host: good morning. edwards.a >> i am manus. these the toaster is. >> assessing trade and the stocks are mixed. >> going to washington for the first state visit. concessions concessions or the

iran nuclear deal. >> the pretax profit comes in a higher estimate and -- >> welcome to the show. and is across the bottom this is a bit of the pretax profit and you see what is going on and the investment sides of the bank. see how this will be with matt miller shortly. big agenda items for today. the revenue comes in at 3.9 billion and it is in line with

estimates. these of the targets for 2017 and 2020. this has undergone a big change in strategy and this was a company that used to be all consumers.and now, it is about health care. we talk about the change in strategy and what they are doing. theyreduce the stake and did a bit more detail on the guidance with the headlines coming through here. we have the numbers from phillips and they aren't bad. ands go to the risk radar this is the asia-pacific. it is down and, if it was down more, it would be pretty next. on the one hand, you have the thatess coming through and

have thes on and we of atomicsuspend test mnuchind we have steve talking about equities. thedollar is stronger and focus continues to be on the u.s. dollar. loses rounding up and the 10 year yield. we have the kind of signal we can get in the bond market and

what that means. that is the big discussion at the end of last week. >> it was what we should have done. there should be a moment of reprieve. this has almost been religious. it has been -- this is the flattening that is taking place. the move towards 3% and above aides this and you are talking end and theith the tottening with that rebound 50 basis points. it moves the agenda along and amded the focus along and i

guggenheim this in we will look at the equity story. is this what they have to consider next? >> absolutely. be this week? on the u.s. equity market right now and will be speaking to the phillips ceo later on today and he will be joining us here. we will talk to him about the earnings and the targets and we are going to be hearing from the ubs ceo. the interview is coming at

london -- 6:00. this is something they will need to talk to him about. we are joined with that. >> the french prime minister lands for the first state visit and will be on a mission to take the edge off of the america first foreign policy. securing concrete policy remains patchy. the foreign minister has issued a warning over trumps threat to withdraw from the nuclear deal. face the nation, he said that the islamic republic could reach, if sanctions are tehran.on

would beng from it seen as an indication that the night states is not a reliable path -- partner. iran has many options. suicideslamic state bomber attacked a voter registration center and at least 57 were killed in the blast. the ministry spokesman said that 20 of the dead were women and children. the u.k. prime minister is battling to avert a cabinet revolt from the euro-skeptic tories. mayesa may's inner circle

have a rejection of a plan when the issue comes to a vote. such a move could trigger a challenge in the ruling conservative party. struggling to hear the divisions thirds in thetwo western conference and it is seen as a relatively poor in last year's election. powered by twitter and in more than 120 countries. things are looking a little bit mix for the fourth session and

there is quite a bit of weakness. really, this is in the regional a lot of there was upside that you have seen in the metals and the copper here. having a look at some of these moves, we have focused on this they have now what they need to survive. the relationship

with the north and the south and there are more possibilities of interrelations that benefit from a stronger career. australia, goldman sachs upgrades the stock and it has risen the most since august. thank you very much. i will pick it up from here. the features are on the rise and .he yield hovers around 10% the geopolitics is very much in play with the tensions on the andan peninsula starting kim jong-un said the country would halt the testing. outside, this cio.

good to see you. there is only one conversation this morning. it is dropping. is starting to shake at the beginning of may. >> close to 3% again for the 10 year treasury and probably just with the reality being that it is good and it is andor the right reasons isse reasons are that growth good and the geopolitical tensions are a lot lower. >> good morning to you. about what happened

in april. there is the bond yields with nervousness. missing link and there is a little bit of that is there a much for the right reasons. you think of the corporate earnings coming through and let's be honest that the bond yields should be higher. and it hasd the show been days since my last inversion. the question is if we have nadir of flattening

and are we passed the point? let's think about it as the fed continues to raise rates and that will force a lot more. that it is higher. you think of the fed and they have six rate hikes to go. that the curve is unlikely to get flat. with this is telling us is that recession clearly is not imminent. from the bondence shapedand this has been

and youalance sheet think you can find singles -- signals. this is declining. you think of the size of the most liquid bond market in the world and what drives that is growth and inflation. markets say you have done too much and the policy is too tight. the point is that we are not there. just trying to change my chart here. there has been a repricing and

global bonds. higher asntinue to go you see this moving? you say that this is moving for the right reasons and the global bond yields drift higher. and it isift higher the european central bank and the bank of japan. the ecb should be more assertive anchor andcess and drifts a little higher. very nice of you to join us here. coming up, theresa may battles the rumors on the customs union

and take the you out of the trade regime. we will talk about the u.k. next. 45 u.k. time. this is bloomberg. bloomberg.

>> good morning. this is daybreak here. it is a gray singapore. you might expect that we see more positivity in the asian equity session given what we are things to be positive about.

moving all the way up for all let's takeeasons and a look at the market. i thinkshade lower and that there is a little bit of an angst out there. these.e all of technologywith no issues is juliet. how are you doing? >> i am not sure about that one. beating estimates and good momentum. it is investment bank and global growth management that can be

lower because of seasonal factors. from this.ill hear walmart is close to finalize a deal to buying a majority stake according to people familiar with the matter and this could be completed in the next few weeks. all of these are after the earlier debate with amazon. walking away from the pending acquisition of acorn after they found problems with products and developments. company for u.s. they reviewed acorn operations.

down.as turned that is your bloomberg business flash. >> that was the business flash. theresa may is battling suggestions and the issue had been a red line for the cabinet the battle could reach a climax as early as next month and it could touch on the .ubject and probably will again,w much are

will be ath and it the lower end of that. it is not a massive issue. the one thing he managed to do is get himself up and there is a split now. there are those who are loaded what dohis morning and you think he wants to achieve? what is he wanting to communicate? is way too low, given the

underlying economic fundamentals. the reality is that it is still they are starting to normalize the process. >> some people are struggling to work out if we get just one. take this and that is going on, in terms of the economy. it is up six times now.

what is it due? treasuries and the bank of england should be doing that. >> oh, certainly. the low base rate and it has and anchoring effect. >> you would be adding sure positions in the back of this. overweight in the u.k. and that becomes the currency. >> it is what you are still aware in the bond market

space. still high-yield bonds. you are paid on that spread. >> corporate bonds in the u.k.. >> particularly in the u.s. and very attractive yields there. >> that is what we like on a monday morning. giving it the way we should be. up next, the ceo joins anna and the analystlk about estimates and reiterating the long-term targets.

the supply chains are up on the risk of tariffs. and delivered the numbers the targets remain. that is next. .

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this is "bloomberg daybreak: ."rope in tokyo, there are well into their trading day. manus, it was interesting to see that dollar strength was back in the markets. you wonder whether the higher rates in the u.s. are starting to stick to the dollar. thes: is it a turnaround, push and pull? you have the inflation, the rates. 0.9% last week put on, that is the best week in nearly a year. let's get into these markets. they are waking up in europe. let's go to nejra cehic. nejra: what a big week for

markets. we get decisions from the ecb and the bank of japan, tech earnings, trade tension in focus. the north korean and south korean conference in focus. we are seeing a touch of weakness on the indexes. they are down 0.2%. it is a mixed picture across the region after we saw losses in u.s. equities. u.s. futures are higher. this is despite the fact that we are seeing the 10 year yield continued to climb. clear up a basis points, trading above 2.97 percent. we have now dropped. the big question is do we hit 3%? and when we do, what are the levels below that? this chart is showing this. some people say the key resistance is 3.21%. these are all 2011 levels.

we are looking at 3.76%. where does the 10 year yield to go? that is the big question for the markets. and also what it means for the dollar. this was the biggest week to the dollar this year. it has gone through its 50 day moving average. the bulls have emerged on the bloomberg index. what does this mean for emerging fx? we do see a gauge of em currencies drop last week. but the turkish lira and the ruble outperformed last week. with that said, if you look at this, this function is great for this. this is showing emerging markets and basically puts to calls. over the next month, traders are the most irish on the russian ruble and the turkish lira. we do have central bank decisions this week as well. anna: philips has reported

first-quarter innings in line with estimates. revenue was at 1.9 billion euros. the company also reiterated its targets. with us is frans van houten, the company's ceo. we are pleased to have him with us. thank you for joining us as always. things look to be very nice. you have come in with these numbers in line with estimates. you are reiterating your targets, so that is great. it leads me to wonder, what is worrying frans van houten this morning? is it trades and terrace with the united states -- and terrorists with the -- and teriffs with the united states? frans: there is 5% revenue growth. trajectory.ns the new innovations to the market across diagnostic imaging.

from that point of view, i am satisfied. you are right, there is also concerns around the market. there are always risks. if i were to name one, it is the uncertainty around trade conditions. we have been to the united states and china. we are strong in both markets. i hope we maintain stability across the world. manus: you very clearly wehlighted something before started this conversation that china is important to you. if there is an escalation, do you begin to prepare any backstops? in businessthe risk in china if there is an escalation? taken anilips has approach where we manufacture in each of the important geographies.

philips has factories in the united states and europe and china. i thinkt point of view, we have a good foundation, and we can always adapt or adjust it that is necessaryf -- if that is necessary. manufacturing in those locations will help you avoid some tariffs. but what about confidence as a consumer? or hospitals holding back at all? do you see hospitals nervous about ordering equipment and services because of the rhetoric around trade? really.o, not the fact that we had a 10% growth in the first -- order growth in the first quarter shows that philips products are in demand. it is also coming back in a strong revenue growth. us ishat really helps that philips is a focused

technology company.we are gaining market share . so in that sense, philips can still grow because of our razor-sharp focus for innovation. very pleased that we won ate new contracts -- eight new contracts, in canada, one of the trusts in the nhs in the u.k. signed up with us. i can go on. many customers are looking for drive solutions to patient safety, patient outcomes, and higher productivity, as there is a lot of demand for health care. . think that is the benefit inherently, the demand is strong. manus: can i ask you a question? you did an interview recently and you said, you alluded to the fact that 4% sales growth, 12% robert modern -- profit margin are not enough.

you reaffirmed new targets for this year. what is the ambition? is it to remain independent? if these are not ambitious enough targets, why are you not resetting the agenda? in the introduction when i came on the channel this morning, you referred to the targets. every year for the next year, we will grow between 4% and 6%. we will improve our profitability on average by 100 basis points. if you extrapolate that, we will get to the mid to high teens in probability -- in profitability. i think then philips is in a place where it should be. i am very focused on achieving that. in that same interview, you talked about your aspirations for the coming years. you talked about remaining.

you discussed how a third four-year term as ceo was right for this company. do you see your vision of the company as essential for the next four years? i am talking about the strength and of management behind you at philips. isns: what i basically said we are on a trajectory that is working out well. we still have more work to do, and i expressed interest to do that. it is up to the shareholders, of course. there are many good leaders in philips. so certainly not only my person to achieve this. i am particularly proud of our leadership team. as we are doing a transformation of the company, it is not easy. we have free diversified to a health technology player, and we are an expanding market. we would just like that to

continue for the next several years. manus: let's talk about the marketplace, because you see ge selling some assets. they were sold to veritas. we want toat this, get the fresh phrase from you, which is transformation. how do you see the transformation for philips, particularly in health care? frans: philips is for most an organic growth company. the plan that we have in place, the research and development we 9.5% in the house. it is transpiring into a higher growth rate as we speak. 10%5% revenue growth, the order intake. we are interested to do acquisitions. last year, we did almost 10, aeaching from -- ranging from

company for minimally invasive heart operations, to two companies in the netherlands we picked up. companies around health informatics, creating productivity for hospitals, company called forecare. also a platform for consumers and patients to talk to their doctors. that is the future of population health care. i am very excited about these areas. but these deals are not huge in size, so they are not transformational from a size point of view. to they are very important put into the philips family and be able to sell -- to offer these solutions to enhance people's care wherever they are in the world. access to care at an affordable price. that is what philips stands for.

much forank you so your candor this morning. it is great to have these kinds of conversations with ceos. frans van houten, philips ceo. thank you for joining anna and myself. it has been more than a decade. frans was talking about china, but china has been asserting itself as the emerging world power. that is known as china's expanding footprint in europe. we have crunched the numbers. we are compiling one of the most apprehensive data audits on a china's presence in europe. it shows china has bought or invested in applets totaling $318 billion in the past 10 years. but spring in alan crawford, the compiler of this report -- let's bring in alan crawford, the compiler of this report. what prompted this study?

alan: i should be clear that i am coming at this from the political angle and it was my colleague who crunched the data. we came up with this idea because the political readers in western europe, notably angela merkel and emmanuel macron, they are repeatedly talking about china. almost every time merkel gives a speech these days, she has some kind of reference to china. there is very much a mixed feeling that there is on the one hand a certain fascination with china, as the rise in global power. but there is also a desire to have every country in europe, to attract investment from china. at the same time in the west, there are growing concerns about the nature of some of these investments. overnight, a deal that

was taken several weeks ago. in it started in germany, particular the concerns started bid for a robot maker. issue that hasal china, which is literally at the top of the agenda in germany. it isyou mentioned how the top of the agenda in germany, and that somewhat answers the next question. how has this investment spread across europe? because germany features highly, doesn't it? alan: it does, and if you look at the graphic, there is a nice map that shows while the majority of investment into changed ins has been europe, that is all part of the

picture. investment is very much spread across europe. but again, the nature is different. in the west, there is a lot of high-tech companies. in the east and south of europe, there is a lot of infrastructure that china is buying up. some of it is key infrastructure, some of the largest ports, korea's harbor, just outside athens. and also china owns a substantial stake in the main electricity grid. are railwaysre being constructed from the south to the east. spreadthere is a huge right across from west to east. anna: allen, thank you very much. alan crawford in berlin. you can see the whole story on bloomberg.com and on the

terminal. estimates ins be what they call an excellent start to the year. we spoke to sergio ermotti. we can now listen to the words from the cbo -- the ceo of ubs. sergio: in addition to a very strong set of reported numbers, the of -- the underlying numbers show it is stronger across the board. standpointgeographic in asia and the americas. areall businesses contributing to the strong performance. reporter: what does this mean for the investment bank, which you have struck down and there are reports last week that you were debating internally the investment bank? sergio: if i can say that kind reporting.as bad

if you look at our resorts -- our results, they have been very strong. we are very competitive. to compete, and investment banking is not about shrinking, it is about growing and being successful. it is very important to our wealth management and corporate franchise, in addition to serving our institutional clients. return in% on allocated capital is very difficult to see the merit of the reports. reporter: the 25% rise in equity trading in dollar terms. puts you generally in line with what the u.s. investment banks were reporting as well. you expect that kind of growth to continue? sergio: to be honest, i think those results are in in-line -- are in line with our competitors.

the numbers are very strong. if in addition to that you put corporate equity that we account weo our investment banking, inld have had a 37% increase dollar terms. i think we are very strong. reporter: that would beat what u.s. banks are reporting. sergio: absolutely. reporter: what you expect from the investment bank? i also some reports you want your bankers meeting with 200 or 300 meetings face-to-face every year. is that a key part of the growth you keep talking about? sergio: i think in every business, there is a discipline in telling people to go out and talk to clients, create a framework of accountability. a benchmark. you guys also have some kind of need to do x number of

interviews or write a certain number of reports. our focus is to make sure we go to see clients, give them our best value, and keep the discipline. reporter: let's talk about costs.it is a main focus for investors . how are you able to keep a handle on costs with method -- with mifiid an continued litigation costs? upgio: it is about freeing the resources, streamlining our costs. program we completed a where we basically saved $2.1 billion, and the vast majority was also utilized to reinvest in full to fulfill regulatory requirements, but

also to invest in our future in terms of how we serve clients. it look at our technology, is up 100 million francs because we are investing in the bank. that will allow us to take down costs and streamline and create efficiencies in other areas of the bank. reporter: what about the possibility of sharing back office work with other banks? like local swiss banks? sergio: i have then talking about this as a great opportunity for the industry. well beyond the domestic boundaries, and we are making good progress. the industry is making good progress in those discussions, but there is nothing's pacific -- there is nothing specific to talk about. reporter: you had tremendous outflows first quarter. can that continue throughout the

year? sergio: i am very pleased. if you are looking at our asset management business's achievements, you have half of what we achieved last year. i am very pleased in what regions haveat all been contributing to that. europe, aipacn and the u.s.. manus: he has got a great story to tell this quarter. volatility is up. back in terms of benchmarking against the u.s., saying if you look at the figures, we are probably in the mid-30's. it is a very big number over on the equities side. he has had a good quarter. equity trading all doing well. anna: just like the u.s. banks, that theme of equity trading

doing well. he certainly did not want to be put in the same bracket. he thought they outperformed the u.s. banks. i was very interested in this conversation about back-office collaboration. he said i am making good progress about that one. toa: go to -- manus: go tliv . great reporting, as always. i found a fact of the day. the single influence from -- in riskflows are an award, there is a lot of money to bring in from one client. then it goes into passive, which reduces your margins. much more to come on ubs from matt miller and the team on the ground. let's talk about your favors this morning. emmanuel macron lands in washington for his first state visit.

he will be on a mission to take the edge off the u.s. leader's america first policy. he says he hopes that trump would grant a tariff exception for the eu, saying it cannot make a trade war with your ally. i thought we were going to have -- nick is listening to everything we just have gone through. thank you for being with an a and i. let's -- think you for being with anna and i. too big things of the agenda, iran and tariffs. do either of those trump what he has to say on thursday? >> not in the short run. when you think of the ecb, they will come back on the growth , the inflation outlook.

if you look at both of those this week, the euro growth has gone from very above trend levels to probably, the inflati. just above trend levels. is that aestion is permanent moderation, or is it just a little bit of a hiccup? in reality, it is probably got. the big question for the ecb is how do they drive inflation a little higher? anna: is there anything macron in his visit to the united states, maverick to maverick, we have got this great cover at the front of "businessweek." he has to fix france and save europe, but they have already handled trump. he thinks of it as something of a skill set. is there anything he can do? anything he can do that matches the bond market? suppose it, but i helps to lower geopolitical risk

and geopolitical tensions. of thethe drivers markets has been the lowering of risks and tensions. that is good for risk asset, growth, the investment story. anything along that site has to be encouraging. thing thatother perhaps might be reflecting on because mind, surprises. when we go to thursday, which is a little more pressing, that he may step back on the gas, putting together economic surprises, and the bullish position of the market on the euro. do you think he will step back from the rhetoric in terms of he gives up a bit of breathing space, sufficient time to assess the data drop? nick: he will do, because ultimately the real crunch point isn't this week, it is june.

because when you get to the june meeting, we will have forecasts, and that sets the ecb up in the direction for starting to taper or not in september. this will be a meeting where they will want to buy a little time, and june is the crunch point. anna: do you think taper or not? it is not certain to you? nick: in my mind, very much a should be tapering. it is clear when you look at the data. but they like optionality. they like two-way risk in markets. that will be what draghi is likely to do, keep the market a little bit on its toes. manus: it is keeping you on your toes. unds.let'sng at b get some knows out of the 10 year -- some news out of the 10 year bond. nick: 10 year in germany, you

have got to be thinking a minimum of 1% by the end of this year. they underperform u.s. treasuries. the german yields go a fair bit higher. ecb policy, given the growth rate, is divorced from reality. it is at of certainly low rates. anna: thank you for your time, we appreciate you being with us. icktside -- nex gartside. we are talking about 10 year treasury yields knocking on the door of 3%, a level they have not hit in more than three years. an interesting conversation. you started the program talking about don't worry because the yields are going up for the right reasons. anna: the question -- manus: the question is this. the risk of what? if you trade at 3.05%, what does that do? does it dislocate the equities story? there was a ruckus in february.

will it be the same dislocation? or do we buy that it is the right reasons. retail.

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wi-fi fast enough for the whole family is simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. ♪ manus: good morning from dubai. and i am anna edwards. live from bloomberg's european headquarters in the city of london. manus: risk assessment. investors continue to assess trade and geopolitical tensions. climbing towards 3%. anna: big runs mission -- macron's mission. can he win any concessions on paris or the iran nuclear deal? to 2018.rong start pretax profit boosted by the investment bank. the ceo cautions over the second quarter.

o: when you look at the geopolitical picture, the picture gets a little more foggy. and the clients are feeling that. ♪ manus: warm welcome to daybreak europe and we are live from london and dubai. two big stories. ubs, the equities business and the foreign exchange business. tlive has all of the data for you. looks like a nice comfortable being. moves.e bank made a few -- is the glass

half-full or half-empty? depends on who you drink with. in terms of macron going to the toted states, what can he do move the story around trade and iran? . let us look at the bond market. $96 billion worth of paper coming to the market this week and that is perhaps some would say a dresser herself. -- dress rehearsal. are we going to make the new magic number, 3%? where do you stop after 3%? we are moving higher in yield and lower in price for all of the right economic reasons. my question as a marketeer would be the sludge of paper coming to the market this week -- will there be any form of indigestion?

that is the state of play in the bond market. goa: if we see the yields higher for the right reasons, what does that mean for the equity markets? will they also go higher for the right reasons? msci pacific faltering a little bit down by 0.25%. we have had risk on comments from kim jong-un in terms of pledges to suspend ballistic missile testing. technology stocks are under pressure in asia. we were strong on the dollar last week. is the top -- is the action around the fed towards higher interest rates? 2.9 -- we're watching to see if we get 2.3%.

let us get a bloomberg first word news update. we go to singapore with juliette saly. france's emmanuel later.lands in the u.s. he will be on a mission to take an edge off of the american leaders america first policy. while he has had more success than many in getting through to trump, his effort to get concrete trade efforts remains patchy. cbs'face the nation -- the islamic republic could restart his program. everyone has a point.

this is not a bilateral agreement between iran and the united states and withdrawing from it would be seen by the international community as an indication that the united states is not a reliable partner. iran has many options. in afghanistan, and islamic state suicide bomber attacked a voter registration center in couple yesterday. abul yesterday. a spokesperson said more than 20 of the dead were women and children. the uk's prime minister is battling a cabinet revolt amid fears that she will break her promise to take britain out of the european union's trade regime. some say she should -- she could be forced.

such a move could trigger a challenge to her leadership. germany social democrats -- germany's social democrats. she was backed by two thirds of delegates at a conference in the western city of these bond. it is seen as a relatively poor showing for a leader meant to revive a party that posted its worst results since world war ii in last year's elections. more than a quarter of the ballots were cast for a third party. you can find more stories on the bloomberg at top . a bit of a mixed start to the trading week in asia. we are seeing a lot of the tech

players under pressure. the chipmakers in south korea, the apple suppliers in taiwan. stocks in china in late trade down by 0.5%. japan closing down the session weaker by 0.33%. players the commodity have lifted the asx in sydney. looking at some of the stocks in detail. the weakness in tech. z te court in china. cte violatedg that a sanctions settlement. it has imposed a seven-year ban on the company. a lot of pressure. the upside, china united network communications, the airship -- the a-shares in shanghai. the age shares also doing well on the back of its first-quarter

numbers. h shares also doing well on the back of its first-quarter numbers. manus: -- anna: u.s. futures are on the rise and the 10 year treasury below 3% asovering investors continue to assess geopolitical risks. tension on the korean peninsula as a north little korean leader has said it would halt testing. steven mnuchin and said he is considering a trip to china. a couple of news items that you might think would create a risk on environment for equities and broader assets. joining us is the portfolio manager. good to have you with us. you warned presently before the february tantrum over vix products, you warned about low

volatility in markets for an when you look at bond yields heading towards 3%, is this something you see in markets that worries you? >> the question is, is it sustainable? economy isthat the growing and it justifies higher yields but if the flow data looks very good, the stock of imbalances in the world -- it is still very vulnerable. you have heard it from the imf and the vis, there is still a lot of sovereign debt accumulated. the u.s. is running a deficit. 3.25% yields have in the u.s. or can periphery countries in europe fund at 3% for a while? 3% answer is we can go above in u.s. treasury 10-year for a economy is losing momentum and eventually higher

yields are not sustainable versus the amount of debt imbalance we have accumulated. in other words, the first -- the recovery is fragile. old, even a0 years small shock can hurt you. anna: you start to feel a little wobbly. manus: a small shock can hurt me a lot. alberto, good morning, with that in mind, if we break 3%, you were pressing it -- do you think there will be a dislocation in the equity market side of the equation as we saw in february? alberto: we should see more rotation in equities. there are sectors that benefit from higher yields and some inflation so for example, financials or also energy names as oil goes up, we are bullish on oil and defense names. these are some of the areas of the equity market which we are

positive on given the macro geopolitical framework. overall, the question is whether real yields will go up? the difference between the nominal rates and inflation. so far, the increasing yield has not rocked equity markets because the treasury's still do not offer a lot of premium. you can getens, your yield on the risk of free assets. trades like credit or emerging-market bonds could be at risk. anna: the matter of inflation is crucial and you mentioned the imf is aware of imbalances and they also warned over the weekend around trade but also inflation. it said there are worries around inflation shock. worried about the level of stimulus the u.s. is putting in the market with unemployment as low as it is. do you worry about inflation shock? is prepared market

for a goldilocks environment. even a small surprise can trigger a selloff. it has has done is created an environment where -- in london, imagine instead of having days of drizzle rain, you have 365 days of sunshine. anna: we have had three. alberto: the central bank of whether comes and says that will be the weather for the whole year. and then we have hurricanes. no one is taking umbrellas anymore. even a small shock in inflation can turn the market around quickly. we are worried about a steepening of the yield curve. that could have a negative shock volatility, credit spreads and other parts of the market. anna: alberto knows his audience well because the weather message goes down nicely in london. manus: absolutely. mind, wherethat in

do i hide from the five days of hurricane? do i reduce my duration? is that where i go to hide for the next five days of hurricanes? the shorter end of the curve? you want to reduce duration especially in dollars. there are still some places to hide in the world of fixed income. fewer and are. when it -- fewer and fewer. the ecb is patient. what we will hear on thursday is more patience than persistence from mr. draghi. in growthatch in q1 is even softer in your. we have potentially some slow down. he will be dovish. periphery debt yields a large amount in dollars. the yield is close to 5%.

in the cross currency hedging gain the you make by converting euros into dollars. same for spain, portugal, and greece. our area is other non-us denominated sovereign debt like japanese yen or other local currency debt. why are these bonds still yielding a small amount? gone close to 50 beeps. investors want alternatives to the u.s. treasury. administration is issuing more treasuries and the yield curve is steepening. investors want to hide in other areas and eventually, there is too much dollar allocations. nceb patiec get this week, are the higher rates in the u.s. starting to override

negative dollar comments from the trump administration? alberto: let us think about the long run. there has been four in the last 20%. around 12% -- around 10.5 milliond dollars. when the euro crisis started. trillion back to euros. i think there is a structured allocation. countriesin saving which are now mostly emerging market countries want alternatives. manus: alberto, will stay with us.

coming up, crude is climbing to levels not seen since 2014. why are investors pouring into oil? anna: a little word on what is coming up later on bloomberg television. the lloyd's of london ceo will be joining us. this is bloomberg. ♪

♪ it has just gone 9:18 in dubai. let us look at the equity boards. when will we headed and trade through 3%? all going up for the right reasons according to jp morgan asset management. dubai is uphat -- by 12.

prices of property. stocks up. we will take a bit of green anywhere. you bet me a fiver it will be today. is that in pounds? i will take your wager. given that we have had a flat to negative picture coming through on the asia equity market. here is juliette saly. ubs it has reported first-quarter pretax profit of 1.97 alien swiss francs. beating estimates. 2018 was excellent, it expects transaction-based income and global worth -- wealth

management to be lowered. walmart is close to finalizing a deal to purchasing a majority stake for $12 billion. the agreement may be completed in the next two weeks. they said all of the major investors in flip court -- flip cart are now on board. walmart declined to, it while flip cart did not respond to requests for comment. has walked away from its acquisition of a court after a proof -- after problems were found. the german company said its outside experts a found "material breaches of u.s. fda data integrity status while reviewing a corn -- acorns operations." that is your bloomberg business

flash. manus: ui. let us talk about the hedge fund community. they are investing in oil. luring in capital. $80 airms are predicting barrel. alberto gallo is standing by in london. pervasive in the inflation story in the bond market story and in terms of the curveball. i havelook at the chart in the gtb library. how do you look at the rhetoric from opec versus trump? where is my risk and reward in this? the word here is geopolitical risk. long-term, there are arguments why economies are shifting to other types of energy. but in the next few months, we

have a global situation with rising inequality, several elections including the u.s. axisrm in november and an forming between russia, iran, and turkey which threatens to increase geopolitical risk in the middle east. on the other hand, the oil producing countries are trying to diversify away from oil and to do that they continue to need higher prices. in aoil producers are also dire situation, think of venezuela for example. countriesand non-opec continue to favor a squeeze in supply. the risk in our view is that we have a supply shock. not just oil grinding higher slowly towards the low but going above 80. that would be a problem for growth in an environment where momentum has already slowed down in the first quarter. we are positioned structurally

for higher oil prices since last year on higher geopolitical risks. there is a small risk of a supply shock which would make the small -- the soft batch we saw in q1 steer us towards a slowdown. anna: there is a lot on the agenda. macronn described -- described himself as a maverick. can they find some common ground on iran and have that nuclear deal stand? to see howm looking long that next handshake is. structurally, the way international bank sanctions have been applied to banks -- effectively, it is like the sanctions have never been lifted. it is still very hard to do business with iran if you are a bank. de facto it is hard. there is a high chance that if

things continue the way they are now, a run will restart its enrichment program -- iran will restart its enrichment program. there are only a few days left before the final date. manus: there has been a great deal written about trump going after oil because we are going into driving season. it is political. what can he do to stop opec and non-opec? you say you are positioned for higher oil. how do you play that exposure vicariously if not directly through the crude market? alberto: what can trump do to stop oil from going up? missiles would help. the second way to position for oil -- apart from the oil itself, the oil futures contracts, it think energy

equities have been lagging. and that you can see in particular across the u.s. extraction and production companies. and also in some emerging market oil companies. -- the medium-term is still below and energy equities that follow the medium-term heart of the oil curve have underperformed the oil curve. that is the cheap part of the market. anna: alberto, thank you for your time this morning. manus, that is it for daybreak euro. the market open is up next. the european markets are waiting for more guidance from the u.s. in terms of whether u.s. futures will focus on philip and ubs. thes: those are going to be two blockbuster names. you have futures better bid. it is all about alphabet and 3%

yields. inge will join us for an exclusive interview right here. ♪

♪ guy: good morning. welcome to bloomberg markets. this is the european open. we are live from our european headquarters in london. i'm guy johnson alongside matt miller today. matt: i'm here covering a you bf today. ,ust spoke with sergio armani the investment bank a leading the way in the first quarter of the cash trade, less than 30 minutes away. ♪ guy: as matt says, we are trading up.