francine: sanctions again russia. the u.s. is set to announce fresh sanctions against moscow over syria. nikki haley says washing is sending a strong message. life after sorrell. wpp's founder and chief executive steps down abruptly. with his life -- what is departure -- will his the partially to a breakup of the giant? james comey calls the president morally unfit to lead. will the dispute affect voters in november? ♪ francine: good morning and

welcome to bloomberg surveillance. i am francine lacqua. these your markets. seeing a little bit of zigzagging. little bit difficult to get a direction. these european markets seem pretty much flat at the moment. mussina retreat from the havens. investors thinking this was a one-off meaning that although they remain a little this cautious on oil, they're still little bit unchanged when it comes to the equities. one of the havens, gold, that we are watching for his down a touch. coming up on bloomberg surveillance, we talk political risk, sanctions, and the markets with vendor sheets for morgan stanley. talk to mercury partners about politics. later, we get views on european banks.

let's get to the bloomberg first news. >> donald has taken an extraordinary step to asking his judge that's asking a judge to block his own justice department from seen evidence about his lawyer. justice department prosecutors from viewing evidence taken from the raid last week. the future of the world's largest advertising company is in sharp focus this morning after the abrupt up archer of its founder and ceo, martin sorrell. the board will be looking to find a long-term solution. meanwhile, the financial times has reported that sorrell does not have a noncompete agreement with wpp. japan and china said they will work together to encourage north korea to abandon its nuclear program.

improving sign of relations between ages two largest economies came as china's foreign minister made a rare trip to tokyo. u.k. lawmakers could send prime minister theresa may back to the negotiation table and engineer a second referendum or prompted general election when the final brexit deal comes to parliament for approval. the government has said there will be a take it or leave it vote on the deal. the influential think tank, the institute for government come will say that parliament almost certainly be able to middlemen the motion. to be able to amend the motion. the bush family has said that barbara bush is in failing health in one seek additional medical treatment. she is surrounded by her family and things people for the messages of support. in married george a w bush 1945. they had six children have been

married longer than any president shall couple in american history. has saidf starbucks that the arrest of two black men waiting for a friend that one of the chains philadelphia outlets was a reprehensible outcome. kevin johnson said he plans to apologize personally. dayal news 24 hours a powered by more than 2700 journalists and analysts in more than 120 countries. i am ed ludlow, this is bloomberg. francine: let's get back to our top story. the u.s. is set to announce new sanctions against russia today as washington and its allies assessed the missile strikes on syria. u.n. ambassador nikki haley says the measures would be aimed at companies that than helping president assad with his chemical weapons program. >> it was see russian sanctions will be coming down. secretary mnuchin will be announcing those on monday if he has not already and they will go directly to any sort of companies that were dealing with equipment related to assad and chemical weapons use.

this comes after president trump declared mission accomplished in syria on twitter. what does this mean for the markets? join us now is andrew sheets from morgan stanley. as always, thank you so much. i want to touch on monetary policy first. what are the markets watching out for? andrew: i think in terms of monetary policy come what they're looking for is, is the fed interpreting rising inflation and trade tensions as material the changing its policy outlook? for the time i think the answer is no. trade is mentioned, rising inflation is mentioned but it seems on track with the feds expectation. in the near term, you have an alignment with what the market and the fed are expecting. as the year goes on, i think that tension mounts because inflation will be rising more

than another other factors come -- eventually on the horizon. how to syria playing to the market? the markets seem a little bit cautious but they're not expecting any more military action. we don't have anxious this is on friday. andrew: it's a fair question. the markets are trying to digest an enormous amount of information. number of headlines on trade, the earnings season is just been underway. licenses that the market is probably going to focus on next, earnings. they're going to see that is the biggest driver for stock prices. it's going on the middle east will matter but will probably matter most to the extent as a regards to investors and what is happening with oil prices. francine: earnings are expected to be ok. andrew: i think they will be. a variety of factors. you have pretty solid underlying global economic conditions in the first quarter. i think this is the part of the

tax story is still the easiest part. the companies have gotten a large benefit and haven't had a real temptation to use that money for other things. things that equity investors might like less. our expectations that the first quarter for earnings is pretty good. but a third and fourth quarter, the fact that expectations are probably too high is going to be an issue. that's a story that would develop over the course of the year. francine: how do you break it down by industry? we're talking about the middle east. once andrew: her favorite industry? andrew:i think energy is well set up. . it's a sector that even geopolitics aside has very solid organic earnings growth given where the comparisons are. it's in the odd place of being a sector that is both one of the cheapest relative to history in the market with probably some of the best earnings growth in 2018 in the market. those two things that often come together.

think that supports earnings. because the ore prices been doing what is doing, but also helps. a bigne: you see difference between u.s. equities and european ones? andrew: when it comes to energy both markets are affected by similar factors. i think we step was -- i think if we take a step back and a look at targets overall, the european equities story looks more attractive. opting -- it's more based on organic growth and less on tax. if you are a u.s. investor to get of investing in europe, you can additional 3% per year if you want to take out the currency risk. giving a lot of investors might want to do anyway. that's a large additional boost. it's a three and a half percent dividend yield may another 3% on the currency. that's a six and a half starting point. sheet staysd her

with us. bloomberg users can also interact with the charts shown using tv . we have some really cool ones. what you do is you log on to g tv and getting you browse some recent go -- charts featured on bloomberg to catch up on key analysis and save charts. up next, advertising looking for a new chief executive. we bring you an analyst perspective. that's next. ♪

♪ francine: economics, finance, politics. this is bloomberg. i'm francine lacqua in london.

we talked about the bpp the hunt is on for successor. mark a sore left the biggest advertising company after three decades, marketing and of an era for the industry. it came amid allegations of personal misconduct, claims he is the night. the board did its investigation this morning saying the amounts involved were not material. the focus turns to findings. sorrells perp -- sorrells replacement and affecting the vpp from a breakup. media analyst a at short capital. thank you. welcome to the program. how significant is this? he did step down but he also steps down abruptly. >> yeah, good morning. i think it's a pretty seismic change for wpp after 13 years. difficult going to directly on the on circumstances.

i think alisa vacuum at the top of the company and a very difficult time interns of underlying trading in some of the challenges going forward. what are the challenges going forward? does the company need to be broken up? >> i think the broadest challenges are the media landscape has become much more complicated and i think wpp as we have clearly seen faces competition from other areas. consultants, etc.. having the broadest question is whether it should survive in its current form. the question is, does the holding company structure still work? i think that's really what they will have to focus on in terms of defending calls for breakup. we feel that wpp has become a much more integrated business in recent years. environment now is to call for a greater degree of flexibility. i think will be incumbent on a new ceo to demonstrate the

company can do that and it can deliver. chart.e: i'm looking at i would describe it for you since you can't see it. its revenue growth of wpp and as you can see, it's been falling off a cliff since 2017. to be in favor of breaking it up? >> i think for the moment, calls for raking it up are premature. wpp has incredibly strong track record. it is demonstrated through the years, has strengthened its own agencies and's ability to deliver a pretty comprehensive service on a global basis. i think writing it off at present, people should do that at their own peril. what kind of person would you put in charge of the moment? mark sorrell was not immune to criticism but he would answer emails at two in the morning and the vpp was his life. >> he's a bit of a one-off. a remarkable character.

i think the developments over the last couple of days to bring us back to a question that people have been asking for quite some time which is, do you have any succession planning in place? i think what we are seeing is that they don't. they probably need somebody who is going to bring a fresh pair of eyes the business. i know the company has an exceptional team of exceptional clients in-house and i think this could be a good idea to cast the net further and bring some with new ideas and new perspective. ,rancine: if you are in charge what would you do? would you look more to china? >> i think the china has been looking to china and the emerging markets pretty aggressively for number of years. i think one of the key things aside from its geographical orientation is to double down on

ensuring that the agencies work together. trying to advise you to each other. if that's the something they can deliver, i think the argument for keeping the group together is pretty much undermined. i think it's a combination of continuing investing additional, emerging markets, but doubling down on attempts to make it is this a bit more joined up. thank you so much. media analyst at short capital. and are sheets is still with us. aboutn't want to talk individual names but as a sector, advertising will go through huge transformation. well and i think it's an important. it's easy to think about advertising is a niche industry and one that is dealing with its own issues but when you think about the fang stocks, facebook, netflix and google, of those stocks, facebook and google have enormous advertising operations. it's the core of their profitability.

netflix's business model is based on consumption without advertising. fundamentally changing the way that people consume tv. that we consume tv in our own household. i think it's a huge question for the market about what is the direction of advertising dollars and how much does this change in the technological landscape. many of these companies, which are fundamentally in the advertising business or have the revenue driven by advertising, how would that affect things going forward? you expecting industries, i don't know if it's media giants becoming smaller, more streamlined? focusing so that you unlock value by knowing exactly what they do? market has been led by technology stocks in the stocks have commanded high valuations. but they do sit in a commanding position with regards to advertising and advertising spend. i think there is a tug-of-war

there that the earnings trends in the growth power of those stocks is very good. position is very strong. i think the markets debate is over what multiple to pay for that. they are fundamentally changing the way we consume advertising dollars. francine: and are sheets stays with us. and nbc poll shows that president trump's republicans are trailing in the run-up to the midterms. can he turn things around in the next two days? we discuss that next. this is bloomberg. ♪

♪ francine: good morning, this is bloomberg. i'm francine lacqua in london. let's get back to politics. the markets are still more than six months away from the november elections. one third of the senate is up for grabs. the guess is that the democrats more wantinge with a democratic congress then the ones wanted gop to hold onto power. the poll does not show knockout numbers for democrats a lot can happen. whatever the result, speaker of the house paul ryan plans to retire. the result likely to be

and what does it all mean for the markets? and are sheets is still with us. morris joins us. when we begin? what do you know -- what do voters in november cap about. morris: they always care about pocketbook issues. what are you doing for me, that's when you win. at when the democrats focus on the voters and don't talk about trump, they do well. this is the most fascinating thing in the world right now. look at it from trump's perspective, he probably wants to go all in and lose as much see can because if you look bad a quick -- look back at clinton or obama, they lose everything in the midterm and then they get elected -- get reelected. do sacrifice the house to get reelected? francine: you lose everything in the midterm and they don't pass anything and they come back to the present election? have anwhen you can

enemy. when you have the opposition party in control you can say they wouldn't allow me to get things done as opposed to blaming euros party. standpoint, the most fascinating thing is if the democrats get the house. that's were you have stock market risks because you have the ability to have short-term impact in the house as opposed to the senate which is a more long-term focus. look at a market sky. what you have in your pocket, is the american consumer better off overall because of tax cuts? as muchthey are but not as corporate america is better off. this was a tax plan with the benefits were heavily tilted towards the corporate sector and obviously the stock market has like that. if you look at consumer confidence surveys, they haven't changed much relative to the pre-existing area. if you look at certain pockets of consumer activity, especially in things like auto loans, if

you look at unsecured credit, you do see signs of stress. those segments does suggest a market where consumers are great. overall, consumer confidence is high but i think this was a tax plan were some benefits were larger than others. also, another thing i would say related to consumer harm -- confidence, generally want to sell when consumer confidence is very high. that's often close to the peak and then the trough. fascinating to hear this perspective because when you listen to democrats, that's what they're saying. that the tax cuts did not benefit you individual voter, it benefited your company. that's of the democrats want to rally. i am suspect because i believe that everything is a pocketbook issue. that's why i'm for a strong dollar because people feel richer. at the new dates with comedic

asian strategy is to the individual because that's the playbook the democrats are going. that's not always the most aspirational story. isember that politics storytelling. it's about the future and how do you make their lives better? president trump fall for the people that him. does he still have his base find them? morris: when you look at a terror standpoint, those individual voters in pennsylvania, the traditional democrats that song there way, the tax does not benefit them. the people benefiting the most, wall street guys, bigger guys, he does not necessarily like those guys the most so it's an interesting dichotomy. francine: but is talking tough. for ohio, the people at the association, he's talking tough with china. are they taking it as the president is trying to protect my interest or he's talking but is not helping me? morris: two things going on.

donald trump is not a politician, he is a business guy, so his focus on the results first. the results for him are the headline that is getting tough on terrorists. as with voters in pennsylvania saw what they will remember. are anyly, if there tariffs, that's we will see. when see china pushing back on the soybeans and with people like turkey booking -- pushing back on cotton, that's ultimately going to decide. if you can rally the trump vote or to exercise them to do things, ultimately, he's playing more of a nuanced game. it's not just as things appear. he's been strategic about how he delivers his message and on the reelection. francine: is the u.s. economy overheating? is that a danger? a chargederheating is word but on a number of measures, things look relatively extended. consumer confidence is very high in an employment is very low.

growth and deleveraging leveraging has been happening for a number of years. on a headline basis, that's all good. market's peak, generally, on good conditions. they trough on back conditions. the challenges that you are injecting into the u.s. economy unusually large amounts any list at when the economy by all accounts is actually and reasonably healthy for a number of years. that's unusual we don't have much precedent for it. that creates a lot of uncertainty. morris: i'm not worried about the market overheating, murdoch capacity issues. and moreng the border talent comes in, people do jobs. we are closing the border in the we won't have talent. if you look in the high-end talents, i would predict that you see guys who are traditionally from france or turkey and thinking about going back home because of these things. i don't think it's overheating.

do we have workers to make sure the company in the economy continue to flourish. francine: to americans support airstrikes in syria? morris: if you look at it from strength redline, barack obama didn't do donald trump did, people feel good because everyone's of patriot. if you look at from a raw -- long-term standpoint, the rhetoric and the actions teaming up. he striking syria but were not taking in syrian refugees. so you have to focus on what he's doing. he's playing in a symmetric game. it's not just checkers, chess game. let me talk about the former fbi director james comey. he talked to george stephanopoulos last night he did not mince his words. i don't buy the stuff about him being mentally incompetent,

early stages of dementia, he strikes me as a person of above average intelligence. i don't is medically unfit to be president, think he's morally unfit. playine: how does this out? if we focus on the midterm, the people is that these kind of interviews and asking cells, what is the agenda behind it are they really start pushing the president? morris: it's on both sides. if you listen to what he says about hillary clinton, then press was sad told you but if you listen to what he's talking about the president, the broncos will say are off. the most interesting thing than it was talking about is, this the first time in history that an fbi director has written a tell-all book so i have to say, is thinking up local issues under hillary in this book about trump, should be around the job in the first place? this is unprecedented. writing acia guy tell-all book? p1 he to think about this.

toncine: does this go back what trump was saying about drain the swamp? it may seem for the international community as a this playsless but out nicely into his rhetoric that everything is out to get him. the deephen he says state is working against them, the only person that's really loving donald trump is the book and the the. there are been more books sold than anything that's perhaps why he hates jeff bezos so much because amazon is benefiting so much from the books. really it depends on your perspective and at the end of the day, that's why when he gets out of the voters they connect across the table with them. francine: markets swing on the midterm elections? andrew: i think they can. i think the markets will focus on a few things. think about 2017 and where the markets did so well, in a simplistic way, tax went from a

low probably to a high credibility and trade didn't happen. in two thousand 18, potentially depending or the most ration decides to run on, it could be were not been a focus of much attack and murder to focus more on tariffs and protectionism. when he on these issues that we think will rally our base. perspective, if a focus on tax cuts and at this focus on tariffs helped the markets, the opposite would be more challenging. francine: morris, you have been a democratic advisor the past. if you were advising president trump, what would you give him as the three top things to do? truly talking to him until the sacrifice the republicans. the midterm is never a referendum on the president, is a referendum on congress. i would go all in on that because he goes heavy there, you'll be rewarded long-term. i would double down on my international base and

partnerships. macron is really now emerging as the trump whisperer in europe. i think the syria thing is helping there. is going to have to go back to turkey because he needs turkey to counterbalance russia. the third thing and most important thing is to get outside the beltway. he needs to get out and start to talk to the american people and sell his packages better. i hope is not listening to be better because that's a winning strategy that the he could do well. francine: you take away twitter? morris: absolutely not. everything with this guys asymmetrical independent your perspective. democrats are outraged but when you run for president is two things you want to do. cannot expand your base which trump cannot, you want to shrink or base and by using twitter it is demoralizing to a lot of people which means he will shrink the pace. that is a reelection strategy. he's playing asymmetrical game.

very fascinating. francine: thank you so much. and her she stays with us. let's get to the first world news. >> pressure want fresh sanctions according to the top diplomats of united nations. nikki haley says u.s. treasury secretary steve mnuchin will announce the sanctions today. it comes as the u.s. and you carry are set to take the next step after the friday strike. donald trump has taken the extraordinary step of asking a judge to block his own justice department from viewing evidence about his private lawyer. president's attorney filed court papers yesterday seeking to temporarily bar justice department prosecutors from reviewing evidence taken in the home,ast week from the

hotel room, and safe-deposit box of trump personal lawyer michael cohen. the future of wpp is in sharp focus is morning after the abrupt departure of its founder. the board's prior to be finding a long-term solution. meanwhile, the financial times has reported that several dozen have a noncompete agreement with wpp. that leaves them free to start a new company. japan and china has said they will work together to encourage north korea to abandon its nuclear program. the latest signs of improving relations between ages two largest economies. they came as china's foreign minister made a rare trip to tokyo head of a career summit and -- head of a korea summit. sendlawmakers could theresa may back to the negotiating table or engineer a second referendum or general election when the final brexit

deal comes to parliament for approval area did the government has said there'll be a take it or leave it vote on the deal. but influential think tank argues that permit almost early be able to amend the motion. the bush family spokesman has said that the former u.s. first lady barbara bush is in failing health and will seek additional medical treatment. jim mcgrath said the 92-year-old astronomer family and thanks to over the messages of support. she married george h.w. bush in 1945. they had six children have been married longer than any presidential couple in american history. global news 24 hours a day probably more than 2700 journalists and analysts in more than 120 countries. i'm ed ludlow, this is bloomberg. francine: from disappointing economic indicators are rising short positions, they had winds parliament for your peering stocks. that's striving equity investors to play cautious ahead of first-quarter results.

my guess says the market is too downbeat. under increases in several key factors. well, senior analyst from bloomberg intelligence. beforelking a little bit to andrew and he likes european equities compared u.s. ones. what of the key takeaways? >> i tell you, as we look into q1, i have a similar view. from the set point of u.s. versus europe. there are a couple of things in we are cutting and scraping to the numbers. the first is if we look at growth in the first quarter. you have to remember, it's a really limited. of time and limited data set that we get to work with. not that many european countries are going to report. where we see the best growth,

it's cyclical. energy, industrials, industrials. it's no surprise. two, -- two sectors jump out. one is financials which is the big yawn. hope and expectation was that interest rates would be better and yield curves with steepen. that is stay we're still waiting for you know in terms of revenue and earnings growth to kick in. and like to be more positive. it's a little bit of what i said before. they do have very good numbers in q1 but it's because the limited numbers of companies who are reporting and who's not. both the years expected much more muted. 45%. francine: do you worry about the high level of -- more muted. four or 5%. francine: do you worry about the high level of euro? andrew: a lot of people i speak

to are worried about the euro which some ways reduces the risk. when our european equity team all the numbers and said if the euro goes to 130 come on the due to european earnings, we still think the earnings could grow nine or 10% in that scenario. you can still get euros -- recent morning's growth. in the market is also overlooking a little bit and there are plenty of counterexamples in terms of the european up and european stock market going up. the 2003 through 2007. the european economy was doing better. francine: overall we had a bit of pullback. what supporting markets? think the reset we had to basic back fundamentals. valuation is pulled back to a more reasonable level.

we would agree that the longer-term earnings prospect as we look into 2019 is reasonably sanguine. we expect stoxx 600 earnings to fororth of 28 towards 29 the time we get out towards mid-to-late 2019. that's not a bad scenario. the currency is an issue. it's well discounted at this point unless we see another jump up. that'll be another key thing we take away. that was part of the reason we didn't get such great revision in the four q. a be a lot of that has washed out of this point. andrew: i agree. fundamentals, valuations, technicals. the euro is stronger. i think for a valuation standpoint, very much that argument. europe always trades at a discount to u.s. equities.

this discount is unusually large by historical standards. i think in technicals, it's not a market where it is as popular as other equity markets. if you are u.s. investor trying to short europe, not only are you paying a three and a half percent dividend yield but if you want to take the currency exposure out of it, you need to pay another 3% in hitching costs. it's an expensive margaret to be short if your non-european investor. on that front, it is intriguing because short-term -- relatively elevated. the hedge funds are taking a little bit of confidence from the pullback. shortssee elevated especially in banks and industrials. that could potentially set the upset up from the standpoint of reaction if earnings come through ok. why the unusual gap wider than usual between u.s. and europe? europe i think because

and the u.s. -- the u.s. has had a better story. cuts, tetra tech and europe is that neither of those catalysts. tohink em has been able focus on a great growth and international story. any cures for a little bit left behind. francine: thanks so much. and her sheet stays with us. , we hear concerns are of the u.s. economy. we talk rates and treasuries with sheets. this is bloomberg. ♪

♪ francine: i'm francine lacqua in london. let's talk central banks.

traders are anticipating they will stick to the rate of gradual increases. the longest-serving member of the fmc has already been speaking of outlining the worries him. would say the policy mistakes or cause recessions and it can come from fiscal policy, monetary policy, geopolitical concerns. but other foreign countries are doing. those are easy to predict and it's just as hard to protect now as it has been in the past. should investors be positioning themselves ahead of the neck -- add of the fed's next move? with jay powell in charge, as a fundamentally changed how monetary policy is run or is it just using different words describe it? andrew: in some way so little bit too early. question andt same chair yellen took over.

it took time for the market to comfortable and understand how she communicated and how she would be the fed. i think were very early on in the new chairs agreement. the one thing how might have the fedr him is that may be very close to expectations. it's also deal policy that's increasingly getting restrictive. he's dealing with an unusually large amount of fiscal stimulus which may increase the need to tighten monetary policy more. is watchingmarket very closely. how much consensus does he need? yellen wasee under very much a consensus driven organization. francine: do you think you will have a consensus driven mojo as janet yellen dead? andrew: i think probably, yes.

i think where the markets might be a little bit more in certain is that under yellen, the fed was much more consensus driven than usual. it will still be consensus driven but maybe less so than before that some in the market would have to that just. francine: once the danger for the fed? that inflation spirals out of control or touches to nap percent and thereafter have to raise interest rates will expected? the challenges that markets love to extrapolate in both directions. francine: that's never changed. you will think especially important now because her head into a. u.s. inflation and headline cpi is likely to be around 2.5% in the second quarter and 2.5% of the third quarter. risinge is going to be pretty steadily over the next six months. it's one thing to sit there with inflation being quite low and say yes, policy is easy is easy

has been easy for a long time. and yes, one half of our mandate unemployment is very low. but the inflation side is nowhere close to target. how the fed communicate a potentially temporary in -- rising inflation with very low unemployment numbers and low rates? that's a big challenge for any fed chair area -- fed chair. francine: you have a lot of central banks trying to catch up. andrew: i think it's more challenging for emerging markets. i still think em is probably a better place in fixed income to get carries than corporate credit markets but it's a pretty popular investment. it's a market that usually underperforms. our fx strategist think we can get a bit of a countertrend rally in the dollar. as good u.s. data comes in the second quarter.

the fed continues to hike rates. that can be a bit of a challenge. on the equity side we like europe much better. francine: thanks. crude spiking to $80 a barrel amid middle east temps -- mideast tensions. opportunities? this is bloomberg.

♪ finance andonomics politics. this is bloomberg surveillance. let's get straight to the bloomberg business flash. >> the future of the world's largest advertising company is in shock this morning. the board's be finding a long-term solution to the stopgap plan of having to interim operating officers and executive chairman. reportedcial times has that searle does not have a noncompete agree with wpp. decided to sell its unit. these cells used in a treatment

for leukemia. the move focuses the company more on treatments for rare diseases. that's your bloomberg business flash. oil prices already near three-year horizon they're about to jump further. jpmorgan, there's the risk of more u.s. sanctions on iran. so what sort of opportunities does this represent? and are sheets is still with us. he's calling this a good time to be in energy stocks. so morgan stanley expects the value to $80. andrew: we expect all to know -- to go quite not -- to go not quite that high. you have peaks seasons where

inventories are already being run down with a number of tricky geopolitical events. recent actions in syria but also the recertification of the iran deal that's coming up in day. you have a new national security team around in the u.s. minister asian. and it's uncertain how they will approach that. i think those are also uncertainties that we can see justifying and being supportive for oil being where it is and investors pricing in that risk premium. francine: do you worry about under investments? andrew: that's another important structural issue. you have these two competing forces. you have the migration away from patch rowing gasoline vehicles towards electric vehicles and alternative energy. that's enormously important. it's a good development. at the same time, that demand is going to be declining in the

supply is also declining. copies have cut back enormously. oils increasingly difficult and expensive to find. those are both going to be push and polls. in our view and morgan stanley's you the clearing price for oil is the higher than it was before. importantthose alternative energy sources. do we have a break even point with shale in the u.s.? it's important and disruptive but we think the ultimate clearing price to encourage shale production is higher. we think the u.s.'s arctic drilling on its best, most productive and best connected acreage. as you move to produce further, we need to move away from that to places that are less well-connected. unemployment is very low in these regions which puts wage pressure and other pressures in the system.

i think shay will continue to be an in a mostly important producer of energy of the ideas always been to be as cheap as it has been isn't quite right in our view. and are sheets. bloomberg surveillance continues and tom keene joins me from new york. talk to an executive about some italian reforms. we will look at politics of that. it will talk deutsche bank and banks with a lot of focus on oil and geopolitics. this is bloomberg.

francine: new sanctions against

russia, the u.s. announces fresh sanctions against russia over syria. nikki haley says washington is sending a strong message and everyone will feel it. life after martin sorrell. executor joinsef us. and italy's surge for a new t.vernment wil tom, we have a lot to talk about, geopolitics and the washington.th tom: let's start with european banking. but yes, it will be an international economics week. really, a wonderful line up of guests, beginning with your arrival on the surveillance

golfstream. francine: yes, i will be with you tomorrow and then we migrate to the imf meetings. taylor: as you were mentioning, the trump administration will impose more sanctions on russia today over syria's reported use of chemical weapons. the u.s. ambassador to the ey,ted nations, nikki hal said the goal was to discourage syria from using the weapons again and keep russia from covering for the assad regime. the u.s. told the u.n. is ready to attack again if necessary. former fbi director james comey said donald trump is dishonest and morally unfit to be president. he spoke during an excluded interview with george stephanopoulos. rule oute could not that russia has incriminating information that would make the president vulnerable to blackmail. james comey: i wish it was not saying it, but it is the truth. it always struck me and still strikes me as unlikely. i would have been able to say

with high confidence about any other president i dealt with. but i can't. it's possible. taylor: president says james comey is a slimeball that is the worst fbi director and history. president trump has asked a federal judge to temporarily block his own justice department from viewing evidence about his private lawyer, michael cohen, which was seized during an fbi raid. the court filings could involve the president and should be first viewed by him. the prosecutor asked to look at the material first. british lawmakers could stall for brexit when a deal get to parliament. a report says parliament could send prime minister theresa may back to the bargaining table and engineer a second referendum or prompt a general election. global news, 24 hours a day on air, and on twitter, powered by 2400 journalistss and analysts

in 120 countries. tom: equities, bonds, currencies and commodities. two screens to set the week for you. dow futures up. curb stable. euro stable. oil, not pushing back much after what we saw friday late in syria. let me reset the vix. to a much more attractive 17.36. peso, stronger, 18.50 down to 18.08. you wonder, could we get a strong handle on the mexican peso. the dollar-russian ruble comes through slightly stronger, but still in the greatest trading range. up asne: the yen, edging pull show failing support for shinzo abe.

possible scandals, keep an eye on yen. bonds are declining. the city and oil falls on anticipation of the missile strikes in syria. i'm also looking at gold. i think there is a bit missing in the deata, just down a touch at 1345. tom: francine and my national coverage beginning on friday. we will have seminars on teh imf panels we will be doing. the russian ruble, back 25 years. this gives you can -- this gives you an idea of the 1998 huge appreciation. this is a log chart, a ginormous weakening of the russian ruble from 1998 and the miniscule crisis where they did pretty well with oil stability here, and the new leg, the weaker\ russian ruble and this little turn up. you wonder i where it will

e two to four years from now. francine: i like your chart, tom. might is a simple chart, looking at revenue from wpp. we suddenly had the departure of the chief executive that we on the quite well for up it was an abrupt exit. that left the advertising empire a new chief executive for the first time. it is also vulnerable to break up. i was speaking with morgan sheets from morgan stanley. whether the model of this huge conglomerates can survive. you can find that on gtv . so, let's get back to the top stories. fresh sacntinctions against rus, related to syria's reported use of chemical weapons. nikki haley clarifies who will be targeted. will see that

russian sanctions will be coming down. secretary mnuchin will be announcing those on monday if he has not already and they will go to any sort of companies dealing with equipment related to assad and chemical weapons use. francine: this comes from washington, who says the missile -- there ishe area oil falling on the anticipation that the fallout from the missile attack will be limited. joining us now is the algebris chief executive. thank you for joining us. start out with you because you have been on the ground and you know syria and russia very well. what kind of sanctions to russia will actually deter russia from supporting the assad regime, if anythning. it is difficult to say. there is a point where one side of the other backing down

involves a severe loss of face. russia has committed to assad, has brought in a plot of assets to that theater. the united states is not willing to make a similar commitment. it is easy to see how purely economic commitments could make russia make a policy shift in that area. francine: what would force russia to do a big policiey shift. the use of chemical weapons is appalling. but you have to ask yourself what the strike's intention was? reporter: from what we can see, the intentions of the strikes was to make a demonstrative response to the use of chemical weapons, to reestablish the banning of these weapons. but the brass tacks is that there are russian forces in

theater. russian regulatory service personnel. there are russian backed mercenary companies and russian aircraft. and unless you are willing to undertake a strike that endangers those assets, it is difficult to make a permanent mark. and of course, russia is a nuclear power. doing something like that really uncontrolled retaliation. tom: we have all become experts over the last three days. tell me about the response from iran? particularly the response of iran acting as persia. what would you assume persia will do? reporter: that's where we are getting into this complex and

multi-faceted war in syria, and dynamics.x military and the politics of the middle east as a whole. i could not give you any particular priority on that as well. there's some question that going syria, you might see iranian and russian ambitions for the region or attemps to influence assad, bring in some divisions there. but that has not happened. tom: tell me about lebanon here, the small area between damascus and israel. what will be the calculus of the strikes were lebanon? reporter: again, that is difficult to say, it has its own complex internal structures. it is probably looking to avoid doing anything that will upset any of the regional actors that have a hand in that country.

so, probably sitting tight and hoping things do not get worse. francine: since you are a russia expert, daragh, i will get to you in a second, but why the market ignoring this. andrew: i think the markets are ignoring it because the ultimate issue, they have realized, the confrontation is limited. it is going to draw a line on chemical arms, even though you have more than five refugees being displaced. the west has been reacting for the last five or six years. russian forces are out on the ground and basically, you see the situation on the west. it is lost. risko not want to run the of nuclear war. unfortunately, the civil war will keep on going. hat kind: daragh, wil

of operation can we have, if any, between the u.s. and russia. is this a cold war? analogy of the cold war was not for truly helpful that was a conflict that was global in scope which was because of different ideological differences. what is interesting in this conflict now is this the greater -- is thenjured greater economic i dependen. blows created quite a few against russia. it is quite interesting in that they not only revealed that when the u.s. is willing to push into cutting companies out of the dollar company, it can, but this has had an effect on the internal kremlin politics.

you know, the key questions of who gets what within that compilation of the elite. and how putin constructs his internment power and how he and overpowered to his successor. it is not the soviet union. that means there are many different ways for the west and for russia to hurt one another, but it also means that they have to show a certain degree of restraint in what they do, lest they inadvertently and a parting themselves more. francine: russia, daragh, is they are too that popular for the u.s. distinction. daragh: prardon me? francine: russian seems to be putting a gamble -- foreign investors still like russian bonds. is that too big a gamble? russian bonds have done very well because of the strong macroeconomic fundamentals there.

that is an area where the u.s. could hit russia. the question is, given these relatively small size of the russian deficit, the low level of sovereign debt as well, if you're not looking at things denominated bonds. but that is a real worry for the russians at this point. if you sanction russian bonds, it prevents them from being section in u.s. dollars, but the banks can engage with russian dead in the future. tom: daragh, thank you so much. we will continue this narrative on european banks with algebris. later, a conversation with stephen cook from the council on foreign relations. we broaden out-- the conversation on the airstrike, particularly in relation to syria. ♪

taylor: this is bloomberg surveillance in a in taylor riggs. drugmaker shyer has agreed to sell the france's unit sanofi. they want to focus on treatment for rare diseases. this is happening as the japanese pharmaceuticals wants to consider making a bid for shire, which could be valued up to $50 billion. the private equity firm advent international is closed by sanofi. the deal is valued at $2.5 billion, including debt. ceo has been shifting the focus to biotech and new medicine. and for the first time, the world's largest advertising

company is searching for a chief executive. sorrellrtin stepped down from the company he founded. wpp has named a new executive chairman and two interim operating chiefs. that is your bloomberg business flash. tom: thank you so much. daragh mcdowell and raj patell. forrong euro, what it means trade, what it means for a po political calculus for europe. it is bad for european relations? >> unnecessarily. what we have seen with the dynamics of the euro is it has turned pro-cyclical of late.

overs seen confidence mobilization, confidence of the broad-based strip of the usa economy. ariffs and trade hit are through the confidence channel. that is what you have seen. we have the dynamics taking a breather. whetherow assessing this confidence turns into broad-based fundamental weakness, or whether it is just a bit of a heightened reaction to all of this noise. there will be so much evidence .n the confidence data ah tom: i will put this chart on twitter and radio worldwide. this is not euro-dollar, euro-ruble, euro-sterling. it's trade weighted euro. this is a real statement of trade weighted euro from 2015 driving higher. agh, for anybody inside

europe, this must be a fantastic it as much ofis i a success as it would be for italy or the netherlands as it would be for italy and portugal? >> europe keeps on being the number one exporting country overall. the topou consider of two exporters are tothe planet, two are in europe. as long as we divide between northern and southern europe, actually, it does not apply. consider italy is the fifth-largest exporting nation on the planet. it is higher than france or the u.k. as a result, the strength of the euro so far has no impact. why? because for the last seven or eight years of the session, the manufacturing session in europe has reformed. what is left is very strong.

and that is why i think over the next two to three years you will see a continuation of european gdp. and hence, the weakness of a large company, which is not to mention the largeest think of the world, does not have an impact when it comes down to exports. onncine: you were bullish the economy and on the pound. the trade weighted theme is here. it is on the chart -- you can also find it on gtb go. what is next? >> still the same things, we are the end.or 1.30 by pound is thehe general appreciation. the dollar is the main story here. over a multi-horizon, it is just whether it is orderly or disorderly.

francine: did you look at the fed? iwhat is the main carry trade? or are there really random pairings where you can make a lot of money with the carry trade option? youj: potentially, but when have nation volatility, fx markets are dormant, but they have that lingering risk. feds,t comes to the these are all the classic signs that we are in the latter stages of this that finding cycle. the flattening of the yield curve, the risks that you are close to new interest rates. and any subsequent fed rate hike could damage the environment. for us, it is infinite ages of normalization cycles. that is where we like the euro, pound,and japanese yen. --

tom: what is the upcoming meeting of the imf meeting. geopolitics,the what is the european gold, the spring meetings of the imf? is the major goals is to get to monday. >> the major goal is to drink adults back in the wrong because as christine lagarde never said, have we been the winner of a trade war. it's a plea does not exist. tom: eyeah. >> the people would be to be rational. if you important the car and the state, theres a 25% stake. these are connect and rational imptems

said anything, but perhaps these european so bring to the table as possible, facebook, apple and amazon. never paid any taxes in europe. that does not seem to be fair either. all of these are issues that need to be brought to the table in order to have the more grown-up conversation. tom: how does europe do bilaterally or unilateral discussions. if we are leaving a multilateral world, how do you perceive a l discourse in europe. brexit in some way is helping this process. there is one europe. and that is the field. they think the me interest of te liver straits is one. and ultimately, you leave one of the most confident economic

trade deals on the planet, the eu trade mission to do with it. has onember brussel goal, negotiating trade deals in that is about it. and i think in this, the eu has been a successful trade block. i have seen the fastest prosperity growth since world war ii. as a result, the member states will probably f need to drive the show on this. does the pound actually move on the back of brexit negotiations. i think on our those days where you this chart, fundamental moves on brexit in the pound stock i think one of those key things is the loud -- is allowing the brexiteers assess you know the come to my roots. 2015ooking at the 2014 and streams, where that is good policy watching. note know it's not it's

that we have more time to figure that out and how it will affect the economy. francine: you mentioned yen, how undervalued is it? to103 are looking between 100 and 105. the risk of that it is even 90 is something to be concerned about. francine: so, are you were to about the scandal. is abenomics dead in the water. john: that is another list of throwing yen positives out there. i think it is one of those things where you cannot completely ignore the medicine of the reasons why anything. thank you so much for joining us. of course, we will talk more about italy and his biggest coal

on the europeanxz banks. pigot the latest edition of bloomberg businessweek. and for more on instagram, log on to the live look on the 10. i think oyu should have a kitty. in new that 2:30 p.m. :3:07.nd seven then very shortly we talk bloomberg.

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tom: good morning, everyone, francine is with me but i'm in new york. here's taylor rigs. taylor: comey called donald

trump morally unfit to be president. he appeared on abc as part of his publicity tour for his new book. he says he can't rule out russia has incriminating information that would make him vulnerable to blackmail. president trump called comey a slime ball. we may get a sense of the impact of tax cuts on the u.s. economy today. brief sales data is coming out and they say consumers opened up their wallets after three months of declining sales. it's the latest sign of cooperation between asia's two largest economies. china and japan promised to work together to push north korea to end its nuclear weapons program. china's foreign minister traveled to tokyo for the meeting and is the first of its kind, more than eight years the two countries vowed to inform u.n. security solutions against north korea. former u.s. first lady barbara bush is in failing health and will not seek additional medical treatment.

mrs. bush is 92. a spokesman said the wife of former president george h.w. bush will focus on comfort care. she has been treated for a thyroid condition for years and had heart surgery back in 2009. global news 24 hours a day on air and on twitter powered by more than 2,700 journalists and analysts in more than 120 countries. i'm taylor rigs. this is bloomberg. francine, tom? tom: thank you so much. over the years of bloomberg on the economy and bloomberg surveillance we've benefited from international discussion in advertising discussion with sir martin sorrell and he's out at wpp. we thought we'd get perspective from paris and of course advertising with claire barberi from invest securities. a terrific experience over the years in looking at media and advertising. claire, from the view of the

future of advertising of the challenges and the challenges of wpp, where is wpp in five years? claire: that's really the question. it's tough to see sorrell leaving during last saturday. and no one was expecting such a sorrell.t of in france we have publicists and even if it took time, obviously we look for someone really able to take the challenge and to make a transition with him. and the much more younger, dynamic is the right guy at the right time. ow we really feel that the

transition has not really been well prepared. the question is really what will happen to wpp now because all know that wpp was sorrell and sorrell was wpp. tom: the idea of this is every account in advertising is a relationship account. do you have any idea of revenue stability within wpp or for that matter the large advertising business as well? can you mod el8 out even 12 onths of revenue at wpp? claire: that's really what scares me because already we knew wpp was not doing very well since one year and all the time martin sorrell was trained to give the reason it was only

viewed to package good companies but it is much more than that. and now he's leaving and was the guy in contact with the clients, we can fear much a throwdown in the states or even a decrease or something that is eally frightening because even without thization was tough, it's getting tougher. francine: i have a look at the revenue drop since 2017, will the company have be broken up o make more sense? claire: that's also a good question but what we know is is full of thousands of small companies which have been bought over time. now the real strategy for an advertising company is really

to have all the businesses working together. so yes, it can be split up but does it really make sense? i'm not that sure because creativity and media now has to work together and all the business coming from contact also helps. also the businesses are really working together. i think it will be a sad solution to really break it up. but as the succession has not been prepared and we are entering a time of uncertainty, we really don't know. tom: thank you so much. claire barbaret with invest securities. we'll continue to speak with european banking in a bit. it's a big week for bloomberg surveillance. we'll be getting our briefings from bob and karen. bloomberg daybreak, really coast to coast on bloomberg radio.

a terrific summation of where we are each morning, new york, boston, san francisco, washington, and digitally worldwide.

♪ ♪ francine: did morning, everyone. this is bloomberg surveillance. tom and francine from london and new york. the future of kim hammond's position as chief operating officer is said to be in doubt, a week after germany's biggest lender replaced its chief executive. on the set is david, and we spoke with you a week before the changes deutsch bank and at the time you said you wouldn't touch it. what would need to happen now given there's complete overhaul

hanth to look in deutsch bank? david: i think you have deutsch bank is investable as equity and a credit level and clear senior level. i don't think deutsch bank is the issue, liquidity, solve enzi and well capitalized. the issue is profitability. and in order to be interested is with a i need to see is a complete overall of the 20th century and try to build a u.s. investment bank which sevened very well the employees but not the shareholder or clients, i would say. and what i need to see is a conversion of the u.s. strategy to a b.n.p. strategy, meaning focusing on cash management, transaction banking and what is needed for the german and european clients and not to be a key leading bank for your u.s. clients because there are plenty of other options.

francine: the management at the top, will they be able to deliver that and if yes, in how much time? davide: this is to be seen because basically i think inside and also along shareholders there is a split. there are those who want to play and think deutsch bank would be the european sachs and after 20 years of failing probably it's time to give up. time will tell. i think here the appointment of the new c.o.o. will be interesting because if they don't deliver this it will be more troubles ahead. francine: should he be commerce bank? davide: even, let's say, i think it would be a mistake in the next future if you tell me three, five years down the road it makes sense. but first you need to sort your house. you need to put your house in order first. tom: let's look at the chart to show you how the trend has not been broken, a vanilla chart of

deutsch bank and down we go to 1112 with a bit of recovery here but no way through one of the moving averages we said up. davide, all this comes down to is can the german bank develop a anglo american strategy? help us with the psychology of deutsch bank day to day as you would any other continental bank. do they have any sense of an anglo american immediacy? are they trending towards that? where does it sit right now? davide: i think the key issue is it you look at the 20th view, deutsch bank has been operating 30 times leverage. on that leverage the return of equity of it's investment banking division would be over 2%. e and make a 2% title destroying the economic value for your shareholder you should not pay yourself bonuses but the former management was happy

to keep claiming europe needs, a german goldman sachs so i play myself goldman sachs bonuses and deliver in returns. that clearly ain't going to last now so what i think is needed here is for them to realize that their own core lines, their own european and global clients don't need deutsch bank to be number one in commercial real estate. they don't need it to be key prime brokerage to dwhrobal hedge funds in the state. they don't need deutsch bank to -- tom: extremely well said and clear. let my ask the money question, what in god's name are they waiting for? if they're going to effect a plan to in some way lessen or exit their new york platform, what are they waiting for? david e: i think it has to do with politics and people. sometimes they build the empire

and strategy of the last 20 years have the problem in letting it go. i think as a result it would be key if it finally does what everyone knows doup bank needs to do or not. there's so many people in transaction banking and wealth management they can't wait for this to happen because it's so obvious to them and the numbers are swaggering, not only the regulators, they are very worried to see a deutsch bank expanding where in a place it has not made any money and every three years get so many losses that on a cumulative basis has been a debacle. francine: you like the french banks. should the french banks consolidate and buy an italian bank. there's a rumor going around on unicredit. davide: from the french perspective, france has within on a spring in italy, whether 's been gucci or the parmela

r others and secondly they already are present with b.n.p. and they know the markets and it's very similar in terms of structure. i think there is room for both the incumbent from b.n.p. to add. how to add in italy, i think the best is to wait for some accident to happen and be the domestic put as has happened in the case of other ones, so there's no rush, just wait. francine: we're expecting results from bank of america later on. do you are like them? davide: we like both of them and own all u.s. banks because think the rates play -- has not materialized yet and in terms of percentage weight we have less exposure and u.s. banks have been our key the last seven or eight years and now they're up with the events

in terms of the structural adjustment. logarithm ay the change. tom: good morning. mervin king writing for bloomberg view. this is an important essay and i'll give a heavy feature on this today, from the former governor of the bank of england, the european central bank in germany may continue to impose austerity on the rest of the monetary union. in the end there will be a combination of higher inflation and surreptitious fiscal transfers from germany and the netherlands to the southern members. what better way to stifle this opposition than to have as the e.c.b.'s president a highly respected german central banker. davide, this essay would be another essay but from who it big om, meryvn king is a

deal. can the european central bank tricchet, he new the new dawg i had. davide: yes, is he a capable and smart person. the key question i ask myself is the following, he's been voting down every key decision of the e.c.b. governing council the last three or four years and because the e.c.b. ultimately is a democratic body where people need to vote has always been in the minority the last four or five years and you totally change tragedy and you embrace the majority or you're going to be put out of the minority in the first e.c.b. meeting. secondly, i think -- remember, he's not the central banker by background, he was angela merkel protege and has been parachuted at the age of 14 in the bundes bank and not sure

he'll have the key support of central bankers and he won't be president. francine: who should be president? david e: if i had a vote it would be the governor of the bank of france and perfectly bilingual and born at the border of germany and france. francine: we had john tricchet, on the fact he's french? davide: he's bilingual and is the equal candidate and a member -- tom: i have to get out my map here. this is what surveillance is all about. francine: you get full marks for geography. when i fly to new york later i'll get you a world map, a globe. not if it's not moet, it's

o-ay, it's moe-et. francine: let's go back to the leadership, in the meantime if you have cool charts you want to steal from tom, log on to gtvgo, there's a cool revenue chart for wpp that goes to the crux of what happened with the chief executive stepping down abruptly and the resolutionle -- ruble charts bringing it back to 1994. this is bloomberg. ♪

taylor: this is bloomberg surveillance. i'm taylor rigs. let's get to bloomberg business flash. another fine cheese -- chinese tech company is talking about a public offering in the u.s. according to people familiar with the matter, the startup could be valued at $4 billion. it is backed by china's internet giant, meilishuo.

management and other deficiencies were first noted more than two years ago and according to documents and pentagon officials and involves production of the f-15 and f-18 jets. boeing is working to fix the issues raised. and the chairman of nissan and renault is reviewing the two companies cross share holding arrangement and says all options are open. in an interview with japan's nikkei newspaper, he said he wants to find solutions by 2022. those comments follow a bloomberg report last month the two automakers are in talks to merge. and that's your bloomberg business flash. tom and francine? francine: thank so you much. let's go back to a conversation , the border between the germany and france and i have a happen map that goes to davide serra's points being the french central governor being the

right person to the u.s. central bank person. where would that leave the periphery. i imagine when the cart trading in full swing who will replace mario draghi, what will the european countries want? davide: they'd like one ultimately want euro because of the implicit transfer out of the interest rates policy, germany has been the absolute key beneficiary through the exchange rate. let's be clear, the fact germany can issue at negative rates it means they can finance the government without the european scombizzing it -- small businessesing it is what it -- subsidizing it. and you consider they have the highest debt in the euro zone, which is the largest between private and public, you're talking five trillion europe and borrowing hundreds below where they should, paid mainly by the higher credit rating to had and the subsidy

germany with the interest rate. as a result of what they want is the fact it's been recognized and start this rhetoric of only looking at cash expenses when in reality they're the key beneficiary and they know this. francine: we're hearing from insiders this great project of banking and more consolidation between france and germany and germany is having cold feet about it. is that what you're hearing? davide: yes, in a way the dynamics, they say yes we want to go further in the integration but we want all the full an banks to have the app and the first would be a red line and no way in europe you can start considering the sovereign debt of implied skills and risk. why? because that will immediately

break the euro. you can't tell in italian banks, you can only hold the bune and the loss making and can't tell french banks this is the type of european risk can ou hold. tom: within the geography, strasburg's location, within the map is the guy to replace drawing i had. how big are the shoes and boots to fill of mr. draghi. davide: they're huge. without mr. draghi today we wouldn't have a european union because when politics got stuck and nobody there to act he took the leadership and as it is mandated, the financial stability, he said the famous words, i'll do whatever it takes. ultimately in his story it takes leadership, he had more leadership probably than most

of the european premieres and delivered, as he always says today there are less unemployed people than ever in europe and that's thanks to his actions and ultimately remember, he only engaged in quantity easing which the u.s. has been doing five years before and the same for bank of england. nod that he's done anything that wasn't orthodoxed and anybody else was already doing it. tom: you've been hugely valuable. thank you very much, davide pifment an important hour, we'll drive forward the conversation in washington on our international relingtses, terry and steven will be with us. this is bloomberg. ♪

tom: this morning, mission accomplished. we see retail sales at 8:30,

the consumer is consuming. further, mission accomplished. james comey launch as book tour. he assaults the president. look for the president to return the fire. look for tweets from the don. and finally, mission accomplished right. in this hour steven cook on the counsel of foreign relingtses on syria, caught between saudi arabia and persia. good morning. this is bloomberg surveillance live from our world headquarters in new york, and with me is francine laqua. pound sterl, 143 print on sterling. do you recall where we were 120, whatever, and the world was coming to an end? francine: i do. it was right after the brexit vote, tom. i also have a nice chart i'll get to looking at trade weighted pound. patel said it best and said the kind of swings we saw the last six or seven months on

sentiment and how brexit was going, we seem to be moving away from that so just look at the parings longer term, maybe 12 or 18 months. tom: ubs said climb aboard sterling. right now the immediacy of the weekend news, your first word news, here's taylor rigs. taylor: the trump administration will impose more sanctions on russia today over syria's reported use of chemical weapons. the u.s. ambassador to unite the nations, nikki haley said the goal is to discourage syria from using weapons again and keep russia from covering the assad regime. the u.s. told the u.n. it's ready to attack syria again if necessary. and as you were mentioning, tom, former f.b.i. director james comey said donald trump is dishonest and morally unfit to be president. comey spoke in an exclusive interview with abc news george stephanopolous and said he could not rule out russia has incriminating information that would make the president vulnerable to blackmail.

>> it is stunning and wish i wasn't saying it but it's the truth. it always struck me and still strikes me as unlikely and i would have been able to say with high confidence about any other president i dealt with but i can't, it's possible. taylor: president trump said comey is a slime ball, the worst f.b.i. director in history. president trump has taken an extraordinary step and asked a federal judge to temporarily block his own justice department from viewing evidence about his private lawyer, michael coe hen, that was seized in an f.b.i. raid. the core pilings, some of the material may involve the president and should be reviewed first by him. prosecutors want a government team to look at the material first. and british lawmakers could still thwart brexit when a deal gets to parliament according to the think tank institute for government. a report said parliament could then send teresa may back to the bargaining table to engineer a second referendum or prompt a general election.

global news 24 hours a day on air and also on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm taylor rigs. this is bloomberg. francine and symptom? tom: equities bonds and securities and commodities on a monday morning. up 12 and now up 16 and down futures up 153 and puts dow futures near 24,500, euro flat. oil turn as little lower. next screen, please, with a big showing, the good feeling for the market to get to a 16 handle would be something. dollar mexico over the last four or five trading days. i'll do ruble in a minute. francine? francine: this is what i'm looking at bonds declining and stocks falling on repercussions of this missile strike in syria won't rock the markets. 'm looking at gold and yen

edged up without the support of abe. revenue groth is falling and the share price down today after that abrupt resignation from its founder martin sorrell. tom: dollar ruble, three great valuations of the russian currency. simply, 1998, down we go. again, the financial crisis and a more recent challenge that the ruble has or a little bit after whisper further depreciation there. where does russia fit in? as we mentioned earlier we have a serious nuclear capability. our gregory white has been on the watch in moscow for many years and gives us wonderful perspective. greg, how are these missile attacks actually greeted in moscow?

greg: i think the main emotion was relief because there's a lot of concern ahead of the attacks it would be bigger and might actually either inadversently or deliberately target russian installations in syria which would an serious escalation. i think the defense here generally it was a pretty narrow attack and whatever message had gotten out about the possibility of escalation being dangerous they got that across. tom: make us smarter here on what mr. putin can do, does he acquire more acreage in ukraine and do his own set of sanctions? what's the to-do list of mr. utin to respond to this? >> at the moment will be response on the sanctions and parliament getting ready to counter against u.s. companies and looks like tale target remaining u.s. exports to russia and some of the areas where russia has been a

important supplier to the u.s. and it's not clear how much leverage there is there and airspace laying some nuclear energy stuff but obviously given the difference in size between the economies there's not a huge amount of leverage russia has. that's the first step. ukraine everybody has been watching for a stepup in the violence so far. we haven't seen it. but that's always a possibility and on the ground in syria, the kremlin really invested in the peace plan keeping assad in place. if the u.s. can -- if any further u.s. intervention is limited i think that ultimately on balance is good for putin and that's going to be something he's happy about. francine: tit for tat but business as usual between the u.s. and russia or can they no longer work together? gregory: on a political level clearly every step lately has been downwards and for all the talk about trump wanting a better relationship with putin, the reality is the relationship

is worse than it's ever been and does seem like the level of trust is so low on both side it will be really hard to patch this one up. tom: thank so you much. greatly appreciate it with a briefing from moscow and now to washington with our chief correspondent kevin cirilli. ben cohen had to do it "saturday night live" with mr. mueller. this isn't funny. the president needs lawyers. how will he retain lawyers this morning? ben: i think the legal team is giving advice president trump doesn't want to letter and all throughout the weekend and the conversation i've had with folks connected with the white house, there's a large expectation the firing of someone might come at any day this week with regard to the mueller investigation. that of course has been a red line of political sorts for many folks on capitol hill including many prominent

republicans. the backdrop to all of this comes as james comey, the former f.b.i. director speaking out publicly in a series of interviews the last couple days as well as today with regards to a new book tour he's launching. all of this creates a very heightened environment surrounding president trump. tom: with the heightened environment surrounding president trump means someone has to tell him what to do, i get that, or he's truly the lone wolf president. how alone is the president this monday morning? kevin: not that alone. i want to follow up on something we were reporting on on friday on "surveillance" with regard to senate judiciary committee chairman chuck grassley bringing forth the bipartisan bill that would make it more difficult for president trump to fire bob mueller in that investigation by giving congress approval. house speaker paul ryan, the was not n who said

seeking re-election said he was undecided whether or not he'd bring that same piece of legislation to the house floor. that would suggest that speaker ryan is not taking that particular hard line approach as the senate judiciary committee chairman is considering. francine: there's quite a lot going on, cohen and stormy daniels are appearing in court today and the president is also moving to block the investigator's review of this evidence. you ever see anything like it. kevin: here's what i say. you look at this matter, we have a lot of lawyers watching and listening and they know a legal fishing expedition often leads to new subpoenas and new trails which folks go down. that's why this stormy daniels and michael coe hen issue is so potentially problematic for this administration. because the administration has said there's been no collusion and they've maintained that.

but these new investigations, in the same way that the anthony weiner laptop led down a different road is very -- could be potentially similar to hat stormy daniels could lead. tom: thank you so much. greatly appreciate it this morning as we turn to finance off international relations and politics, there's no one better able to speak on full faith and credit america than ira jersey, our bloomberg correspondent in charge of trillion dollar deficits. how does a guy like you synthesize trillion dollar deficitted and what we heard friday that the goal is to get down to a trillion dollar deficit. at some point the trust has to break. >> the trillion dollar number is obviously a big number and back in 2009 when we had president obama come in and we had our first trillion dollar deficit we were all worried about it and everyone was

worried about the sustainability of u.s. debt but we have to keep in mind the economy has grown a lot and with the idea of the tax cuts and current budget plan, we're going to spend now but that should boost growth later and because we're boosting growth later deficits have a share of g.d.p. it. it sounds good except for the fact we're talking about debt to g.d.p. still going up even in this environment. when you look at the latest projections from the congressional budget office and the work we've done it suggested we're still getting close to 100% g.d.p. which we've never had since world war ii. tom: the trust know at credit swiss and bloomberg intelligence, what's the risk that breaking or do we just print more money? ira: the chance of the u.s. defaulting is very low. it's amazingly low, it's not a credit story but might an price story to your point as we issue more and more bond at some point there might be a buyer strike.

you asked me the last time we were on is vigilantes but they won't show their head until you have strong growth and growth continuing to move higher and inflation moving higher and this very high debt level that is going to continue to force more and more bond into the market. and that crowding out has only one thing to do and that's lower prices. tom: can i show a chart? we will with do this for francine and wondering how pound sterling will work in washington this week. the brexit chart. what a tour de force of bloomberg graphics, gtvgo go for you to steal this chart. up here is where i had a dinner in mayfair that the keeper of the expenses doesn't know. a strong collapse here in terling. a weak sterling and then we turn around and come back where

we were in june a few years. that's a cool chart. gtvgo. stay with us. this is bloomberg.

♪ tail major: this is bloomberg surveillance, i'm taylor rigs. let's get to business flash. the drug company agreed to sell to france. shire wants to focus on treatments for rare diseases. meanwhile, japan's pharmaceutical company is making a bid for shire that could be up to $50 billion. private equity firm advent international is close to buying the european drug business and according to those familiar, the deal is valued

$2.5 billion including debt. the c.e.o. has been shifting the focus to buy to tech and new medicine for sanofi. tom: with us is ira jersey as we peruse the chart that matters. in here is the idiocy we have a non-fed meeting and then a fed meeting with a press conference. i don't know how we got here as well. let's bring up the chart. if we could swing around the two-year yield and what's important is this goes to the great stanley fisher. and this is at the percent change matters and ira we see this in a large chart with the new gamma and velocity of a higher two-year yield s. that velocity a good thing for chairman powell? ira: it's what would be expected with chairman powell saying we're going faster as we've had the word further in the statement since september which obviously is before chairman powell took office.

but the fact is that chairman powell is just continuing janet yellen. we're likely to get two more hike this is year and starting the price for three hikes in 2019 and that's why you see two-year notes starting to accelerate their sell-off a little bit. francine: are there more signs the u.s. is overheating? ira: you see in europe and u.s. a modest slowdown in a lot of the indicators. you saw a reasonably weak payroll report. things are still on trend but not accelerating the way that they were. you know, the fed in a way might say hey, we were actually kind of at the curb, not necessarily ahead of the curb but at the curb in terms of hiking and expectations of where we're going to go. i don't think right now we're looking at significant acceleration in growth or inflation. but the trend still continue where you have modest upticks

and this means you can get two-year notes that will continue to climb just if not on nothing else but the fact the fed is likely to continue hiking and you have a calendar issue as a two-year note today is a three-year note in a year. so you wind up needing to have higher yields just because of that and we're priced for it. francine: what about the 10-year? ira: 10-year notes is interesting so you need significant acceleration of the inflation in order to get 10-year notes above 3%. at in point this year we'll see 3.15% on the 10-year note. ultimately to get that much higher, you need more sustained growth and more sustained inflation. it's not so much to do with the fed, quite frankly, as it is for our economy. tom: our listeners just spilled their coffee and we get back to questions we haven't asked in 12 years. what's it mean for a mortgage and all the add-ons of our debt

as well. you in your head, ira, forget about the wongy log rhythmics, do you have a point in the 10-year yield like in 2006? ira: close to 3.5%. tom: i don't buy it. really? ira: we're at 3.85% today and another 30 base basis points from here is one hike and when you think what it means for mortgage rates it means a little higher but you're not at a point 10-year yields are significantly higher than growth or wages. you're talking things like housing affordibility which will be impacted more by the price of housing which naturally is doing ok and has continued to climb. tom: do we have a vice chairman of the fed? ira: not yet. tom: can we get him by wednesday or thursday in washington, is that feasible? ira: we have quarrels. governor quarrels --

tom: on the short list. ira: it's possible richard who we talked to on this very desk, what's interesting about this fed is when donald trump came in we thought maybe he'd do things differently but with people like jay powell being appointed and richard clara being appointed, those are mainstream people in terms of monetary policy and view of the world so we're not necessarily getting out of the box thinkers here. certainly more deregulation for sure. tom: ira jersey with us of bloomberg intelligence, chief u.s. sba rate strategist as well. coming up later today, really a wonderful time to speak with steven whiting of citigroup, not only the strategy and the economics off of the team but steven whiting on profit in america. he's very good at that in the 6:00 hour. stay with us.

francine: good morning, everyone. this is bloomberg surveillance. the hunt is on for a successor at wpp, the chief executive and founder martin sorrell left the group and transformed from a wire shopping manufacturer to the world's biggest advertising company. his exit comes amid allegations of personal misconduct, claims that he has denied.

wpp's board ended its investigation this morning saying the amounts involved were not material. joining us to discuss all this is our bloomberg intelligence senior analyst and head of research and head of the european media research. thank you for joining us. matthew, you have a great piece on bloomberg intelligence basically saying whoever takes the reins at wpp has big shoes to fill. what diamond of person and what would their job be? matthew: you need somebody to continue the huge transformation in the agency model. we've seen a lot of talk and evidence from the consultants the way advertisers are buying and it's a advertising source in a different way and you need somebody with a creativity angle and someone with a technology angle to reshape the business.

francine: do you think wpp should be broken up? matthew: it's a matter of selling off certain aspects, potentially the p.r. business. but for the core of the business, actually that should probably be kept together, the creative side, the media buying side and some associated agencies around there, particularly media buying and is the one part you need scale. the more scale you have the better the business. tom: ian, you're knee deep with our work on sky and i-tv and what's the technical disruption right now, what's the technological disruption that sir martin had to deal with and the next pair of people have to deal with? ian: you have a couple things which impacted the agencies. first of all is the shift of money that's gone to the big online giants such as facebook and google. so traditionally with agencies and tv companies have been the

intermediaries and the online companies made more of a direct 'tiser, o to the potentially not the agencies as well as the consultanty and getting in the business and what you've had in the agency world is essentially the two sides coming together. agencies actually more in what traditionally would be much of the consultanty and vice versas as well particularly in e commerce. tom: what i've observed at home is everybody is doing everything they can to avoid advertising messages. youtube disruptive and on and on and on. with that said, what will you look for the next 12 months besides something strategic like selling off assets. don't they have to move bodies out the door? ian: this is something wpp does is restructure businesses. the question mark is whether the old traditional creative

agency model where you're paying people a lot of money whether it still works in this world. for agency work, this work is actually labor intensive. so if someone has to spew they are automated, it's not. there's a question whether you ship bodies out the door, you have to increase them. the wider question as well as what's going on with facebook and the problems around youtube, models are coming under scrutiny and more evidence whether they return the investment they generate justifies the cost. those aspects that the success will have to deal with as well. francine: there's a simple chart looking at wpp's drop in revenue and will push them out for radio listeners but does it a e more sense in looking at candidate on the inside. matthew: it's been built up and

the continuity makes sense on the right strategic path. if the board looks at this and decides they're on the right path but need a stronger push or if they've gone down the wrong route would have to push for somebody external with a very big profile and bold and can take on a huge number of personalities to implement more fundamental change. francine: we were mesmerized between the contacts of sorrell and his friends. who wpp put on top as an insider is very young and charismatic. ian: for wpp the chances are they go with an insider. the problem they go with an outsider is the message you send though there's a large pool of talent within the wpp, you say essentially there is no one in there to do the job and is a mixed message to send out. matthew is right, the person that comes in next has to look at the strategy of what wpp does. going back to the point about

market research prkts martin was always seen as the lead defender for wpp because none of the big agency groups did that. the next candidate who comes along will take athe next candie look at the assets and will they expect change. francine: we are just getting a do with that has also syria and the possible extra sanctions that the u.s. would impose on russia. we are hearing from the kremlin that russia would respond to u.s. sanctions without hurting their own economy. would be targeted sanctions on u.s. companies that would not hurt the overall composition. also looking for the morning agenda, we got further bank earnings and revenue than all the details in that. bank of america is coming up with some real unique distinctions coming off a

.riday's jpmorgan report right now, first word news with taylor riggs. taylor: former fbi director trump president morally unfit to lead. out thate cannot rule russia has incriminating information that would make the president vulnerable to blackmail. impactget a sense of the of the tax cuts on the u.s. economy today. retail sales data is coming out and consumers finally opened up their wallets after three month of declining sales. it is the latest sign of collaboration between asia's two largest economies, china and japan. they have promised to work together to push north korea to nd its nuclear weapon program.

it is the first meeting of its kind in more than eight years. the two countries about to enforce u.s. security council -- un security council sanctions against north korea. barbara bush is in failing health and will not seek additional treatment. of is 92 and former wife first bush president. she had heart surgery as well in 2009. global news, 24 hours a day on error powered by more than 2700 analysts and journalists. i am taylor riggs, this is bloomberg. it --nk you so much for thank you so much. when to say thank you for that to briefing to our two guests, matthew and ian.

and the to washington international relations and the set of domestic relations that we have seen over the last number of days. this having to do with the president and syria which we covered with mr. cir rilli earlier. you are knee-deep in the legislative realities away from the news flow. is the work of the senate and the house changed at all by all of these distractions? >> no, it has not. the legislative schedule goes on as it has before. there is a bipartisan understanding here that the vast majority of legislating has already been done for this year, which makes it simple. we have had our two-year budget deal, the first year of the spending deal coming in after

that. there will be a variety of things done by both parties to position themselves for the november midterms. by and large, legislating is done so there is little to distract. tom: i want you to explain, terry, where the gentleman from iowa fits into this mix. senator grassley is doing more than just being the senior senator. he is looking at the president, he is looking at all the president's men. how does grassley the into the matrix on a monday morning? senator grassley is one of the most senior senators in washington, and senator grassley is also chairman of the judiciary committee. he is a number of responsibilities. one is a very important job of vetting the president's judicial nominees on the senate floor and , he has ais

responsibility to oversee justice department operations which means among other things, he wants to make sure that both the justice department is operating properly and part of that means the justice department has to be operating three of interference. senator grassley is up to that task. the president is asking for people to get involved and not publish some of the things that they have found through his lawyer. how we ever seen anything like this happen before and what happens next? terry: not with the president. but this sort of thing happens all the time. apparently what is going on is cohen is being investigated for a number of things. stormy the payments to daniels were proper, whether they violated some sort of law are not, and what the president

and his lawyers are trying to do is make sure and limit the scope of discovery. to say, you can do what you like with cohen, but you cannot misdeeds toged get at the basics very bit of relationship we had is lawyer and client. that is quite common. they are trying to work that out before the united states district court. francine: how alone is this president? terry: i do not think he is particularly alone. different presidents have different styles. nixon was a famous loner and a lot of different ways. other presidents are more inclusive. biographerevelt's used to call it his stickly fo rced mind where he was the hub.

i do not think he is particularly alone. there seem to be a number of people that remain interested in serving. that said, he has changed out a good deal of his advisory team so we are another shakedown. we are looking for another stimson are marshall, thank you so much, terry. what a joy it is. we're going to move from mr. haines over to mr. cook. he is senior fellow for the council of u.s. relations and we are honored he joined us. i been thunderstruck the lack of analysis on what iran will do. what will they do off of the offensive friday night. -- friday night? iranians have the capability to make problems in a number of places. including our allies in the , the northernis

border of lebanon -- they are building an infrastructure in syria that is a major threat to countries in the region that are friendly to the united states. there is opportunity and motive for the iranians to do damage. tom: what did you see as a response from the sunnis from saudi arabia? what did steven cook see from a dominate sunni royalty? sonali: it is an steven: it is interesting. you also see creeping into the gulf of leaders in the that this is a conflict that has destabilized the region for too long and they would like to bring it to an end as soon as possible. they have no means.

they have washed their hands of the great hoping powers, united states, russia, and others that are involved in -- conflict we thoug will find a solution to it. tweets,: donald trump mission accomplished. what should the mission be for the u.s. in syria? steven: this has been a debate for the last seven years. should the united states be more directly involved with the conflict in syria and bring the civil war to an end by introducing large numbers of forces, should be doing what it is doing now which is including about 2000 forces in the northeastern part of the country -- iranians iranin , or should it be as the as he wassuggested announcing these airstrikes, that the united states is going to get out of syria soon and

leaving it to the region to sort out the problem that syria represents. francine: right. what would you advise the trump administration? steven: my own view is that there is no possibility that the u.s. could margin army so our bests, course of action is to do what we have been doing. working with the kurds in northeastern syria and preventing as best as we can the iranians and the russians from doing more damage. tom: steven cook, thank you so much. briefing,y morning worldwide and coast-to-coast, bob moon and karen moskow, bloomberg daybreak. all of our different affiliates in boston, new york, san francisco, and sirius xm channel 119.

this is bloomberg. ♪

♪ this is bloomberg surveillance. let's get the bloomberg business flash. another chinese tech company is headed for an ipo. it is in talks with investment banks about a public offering in the u.s. according to people familiar with the matter, the startup could be valued at about $4 billion. it is backed by $.10. the pentagon has decided boeing documents ando pentagon officials, problems involve production in a boeing f-15 jet, but says it is working

to fix the issues raised. allegiant airlines is pushing back against a critical television reports. says.s. discount carrier it emphasizes safety and meets all federal requirements. 60 minutes reported that allegiant had more than several incidents in one year. that is your bloomberg business flash. francine: thanks so much. sonali basak with us. bring up the chart. we are going to show you the chart in a bit. bank of america just out. francine, what is the first look at uc? francine: it looks below estimates. it comes at about $4.1 billion in 4.1 billion -- the earnings

6.2%.at looking for three things, a little bit more on how they are planning to open more branches and actually grow within the united states, and i am also looking for a little bit more news on what we heard from the all i have is the revenue a touch below estimate, earnings per share at 62%. -- 6.2%. francine: this is that tom: this is the -- tom: here we are. sonali, i'm going to go right over here. ats is what the pros look -- the organic revenue growth. loans up 8%. revenue up is a good thing.

income, yes revenue is down, however, it is told in revenue in line with expectations which means that equities must of been stronger was is what everyone wanted to see. earnings outt the of the way but the vector is in the right direction is in it -- isn't it? sonali: it is in the right direction. of plans likelot opening 500 branches across america. francine: so on those 500 branches, hiring more than 5400 workers, kenny stick to those plants? sonali: that is something they're going to be asking about on the call. they are going to have all this extra money to use after the tax cuts. i had them take a look at investment banking revenues were , that is something that people thought was going to be a weak --t in the quarter, so it

with the see of revenues and other areas were able to shine. the equity trading seems to be better than expected, so you look at equity ,rading for the first quarter that is $1.5 billion instead of 1.1 billion that we were expecting. two different metrics for two different units. at the bottom is the which is return on average tangible e quity, 11% and now 15%. a 46 pagere to do letter, could he say that fortress bank of america? sonali: he left also mention interest rates. incomeough net interest

is up, there is a flattening yield curve. pro,let's go to the ira. a 3% 10 yearout that he talked about? is, you cane issues primarilyt income because you have higher things like libor. a lot of the instruments that they hold are either floating or they have swapped them into floating over the last couple of years. with higher short-term interest rates, some institutions like bank of america and others can do well in an uprising interest rate environment. tom: ok, we are three or four weeks on the extended agony of late june. explain to me why a banks benefit from florida and -- why

banks benefit from floating? it is not a free lunch. fed'snothing else, the activities have been highlighted for a long time. short-term interest rates are going up. there is opportunity to hedge the interest rate exposure. barring short by banks and lending long, you do not to do that today because you can hedge. you can use an interest rate swap to hedge your long-term risk into short-term risk. tom: do we know where the hedges are? of our team have transparency and understanding of what is on the ballot sheet of bank of america or jpmorgan? >> this is been a question. -- has been a question.

whether the markets of already priced in on how much they are able to benefit on interest rate environment is a big question mark. the other thing about interest rates that people are hurting from is the mortgage lending -- halt --has come to a halt is the right word? sonali: slump is even better. jpmorgan slumped 2% on friday because of mortgages. francine: thank you so much. are very right in pointing to the return on equity's, and -- 10%. the return on assets, 4.2%. you can follow along on your bloomberg terminal to follow more of these reports and results.

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♪ i am tom keene in new york.

we are together again, rumored tomorrow and wednesday, her people have not told my people what the travel plans are. we will be in washington this week that imf meetings at the world bank. really looking for to that. right now, ira jersey, let's do rt with ourst cha bloomberg intelligence chief. ira.on down, the price of the 30 year bond. what are the headaches with long-duration taper over the next 12 months? >> they have to issue more of it. one of the big worries is as things start ramping up issuance of 30 year debt, is will it become significantly more expensive for them to issue this debt over time. right now, it has not been an issue over the last couple of

months since they started this increase. in two weeks, we get an additional a refunding announcement to where treasury will tell us, we know we have to issue a lot more bonds. here is how we are going to do it specifically. that is around a time when people are going to start talking again. are we going to be able to absorb all of this that into the market? francine: when you say it may get more expensive, how much more expensive? year debt and 30 year debt, you're not likely to see increases in yields. we could get up to 3% on the 10 year. the 30 year stays around 3.25% maybe. the short end is really where you are going to see much higher yields. tom: i want to look at the chart again, but i put the bracket up there which is a 5% loss in price since the good times. how much price decline are

institutions going to enjoy lummis termination does is -- his magic? >> you are looking at another 10 points potentially of the climb. that is a really large decline. incomein -- your is not keeping up. you have lost in price. ,om: remember that in your income is not keeping up. ira jersey, thank you. an important conversation as we begin our week. the reserve bank governor of zimbabwe. ♪ 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. ♪ >> looking for a loan growth.

bankamerica earnings beat estimates, and equity tradings zero in on demand spurred drops. nikki haley says that fresh sanctions will be imposed on russia. high expectations. about the strength of a global synchronized growth bubble up. david: welcome to bloomberg daybreak. we are not showing up in new york city because it is so miserable. alix: been you play tennis for 24 hours? david: four hours. alix: will be sick of the whole week. in the markets, i would not categorize it so much of a risk on but taking some risk off. as of the futures of about 17 points as investors were hedging risk into the weekend. you can unwind some of that hedge. if you look at euro, slightly higher.