margins.

what are you going to be looking out for in terms of your outlook and how you invest in banks? of notave to be careful being jerked around by speculation on a lot of things, including changes in regulation. the curve is a positive story. that is feeding through to the interest margin. the first issue was always the state of the economy, especially those below the top tier. wages are rising. there is greater confidence. as this is are investing. businesses are investing. investors should be putting a more positive outlook for those banks. host: you like u.s. banks? >> they are neither super positive or super negative. we have positive and negative sections. banks are not featuring in either of those extremes at the moment. host: what sectors are you focusing on for 2018? what is driving that focus?

is is still the outcome of u.s. tax reform or something else? difficultorm is quite to digest. anyone who has large-scale repatriation to do from overseas , anyone who would benefit from a shorter-term focus. it could be encouraged by tax reform. on the other side of that, maybe those with weaker balance sheets whichgs like biotech, made a good but are not beneficiaries of the things we're talking about. host: when you look at u.s. equities versus the rest of the world, how you view that? >> it is certainly not accurate to say they are safe haven. is outlook in many respects a little bit more visible than in other areas. the best contrast is emerging markets. we like u.s. equities.

we like emerging for very different regions. the valuation story is much better. some of the worst aspects of riskhave been reduced -- have been reduced in emerging markets. we think china is in good shape and china soft landing in the recent articulation of the story ism press -- the president not just encouraging china but all of the other emerging markets. host: our guest stays with us. 9:30 we expect a news conference from volkswagen and it is a big day for u.s. bank earnings. we are due to hear from city and wells fargo. up next,. in rolls on from dieselgate. we are live. this is bloomberg.

♪

host: 6:30 a.m. here in london. let us check in on the markets. dollar-yen up 1/10 of a percent. really treading water overall. muche not really seeing expression either way in terms of risk on or risk off. we are seeing the 10 year yields down. it rose yesterday. on are not seeing a risk view. we are above 2.8% on that 10 year yield. it has been rising this week on those increasing geopolitical risks with the u.s. in syria.

a touch of softness coming through on the ibex crews there. -- crude there. while we are seeing the asia-pacific index a little higher today, s&p futures are a little lower. a management shakeup that will be key to reassuring investors the german automaker is capable of reform following the diesel scandal. your joined by bloomberg's matt miller. matt, what is the reaction to this appointment. -- appointment? reporter: it is quite positive in the investment community. he has been very successful with codding costs with the brand.

costs with the brand. investors hope you will be that successful running the whole company as well. the other big positive, as far as analysts and investors are concerned, is that it looks like the company is going to move ahead with the separation and bail the heavy machinery units. that is not closely related to the other 10 car brands that and runs. owns investors are keen to see that spun off and monetized. they had a problem trying this with ducati. they are hoping they can do it well with the truck unit. we just got some breaking lines. labor unions fully support the new ceo and overhaul plan. the unions are saying the decision on the truck ipo is still open. these are just headlines crossing now. matt, is there anything that is still concerning investors from here? there is -- there has

to be -- labor union support for this to happen. not everyone understands the way german companies work. half of the board seats are filled by labor union representatives. 10 of their board seats are filled with labor union representatives. two of those 20 seats are filled by government representatives because the state owns 20% of volkswagen. seatsthe 20 ceos -- represent workers or the people. this kind of thing cannot go ahead without their approval. that is what is interesting. they not tense over a job cutting package that they wanted a couple of years ago. he was able to get it through. that is another reason investors are positive about the move. host: thanks so much for joining us.

9:30 a.m. u.k. time we are expecting a news conference from volkswagen headquarters. he is still with us. are you positive on automakers generally? >> yes, slightly. not screaming but certainly ok. the macro outlook is pretty positive. credit conditions are good. there's a fair amount of innovation. the things i can stimulate demand and keep demand at these levels are very important. is survey by the premium segment. china and other countries going upscale in terms of purchases is pretty important. we think that is a driver of profits and is going to continue to be in place for a while. there are currently challenges.

, innovation,hicles is a little bit of a double-edged sword for a lot of them. repositioningthis , it can be costly. it can also stimulate long-term demand. host: that sort of electric doesle angel -- ankle, that alter your view longer-term on automakers? >> from an active perspective it what isu have to -- happening in those individual the technology is evolving very rapidly. you have to think about supply chain and how that is going to be impacted. protectionism, which given the nature of the supply chain and the auto sector, could be significant. it could be a drag on costs in terms of corporate performance. host: this is why we love

getting you want. i was going to ask if we were going to see any potential impact from trade tensions in the at a sector? given that he just answered that, in other corporate sectors in europe, do you see any risks in these complex supply chains we're looking at? the bigu look at picture, europe is the opposite of the deficit challenge. eurozone are huge exporters. yet dow's questions about how vulnerable they are -- you have to ask questions about how vulnerable they are. they are so complex that picking that apart suggests they don't want to overreact. all that we have seen in the last 18 months from the isinistration in the u.s. that announcements are made, risks are taking, but very often we get to the final stage, things aren't quite as bad. you have to have a risk premium

premiumd yourself for the to reward yourself for the risk of trade protectionism. you don't want to exaggerate the risk. to the extent for you begin to not count waves of your portfolio as being vulnerable. not as excited about european equity as you are about the u.s. emerging-market. is that to do with the growth picture, if -- devaluation, earnings? >> growth is much more stable from a macro perspective. it has been for a long time. you have a better domestic story in some countries. the longer-term picture is still challenging because of demographics and other factors. the euro has appreciated which creates a little bit of a headwind that has not been appreciated fully in terms of the earnings. i think that makes us a little cautious about european equities. host: i want to bring in the ecb here. i have a chart if i can bring it

up for you. as we were talking about earlier, central banks are potentially reacting to trade tensions. the ecb slowly moving to the end of its program. i know you are more than familiar with this chart. with the euro that you have just are you expecting them to signal anything or will it be june? >> i think they will be following this slow but steady pastel. -- path still. i do think that, although there actions, much stronger europe is really not out of the woods in terms of many aspects of its eurozone policy. i'm not talking about monetary policy but structural reforms, the nature of financial risk and the way the system operates, and

is still very dependent on banks. that causes ecb to be somewhat cautious in changing policy. versushat about europe the u.k. and the divergence that we are seeing between the boe and it ecb -- the ecb? specific.. is very it is appropriate that banks in england focus on those. the inflation risk is quite volatile in the u.k. compared to the rest of the world. because of the open nature of the economy. they have to really act as a counterweight to some of these forces. that has driven sterling a little higher. 2018,as a theme here in monetary policy divergence has reemerged as a driver currency returns. that is another reason why the

dollar should be real value in by investors. reevaluated by investors. i don't have the euro-sterling charts up i'm sure you are familiar with it. when you look at the fx face, had you see that playing out in terms of the mains? where would you belong? -- be long? >> the doll your might have a revaluation this year. -- dollar might have a revaluation this year. it do anything for 10 year yields. pressure toically have that spread. that is what people are doing. excitingure people are the long end of that curve.

i think the risks of being rewarded, we're talking about these binaries. the risk in em fx is very visible government trade policy. it is much more diffused and diversified. therefore, a more attractive risk. ceo, thank you so much for joining us. remember, if you are a bloomberg customer you can watch the show using tv as well as the video stream. you can follow all of our charts and functions. you can influence the conversation by clicking, ask the questec question -- guest a question. our guests always wanted here from you. the return of volatility has spurred traders to devote less cap -- cached etf.

investors will be able to ride out the increased volatility. >> this volatility pattern that we have had comes from -- on the heels of a. period of low volatility. when investors take a long-term view, it is something they could write up. there are a lot of products available for investors that 11 to take advantage of dampening the volatility. do you think it is going to have his michigan on index investing? impact on index investing? >> this trend that we have seen of active assets moving into index assets is really driven by a lot of other factors. the underperformance of active managers, the desire to see more transparent products, lower cost products.

the short-term volatility is an investor perception standpoint. long-term it is not going to change these trends. host: what does it mean for the etf index? when you think the impact of this higher volatility is going to be on the etf market? i don't think it changes the economics and the business. you are seeing larger etf providers at scale, they are becoming more global players. i don't the bed is a function of what is going on in terms of volatility. i think that is a natural evolution of the industry. host: we have seen, in the last funds of weeks, active

seem to be staging a bit of a comeback here. more than two thirds of their funds beat their benchmark last month. what investment strategies are going to be in favor this year? we don't actually forecast specific investment strategies. i wouldn't necessarily create a trend out of one or two months and think the academic data that we have published with the reports show that over long periods of time it is very hard for active managers to outperform the benchmarks. the does not mean there are not managers out there that can outperform. i think that is natural. for the average investor it is hard to find those managers. when you look at it over the long-term, which is the way most people look at investing, the advantages are pretty clear. coming up, trump's new

take on tpp. the shift of his tone on the asia-pacific trade pact. we will bring you the latest. we speak to christina, global market strategist at invesco. this is bloomberg. ♪

host: innis: -- 6:48 this morning. u.s. futures coming off the lows from earlier but still weaker by about 1/10 of 1%. get to bloomberg business flash. reporter: reporter: -- reporter: volkswagen has picked a new leader in a management shakeup as the world's biggest carmaker. of vw's namesake brand will become ceo as well as overseeing technology across the

organization. the move comes as the company prepares for a wave of technological change set you up and the industry's traditional business model. at 9:30 we are expecting a news conference from their headquarters. airbus says it's it -- expects to achieve chinese approval by the end of this month. the ceo says final certification is imminent after a similar china'ss signed off by civil aviation administration earlier this week. that signals the end of a standoff between european and asian regulators. has ordered the creation of a task force to review business practices at the united states postal service. it is a move that could affect one of the presidents favorite corporate targets, amazon. has lost morevice

than $65 billion over the past decade as americans increasingly transit messages online. the task force will be led by the treasury secretary. elliott management has built a division in micro focus international and plans to push for changes. holding of elliott's aren't clear. representatives for elliott and micro focus declined to comment. it is your bloomberg business flash. host: thank you. stocks have rallied from the u.s. to asia as president trump can't trade tensions. the s&p 500 is headed for his best weekly gain since early march. are we starting to see a reversal? isning us now from davos chief global manager from invesco. is the recent weakness we have seen in equities, is that

foreshadowing any sort of risks to global growth? >> absolutely. this recent weakness is for shadowing, certainly the growing risk we are seeing to global growth. and it isotectionism a very significant threat. it can create a drag on global growth. we don't exactly know just how bad things are going to get. we need to at least prepare for that possibility. host: that said, i struggled to find people who are turning negative on the global growth picture for 2018. is that because it is too hard to predict exactly how any escalating trade tensions could impact the global economy? or is it that the global economy is robust enough to withstand any adverse trade scenario?

>> the global economy is definitely robust. we are seeing an improvement in hard data and that should continue for the months to come. having said that, all growth is somewhat fragile. particularly if you have some kind of spoiler, like an increase in trade disputes or in tariffs and other protectionist measures. host: what about the picture for equities? is it time to do risk -- the risk -- de-risk? are there opportunities to be found in the selloff we have seen? >> there are always opportunities to be found. in particular, because of the selloffs we signed technology, that is certainly a chance to pick up some stocks that have been beaten down. many of which have been beaten down unfairly. absolutely there are opportunities in this market

environment. we do want to be selective. careful ande thinking about those industries that might be hit hardest. general, focusing on fundamentals. fundamentals matter more and more as central banks remove the foot they have on the spot market -- stock market. >> what do you advise your clients to do? take a more active approach? stay away from certain industries? if so, which ones? >> you certainly need to take a more active approach. right now what we know are the sanctions that have already, the tariffs that of already been announced. we can make assumptions that particular industries may be hurt more than others. for example, automakers could certainly be hurt. u.s. automakers could be heard by chinese tariffs. -- hurt by chinese tariffs.

in the event that we actually see an increase in this trade dispute and it gets worse before it gets better. host: overweighting domestic small caps. looking at u.s. equities in terms of the s&p 500, is it fairly valued now? is it undervalued relative to the growth outlook? well, it's valuations are slightly stretch. there are certainly pockets of opportunity. you could say it is fairly to slightly overvalued in the u.s.. is, there are other areas of the world that are also benefiting from global growth. they are exhibiting lower valuation. that really makes a very strong case for broad diversification. host: were to diversify globally

-- where would you diversify globally? >> i would have exposure to emerging-market equities. we could see a lot of volatility there this year if the tariff dispute heats up. having said that, that represents a buying opportunity. european equities look very good and they are certainly benefiting from continued support by the ecb. host: i'm glad you mentioned that. i want to ask about the central bank's potential reaction from -- to any concerns about global growth. do you see this affecting the fed's dot plot at all? saw the other day that most members of the fomc believe these trade disputes are a threat to growth. the fed has difficulty really quantifying that threat, given

that their models are more domestically oriented. certainly there is a recognition that it is an issue. i don't believe we are at this point where the fed feels that needs to act in any way. certainly they are watching that situation closely and i would imagine all central banks are watching the situation closely. briefly, where does the 10 year yield and the year -- and the year -- end the year? >> that is one of the biggest questions you can ask. you're going to see a lot of volatility this year. there are forces pushing the yield down and there are forces up.ed it i would not be surprised if we ended the year with a 10 year yield still below 3%. host: all right. thank you for joining us. cheap global market strategist at invesco. remember bloomberg users can

interact with the charts using tv . this is bloomberg. ♪ welcome to the xfinity store.

i can tell you about... streaming the most free tv shows and movies on the go. yeah, and... xfinity internet. it's so fast! and you can save by... by getting up to 5 mobile lines included. whoa, you're good. i'm just getting started. ♪ simple. easy. awesome. come see how you could save $400 or more a year with xfinity mobile. plus ask how to keep your current phone. visit your local xfinity store today.

♪ nejra cehic. this is bloomberg daybreak: europe. president trump floats rejoining trade pact but only if he gets a better deal. china posts its trade debt -- first trade deficit in here. asian equities are boosted and oiled that oil stalls as a u.s. strike on syria is put on hold. the new ceo in a new overhaul since the diesel scandal. ♪

nejra: welcome to the program, everyone. let's get you some breaking news. lse group naming david schwimmer as its ceo. chief executive officer, we will keep those lines for you as we get them but let's get back to the markets. we have seen some risk on in the asia session with the msci asia-pacific index. it has not fed into the u.s. futures and europe is trading sideways. ftse 100, dax, and cac futures that plaque. not getting a lot of direction for the european equity market. if we switch to the risk radar, we can see how the radar looks across. the 10 year yield has been moving lower, he was down to basis points earlier, now down eight basis points. he still trade above 2.8% on the 10 year yield. the bond markets not showing a

risk on picture. oil, heading first -- its biggest weekly gain in months as concerns around geopolitical tensions in the middle east have abated a little bit. you have seen a touch of softness, off by .1%. brent is holding above $70 a barrel and looking at the u.s. open, those futures are pointing lower. down .3% after gains in the u.s. session yesterday. the s&p 500, despite any drop today, is heading for its biggest weekly gain in five weeks. looking ahead to the bonds in europe, the cash open is happening about now. have the futures up here for you. he won not seeing a lot of movement in bund future's. flat overall. it is more movement in the 10 year yield in the u.s., which i have already shown. ceor on in programming, the david shorn or joins us for an exclusive interview for 7:30

u.k. time. here is juliette saly with the first word news. president donald trump met with his national security team yesterday to discuss america's response to an apparent chemical weapons attack in syria carried that came as the u.k. prime minister's cabinet said it is vital to respond to the incident. it suggested britain is prepared to join trump and emmanuel macron if military strikes are launched against the assad regime. its --en is heading for aluminum is headed for a good week as investors and the industry battle with supply disruptions after the u.s. imposed sanctions on russia. prices on the london metal exchange are up 12% this week after surging to a six-year high. biggesttions on the maker in russia have rocked markets.

qatar has raised $12 billion in its first dollar bond sale in two years. -- else saudi arabia saudi arabia issued a $11 billion in debt this week. the sale comes as the middle east security risk ease after donald trump hinted that military action in syria may not be imminent and russia toned down its rhetoric. slovakia's prime minister has said his country is prepared to contribute more money to the european union budget following the uk's departure. peter appellate green he made the comments in an exclusive interview with bloomberg. slovakia is prepared to contribute more to the eu budget if necessary and we are prepared , toncrease our contribution 1.1 or 1.2% of the gdp. it depends on the position of

other member states. juliette: former fbi director james comey has likened donald trump to a mafia boss in his new book. that the president waged an effort to secure the loyalty of the then fbi director taking office. some regretses over his handling of the hillary clinton email investigation. global news 24 hours a day, powered by more than 2700 journalists and analysts in more .han 120 countries you can more stories on the bloomberg at top . trading in asia on a pretty strong note apart from chinese markets, which are lower. remember, indexes have done well over the week. japan is closing out the session, the nikkei higher by .5 percent. australia closing higher and a good showing in india midsession, as well. asian stocks are on track for

their best the -- weekly gain in a month. we see the trump rhetoric change somewhat and the trade tensions easing a little in terms of being at the forefront of investors minds. stocks we have been watching, and apparel maker in hong kong, falling significantly. bloomberg intelligence saying it could face headwinds from the likes of nike and adidas and this is impacted by the tariff talk, as well. let your building in new zealand at the close. this on a report that the conglomerate could be taking a e.g. percent stake in the company and this is electric co. in tokyo doing well, up 5.5%, upgrading the target on this stock thanks to a buy in at&t in the u.s.. that will be strong for its fiber-optic business. nejra: juliette saly in singapore, thank you. let's take you said -- december aching is on rolls-royce.

-- take you to some news on rolls-royce. it seems there might be engine trouble, rolls-royce giving an update on the trent package, this powered the boeing dreamliner. carry out added inspections. it is seeing disruption for customers from this and basically, it is going to lead to other disruptions is what rolls-royce is saying. it will work closely with owing and affected airlines but ultimately, the thing to take away as it will carry out more inspections on the trent 1000 c.k see -- pack sees an spf of 450 million pounds with 100 million pounds more or less. enginete on a little trouble that could lead to disruption for rolls-royce, but they are inspecting it, they will be getting more updates and

looking into it with us -- specific affected airlines and boeing. that might be a stock to watch at the open in under an hour. presidentr top story, trump has directed officials to explore rejoining the transpacific partnership, a great deal he withdrew from after taking office. positive tonere on china, boosting sentiment in the markets and it seems markets are seeing more of a muting of geopolitical risk in the middle east, as well. joining us is simon smiles, global cio of uh and w ultra .igh net worth he is in davos, switzerland at the summit. simon, great to see you. hope you are still having fun down there. seeing more fun coming into the asian equity session. on, give us some developments in geopolitical tensions we had overnight. how do you see these tensions

involved -- evolving from here? the concerns over tariffs and trade wars are just that, concerns. but not reality. if you take the 200 billion of potential goods which were you arelly tariffed, talking less than 2% of chinese gdp and u.s. gdp and we had the s&p 500 fall one trillion in market cap. wars was worry of trade than the reality. news overnight about the de-escalation is clearly positive. your clients at ultrahigh net worth tend to invest over the longer term. how concerned are they by these short-term news headlines and short-term volatility in markets? this year, not so much.

we haven't seen panic by any degree. we have seen clients trying to read i diversify their investment portfolios and take advantage of the business. 120 funds, our industry leaders network and when we surveyed them last month, they were very much looking through the tariff and trump noise. they believe this is just a negotiating gambit and trade wars wouldn't happen. they are expressing to us very strong growth particularly in europe and asia and the demand for both industrials as well as -- and talking about longer-term trends in china. talking about the business they own, they were long-term and weren't getting caught up in the noise. terms of client investment this as ansing opportunity to read i diversify rather than panicking.

nejra: that is interesting, about their own businesses. are they concerned about corporate sentiment in general? that any of this volatility in markets, any concerns that could feed through into global growth might affect corporate sentiment and business investment in general, perhaps in the u.s. more than elsewhere? of 2016, the start when we were talking to entrepreneurs and clients to head stakes and own significant stakes in public companies, there was more concerned about sentiment turning into real downturn in the united states. this year, not so much. people's own businesses, they see robust demand and hence, were positive with their own sentiment, but very little concern in the client base. the highs and him --

of last year. we haven't seen these headlines play out in broad assessment, we haven't seen them play out with our clients own businesses. nejra: your clients looking to device if i -- diversify rather than panic. how is this diversification planning -- playing out? equities,llocating to it also looking across the board of the creditverse. we have a favorable view of hard currency bonds and emerging markets fx. each of those cases is an opportunity with the weakness in markets for clients to rediversi fy their portfolios and i think that is worth noting. for all of the concern in markets, we are looking at expect haitians for first-quarter earnings in the u.s., 18% eps growth. if consensus is met, that would be the best reporting season

since 2010. that is against the backdrop of trailing pe on the s&p 500 around 16.5, the lowest level in 18 months. hence the relative buoyancy of client investment sentiment. looking aheadting to earning season. we were showing a chart earlier over how the past 20 earnings seasons, we saw earnings support further equity gains. the your clients and uc see earnings this time around doing the same for u.s. and global equities? simon: we do. we remain overweight risk assets in general. again, with all of the concerns about much greater escalation with respect to trade rhetoric and fears rather than reality, we have a look at the first quarter earnings of companies and see robust expectations come through against the backdrop of cheaper markets.

should be supportive for risk assets. nejra: i have asked guests what their view is on the elevated equity volatility versus a subdued volatility we have seen in fixed income and fx? when you look at fixed income, what is your view? do you prefer the short end, the long end? on your point on volatility, when we talk about elevated equity volatility in that situation currently, it is only elevated against the extraordinary situation up to the end of january. the volatility risk is normal equity volatility. but that against a backdrop of i taked fixed-income, your point we haven't seen spikes there but that is for good reason. of tradef the concerns wars and tariffs, there have not

been any fundamental impact on the economy. when you look at relatively elevated and stretched sentiment and positioning with respect to equity markets through to february, it makes sense there would be jitters and volatility but when it comes to rates and fixed income, the lack of a fundamental impact explains why you haven't seen the volatility flow over. nejra: it is interesting because equity markets may be focusing more on trade tensions in the short term whereas fixed-income markets focus on fundamentals and central-bank policy. we could talk about the central bank reaction function to everything, but i want to ask and completely take your point and know that equity volatility is at more normal levels now. does that mean fixed-income volatility rises to match it or with the signaling from the fed, for example, is the yield curve going to risk fire from here? jgb anchortill have

deals from the janke -- bank of japan. in europe, they are continuing quantitative easing and negative front-end rates. it is the united states and is trying to normalize policy as we stand. with the signaling, three further rates this year which is market consensus and a steady happen to 2019. our expectation is volatility will remain relatively subdued. smiles stays with us and coming up, volkswagen rolls on from dieselgate, can a new ceo restore the reputation of the world's largest automaker? us fromd saunders joins the ubs davos psalmists -- summit. this is bloomberg. ♪

♪ 7:19 in london and just

40 minutes away from the equity market open. in terms of how european equities might open, we saw usg a littles pointing lower. the euro stoxx 50 futures treading water. let's get the business flash with juliette saly. juliette: donald trump has ordered the creation of a task force to review business -- at the postal services. it could affect one of the president's favorite corporate targets, amazon. according to the executive order, the postal service has lost more than $65 billion the last decade as americans increasingly transmit messages online. the task force will be led by steven mnuchin or his designee. secure chineseto approval for the general electric powered version of its

neo-jet by the end of this month. the ceo said final certification for the plane is imminent after the engine made by ge's cfm international venture with french's saffron was signed off by china's aviation administration this week. that signals the end of a standoff between european and asian regulators. elliott management has built a position in micro focus international and plans to push for changes at the u.k. software company. according to people familiar, the size of elliott's holding and the changes it would be seeking aren't clear. representatives for both companies declined to comment. bitcoin has had its biggest intraday surge since december, climbing as much as 70% at one point. possible reasons include the end of tax related selling and -- some backers noted bearishness may be fading after the recent

swoon drove the price down more than 60% in a few months. that is your bloomberg business flash. thank you, juliette. volkswagen has named herbert these as its new chief executive. be key top will re-insuring investors the automaker is capable of her firm following the diesel scandal. joining us is simon smiles, global cio for ultrahigh network ubs wealth management as -- and he is in davos. about corporate governance because ubs has a big focus on sustainable investing. when you talk to your ultrahigh are they morents, focused on anything in particular or do they just want to have more sustainable investments in their portfolio and leave the details to you? multi-parts a

question but what is noticeable in conversations with clients. there are a portion of my clients who want to exclude bad companies from their portfolios. investing inon are social governance companies and a large portion of investors who want to do neither of those. what has evolved over three years had -- is a more nuanced approach to investing. rather than excluding bad companies, being able to invest in strategies from companies including -- improving their environmental governance while doing that, investing in the death of the world bank rather than treasuries. oresting in green bonds rapidly expanding markets. conversations are becoming much more widespread and much more holistic. bits not just about adding of sustainability to cross asset

portfolios. there is more interest in having 100% sustainable investing portfolio. something in its dna is sustainable. we launched 100% sustainable investing cross asset portfolios to switzerland, two weeks ago in asia and demand has been strong to date. nejra: fascinating, and how much matching -- lender matching this? companies with better gender diversity at a management level and across employee base onlyovertime lead to not improved social outcome, but more importantly, from an investment perspective, superior investment returns. hence, that is an allocation within this 100% cross asset portfolio.

it is interesting to say that because we are showing a chart right now on tv of the bloomberg gender equality index and it shows how over the past year and going further back than that, it has been outperforming the s&p 500. is that to do with the performance of those companies or is it a sort of self-fulfilling prophecy because it is a lot of focus on sustainability. so people are investing more in that now? there are -- simon: 11 trillion in assets represented here at the summit. it is the seventh year we have broadcast with bloomberg from this event. ist is noticeable this year how much focus there is on sustainability. not just from a wealth management perspective, but an institutional perspective. he had our opening panel

yesterday talking about macro views. every panelist that some point during that panel talked about growing demand through institutional investors to her incorporating and sustainability aspects into their investment processes wasn't just the right thing to do, but added financial performance. to answer your question, it is two things. thatimple notion diversity, gender, skill set, background, age, all management tells you that should we do better operating performance and the greater focus on sustainability leads you to the companies seeing market shares. smiles, global cio for ultrahigh. thank you for giving us that perspective on sustainable investing. and 9:30 u.k. time, we expect the news conference from volkswagen headquarters. we will keep an eye on that.

that is it for daybreak europe. the european open is up next. futures trading sideways. this is bloomberg. ♪

guy: good morning, welcome to "bloomberg markets: the european open." i'm guy johnson at our london headquarters. i'm alongside matt miller, who is outside vw headquarters. cash trade now less than 30 minutes away. ♪ donald trump changes tack, the u.s. president floating the idea of rejoining the tpp trade deal. he is also toning down his china