anna: good morning from london, on anna edwards. manus: these are today's top stories. metals higher and oil gains ahead of a key meeting between opec and its allies. we are live. concerns, worries in version could come within six months. even as fed colleagues don't see a recession. anna: and the u.k. upper houseboats against leaving the e.u. customs union which could

herald a faster brexit. ♪ anna: good morning, it's 6:00 here in london. this is "bloomberg daybreak: europe." marketsok at where the are over in asia, waiting for a host of corporate's to report. we will get to those in just a moment. this is the picture across the asia-pacific, up .6% right now. commoditybout rising prices not hitting the equity markets just now. profits from the earnings season seemed to upset -- offset concerns about concerns about geopolitical and trade tensions. a pretty rod move higher for asian equities. 2.86% 10 year yield. that wasn't the story overnight.

we had seen an increase of to 2.87%. the beigee back of book and what it said about the u.s. growth story. concerns about the flattening yield curve and the potential for an inversion of the yield curve still alive. now we have breaking news to get to. anne-marie is at the key opec meeting. while we watch commodities broadly going higher, let's get to that breaking news. manus: i'll: set the pace in news, action on out con is not likely before the first half of 2019. something the market has been preoccupied by. core earnings-per-share comes in this morning. 12.43.beating

earnings-per-share, above the estimate of 1.29. a nice move higher there. outlook confirmed. they have delivered a strong first quarter. the deal, $8.7 billion takeover. we are ranking the amount of money they spent on analytics. they come in at number nine. shifting the focus is the objective there. alcoa, and there's a lovely correlation i found. is ok beating the russell 3000 materials index. an explosive movement, they lifted their ebitda focus.

chaos just beginning as alcoa lifts its forecast. higher and alcoa season unprecedented conflict of events in aluminum. can this trajectory sustained? nickel,-- aluminum, positively on fire. it's all to do with russian sanctions. are we at and explosive moment in terms of the paradigm of inflation? anna: this move higher in commodity prices being taken as a positive by equity markets broadly and by those concerned. if you are operating in that space, you might benefit from those higher prices. this is what the futures tell us right now. we are expecting a little bit of upside at the start of the u.s. trading day.

let's tell you what's coming up in the program. the doha bank ceo joining the bloomberg surveillance team at 9:00 a.m. u.k. time. chancellor john mcdonald joins us at 10:00 a.m. london time. the day after we saw the defeat in the house of lords. there plans for financial services. here is juliette saly with the bloomberg first word update. juliette: donald trump has replaced his threats on north korea with more diplomatic language. speaking with prime minister shinzo abe he said, i look forward to looking forward to -- i look forward to meeting with kim jong-un and hopefully it will be a great success. indicating it is increasingly likely to take place by early june.

meanwhile president trump and prime minister opry have -- have pledgedr abe to increase bilateral trade talks. trump is pushing for an agreement that would reduce americans trade deficit with japan. abe seeking an exemption from tariffs announced last month. we're lookingp: forward to removing barriers to u.s. exports. the united states is committed to free, fair, and reciprocal -- very important word -- trade. and we are committed to pursuing a bilateral trading relationship that benefits both of our great country's. the u.k. upper half has voted against a key part of prime minister theresa may's exit policy. an amendment presses the government to seek up

post-brexit customs union with the e.u. anticipate winning further votes during its passage through the upper chamber. it could eventually push britain toward even closer ties with the european union. south africa's president has touted a so-called new dawn for his country as he attempts to raise $100 billion of investments. he is to convince investors he's committed to reverse economic stagnation. he made the comments in exclusive interview with bloomberg. >> we certainly want this to happen and we are going to make every effort to make sure that we get close to that. i've heard that the imf has revised their own figures upwards and our treasury has also revised them upwards. to revise mine

upwards as well. so i think it is possible. african: in the south reserve bank governor would join us at 7:30 london time. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. on the markets here in asia in late trade, it certainly is risk on, driven by that commodities rally and the positive outlook on global growth from the fed beige book. hong kong and china leading gains in the region. sharemarket that buy what you're seeing in the materials and energy space. stocks we'veof the been watching in the region, we've seen a lot of movement coming through in the south korean building stocks. on hoax that you can see a lot more business happening with the north.

seeing an expectation of resumption of korean business. alumina has a joint venture with alcoa, listen sydney. -- listed in sydney. the price of the commodity could rise to $650. then to the downside, we've seen a lot of weakness coming through in the philippines today. the stock is outperforming those losses but there is a weakening peso and concerns aggressive rate hikes from the bank of philippines. other than that, a solid session for asian stocks. manus: juliette saly with the latest rundown. there is fallout from u.s. sanctions to russia. it isn't limited to aluminum, which hit the seven-year high.

nickel also searched. assessing the global oil glut and the need to rebalance the market. annamarie gordon is never afraid of tracking the story. good to see you. the backdrop is that u.s. stockpiles are below their five-year average. there's a confluence of bullishness as a backdrop. >> that is right. what a day for these producers .o all gather in jeddah officially the meeting is a catch-up to see where things are with the deal. but this target insight and the glut nearly killed, some opec producers calling for longer intervention,n -- the question is how long does the deal last?

the oil minister if anything, said withdrawals could come in the first quarter of 2019. russia was a bit more cautious on that. seeing down with me in moscow, saying they are committed to the deal but they need a discussion on withdrawals and he pointed to third or fourth quarter of this year. their news to be consistence within the group on where the deal is going and how long it will last. that is the key question leaving this jeddah meeting. anna: so timing is crucial. are there other sensitive issues on the agenda? iran and venezuela, for example. what else is making the news? >> as well as syria. the secretary-general told me last week in new delhi that they are looking at this with keen interest. when it comes to venezuela and

iran, this is a serious issue for opec and one they may have to discuss here. dripvenezuela it's a slow bleed, oil that they are not exporting. that's to their economic hardship at home. last month the data showed that has the biggest cuts among any group, but that was due to the .conomic hardship, involuntary for iran, the beat date is coming up in may were analysts are saying a 70% chance at president donald trump of the united states will not renew the iran sanctions. saying from rbc are 200,000-500,000 barrels a day. you producers picket up or do they just let it fall off and let the market tighten even more?

another critical issue is happening alongside that meeting today and tomorrow in jeddah. gordon on therie ground in jeddah. the chief economist, welcome to the show. oil is on a tear and commodities are on a tear. it must be music to an economist's mine. >> if you conclude it is a demand story. roddick, having been a supply story in the commodities space for most of 2017 you would see it as a larger part of the balance we are now seeing in the oil markets. to upgradeaving their demand call but also you look at some of the supply decisions that were not in opec's plan regarding venezuela's production, which is now down to early 1960 levels.

so an extraordinary turnaround there. q2,me, looking forward to there are two dates for investors to look out. may 12, when you're looking at the u.s. be visiting the iran deal, and in june 22 when opec will need guidance as to whether their comfortable with the accelerated oil price and whether they revisit their production cuts. anna: so those are the dates we need to watch for. when you talk about commodities in general, let's dive into the oil bit of it with a moment because there are different prospects when it comes to supply. simon: i think that's right. once you push the project to these levels, you worry across the commodities they spirit first it starts to impact commodities. there's less evidence that that

will become a headwind. on the oil price, what is opec comfortable with in terms of the incentives, also technological change. if you're looking at a 15 your view, you have to be a little uncomfortable with channel shift away from oil at elevated prices . it will be interesting whether opec members can find the level their comfortable with. manus: i started the show talking about alcoa ripping higher. we ripped up the whole global perspective. aluminum, theyn raise the outlook. the point i want to make here is, aluminum is at a six-year high. andre added president confluence of events in the alumina market. it takes one small stone to

costed entire ripple in the economy pool. this could have consequences in the medium-term. medium-termit is a perspective. at what point will the market take notice of the long-term impacts on the real economy? prices ishanges in perhaps not as relevant for the overall macro picture. once you start to see that become more broadbrush, and this is why go back to those factors as they start to replicate across multiple commodities trade tariffhe starts to go from market to market, the becomes macro significant. , investors have made the calculation that they are isolated. as we have spoken about previously, this ramps up to the november midterms, the point at

which it will diffuse. therefore you do worry about escalation. simon is staying with us. more breaking news, mark schneider, the guidance is the news from him. organic growth, 1.2%. a little bit light on what the market had expected. confirming the guidance. the pricing, they are struggling with, only rising by .2%. the market had penciled in .5%. organic revenue of 2.8% for this year, beating the estimate the market had penciled in. revamping the portfolio, they ditched the candy business in the u.s.. we will get into those issues in a while. will it be enough to

placate the frenzy in the active investor community? bookg up, the fed's beige cast a shadow of the u.s. central banks outlook. south africa's new president promises incentive to attract $100 billion in new investment to the country. that's from our exclusive interview. this is bloomberg. ♪

it's 9:21 in dubai. juliette saly is standing by with the business flash. isiette: proctor and gamble in a 3.4 billion euro deal, expanding the consumer health care business by adding a fast-growing portfolio of rants

-- of brands. the unit was put up for sale last year as it seeks to put money into testing new drugs. and the ousting of the ceo of deutsche bank has now claimed is cheap operating officer and head of investor relations. at -- at thenure bank will in by mutual agreement at the annual general meeting on may 24. earlier the bank announces a memo to employees that john andrews is leaving because of the recent management change. that is your bloomberg business flash. anna: juliette, thank you very much. that's bigger has -- have been out in force this week. the main talking points of flattening your car and disputes over trade disputes. yorking of that, the new

fed president set of trade conflict would be a terrible outcome which the u.s. could not win. let's talk about the u.s. economy, simon french is still with us. the fed very vocal on the subject of trade as was the fed --. what is the concern about threats to free trade if that's what we are still talking about. what does that do for your assessment of the u.s. economy? doesn't change the outlook hugely in the near term. the market has been quite positive overnight on news that a tight labor market and the specter of trade tariff not pushed up core inflationary pressures as far as passing on cost increases. it'sst historical measures quite a tight labor market. at this stage you see a lot of rhetoric but you don't see a pass-through into near-term economic activity that will drive markets the most.

it's whether the fed will change their guidance from three to four increases. dudley is on his way out at the new york fed and he's talking about a neutral rate of 3%. a little different to what the rest of the market has. surprise,e economic global economic surprises. night,beige book last there's guys, dark horizon. they mentioned trade disputes 36 times. it's becoming a real risk, isn't it? simon: yes, it's becoming a real risk to some indicators. , it doesust caution take into account quite a lot of sentiment-based indicators. we have seen a number of events in the last couple of beers were

sentiment and will economic activity have decoupled. one of the things i've looked at for this week is whether those soft market pmi's that have driven the economic surprise index lower in the near term, you look at the u.s. industrial output numbers year on year, it suggested march was not nearly as weak as sentiment suggested. a lot of agents talking about concerns, how it impacts their decision to go on in terms of expansionary policies. therefore, just be cautious of interpreting metrics like that and their pass-through. anna: i have a classic chart for you. this is the flattening of the yield curve, further flattening. we see fed officials talking about this and how the fed

should debate this and what it means. what is the most important question to be asking about this yield curve at the market? if it inverts, does that mean recession? what is first and foremost for you when you look at this yield curve? simon: it's a technical .tructure of markets we are so conditioned, people in this industry love lessons from history. that has been a great predictor of recessions over the last 30 or 40 years. things the e.u. concerns itself about is that history will repeat itself, but we face a world of $24 trillion worth of quantitative easing globally, and still rising. and a demographic profile very different, does that still have the same quality? manus: hold that thought.

say,an that has things to the french and german leaders will hold talks before independently going to see the man himself in washington.

anna: this is "bloomberg daybreak: europe." it's 6:30 here in london. 2:30 over in london. -- over in hong kong. the commodity story, not really sticking to the equity markets, being traded on as a positive in the moment. manus: you have this ratcheting how are in aluminum, nickel, all those things. the dollar-yen tells a whole other story. bilateral is an is the word. we are waiting for details from those negotiations between

trump and abe. china's new years celebrations are the key things to watch when it comes to these numbers. a shadearter sales above the estimate. third-quarter organic sales growth at 9.3%. tosing the dividend payout 50%, positive for shareholders. growing chinese demand for spirits seems to be the thing here. is it long-lasting are just transitory? chinese new year celebrations happen in february, later than usual this year, making for some favorable comparisons. the company feels comfortable enough to upgrade their guidance this morning. taiwan semiconductor, $89.9 billion per square in net income. line withetty much in

what the market had estimated. the offering profit comes in just in line, when it comes to margin, pretty much in line. the big discussion around the whole chip industry in the world is about china driving their chip business. that's a much bigger context but pretty much in line, net income meets estimates would be the bloomberg take on those markets. let's get to guy johnson. the debate is this, to invert or not to invert. is it fast and furious money that is driving the bond markets guy: it has been a slow story, hasn't it? it's one of those stories that flares up every once in a while. different world when

you're dealing with an exit from monetary policy. maybeect the inversion something that means something a little lower or further in verdict. turkish elections being held, the turkish market reacted pretty strongly to that yesterday. the russian story back into the front foot. the market had a pretty solid day yesterday. the australian dollar is looking pretty solid as well. standout,bviously the up by 3%. rubber, copper, iron or, everything moving in that complex. there are a few others in there as well. take a look at what is happening with rubber. making these is getting more expensive right now. europe absolutely flat at this time.

the s&p absolutely flat as well, as we figure out exactly what is happening in these markets. care?ain, do we really will carething he about later is the reaction of the markets to the fringe corporate earnings we've got this morning. ,nd another bullish update saying first-quarter sales are strong after winning a series of new businesses including mercedes-benz and marriott international. first-quarter revenues of 2.28 billion dollars. this sector is fascinating at the moment. what does it do for other players in the market and their ability to win and coach clients? reportatch that sector earnings. a united front against president tariffs, both

traveling to washington for separate talks. ahead of that, they are meeting in berlin this week. matt miller joins us now from berlin. set us up for next week by telling us what we will be hearing more about this week. international are u.s. relations part of this will definitely be interesting. macron has got a step up on merkel. he was very merkel to talk about military solutions or retaliation with syria for chemical weapons. from the get go, he has gotten donald trump's attention. remember that handshake where he didn't let go? he is also an outsider like donald trump u.s. very little concern for the normal kind of diplomatic practices that world leaders are expected to follow. work muchdonald trump

better together than angela merkel and donald trump. refused to famously shake her hand. to be fair, he said he didn't hair -- he didn't here, which i guess is believable. he has a couple of days with donald trump. merkel comes after gucci has already been reprimanded by the ambassador to germany for her failure to take part in that military strike against syria. macron definitely has his foot in the door with donald trump. manus: simon french is with anna edwards in london. let's bring him back into the conversation. i want to circle back to something you said to us 36 minutes ago. last week macron was claiming he was a man who single-handedly convinced donald trump to remain in syria. here we are at the precursor to

iran. what is more important to you? simon: to me, the biggest story is entrée. iran areics in specific to the oil price and the trade therapies can go much broader than the commodities space. for that reason, much more macro significant. anna: we were talking about the meeting between macron and merkel in a context of trade conversations that will have in washington next week. they want to come to a common understanding around things to do around the firm for europe. is there a concern that because of the problem with strong growth in the eurozone right now, that's sort of removed the burning platform for reform in the eurozone? simon: if you take the boot of crisis off the neck, then the reform doesn't get done. to the upside of the growth story, the falling unemployment

does provide some room for policymakers to sit back and perhaps not have that level of urgency. things i've found most interesting in the last few months is the potential and t merkel-macron coalition emerging in -- potential anti- macron-merkel coalition emerging in europe. a much more common defense policy, migration policy. the integration journey as put an informal block to it. they will have to navigate that difficult diplomacy. manus: you mentioned some of the big issues that matt has been chatting to us about banking union, about becoming more europe and european reform. , he has theoment

strength of support politically. he is pushing the right doors as far as the french are concerned. and he's talking about more europe. seen: european leaders will his domestic agenda and the popularity of that. as a proxy for how powerful he can be as a voice around the table. clearly they are less than taken away from the domestic reform agenda, even step that is unpopular can be delivered and that will embolden integration is within the european union to take on those who may be the doubting thomas is. anna: talk about the latest brexit developments. speech in the lord's last night, how much does that make staying in the union in never will, or is that too strong of a word? simon: i think it is too strong

a word. the house of lords cannot force the government, but there is a strong signal being proposed and will continue to be proposed. there are a number of clauses, the strong signal that will embolden potential rebellions in the house of commons to push the government to enter into union,ions on customs not the one they currently enjoy. if byment hold the line doing so it will tie their hands in third-party trade negotiations? play outmic will throughout the summer. it was quite a damaging defeat for the government but only from the message it sends, rather than the material way of disrupting the elections. other side of the coin is that politics will continue to play. -- this timede

their own suicide up. inflation, core inflation is the lowest in the year. the market has shifted its expectations from 100% probability of the rate hike in may, but the probability of a subsequent one has dropped to 4%. orit just an anomaly something more structurally sound? data. not an anomaly of i've been wondering since we published our 2018 outlook, please that the market is coming to or three. the reason i was there is that we do not understand in the u.k. how tight the labor market needs to be to generate core wage inflation. there are academic out there, there is an interesting paper about potentially the natural rates of employment being as low as 3%. we are at 4.2% at the moment. potentially quite a lot of slack

can be enough before the bank of england faces capacity constraints. cluesrket should look for .n the may inflation report that will give the signal around the rate hike or not. anna: so we don't know yet about november. simon french, chief economist. south africa is working to seal , promoting what he's calling a new dawn for his country. he said he is committed to reversing years of economic stagnation, policy -- policy uncertainty, and he also promised to crack down on corruption. going to bee is that we are open for business. reforms will lead to south africa becoming even more attractive than it has been. who will have incentives for

various sectors of our economy, depending on which sector one wants to invest in. we will have well-crafted incentives that will attract people, some of them may be tech sensitive. having the uncertainties given rise to buy particular sectors. creatingrious, we are a good climate for investment to come into our country. we will give you good incentives, good security, and we will make sure that the concerns you may have will be addressed. and we will ensure that our infrastructure is safe in place. a country with good infrastructure, if you like. we have a good regulatory framework. all those things, a combination of all of them will give people really good package and an

offering for them to come and invest in south africa. level of the rand, i'm looking at it now on my rant against u.s. dollar. on my rant -- on my bloomberg against the u.s. dollar. coincides with your arrival. let's talk about if you're comfortable with where it is now. etc. reflection of international sentiment toward south africa be more positive, or would you be comfortable with the cheaper rant that will be a little easier to -- with a little cheaper rand. grexit it is a double-edged sword. the ranch where it is now reflects the level of confidence that the world has in south africa because they can see that south africa is going somewhere. but for exporters from our own country, stronger in is not so

positive for them. we need to find a balance. >> is it balanced? now >> it is not quite there, but it is near the balance. but it is a double-edged sword. by guygreat interview johnson with the south african president. talking about how to bring that inward investment into south africa, and the challenges there. here's your business flash with juliette saly. isiette: procter & gamble buying the consumer help business from merck in a deal that enables procter & gamble to expand its health care business by adding to its over-the-counter products. merck put together enough for to concentrate on

new drugs. the tumult at the top of deutsche bank that led to the ousting of ceo to acquire last week has now claimed its chief operating officer and head of investor relations. with the bankear will end at the general meeting on may 24. the bank announced in a memo to employees that john andrews is leaving because of the recent management change. credit suisse and ubs earned talks about combining some back-office functions to cut cost, according to people would knowledge of the matter. arezerland's biggest banks in early stage negotiations about cooperating in areas such as liens, settlement, and trade processing. representatives of both lenders declined to comment. that is your bloomberg business flash. for u.s. bankek

earnings continued with morgan stanley reporting a record quarter yesterday. burger withs any the details reported by the sector. what are the common bright spots were seeing in these are in reports from the banking sector? >> we finally had some volatility come back into the market. would it be the right kind of volatility? would it be the kind of volatility that scarce clients away? seenorgan stanley, we've anywhere from 20-38% increase in equity trading. fixed income has been a little mixed. it was pretty positive at morgan stanley. it's all about trading this quarter. manus: it's all about managing expectations. i think that done extraordinary job on that. jamie dimon, his numbers are

good, but it is tough out there. >> morgan stanley did not raise their forecast coming up, which is pretty indicative of how dependent the earnings were on the return of volatility. by all indications, the vix is trending lower. bigsaying we will get a subtenant, but there's no indication that we will have these wild swings in the market anymore that really benefited the trading business is. thanks for the latest on the banking sector. joining us, a global economists and managing director of securities. great to have such economic expertise around the desk is morning. welcome to the program. let's get your thoughts on the global trade story at the moment. you were trying to get in

context the threat to global trade that we see from the white house and then other measures from china. how do you put that in context? to what extent does it threatened to derail global growth? if you look at the effects of some trade war between say the united states and canada, it's pretty manageable. year, the u.s. exported $130 billion to china. i can trump that, so to speak. number would be 19 trillion, the size of the u.s. economy. it's the second artefact that you have to worry about. we saw global equity markets really start to shake. and you'rea ceo thinking about some sort of investment project, you see all the trade tensions going on. those are the things that are

difficult to quantify. we will see how things play out as we go forward. anna: is it may be difficult place we are in at the moment, trying to get your head around a very different negotiating style. all of a sudden we are presented with the art of the deal in negotiating trade deals. time look at data all the and trying to put this into some sort of model. we are trying to make estimates , whicholitical decisions are very difficult to try to get your head around. it certainly expands the range of possibilities where it economies could go. you, theod morning to imap see sustainable growth over the next couple of years. i'll: us that reported, and they warned it was a duplicative

moment in regard to sanctions. struggling to get to 2% inflation, and here we are, there is a blue -- there is a blow torch coming. would you agree or disagree? >> i would not use the word blowtorch here. up or even ifes , what you're worried about is the underlying core rate. into wageo have it inflation. we do believe that inflation in the united states will trend higher and the fed will be responding to that. we don't think it will be so bad that the fed has to jam on the brakes, but if you're thinking about the downside risk to the global economy a year or so from

start toation will ramp up in the u.s., largely because of the labor market. if the fed over does it, that could be something you are leaving to your next big slowdown and the potential reception. anna: we are getting some headlines coming through to us from north korea -- from south korea. moving of south korea talking about the potential for finding common ground with the north show. it's not easy to find ways to implement agreements, but he does going to see that north korea and south korea should eventually declare indo for. really underlying the extent to the global and geopolitical significance of the potential for these conversations between trump and his leaders.

the new seed trade tariffs imposed on they could have an inflationary effect on the u.s. economy because of the way that community processes go higher. nervousness from investors, perhaps. fedow does this affect the kirstjen nielsen? after the fed?-- grexit you add in a marginal terror, it should pass through the supply chain. i would like to bring up an issue that has not been discussed in the rebound in commodity prices and we really should have expected this. it's a super cycle in commodities globally. so we have the big collapse in commodities in 2014-2015. we have the synchronize

pickup up in global demand, can the supply side, which is fairly elastic and can respond immediately to increase demand calls, what is going to pick up the slack? part of it is structural, price inflation come as a result of the imbalance. part of it is anticipation, realization between key trading partners which adds additional cost to transact and produce. shinzo abe meeting with president trump yesterday, saying maximum pressure should be maintained on north korea. , can i read the conversation back to you? mr. bullard over at the federal reserve is warning, they're getting concern.

the question is about a flattening your car. u---uld have an inverted yield curve within six month. to what extent do you think there is a risk of policy mistakes from the fed? a little less aggressive in his vocabulary on rates in the neutral rate being 3% for him. >> a start with the yield curve. historically that has been a pretty good predictor of recessions. ,eep in mind in this country and the u.k. back 10 or 15 years ago, it was inverted a number of years because of a structural sort of thing. required to for hold a lot of long-term guilt. you have the inverted yield curve that was not a signal at the time.

people wanting to buy a lot of long-term securities in the united states. i would not necessarily worry about that. the broader point in terms of the fed making a potential policy mistake. two years ago we would not have even been having that sort of discussion. we don't think the fed is going to make a policy mistake. however, it's a reasonable downside risk to keep in mind, if we start to see inflation trending higher in the united states. about fed starts talking 25 basis points at every meeting, that is a potential problem. anna: thanks for joining us this morning. and thank you, simon french, as well, joining us here on set in london. of next, gains ahead of the opec and nine opec meeting, taking place in jeddah, of course.

aluminum at a near seven-year high. , upalked about commodities next. this is bloomberg. ♪

manus: good morning from dubai. this is "daybreak europe." anna: these are today's top stories. manus: oil gains ahead of a key meeting with opec and its allies. anna: yields curve concerns. james bullard said he is worried [indiscernible] see though a colic does not a recession. could herald a softer brexit. ♪

a warm welcome to daybreak europe. this is the futures, we have a bit tone. the key issue is trump. fire and fury for diplomacy. titles are on the move -- metals are on the move. unileverhat we have, underlined sales, rising by 3.4%, the estimate was 3.4%. they had that boost post hurricane, the dramatic used in the fourth quarter and we are expecting q1 to normalize. rose 3.4%.by am the revenue numbers 12.6 billion for the first quarter. the market pencil then 12.5.

a lighter price than the marketed estimated. this comes in at one -- .1%. the market had estimated .8% but the underlying sales was 3.4% and the dividend of 3.7 two cents for you. breaking news on all of that. they have a big currency headwind, different to some of the other stocks we're watching. you have sky. have just been through the numbers. they are -- under pressure from activist investors. coming numbers from sky through. they say that nine-month revenue is at one point -- 10.1 billion pounds. operations remain on track for the year. that is the forecast, big picture. u.k. --umer in the environment is to remain challenging according to this london listed.

and interesting to ask how strong will the quarter be and what is that going to do to the intentions of 21st century fox and comcast? as of them have bid for this business, comcast is expected to formalize its offer shortly. fox is weeks away from hearing the fate of its 11.7 billion pound takeover proposal for sky whether it is going to get the ok. at the end of that if we see 21st century fox successful the plan is to sell this to disney. what do the numbers mean in the context of this being a takeover target? it tells us something about the price. they talk about third quarter new customers as well. we get continued breaking news. to the bondng back markets, the equity markets slightly better bid, the bond markets we are focusing on especially with our next guest. templeton have moved their

position, we picked out 2.87% but templeton has reduced the duration to -.85. coming along the yield curve, they are betting on being at the short end. deepening the divide. the lord we mentioned with our guest, he is saying that the itasury curve could invert six months. it does not support any interest rate rises. mr. dudley does not see a case for faster rate hikes. the bunds and the o.a.t.'s a shade lighter. the question is is the growth story in europe topped out? let's talk about what is going on in equity markets. lotf 1% and we talked a about commodities. it does not seem to be sticking as a negative. we saw commodity related stocks

in the asian session going higher. commodity prices rising and that is how the market is taking it. unchanged on the u.s. ten-year. focus on whether we see curve and version. we have seen curve flattening. we put the nymex oil price in here, up .4 of 1%. we will hear later on from jeddah. the key to the conversation for this man. he is joining the surveillance team at 9:00 a.m. u.k. time. what does he have to say about the commodities space and tensions in that region between qatar and some of its neighbors and john mcdonald will be joining surveillance an hour later. i will be talking to him and we will get the reaction to the defeat of the government and the house of lords we saw yesterday. here is juliette saly. u.s. president donald trump has replaced his threats to unleash fire and fury against

north korea with more diplomatic language. speaking during his summit with shinzo abe at his mar-a-lago resort, some -- he said i look forward to meeting with kim jong on and hopefully that will be a success. the white house indicates it is likely to take place by early june. president trump and prime minister shinzo abe have pledged to intensified bilateral trade talks. u.s. seeks to rewrite agreements with many of its biggest trading partners. trump is pushing for an agreement that would reduce america's trade deficit with japan. is seeking an exception from the steel and aluminum tariffs from last month. president trump: we are reducing our trade imbalance and removing barriers to u.s. exports. free,s. is committed to fair, and reciprocal, very important word, trade.

we are committed to pursuing a bilateral trading relationship that benefits both of our great countries. juliette: the uk's upper house has voted against a key part of theresa may's brexit policy. the defeat by a margin of 100 votes is on an amendment pressing the government to seek out post brexit customs union with the eu. lost.the first she has her opponents anticipate winning further votes during its passage to the upper chamber. it could push britain toward eu.ing closer ties with the south africa's president has touted a so-called new dawn for his country as he attempts to raise $100 billion. cerro ramaphosa is committed to rivers years of economic stagnation, policy uncertainty and looting of state funds. he made the comments in an exclusive interview with bloomberg.

ramaphosa: we will make every effort to make sure we get close to that. is revising their figures upwards and treasury is also revising them upwards. i am hoping to revise mine upwards as well. i think it is possible. juliette: the south african reserve bank governor joins is that 730 pa you crime -- u.k. time. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. if you get more stories on the bloomberg at top . having a look at the market action here in asia. it is risk on. we had that strong rating on the global economy from the fed's facebook. yen weakness as well. propelling the nikkei on the of 1%.p by almost .2 austria boosted by the movement that you have seen a materials

players but it is china leading the gains. the csi 300 in late trade up i over 1%. we have seen a lot of week is coming through in philippine stocks. the index being sold off at another two-year low, a weakening peso and worries about aggressive rate hikes in that country. in terms of socks we have been watching, it is all about the commodities space. aluminum in sydney has a joint venture with alcoa, up 7% on the close, also sure partners say you could see the price of alumi na at $650 a ton. you could see the stock hit for aussie dollars a share. copper hit the 50 day moving average in london. the macd index showing upside for coffer. -- copper. a lot of weakness in korean biotechnology stocks. the party is ending for the

stocks, 80% of the top 30 gainers on the kospi since november have been biotech stocks. it is coming to somewhat of an end. manus: thank you. the latest in singapore. one or two more lines coming through, we gave you the lines at the top of the show on unilever. offering a 6 billion euro buy back in may. the question for markets when we get the opening sweeps will be whether the buyback of 6 billion euros will trump the underlying sales and the lack of pricing pressure they are able to bring to bear. that is a quick take away on unilever this morning. the pricing prices by .1%. the mike -- market penciled in .8%. a hurly-burly over the commodity market. let's talk about the oil market. we have lanes ahead of the non-opec meetings. your sanctionsm on russia, pushing aluminum to a

seven-year high. the federal reserve warns the trade tensions, closing their otherwise positive outlook for the u.s. great to have you with us this morning. as we look around the world, commodities are on a tear, our last guest stopped trying to tie up oil commodities and something which commodities -- commodities and oil and its propensity to impact inflation. do you believe in that, are you more of a believer in terms of the correlation coefficient between the two? mathematic, if prices go up it will affect inflation. the argument for policymakers is if it is a temporary thing. if it was down to sanctions and you had a one-off balance in the commodities that was over with within a year they might be able to look through that.

as a one-off temporary effect. in our case, we were constructive on commodities and overweight the sanctions -- the sanctions issue has given a terrible boost to certain metals. we have been seeing some reasonably constructive data on china. consumer ofajor commodities. this is accelerating it. they may choose for their own purposes to not concern themselves in a spike in inflation arguing it is short-term but our view is that there is strong underlying pressure driving inflation up pretty much globally. anna: you saw demand reason for commodity credit -- prices to go higher. what do you expect on the inflation side? to what extent do you expect inflation to meet target and exceed target in this year and the year ahead? guest: we expect inflation to go

up above the 2% target and be surprisingly persistent. reticence -- ar reticence, a lot of economies would like some soft combination of a weak currency and low interest rates. and so on. it will be difficult to justify that if inflation goes up and stays up. we are not expecting things to get out of control but comfortable above 2% and not coming down. in ouri have this debate top on story about who is driving the bond market. here you go. this is the difference between long bond specs and you have to asset managers eyeing bonds because they like wants relative to germany and the u.k., you get eu versus the specs which are record short. this is the debate on the street. who is going to win this debate?

positioned on the intereste in terms of rates. we do think they are going to go higher. it is an awkward position. we need to be convinced it is going to happen within a reasonable timeframe. i am not too concerned by the flattening yield curve in the u.s. i heard being discussed there. it is not a desperate surprise that as the u.s. is the only central bank that is moving on raising interest rates, mathematically as you move interest rates up to the friend end, the curve has to flatten somewhat. , theest of the world economies like japan and europe, are sitting with negative interest rates. the u.s. is going to look quite

attractive from a yield perspective. the big movement in bond yields ofs await the ending european central bank qe type programs. we will start anticipating not quite soon -- that quite soon. you areis is what describing, the flattening of the yield curve. we were talking in the last hour about how this does not send the same recession signal as it may have done in the past because of the extent of quantitative easing we have seen. would you agree, would you say asis not telling us the same it might have told us pre-financial crisis? guest: it is flattering that people imagine bond markets are so far seeing they can see recessions. if you -- it comes down to the structural buyers and what their

motivations might be. if you look at the long end of use is moving to the u.k. market, 50 or rates and 50 her eime in the u.k., swaps ar slightly above 1.5%. that is with an economy with 3% inflation. that is clearly the wrong price. it is driven by structural demand for duration from pension funds that are hedging liabilities. in the u.s., i think you have a lot of official sector interest datedin u.s. longer bonds. they are higher-yielding than the rest of the world. the short-term interest rates go up and you still have some interest in the long and, mathematically the curve will flatten. there is a debate at the minute about what the terminal rate might be, a lot of people have convinced themselves that 2% is going to be some sort of limit for long dated bonds.

my view is short rates are going to three and it would be surprising if we do not have a term premium at that point. manus: nice calls there, always good to get your thoughts. we have more to get through. screen, i love the colors and spiking prices. it is risal. up 23.4%. talkss -- rusal is in do achinese regulators to deal. we are seeing a massing impact in terms of the rusal price. aluminia paying the highest level in six years. jumping sevenlso point 4% on the lma. highest since december 2014. we are focused on those price rises. coming up, defeated in the lord, peers vote for changes.

what does that mean for theresa may's exit strategy? we will discuss next. this is bloomberg. ♪

manus: 10:21 a.m. in downtown dubai. welcome back. let's get a quick check on these markets. a solid beige book. curves --ried about dudley is worried about curves. that is the dubai market. are geopolitical concerns easing? andave one day we are up the next day down. is that vix rigged? that is a question for the markets. s&p futures up. even of the allocation to equities is the lowest in 18 months.

interesting how this plays out in equities. is one thing they are watching this morning. these are the commodity market moves we are seeing. aluminum, and the coal, brent, the bloomberg commodity index all tracking higher. the move to nickel higher considering some of this demand is driven, that is what we are getting from guests and there are concerns about supply and sanctions in environment. let's talk about what is going on in the u.k. because theresa may has suffered a loss in the house of lords. the defeat by a margin of more than 100 votes was on an amendment pressing the prime minister to seek a post-brexit customs union with the eu. give us your thoughts here because how much do you think markets are still clinging to the will they, want they outside

the customs union conversation? big questionshe that is outstanding is the northern ireland issue. that will be one of the big stumbling blocks. a borderlessave northern ireland, you need some kind of customs union. there is a lot of people talking about the sophistry between the customsunion and an union. we have to have something of that nature, we have to. the currency is the best indicator of how people are brexit about the kind of that we are going to have and -- a sterling has been recovering recently, people have felt we are inching toward an acceptable brexit. there is not going to be -- it is not going to be so damaging economically. is one of the big standing

issues that has to be resolved, particularly northern ireland. what is interesting is the reaction, are people going to big standing issues that hasthrow their handr and say this is terrible or will aere be some realism, borderless ireland does require a customs union. manus: there is a shot. i have vested interests are cannot make any comment on it. you mentioned the pound. i have a vested interest in the pound but i can comment. there is a lovely piece this morning, three stakes in -- strikes and you are out. today retail sales. the case for two hikes is being a million rated. currencies being a

lot of the work. whenever you have a strength name currency, which is probabl y wasn'-- probably not my central expectation. you need to do with other aspects of policy. tinghe round, we are geti some tightening happening and possibly enough. anna: where does that leave you on u.k. equities? you have been underweight and the pound has been recovering. that does not always have a positive relationship with u.k. equities. been turning a bit and reducing. i mentioned a couple weeks ago thehanged our position on mining stocks. they are a fairly major element of the u.k. stock market. that is disposing us toward the u.k. but we capture a lot of commodity exposure toward

overweight emerging markets. from a portfolio point of view, we do not need the u.k. some much with all of its brexit on -- uncertainty. often you would capture through emerging market manus: relations. -- market relations. manus: thank you. aviva investors. unilever doing their share of buyback along with that you have a bb with a good set of numbers setst is the buyback that the tone. are the markets getting less schizophrenic in terms of trumponomics. are seeing how markets are responding to corporate earnings, the french corporate earnings season, how will they go down with investors question mark the european open is next.

futures pointing higher in europe. we will keep track of those. this is bloomberg. ♪ welcome to the xfinity store.

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morning. this is the european open. i am guy johnson at our london headquarters. matt miller is in berlin. cash trade less than 30 minutes away. ♪ abe going home empty-handed. leaping mar-a-lago with little to divert attention from the scandal gripping has government. above 2600, the metals market has been on a tear ever since the u.s. plan to down on rusal.