♪ >> u.s. stocks close out. the dollar climbs to a three-month high. >> googles parent alphabet closes, shares rose after the bell. >> at least nine people killed when a van jumped a curb in toronto. police say it is too early to figure out a motive. >> president macron the first state visit of the trump. stocks, asthe dollar rally wilg

focus in asia. flat, two mixed and wars we will be hearing a lot about today. we have one market open already of course, the index over in new zealand. it is just off by a couple of points, the kiwi dollar holding firm against the strengthening .71. dollar, we have got the aussie dollar also being weighed down by the index, heading toward $.76. on's get a quick check commodities, aluminum, huge moves today. this is of course after news resalee sanctions on the may be eased, and that will definitely be the stock to watch in hong kong.

we will take you to other commodities, crude continuing to nudge, $69 a barrel, betty. betty: all right, paul. activist earnings reporting strongest sales and was four years. earnings beat analysts' estimates. investment in ai, cloud computing, consumer devices, and voice-control digital assistants. italy chang is in san francisco. it seems like all of these thatacy concerns have dolled facebook did not really affect alphabet. emily: absolutely, betty, and we see continued momentum across alphabets business and specifically google's ad business, despite the increasing scrutiny around data privacy, around potential tech regulation, costs are continuing to grow, $6.3 billion. that is what google spends to

get new traffic. alphabets a call with ceo bruce porac, and she said that is going to start to slow down. saidth porat, and she that is going to slowdown. continues to be high for google. they are investing in clouds, in google ceo said on the call that the business will take at least two or three more years to really realize its potential. the other interesting thing that we saw is due to a shakeup in the way that google reports, they had to break out the gains on investments, having investments in companies like uber, companies like lyft. 2013, for example, investor over $260 million in billionen uber had a $4 valuation. on itsle reporting gains

private investments, now standing at $3 billion. we can assume that a good chunk of that is from uber. betty: interesting to get those details, emily. privacy issues to not seem to faze alphabet. did they address any of this? emily: i did ask ruth porat specifically -- what are you doing about it, how will that impact as we know the european alreadysai regulations are -- european privacy regulations are already rolling out. she said it is something we are already working on for a long time. meetel well prepared to the requirements. we did ask for a couple of times -- what does this mean for the business? she did not give us a straight answer but pointed out that most based on revenue is search, which relies on keywords entered.

not necessarily so much on personal data that we shared with google. been committede to those requirements, but of course, this is part of the business, also leveraging user'' personal data. beit definitely remains to seen how these new regulations will impact google going forward. we spoke to a couple of guests on our show who suggested that facebook loss could be googles loss could beok's google's gain. on the other hand, google has been silent on some of these issues. perhaps we do not know how these new regulations and new privacy concerns could impact google, because we do have just as much on googled anda facebook. paul: a very news-rich announcement. anything else that we have learned about? emily: yes, google's other vets has continued to shrink. moved nest under

another umbrella. it started breaking out a couple of years ago. revenue from other vets is now $150 million, the operating loss , $571 million. ruth porat told me the main drivers of this are google fiber. those are the main drivers of revenue. she also singled out progress in waymo, google self driving car unit. take a listen to what she had say about waymo. ruth: waymo has achieved $5 million of driving on city streets. the latest million in just three months. we announced a long-term partnership with jaguar randall over -- jaguar land rover. emily: self driving cars continues to be a great fascination, but as far as we can tell, it is not driving any revenue at this point and may in

fact be driving much of the loss that we do see in that other best category. right, bloomberg technology post emily chang in san francisco, thanks very much for joining us this morning. first wordet the news with jessamine summers. jessamine: thanks, paul. has arrived inn the u.s. this comes after trump receive a lavish welcome in paris last year. they will touch on security, trade, and issues that go beyond the u.s. and france. german chancellor angela merkel is due in washington on friday. nine people were killed and at least 16 more injured after a van crashed into protesters in northern toronto. police say the driver has an aggressive, but it is too early to speculate on a motive. witnesses say the them jumped a curb at a busy intersection and

hit a curb before driving away. the ministers gathered in toronto ahead of the meeting in june. u.k. prime minister theresa may suffer the third brexit durham feet -- brexit defeat in the house of lords in a week. political, social, and economic rights, british law after brexit. critical speaker said the government's proposed legislation is "unprincipled, unjustified, and confused. " facebook says it has removed more content from terror group al qaeda by actively looking for it. some systems have been retrained to seek out hate posts. it has taken out more than 2 million pieces of content in the first three months of the year. facebook is about 99% of that was inspired by internal procedures and not reported by the news. struggling brazilian conglomerate over to brush is

likely to miss a debt payment this week despite negotiating the stakes for a loan. the privately held group will miss deadlines. $150 million in offshore bonds. fallout afterd a a controversy. global news 24 hours a day, online and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am jessica summers. this is bloomberg. paul: thanks, jessica. banks have a habit of misbehaving, but they really have not suffered any consequences. we find out whether the latest rout of outrage will be enough to get them to change. betty: earnings season, as we know, kicking into high gear now. this is bloomberg. ♪ now. this is bloomberg. ♪

paul: i am paul allen in sydney. betty: via betty liu in new york. you are watching "daybreak: australia." rallying to the highest level in more than three months. bond yields -- i left a week ago, and we were not even talking about this. that might cause a problem here for earnings. reporter: we were really hoping it would be picked up behind the 3%political tension, then showed up this morning and sort of crashed the party. questionsing a lot of about earnings going forward, whether they could be erosion there. when you think about it going higher and continuing to stay higher, we had earnings growth situation,nd in that

we would have to reevaluate capital spending, investment, obviously stock valuations. if you think about the earnings season so far, it has not been great. not embraced stocks, consumer investments fell on her face, energy did so-so, industrials did well, but you are not seeing industrials embracing, so that leaves tech as sort of the big sector to maybe pull this off. betty: paul has some breaking news. to interrupt you, but this is breaking news you see on the bottom of your screen. senate panel has advanced denomination for secretary of state for maupin pale -- mike pompeo, so the cia director clearing another hurdle on its way to becoming secretary of state. that is breaking is just crossing the terminal now, betty. betty: so advancing closer to that position. that likely -- not in the immediate term -- it will have

longer-term impact for market sentiment. we know it, romaine, was down today. we saw reports from alphabet. what i turn cinnamon around it all? will that turn sentiment around the? romaine: everything is possible that they can real that in. facebook was down for a second day, so there are concerns of the regulatory overhang. twitter also dropped about 2% today as well. apple, which does not report for another week, they are dropping for their fourth straight day, and that was largely because of concerns over the iphone x. it may not be having the market penetration that they thought it would have. then you have to look at the semiconductor space. they were the leadership category for quite some time, but we saw a couple of reports last week and then earlier today. about half of the

philadelphia semiconductor index reporting this week alone. i think that could be the canary in the coal mine, at least as you look at how semiconductors do, could say a lot about the hardware side. paul: romaine, what would be enough? romaine: that would be a good question. one thing we are looking at today is if you take a look at the s&p dividend yield, which is now below 2%, and you compare that to the earnings yield you two-yearng on a treasury, about 2.47 now, trending well above, but even if you look at one-year yields, they are basically above what you are getting on the s&p. six-month yields also bigger than what you get on the dividends. pre-month even only a quarter-point away from getting above the s&p dividend yield. that is for investors who might be considering moving from equity and shifting into fixed income.

there are a lot of attractive yields there are seeing on the front of the treasury curve. that could mean potentially that they move money out of equities into fixed income. that would be for a broader market. betty: ok. romaine, thank you so much, romaine bostick, our bloomberg news editor, looking at some of the breaking news out on mike pompeo and has nomination being advanced here for secretary of state. for more on the markets, i want to bring the center stone investor's cio and founder. million in assets. abhay, should%, the markets be rallied? ay: as romain mentioned, what has really changed, as he was saying, now short rates are very interactive and offer competitive yields.

for the last 10 years, interest rates are basically zero. there are people alive today that do not know that banks are supposed to pay their deposits. [laughter] betty: that is a generational thing. it seems rather crazy that it has been so low for so long. guys, let's pull up the gdp chart on my terminal. we show you the correlation between the u.s. dollar in a 10-year yield, which had been widening. though it was an inverse correlation, so to speak, which is odd because rates are going up, and the dollar seems to be weakening. as weg the tide now, heard from romaine, that my hat that implications for earnings, but where do you think the dollar is going to go? abhay: we are long-term investors. from our horizon, currencies watch. we will make tactical changes in ar portfolios to help for

variation of one versus the other. we think the dollar is slightly overvalued versus the euro, maybe some of the european countries more overvalued versus some of the emerging markets. so in the dollar space, we do hedge a portion of our non-us currency exposure back into the dollar. betty: right 20% now. you don't think they will get out of hand? abhay: i don't think so. 3.5% yield, from a longer-term perspective, on the insurance values of business, the interest rate differential does not have much of an impact on the actual value of the business. abhay, geopolitics is a pretty deep and rich well right now. is there anything in that roma it keeps you awake at night in terms of risk? stone, we center

assume something is going to go wrong, so we are prepared for many different events, not knowing in advance what could go wrong. in other words, we are buying securities that could be -- that have very solid balance sheets. we are very comfortable with the market position. some reserves. usually we have some reserves right now between 20% and 30% reserves just in case something goes wrong. over the longer term perspective, the geopolitical least inve proven, at my career, to have a short-term impact on stock prices, but almost no impact on businesses. our history has been to just ignore the noise and stick to the business side and go bottom-up. one security at a time. paul: i want to go back to an

earlier point you made about how some people do not even know banks are made to pay interest. this environment of rising rates , do you have any concern for some companies that might be a little too loaded up on debt? abhay: yeah, i mean, there is some concern that corporations, especially in the united states, have gone a little to the extreme in terms of borrowing. from where we sit, most companies have engaged in borrowing in the united states have learned really from the past, the financial crisis, and have turned out there debt maturities, so they will not get in so much trouble if there is some move up in interest rates in one year. that is something for that a lot of companies learned in the last go round, the financial crisis. the leverage is definitely there. it is something we are watchful of. it is not something on top of mind in terms of key risk markets in the stock market. betty: what can't are you in?

do you think it is the end of the bull market for bonds or not? abhay: the top of cycle sort of feel. betty: what does that meanbetty: ? come on. [laughs] abhay: it is cyclical, not structural. cycles cure themselves, and the next inflation will cure recession and possibly or could possibly put a lid on long-term rates. i am not a believer that we're going to 4%, 5%, or 6%. can we go 3.25%? maybe. but from a long-term perspective the modern aussie a dramatic shift from what we have seen over the last five years. end oflook, this is the the 30-year bull run, and here we go, we will see this crash here. abhay: it is kind of the 1970's and after this period, i would imagine the next 20 years looks like the 20 years prior to the 1970's. interest rates went up and down. there was not a massive shift up

in the rate curve, in terms of the 1970's. betty: that is interesting. the implications them -- or how that impacts the equity market, in your view, would be how? if we will not see it accelerate or get out of hand. abhay: it means we will have volatility, but i do not see a huge bear market -- betty: you do not see another 2008 crash or anything of that sort? abhay: no. we could definitely have a 20% decline. that is a run of the mill, normal bull market -- betty: it still feels terrible. abhay: but it is not a reason to panic and think it will be zero. betty: abhay, thank you so much for joining us, abhay deshpande, centerstone investors cio and founder. we want to recap that breaking as i cannot on cia director mike pompeo, being floated by the senate floo foreign relations

committee to advance as the next secretary of state. this is after senator rand paul flipped, the kentucky republican had earlier said he would not back his nomination, and reversed his opposition under pressure from other republicans. l, it could have possibly been more of an embarrassment if he had not been nominated to advance, but it looked like he got the votes, and it looks like there will be a larger vote by the senate later this week. paul: yes, but it was a close one, though, wasn't it? -9 with oneoting 11 democrat in favor. if the one democrat had not gone in favor, we would be looking at a very different story indeed. but mike pompeo has been to north korea. he has met kim jong-un earlier this month, so he is in a good position to start of this new role if he clears the remaining hurdles, betty.

betty: we will be keeping our eye on the headlines out from washington. stay with us. watch us live. see our past interviews on our interactive tv function, tv . you can dive in and to the bloomberg functions that we talk about, and you can become part of the conversations. send us is it messages during bloomberg our show. this is for subscribers only. this is bloomberg. ♪ ribers only. this is bloomberg. ♪

betty: get a quick check of the latest business flash headlines at this hour. we saw jumping the most in the air as the u.s. treasury softens sanctions and talks of listing them here in shares gained 19%, more than any full day since at least april 24 of last year. officials say they have received measures if oleg relinquished control, aluminum fell in response, falling more than 9%,

the most on record. paul: gm in a bit of bankruptcy after reaching a deal. revamp of a business that has lost about $3 billion in the past four years. failure to reach a deal would have led to change in leadership. more coming up. this is bloomberg. ♪ this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.

paul: it is 8:30 a.m. here in sydney. markets opening. futures looking as flat as sydney harbour. very quiet. i am paul allen. paul. how poetic, i am betty lou in new york where it is 6:30 p.m. let's get to first word news with jessica summers. jessica: alphabet shares soaring after beating analysts' estimates. forecast atbove

$9.30. other revenue, which includes hardware, cloud, and out sales, jumped 40% on the year. that reflects a $2.4 billion purchase of an office suite in new york. escalatingon the conflict between saudi arabia and yemen. tensions reach the highest since 2014 after i romney-backed rebels launch unsuccessful militant attacks and a senior member of the group was killed in a saudi coalition strike. a barrel. at $68 whiteness premium for wti since january. nafta negotiations resume on tuesday. the canadian foreign ministers are in an intensive phase, however, president trump said again that he could make a mexican agreed to curb a condition, highlighting that a deal is still far from certain,

writing on twitter, the president said "mexico must stop people heading through their country into the u.s." he also called for wall funding. global news 24 hours a day, online and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am jessica summers. this is bloomberg. you sojessica, thank much. a quick update on how the markets are trading and about to trade over in asia. dealing already underway, looking pretty flat after that mixed close in the u.s. of course the stronger dollar having an impact over in asia. , as pauln australia just said, looking as flat as the sydney harbour. dating ever soar slightly against the greenback, but again, the greenback strength will be the focus here in the currency markets. speaking of the currency market, a quick check of how the japanese yen is trading right now.

unchanged at this point. certainly watching the pound, brexit concerns, the pound sterling, and that 10-year yield, we are watching it ever closer to the 3% level. that having a flattening effect as well on the s&p and the markets here in the u.s., paul. paul: yes, 3%. that will be a number we will be hearing a lot of today. let's get a little more of that as trading gets underway in asia. bloomberg's global markets editor adam hayes with us. nearing that 3% level. looking at some of the possible impacts on other asset classes, including emerging markets. the 10 year level itself focusing on the bond market. what is happening has implications for a number of asset equities of course, and

the emerging market is important of course. the 3% chart, not being here on the 10-year since way back in 2014. it is key that people have to adjust to this new level of borrowing costs. i think jim paulsen summed it up pretty well. historically, stocks do ok in this kind of environments. the issue is when you have stagflation. that is not something that is happening at the moment. of course, what you have seen at this yield on 10-year treasury's pushed up is the relative decline, the earnings yield, if you will, that you get from the s&p 500. the yield when you get when you have your equity exposure. that is the maryann, of course, which downplays the valuation you get in equities relative to bonds. in emerging markets, it is whether this is a commodity price or an inflation story, which many at this point think it is.

oil rated higher over the last few weeks, and that is causing breakeven rates, bond markets, expectations of future expectation to push higher. reason, itthe real could be the problem for emerging markets in the sense that central banks and some emerging market economies might have to raise rates a little bit quicker than people expected, which may put the brakes on both domestic currencies but also local equity markets across the euro space as well. certainly that is something to watch. going back to stocks for a moment, remember that margin moneythe amount of people borrow to find their equity exposure, has been going up and up as this bull market has run up. the question is how much higher borrowing costs can go before the margin debts start to get a little bit -- people have to start to ring those in. they will have to stop borrowing to buy more equities. we see 3.5%, 4%

by the end of the year, you know, are the equity markets going to be able to withstand that jump? the debate nowy, is around the magnitude of the move. now we are around the 3% level. the question is how quickly rates continue to go up. it is certainly a big leaning in the market to rates progressively moving higher, obviously, as the fed continues to normalize monetary policy. in one sense, if we get up to 3.5% or 4% on the treasury yield over the next 12 or 24 months, it may not be a problem in and of itself. it is the magnitude of that move, if we move very quickly towards one of those numbers, say, sixe space of, months, you would have thought that would be a big enough shock for equities for them not to be able to withstand the. if you are looking at a 4% 10-year treasury yield, the real

yield of inflation is around 2%. it is really backed the old days of when policy was normalized, pre-financial crisis. we are watching the speed and pace of the movement, if indeed we do creep higher. plenty people in the market are saying that 10-year can drop back easily to 2.9% within a few weeks. betty: that level certainly is proving to be a buy in level, adam. thank you so much. adam haigh, bloomberg's markets editor on the bond market. more to come on "bloomberg daybreak: australia." ♪

paul: i am paul allen in sydney. betty: diane betty liu in new york. you are watching "daybreak: australia>." management's elliott

setting of the pressure, it's planned million dollars merger pleasing investors. elliott says hyundai motors should link up to form a holding company that would oversee the group. elliott says the group should raise dividends and return more than $11 billion to shareholders. paul: the "wall street journal" says softbank is putting $1 billion in two a chinese company. alphabet's investment fund is also thinking of investing about $30 million into manbang, the so-called uber of logistics, 4 million drivers and one million exporters. betty: steph curry is heading to hollywood, signing a deal with sony pictures. the company curry cofounded, unanimous media, well face a sony backlog in coal or city.

if it presents announced, but curry said he wants to use the deal to "affect the world positively." paul: a strong us financial system is under scrutiny, and it very well sofaring far. a royal commission inquiry suggests companies have been lying to regulators and even charging debt people for financial advice. we are joined by bloomberg gadfly columnist david sick linger. if you look at the history of commissions, they generated lots of noise but not a great deal of change. change in australia generally from the party putting down bipartisan legislation, which often comes after the commission, but it will essentially come anyway. commission, we need the incarcerating average to have a

lower rate than we are. the rate has doubled since then turned if you look at that history, we have bipartisan pressure, and there is bipartisan push for changing the financial system, but i do not know that this is going to advance that. paul: could this be different, though? we have a political difference as well, malcolm turnbull and climbingury down. this could be a real boost for the opposition. there is an election next year, and an angry public could vote on the reform. david: i think that is right, but i think it can look at what is going on in any case in australia in terms of legislation. theay come in many ways, corporate regulator was granted much more significant power. it has essentially been a tiger, australia's equivalent of the

sec or whatever. it only has power to levy fines of $1 million. tampingad very little down the bad practice, so it has wound up essentially cajoling companies rather than trying to compel good behavior out of the. coulter change, but i think practices like that are things that are going to change this. and many are already trying. betty: david, this seems so deep-rooted culturally. what is needed to be done to really dig out of this? david: well, i think that is the real issue here. the issues, like the one i , thereed with asics have been changes to the way financial advice has been given, which is not helped over the last couple of years, but i think that is the core of the problem. again and again, you hear low-level people saying i solve

this that product, i gave this that advice, because i needed to make a sale. if you look at australia, there are not big institutional businesses like a lot of the banks on wall street and in europe have, so really the only do isat people can increasing sales, and 60% of that is incentive payments for executives. es out ofore fe their retail customers, and that is causing a real irritant. i do not think that will change much. paul: bloomberg gadfly columnist david fiddling, thank you for joining us -- david fickling, thank you for joining us. we will look closer at how 3% yields could reshape markets. we have a guest joining us from melbourne. thank you for your time. we have been hearing from a

number, 3%, and if it gets there, are there implications that equities are they really negative? or do we have an earnings upset here? good morning. i think exactly that. there is a psychological level about the 3% yield in u.s. 10-year treasuries. 3% comees go through how quickly will ago to 4%? a bit different, why we see the three-year yield moves, we see a bit more inflation, rate hikes of priced and by the market. on the back of that, you're actually seeing a growth out very well. we think that reflects in the earnings season, going through the u.s. high heels turn to high borrowing costs, and eventually, but we're not at that point yet, i think it should be reaffirming this is a global economy, something relatively healthy. the markets are always trying to

figure out where the next inflection point is. is 3% going to be inflection point for the market to move higher or lower? in our minds, it is not really a inflection point, it is reflection of what we have seen in terms of rising yields for the last two months now. paul: how high can it go? you mentioned 3.5%, 4% of a possibility. do you imagine that the federal reserve will be doing it? i think it is interesting what you have seen over the last yieldys in terms of market. back then, the market that play a big catch-up in terms of the federal reserve in terms of rate hikes. it is still not pricing in the full rate hikes for this year, talking about before that we think will be delivered by the feds. higher,till move but what you are seeing is less an adjustment and more an adjustment of the inflation coming through, commodity prices.

but again, our view is that you will see core levels of inflation turning up. that number as the fed looks up hitting back taxes, headline levels being higher, and a year ago, though sort of effects from lower prices or lower lodging costs, and inflation is likely to go off the first half betty: of this year. -- first half of this year. betty: kerry, i am curious come in your field, staying on bond yields, why do you think the 3% level is so critical? kerry: because we have not been there for a long time. it is a nice, round number. i think it is something that psychological you will see -- maybe it there are losses around 3%, we should get back into the yield, bonds on the basis of this. i think the fact that we do see

more hype coming through theests duration risks in market. the upside, inflation from the fiscal stimulus in the u.s. and the fact that you might see growth come in on the back of tot suggests it is too early get back into bonds and be defensive in that realm. i do think they need diversification of portfolios, and for a long time, investors have been scared of government bonds. they are still looking for something to divide that diversification. erry, speaking about the currency markets, certainly they are impacted by this, and in particular the dollar. we have seen the strengthening in the greenback. should markets be, particularly equity markets, company earnings, should investors be more worried about the strengthening dollar than actual yields on the 10-year? implication of currency portfolios this year are going to be quite marked. we talked about the u.s. dollar weakening over the course of

this year, white substantially last year. in the near term, we should be supportive because we have seen treasury yields, the growth outlook for the u.s. economy has been stronger than perhaps elsewhere, like the eurozone and japan. this is a dollar strengthening story. and also the mayor outlook we have seen in the u.s. -- bear outlook we have seen in the u.s. the earnings season has been robust, but overall, delivering on those expectations. we have seen funds flow to the u.s. on the back of that and currency being supported. i think it does play to some of our other outlooks for emerging markets, say emerging-market debt and equity. a weaker dollar will help those markets. in the medium-term, we do see the u.s. dollar weaken. we will get a sugar hit from fiscal stimulus abroad in the u.s. this year, 2019 and beyond, we do expect to see that growth starts weaken and inflation start to weaken, and we do think the dollar will be weaker in the more medium-term.

paul: kerry, i want to quickly get your thoughts on commodities as the 10-year approaches 3%. do you think we will see longer volatility in the commodity sector? kerry: it is something that has been apparent. we have seen volatility in bonds , commodities, but not so much the equity market in the last couple of weeks. i think the volatility in commodity markets has been driven by the geopolitical risks. we think about the oil market. we have largely seen supply and demand go and come back before. we have seen production cut by opec, the decline coming through a stronger level than indicated, while at the same time seeing demand. it is robust as china stabilized and the rest of the world grew quite well. the geopolitical environment as we think about trade wars in the whatcations taking off, that means for the oil price and to weaken and has

little bit more, as you have seen some of those sanctions a little bit off nervous as to the idea of the inflation out look being a little bit higher, but it should be lower over the rest of this year. betty: kerry, we will leave it there. much.you so kerry craig, jpmorgan asset management global market strategist. alertsh family cannot here, that the former president george h.w. bush was admitted to the houston methodist hospital yesterday morning, according to the statement hear from the spokesperson for the former president, "after contracting an infection that spread to his blog, he is responding to treatment. appears to be recovering. an additional update will be put out as they are warranted." the former president suffering from, as you can well imagine, che as he put to rest

barbara bush over the weekend. much more ahead. ubs flying past forecasts with its estimated trading results. hear from the ceo next. this is bloomberg. ♪ . this is bloomberg. ♪

betty: good morning. i am betty lou in new york. paul: i am paul allen in sydney, if you are watching "daybreak: australia." shares fell despite being just under 2 billion swiss francs. overshadowed by weaker results, such as wealth management. ermotti promoted the strength of the overall ubs operation. sergio: actually, i think it is due to the fact that in addition to a very strong set of

important numbers, the underlying numbers in terms of profitability were strong across the board, particularly in the global wealth management and from a geographic standpoint, asia and in the americas. but all businesses were, you know, contributing to the strong performance. joe: what does this mean to the investment bank, which has struck down, and reports that you were debating internally? sergio: i cannot really say. i can say that report was a little bit of fool reporting. if you look at our results in the last five years, they have been very strong. we are very competitive. we compete in the u.s. compete, and investment banking is not about shrinking, it is about growing at being successful.

it is very important to our wealth management and corporate franchise in addition to serving our institutional clients. 25% return on allocated seetal is very difficult to the narrative of those reports. reporter: and in 25% rise in equity trading, and dollar times, is generally in line with the u.s. investment banks, what they were reporting as well. do you expect that kind of continue? sergio: tosergio: be honest, i say those results are in line with our competitors, if you allow me to say that, i would say the numbers are very strong. it is actually lucrative. if you listen to that, the part of corporate equity, the risk that we account into our investment banking, we would increase in7%

dollar terms. so i think very strong -- reporter: that would beat what u.s. banks are reporting. sergio: absolutely. reporter: what do you expect from the investment bank? -- isil reports that you expect to meet with 200, 300 clients face-to-face every year. if that really a key part of the growth that you are talking about? create you want to grow, more accountability, a benchmark. you guys also have some kind of need to do x numbers of interviews or write a certain number of reports. our focus is to make sure that we grow these clients, make sure we give them our best value. betty: again, that was ubl ceo sergio ermotti speaking to bloomberg's matt miller. i know you are keeping an

eye on how the markets are right now. yes, futures looking kind of flat, the aussie dollar, keeping an eye on that. first quarter due out in australia in 2.5 hours. stay tuned. betty liu up with "daybreak: asia" next. ♪ >> welcome back to back to this wi-fi is fast.

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>> 7:00 a.m. in hong kong. i am yvonne man. welcome to daybreak asia. a weaker yen may support japanese equities after the dollar rose to a three year high. futures indicate small gains elsewhere in asia. google's parent reports a surge of sales and spending. alphabet shares rose after the bell and then gave up a game. yvonne: i am betty liu in new york, where it is past 7:00 p.m. on monday evening as we get the week started. mike pompeo having a better week. succeed rex to

tillerson as the next ar