♪ anna: good morning from bloomberg's european headquarters in the center of london. i am anna edwards. manus: i am manus cranny in dubai. here are the top stories. anna: french president macron first visit to washington. flirting with 3%, the 10 year treasury yield at its highest level in four years. -- dollar bulls catsup rank catch a break. anna: third quarter sales boosted by 34%. the tech giant is playing

catch-up. manus: very warm welcome to daybreak. we have breaking news. quarter revenue from continued operations, 2.8 one in terms of adjusted earnings, that is below the estimates. this is all about focusing in. they sold the chemical unit. they want to be a paint and coating business. transforming akzo nobel.

robust pricing initiative is ramping up higher costs and adverse effects on the critical issues for akzonobel. continued operations also missed. we will have that conversation. you are all about the tech. anna: absolutely. all about the cloud this morning. forecast onits 2018 the closing and q1 results. they did their own m&a earlier this year. they did their biggest acquisition in more than three years when a soft canada's software think. -- software inc. this enables them to access customer engagement tools.

we speak to the management of the business, diving into the detail a little bit in terms of the bottom line numbers coming through. to 7.5.operating profit what is the range for the full year. that is the uplifting guidance that we are talking about. we will be speaking to sap a little later today. -- that ise numbers the numbers out of sap. sector,on the banking this on commission income and the first quarter numbers they have increased their lending volume. cost of element is in line with expectations. they're coming in ahead of estimates.

the credit quality remains good in all of their markets. swedbank 24.8%. in terms of core european bank earnings yesterday, this one of the tentacles into latin america. the net income comes in at 2.0 5 billion. on the net income level they beat 2.05. she promised to boost dividends in 2018 to 23 euros.

that is a direct correlation and relationship there. they expect returns from investment to hit 14% by 2020. getting back to the double-digit returns are critically important. latin america is on the agenda for them. especially brazil. to that end, these are questions we will put to the cfo when he joins us a little bit later on in programming. that will be after 7:00. we will have the ctf -- the ceo of santander. how does the world look from a risk perspective? it is all about rusal and a powerful sigh of relief as that stock rises in asia. to break convention with the other end of the risk rate or, we have the aluminum price showing weakness overnight. it was down more than 9% in the u.s. session yesterday, after we saw changes from the white house sanctionsal and the

there, raising questions on commodity prices. commodities had risen in part of consensus around sanctions. let's look at the other assets on the risk radar, in particular, the u.s. 10 year yield. it., it did not quite make we wait to see if we get to 3%. we will debate that later on the program. we got the 2.99%. pacific.msci china doing quite nicely. fiver, but owe you a i need to convert sterling. 5%, not 20. let's talk about that correlation coefficient, what a wonderful segue. i am talking about the dollar on

10 year yields. the dollar had a winning streak. that's not do a red headline on it. we have had the longest winning streak and why? the correlation coefficient and fx, the yields 60 day correlation has gone back into the green, and that is critically important. suddenly the dollar has awoken to a bit of risk differential action. we were told yesterday it is not about getting to 3%, it is about the ability to maintain those levels at 3% or above that. the dollar bulls get a lifeboat. those bond traders are struggling to bust 3%, but if they do go to the profit columns , they talk about 4% being the critical level of risk to markets. a fiver on the weight in the

post. in thever on the way post. we believe that there. let's talk about u.s. futures. we are expecting them stronger up. nothing enormous. let's talk about what we have , all of these conversations and the trio of executive interviews. we will talk about the labor markets broadly. we will speak to the cfo of santander and sap. we will talk about politics in latin america with santander. that's get the first word news with juliette saly. juliette: thank you. in canada, 10 people have been killed, and 15 injured when a van slammed into pedestrians in

the north end of toronto. a suspect has been arrested with a dramatic standoff with the police officer. authorities have named the 25-year-old as a suspect in the attack, that say it is too early to speculate on a motive is one of the country's worst mass killings. in washington, senior trade officials from the u.s., canada, and mexico met again today in an intensified push to get a nafta agreement. said afternister seven months of discussions, the three sides have entered a concentrated days of talks. victoryot a separate with the deal in principle to free trade-year-old agreement with the european union. in washington, a divided senate or and relations committee has voted in favor of mike pompeo to be secretary of state. the committee back his nomination after senator rand

paul of kentucky reversed his position. the cia the way for director to gain approval from a full senate leader this week, handing a victory to president trump. upper house has voted against theresa may on a key piece of brexit legislation for the third time in a week. the house of lords backed an amendment to the european union withdrawal bill would ensure the bulk of eu rules on political resultsal -- the plans on theay's departure from the eu. former u.s. president george h w bush has been hospitalized after attending the funeral of his wife. the 93-year-old was admitted to the houston methodist hospital on sunday morning after an infection spread to his blood.

barbara.w. bush and were married for 73 years, the longest president on marriage in u.s. history. global news, 24 hours a day on air and tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 you can find more stories on bloomberg at top . mark, waiting for that 3% but we have seen buoyancy coming into asian equity markets. the dollar at its strongest level since january. the yen down for this session. chinese stocks leading the way on hopes there could be policies eased in the deleveraging campaign. you have seen weakness in the tech players. -- overall the regional index up. some of the stocks in detail, a lot of focus on what is

happening in the aluminum market, depending on where you are in the world. in sydney, aluminum down. kong havees in hong risen by 37%. a little worries here about the overall chipmaking industry after it came through with sales the first quarter that missed estimates. the upside, a lot of buoyancy from the developer stocks in hong kong. thinks to stronger than expected demand in smaller cities, and earnings release giving an overall boost to chinese equities today. manus: thank you very much to read juliette saly with the latest on the markets. 3%, the flirtatious level everyone is talking about. paper continues

to nudge towards the number. it is being pushed up by higher commodity prices and concerns on the inflationary effect on the wider economy. here is why a whole host of participants -- >> when we look at the decomposed nature of the 10 year move, it has mostly broke even on inflation rates. i would chalk that up to inflation risk premium coming back to the yield curve. i think the 3% threshold is enough to get peoples attention. by itself it is not a bad sign. we've seen growth upwards of 5%, the 10 year yield seems priced. when you look at the turn, it is the better part of the last few years, this is a 35 year change in bonds. we think it has just begun. >> you may have a a market looking at the fed and wondering how much will they let inflation run above target? if it will not wish back on

higher rates of inflation, maybe we need a steeper term structure. i think that is what we will be seen. anna: now joining us, the head of economic research. good morning. we have opinions on what the 3% level means to react people call it psychologically important and say it has big significance. for some people, it is called the bear market for bonds. what does it mean to you? inflation iso me rising in the u.s., and inflation expectations have gone up. i think that is a key thing to look at, inflation is rising. a long-term on yield, it does concerns at the end of this cycle there may be some nasty shock. manus: very good morning to you.

the other conundrum for markets at what point does it matter of -- for our investors. this chart blends together the s&p yield and the 10 year yield. at the narrowest in nearly eight years. it is coming to a pivotal moment in terms of asset allocators prevarication. it does 3% provoke that change, or does it have to be near 4% to pick this story? 3% is quite low in real your earlier comments suggested. the real yield, if you take inflation now, possibly rising to 3% by the end of this cycle, that is a low real deal. the bondsee as yet

market having a decisive effect it is more important the fact that people are getting a high nominal rate on cash type assets, so cash as an alternative is more attractive than six months ago. anna: should emerging-market bulls be nervous? some are making a link between the 10 year real -- yields and , is this a link you would make on higher treasury yields, a higher dollar? with the emerging markets i would be looking at nominal interest rates on essentially cash. it will make it less attractive to go into emerging-market currencies. that is one point. sectionturn to the fang in the market, much less important than yields is the story on the things themselves

-- on the fangs themselves. that is more of a story. that is certainly going to be a key story for this week. we get other hitters in tech coming this week. there is more to get through. breandan brown, head of economic research, head mufg securities stays with anna and myself. coming up, it is all about the men and women. the crown and his wife arrived in d.c. for trump's first date visit. we are live. this is bloomberg. ♪

♪ anna: this is "bloomberg daybreak: europe." is 6:20 in london.

president macron arrived in washington for a three-day visit heavy on symbolism and substance. this is donald trump's first official state visit. they have a long list of met -- issues to discuss. good morning. how did the first day go? what can we expect from today? monday was planting and oaktree. then they toward washington by helicopter. that is probably when discussions of trade started during this dinner at george washington's house. today is really the beginning of the official state visit.

there will be a big ceremony with 500 members of the armed forces at the white house. betweene-to-one meeting macron and trump in the oval office. then a broader meeting with the delegation of the u.s. for one hour. they will give a press in the rose garden. any progress on trade and iran, macron wants to convince trump to stay in the agreement. this is what it comes down to, can he -- he claimed last week he can persuade trump to stay in syria. that is the point here, which is

many go to washington, shake hands, and come away with very little in policy. caroline: this is the main concern. the red carpet treatment does not necessarily mean they will come up with solutions. manage trump not to stay in the paris climate agreement. started with ait kiss on the cheek and a hug, not the usual handshake we see between the two in the past. they remain cautious about the chances of macron to convince trump to change his mind about deal.an some officials before the trip said trump's advisers had not made their decisions quite yet. they might have more chance on it might be more of a

symbolic meeting than results. as long as he doesn't show him the deficit with france. red-hot headlined, you are -- the ceoa story tells us the demand, most of its markets continue to be good. this -- the part of the supply chain are strained. this is an important part when it comes to global trade. more to do in improving efficiency along the holdout you chain. supply constraints remain in the near-term, profitability will be hampered. water intake up 29%. anna: we will watch that at the

open. let's talk about hiring and staffing. revenue numbers for the first quarter coming in a shade light. the margins are broadly in the ballpark. they are painting a picture of stability, talking about growth margin to be broadly stable sequentially. we will have a conversation with the ceo of randstad holdings. coming up in the next half-hour of the program. breandan brown, head of economic research, head mufg securities, we were talking about the visit ofmacron, and when you think the euro zone, i know what is on how itnd is the ecb and deals with inflation. how close you see them getting to the target? how dovish you see them being this week? will be i think it

dovish this week, and last week we had the ecb chief draghi not looking at any tightening of monetary policy. there is a more fundamental question going forward. policy ofsuing this 2% inflation when inflation is well below that, and europe has huge surpluses on trade is looking and unsustainable policy in terms of the german political scene is unpopular. manus: hold those thoughts. this is one of those moments where i thought anna was going to thank you, but it is me. thank you for being with us. breandan brown, head of economic research, head mufg securities. more to come. we have more to consider.

we will have the conversation with the randstad ceo. he joins us with the first interview of the day. ♪

this wi-fi is fast. i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops. oh boy. 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: a live shot of tokyo.

the dollar-yen is not rocking but the yanis dropping. -- the yen is dropping. economists are taking note and pushing back expectations for central bank adjustment of policy. so say the mliv team. anna: as dewey all. -- as do we all. a pretty broad rally, some of the comments they are making in china about easy credit policies on their way. let's check in on the market.

>> the shanghai composite is leading gains in asia more than 1% but we are seeing the mc -- and japan higher on a weaker yen. overall gains in the msci asia-pacific index but the focus in the market, let's switch to the next chart is watching that 10 year yield, watching .43%. we failed to break 2.99% yesterday. break the key 3% we could drop back to 2.7 if the bulls command, if we break above 3% we could be heading for 3.25. he said the key thing to watch is the 10 year breakeven rate. some of the rise in yields last week was led by the rise in inflation expectations, the tenure break even rate went above 2.19%. we are at two point 87.

if this rise is without the 10 year yield going above 3%, that is when we might see yields drop in the bulls come in. that is something to watch according to morgan stanley. pushing the correlation between the bloomberg index and the treasury yield, bloomberg dollar index hitting a three-month high, it is also crossing the hundred day mark -- moving average. for the first time this year. for now. back at least taking a look at metals markets, the gain we saw one of the reasons the 10 year yield was rising last week. we have seen aluminum drop the most in almost eight years with the u.s. looking to take a softer stance with sanctions toward rusal. it's a cap -- it continued declines and that means volatility has climbed to the highest since 2010 on aluminum. manus: thank you. whatrevarication about

happens next in markets is important. stocks. equities -- surged to $100 billion over the last 12 months. consideringe bank, cuts and its business as part of a wider restructuring of the bank. let's bring in our guest, the co-cio, great to see you. we have been dancing around this what happens next in the equity markets. for ubs at the ebs, they would say this is an opportunity to step in. money flowing out of equities, do you believe in that sort of trade line of by the dips?

gregory: we are positive on u.s. equities last -- like last time we were your guests. earnings season is looking positive. we have 85% of s&p companies have released earnings which have beat expectations. there was a recent dip in some of the eco-data out of europe and there has been a vindication . secret eyes global growth should be supportive. good morning. interesting to look at the ubs story because they are the biggest bowls on the s&p 500. they have a and of your target that is among the highest among the strategists bloomberg tracks. -- it ist does slightly confusing but it shows you the extent of the outflows s&pave seen that track the 500. do you expect to see a continuation there? this moves away from u.s. equities to global equities,

would you expect to see any change in that trend? gregory: it has to do with of tech.' perception there is a lot of talk about tech regulations and if they scare investors and we can see a pullback in growth stocks, growth stocks is leading the u.s. equity market, that would be the indicator in terms of what we should be looking toward in terms of performance going to year-end. thes: you mentioned earnings season which should up the let's pull ea function. 96 reported out of 490 nine, the earnings surprises 7% but the bulwark is on industrials. are sing the we alphabet. what sectors do you want to be long on?

gregory: like i said last time, we are still bullish on u.s. financials, financial companies should be in i addition to profit from rising interest rates which we think will continue throughout the year. showedet interest income a positive reflected and we have seen some strong numbers so we think that is the best place to be. you could be slightly insulated from any tech selloff. so you get a double benefit. we will talk about tech in our next conversation. we have specific earnings out and we will look ahead to what is to come this week. talk to me about the three cents watch on treasuries. is this psychologically important, or more than psychologically important are other levels you are watching in terms of u.s. treasuries? gregory: a lot of people are making a big deal about the psychological number and i think it is much ado about nothing. what is important to think about is how they shape of the yield

curve is changing and what we are seeing is the short end of the curve rise whereas we are on theing a large move end of the yield curve around 30 years. if you count the 10 year versus the third year, the 10-year has moved around 60 and the 30 years has risen, about 30 bits. we also need to be mindful of the fact that if trump is side,uing on the spending that could spell a little bit of a problem for investors' perception in terms of making u.s. bonds more attractive. value, u.s. bonds provide a lot of value relative to their year -- peers. manus: picking up on a couple of things, it yesterday we had a gallo and heerto

said you need to think about real [inaudible] the you see a widening in real you? f journalists have -- will be devastated they have written so much about it. will it explode? ll be careful in what i say. jeffrey gundlach was correct in terms of his that on an upward movement in the 10 year in terms of the yield. he is bullish on oil and energy. he came out with a big call on and energy etf's yesterday. he will be right again in terms of place to hide in the u.s.

equity markets regardless of whether the 10-year sells off. anna: we will talk more and get to tech. theust had results from employment services company reporting revenue for the first quarter that met the average analyst estimates and let's talk van denvandenberg -- broek. business performing? what worries you right now? : there is not a lot of worries currently. europe is continuing on its good france --n southern southern europe it is still good. so that is good, the slight

worry is the german market, there is a lot going on in haveny currently, there been some strikes. the german market is the toughest one to call but apart from that you are good. strengthening growth in the netherlands and the u.s. is flat but it has been flat for a long is stablet development with better earnings as a percentage. pretty good start of the year. manus: that is a bit disparaging. good morning to you. not about your numbers but your rhetoric in regard to the u.s., with their fiscal spend and tax breaks. we have growth rates we have not seen in a number of years but you are saying to us fairly flat, the earnings growth is good, is that is bullish as you can get on the american story? yeah that is as bullish as i can get.

is an indication we think up market is 1% or 2% driven by the labor market. it is time -- hard to find people. the tax break might help the overall economy. the labor market is something the government needs to look at. revenue growth has been driven by strength in continental europe. is that still the case? you mentioned germany is hard to call but how strong is the continental european business? strong.it is comparisons in italy where we saw 25% growth last year are tough but 19% growth. that is good. what we are doing when we talk about growth is balancing growth and profitability in it in france, and the netherlands and

maybe we could go a bit faster but we are diligent on pricing. europe is good. the rest of the world is good for us, with good growth. in japan, double-digit growth. china sees a good rebound. overall, as i mentioned, a good start. 13% growth. it is also very good. and we also see 8% growth of that in the u.s. business which is an indication that all clients want to hire people directly because otherwise they might be gone. manus: it is about retaining staff in north america. president macron is having a great time, he is over in washington planting trees, looking very presidential but at home, he has got strikes coming out of his ears on the railways, he has a defiant union proposition. talk to me about i suppose the

changes in the labor market there in france, is it good to yourthese reforms, what is take on them? he has promised a lot, we are in the eye of the storm, aren't we? jacques: my french president said that macron is changing as much as any president has done on the labor market but it is not good enough. he is doing a lot. i do feel the railway strikes, the railway organization is the lost the work of old-fashioned socialism. course.it will stay the so far if you look at how things go in france, the street has not reacted in full force against bit. there are reforms that have been put into place. a frenchense, from perspective, it is positive but he needs to do more and he is

definitely going to wait out this strike. the railways need to change. if you look at the conditions they are. he willu seem to think stay the course but you do not think he will go far enough. what else should he be doing with the labor market in france? collectivee french segment government and what have you is 0% flexible. there are no [indiscernible] for flexible labor. i would create a hiring freeze and if there is a job you cannot do by the people that are in the is this, do it flexible over time, it increasing the collective course. unemployment benefits are still lavish. and retraining. in any market and the french on the one hand you have high unemployment and demand for jobs that cannot be filled.

retraining into technical jobs at the med and high-end level. in general, better and more cooperation between the pirate public sector on finding solutions for the labor market. in france, it is silent, you you have thect and private sector. that is a pity. we see some countries were this works better. manus: let's close out the conversation. you bought monster. the revenue has been some say a little bit light. can you update us on that and are you concerned in any way? this was -- i thought this was the revolutionary moment to get through the monster firewall to get my next job. jacques: that is a good question. -- a main reason for monster is creating a big profile. the labor market is shifting, we

talked about it already. -- notare looking looking for jobs, jobs are looking for people. we are collecting monster data with -- and collected a few thousand of our own consultants directly to monster. we call this where monster can help, that is on the way. the regular revenue, the traditional revenue is still negative. that is disappointing. beef thisesting to up, we are investing in the brands and in mobile. so that candidates can come quickly to us and we see some good traction in traffic but that does not translate into the revenue. work to do here. yous: just make sure protect the data well. that is a message from the market. ramstad --r at randstad.

team. ne to the users can interact with everything anna and i show on the tv. you can browse the charts, time series, make the charts work for you. anna: we will have that conversation about technology we have been promising. after which results came with a clear message to wall street, they are embarking on a new spending binge. we will discuss that next. and joining us to discuss the banks earnings. this is bloomberg. ♪

anna: this is "bloomberg daybreak: europe." up at the start of

the trading day. we were either side of the flatlined yesterday, technology was a weak spot. we will talk more about that in a minute. manus: the alphabet numbers came out. a couple of momentum things. the white house may be more lenient on rusal, giving palpable relief to the market. are seeing the bond yields, we have not made 3%. we do not need to worry about 3%. let's get a business flash. juliette saly. to the business flash and deutsche bank is said to be considering extensive cuts to its cash equities business in the u.s. according to people familiar. a decision could come as early as this week and maybe

communicated as part of a larger package of changes to its securities unit. the supervisory board will discuss the issue tomorrow ahead of first-quarter earnings on thursday. a spokeswoman declined to comment. santander's latin american activities and a pickup in its spanish business drove a jump in profit that beat estimates. spain's biggest bank posted net income of two point 5 billion euros slightly ahead of estimates. an increase of 10% from a year earlier as other latin american markets including mexico also contributed to higher earnings. profit rose 7% in mexico and brazil and 26% in spain. usal has jumped by the most ever in hong kong trade after the u.s. treasury softened its position on sanctions and discussed a path for lifting them. companies can keep trading with her but for five months and

five what dealings will [indiscernible] at the time. shares sank to a record low as traders thought it was days away fromhaving to shut plants jamaica to sweden. rolls-royce is in talks with aeroengine of-- china. two companies met earlier to discuss whether to cooperate on the turbine for the jet. representatives for aecc could not be reached for comment and roles was not immediately available for comment. that is your bloomberg business flash. manus: thank you. google's advertising business is booming. the parent company alphabet boosted quarter sales topping the estimates from the street,

rising at the fastest pace in four years. joining us now to talk about all things tech, alex webb. still with us in the studio. let me bring it to you in terms of the numbers, the strongest growth in almost four years. the one line which the market seems to have focused on really is this spending cap at $7.7 billion. are they spending it on good, worthy things, or are they amazonesque? year schedule is important here. at the time google was spending money on what they call the moonshot. of alphabet company in terms these different letters that they are in the group and they cut back on that sort of

spending ambitions and focused on the core business. the spending is increasing again but the spending is going into the core areas. things like data centers, the pixel phone, undersea cables, real core infrastructure that supports the way that google views its little piece of the internet. anna: in terms of what we look forward to, facebook. alex: it is about user engagement and user ads. a lot of expectation there will be a drop off in user numbers because of the cambridge analysts, we will now with that number really is. thatsition is not that big engagement is the other element. it may be they have not lost users. give us your thoughts on the concern around models in the tech sector that are funded by data.

>> short-term less worried area day goes back to the regulation on growth versus value pop -- proposition. if you look deeper on the growth side you will see that in terms are 4% ofhe max finds revenues. the giants can weather that hit. anna: longer-term it is about changes to the business model. gregory: we have to factor in what the u.s. is going to do from a legal perspective and trump is a wildcard. no one can forecast what he is going to do in the proof of that is comments on amazon. anna: amazon has been in the cross-hairs recently. thank you for joining us. theill talk more about banking sector across europe and into latin america. latin america boosting

earnings. we will talk to him about all things to do with the latin american politics story. this is bloomberg. ♪ ♪

manus: good morning from dubai. this is "bloomberg daybreak: europe." anna: these are today's top stories. manus: the french president fights europe's corner during his first state visit to washington. can he win donald trump's favor on trade and iran? anna: flirting with 3%. the 10 year treasury yields holding at its highest level in four years. can it break through the psychological barrier? manus: alphabet beats. boosting first-quarter sales by 24%. capital spending tripled. is the tech giant playing

catch-up? warm welcome to "bloomberg daybreak: europe." equity markets have a sense of relief. alphabet is not spending on a serial or things like flying to the moon. positive move in alphabet. chipmakers could be another story. we have had a raft of numbers, the all adding to the up momentum. santander beat on a net income level. we will get into those stories shortly. politics, the mayhem of politics isr rusal as capitol hill considering a request to lift the sanctions. that extend the time you can deal with rusal.

stocks are stronger this morning. anglo american may deliver their numbers. million --ying 304 to 400 million reduction. things ine are a few the mix. one thing that is going higher is that oil price. heading over $75 a barrel. we are focused on that 3% level in the bond markets, we had that conversation yesterday in the first hour. are we really there yet is one of the cries we hear from the markets in terms of waiting for it -- thereor is too much attention attached to one number? let's talk about aluminum. this was the big focus in the market.

we saw the price of aluminum more than 9% lower. that is the white house change of stance on resell -- rusal. you have on markets. he dismissed the idea that this would rock our world. where does the journey in bonds, they say 4% is a real number. we have not quite made it up to 3% levels this morning. we are seeing a bit of a turnaround. likewise in bunds and o.a.t.'s, $96 billion worth of paper coming to the u.s. market. we have not made it to 3%. the debate is about real return. is the bond market priced for a

growth rate in the u.s., approximately 5%. right.95%, is that the rise for a bond if you have a growth rate of 5%? we will hear a host of voices throughout the morning. juliette saly has the first word news. peoplee: and canada 10 have been killed and 15 injured when a van slammed into industry and in the north end of toronto. a man arrested after a dramatic standoff. mthorities have named alec anassian. the country's worst ever mass killings. trade officials from the u.s., canada, and mexico meet in an intensified push to reach a nafta agreement. mexico's economy minister said last week that after seven months of discussion, they are

in a concentrated phase of talks. updated as 17-year-old free trade agreement with the eu. the head of china's top investment firms said he is redirecting the company's financial firepower to europe and japan amid trade tensions with the u.s. making the comments in an exclusive interview with bloomberg. >> we will be more practically looking for those in europe and inare doing a lot in japan the last 10 or 12 years. capital can go wherever it is welcome. juliette: in washington, i divided senate. of mike pompeo

for secretary of state. senator rand paul reversed his earlier opposition after pressure from members of his party including donald trump. it paved the way for the cia director to gain approval from the full senate later this week, handing a victory to president trump. uk's upper house has voted against prime minister theresa may on a key piece of brexit legislation for the third time in a week very the house of thes back to amendment to european withdrawal bill that would ensure the oak of rules -- the bulk of roles are written into british law after brexit. the result complicate mays plans for britain's departure from the eu. for my u.s. president george h.w. bush has been hospitalized days after attending the funeral of his wife barbara. the 90 three rd was admitted to houston methodist hospital on

sunday morning after an infection spread to his blood. george h.w. bush and barbara bush were married for 73 years. that is the longest residential marriage in u.s. history. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. it can find more stories on the bloomberg at top . watch ineen on yield asia. we are seeing a generally positive session across the board, the nikkei closing higher by .9 of 1%. as the yen weakens against the dollar for a fifth session pushing toward that 109 handle. some upside coming through in the australian market losing higher by .7 of 1% but it has been all about china. large-cap stocks are rallying. seecsi 300 up by 1.8% as we a little bit of potential easing from policy makers in terms of the deleveraging campaign.

you have seen weakness coming through from the chipmakers and south korea and taiwan today. having a look at the stocks we have been watching, it has been space.bout the metals aluminum futures in shanghai plummeted following the downside you saw in the u.s. session. this is an indian aluminum company down by 8% but coal miners are looking good in china. this is we see the price of the spot price rise in the session. and the weakness in tech players are led by high next. in missed expectations with first quarter sales, racing the further expectations and concerns about the future of the chip industry. manus: thank you. juliette saly with the latest on the market. first-quarter profits earlier this morning over 2 billion u.s. , driven by the banks latin america activities. of's get straight to the cfo

santander. 10% up year on year. my question to you on the balance of his this and the off the -- business and the alpha of this bank, was a big political risk in terms of what could of drivingerms markets? >> we operate in 10 different countries and we have elections a must every year. we are used to dealing with these types of situations. in the case of mexico, it is despite all the talk, the reality is the peso has remained strong. are assuming a

relatively quiet election period relatively positive outcome of elections. we have organized meetings between the candidates and investors and investor community. in favor ofy are the market. we do not see any major surprise out of that. good morning to you. no major surprise out of mexico. what about brazil? latin america a part of your business area you are very accustomed to the politics in doingart of the world and business in amongst that politics. are you concerned about the election in brazil? the elections are in october. we do not know the candidates. it is too early to tell. in this period in latin america

when you have an election year, probably there will be a lot of are but these countries very robust institutionally. will not say it is indifferent who wins but the institutions are much more robust than they were in the past. we do not see any major hiccups after the election. it is one more election after another. poster childe the if i can put it to you that way for spain. spain is on fire, the recovery is entrenched, moody's said there is an outlook that is stable and enhanced economic resilience over an increasingly balanced growth profile. give us your take on spanish

consumers, lending, the robustness of for covering -- i've recovery. -- of recovery. up again thiss year. the beginning of the recovery, it was mostly based on the improvements in competitiveness, spain gained a lot of market share. recently growth has been fueled by domestic consumption. that in have not seen bank's balance sheet. lending is strong. compensationh to the portfolio but clear demand is very robust. we would expect to see positive bank lending to almost the end of this year or the beginning of next year. to lookat is the timing

out for. in terms of the spanish business, banco popular come a your acquisition has brought a number of legal headaches for the business. there are several litigation cases against you not only in spain but the new york court. is there any sense of regret, have you put aside money to cover that litigation? jose: absolutely yes. any regrets, none at all. we are accelerating and the legal acquisition. it will be concluded by september. before we thought we could do it by march. the integration is going as planned and we are accelerating so we can [indiscernible] around six months before we expected before. synergies will be coming as planned.

we have integrated the headquarters. great acquisition for santander. is performing respectively. one of the lines from another ceo, talking about the end of quantitative easing, we are getting ready for potentially a shift from the european central bank. he used the word trauma. he said there will be trauma in quantitative easing exit. how would you describe markets, how would you describe the preparedness for an and winding down of qe. what quantum would you put around the market dislocation when it comes? been veryink this has well [indiscernible]

isryone knows that this coming. we cannot discuss about the timing, we do not know if it is second quarter or earlier or later. qe in europe is coming. everyone knows and is very prepared for that. we are having to pay back the [indiscernible] to the ecb. banks have time to prepare for that. in our case, and the case of other financial institutions, you have seen that we have been proactive in issuing the market preparing for that. i do not see any major dislocation. we have years to prepare for that. we have known that this was coming for a long time. you areat is something preparing for, you are also preparing for brexit. can you update us on what impact you see on your u.k. business from brexit and what

preparedness you're are having to put in place? jose: the u.k. economy has proven to perform resiliently. in the first quarter, [indiscernible] which is the strongest growth we have seen in a few quarters. so clearly there is uncertainty about the process. the economy is performing relatively well. obviously, the rest of the u.k. are a bit more conservative in terms of marginal risks to our balance sheet. and the consumer lending area. in general, banking activities remain very active. an increase in competition which is fine -- a sign that the economy remains resilient. anna: resilience remains.

thank you for joining us. we appreciate your time. the cfo of santander. coming up on the program. we are breaking down sap earnings with the company's cfo. what us is coming up? up?s-- what else is coming manus: this is all about the finish in the paint job they tell me. this is bloomberg. ♪

manus: a live shot of downtown dubai. we have the flair up in tensions between saudi arabia and yemen, you have this along with inventories expected to drop. and you have breaking news

coming through. anna: a little bit of m&a for small precision motors used in home appliances and the automotive market and that is relevant because of the headline you see across the bottom of your screen. embraco.buying let's get other corporate news for you. bloomberg business flash with juliette saly. juliette: deutsche bank is considering extensive cuts to its cash equities business in the u.s. a decision could come as early as this week and maybe medicated as part of a larger package of changes to its securities unit. the supervisory board will discuss the issue tomorrow ahead of first-quarter earnings on thursday. a spokeswoman declined to comment.

has posted the strongest sales growth in almost four years indicating that servicess cap to its among scrutiny of digital ads. company expands at record levels nearly tripling capital expenditure to $7.7 billion. that is your bloomberg business flash. anna: thank you. sap increased its sales outlook for the year as it benefited from increased global spending. the software company generated sales that miss the average analyst estimates. let's talk about the business and where this confidence is coming from. we are joined by the ceo of sap. good to have you with us. as to upgradent your guidance today? thanks a lot for having

me on the show. we had a terrific start to the year, q1 was strong especially in our cloud business where we grew 31% from a total revenue perspective, growing at 9% of constant currencies and we expanded the bottom line in double digits, also the operating margin by 110 basis points. that gave us the confidence to not only increase our annual , but also reflect the ongoing strengthen our operational momentum especially when it comes to operating profit by increasing the lower end of our annual outlook beyond the contribution and we feel strong about the market share gains that we are having and the momentum in the business. if you take our cloud business and translate it into u.s.

dollar terms we have been growing in q1 by 37%, and that than virtuallyn all of our u.s. based competitors have seen. we are definitely on a roll. manus: the cloud is incredibly and -- important, the world is racing to grab more market share. you have done one very big deal with callidus software. can you grow to the scale you need an cloud, do you need to do a deal, do you need to make it acquisition, is that the step change or is it organic, what is the thinking on the board? we believe that we have a holistic portfolio in the cloud that allows us and our customers and with callidus, w

e completed have the lead to cash circle. our story will be or, that does not rule out smaller acquisitions but when we look at the 2020 targets they call for a 3% [indiscernible] an cloud revenue growth. that is consistent with the organic growth rate we have been able to show in the last three years. we are equally confident we will continue on that march for the next two years without the need to result -- resort to any major acquisitions. has global spending reason? will you continue? luka: when you think about the fact that companies across totually every industry need digitize their operations, every company needs to be a digital company today whether it is in

manufacturing utilities, and retail and not to start talking about financial services, that inl spur tremendous demand i.t. spending for the next coming years but it will be in smart categories. will be and hardware outpaced substantially by spending and software and in cloud in particular, those of the categories we are fully concentrating on unlike some of our competitors and we are participating in an accelerated ine from this increase spending we see especially at the software layer where true value for our clients is generated. that has translated into the superior growth rates at you have seen from sap. not only an q1 but i would argue for the past two years. manus: thank you very much. we did not get to ask you if you were able or bear on america. in five seconds. bull.i am a

tremendous growth especially in the core. manus: thank you for being with us. sap.is the cfo of we will do it all tomorrow morning, more ceos to come on bloomberg right now. welcome to the xfinity store.

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to bloomberg markets. i am guy johnson here in london. matt miller is in berlin. ast: stocks in asia higher the dollar trading is higher since january. the 10 year yield on the brink of 3%, the cash trade is less than 30 minutes away. ♪ guy:he