>> i am anna edwards. this is bloomberg daybreak: europe. apple announces a $100 billion andob -- buyback program boost dividends after shares of top estimates. the decision day. -- fed decision day. how much could america boost its borrowing? brexit brainstorm. a meeting to discuss the customs union. talks resume in brussels. ♪

>> good morning. welcome to "bloomberg daybreak: europe." welcome to our audience across canada. i know with his early. -- it is early. a bit of breaking news in the drug sector and oil sector. we will keep a close eye in the european session. 1% on the by 4/10 of msci, asia pacific right now. a little lackluster. drifting on the asian session. below 2.97% right now -- at 2.97% right now on the 10

year yield. pce looking near the target. what will they say about inflation in the united states? dollar index down by 1/10 of a percent this morning. themes we were focusing on. we had a lot of corporate reporting yesterday. apple in the headlines. a different cash story from tesla. we will talk about that later. pretty flat on s&p futures. dow jones futures down by 2/10 of a percent and nasdaq futures up. a little bit of an apple effect. there could be a subpoena for president trump because of the ongoing special counsel investigation, if you refuses to conduct or be part of a voluntary interview.

-- he refuses to conduct or be part of a voluntary interview. we will hear from secretary ross. he was at the milken institute. we have a great interview coming from their -- from there. we'll get this throughts on metals, tariffs, trade imbalance. headmanned steve mnuchin -- he and steve mnuchin are going to china to talk about trade. >> prosecutors working for robert mueller have made clear to president trump's legal team he would come -- compel the president to testify before a grand jury if he refuses to participate in a voluntary interview. he has legal standing to subpoena a sitting president, even though such a move has never been tested.

hastrump administration laid out expectations for a swift breakthrough on trade issues with china. robert lighthizer said at this point, it will be a big challenge to resolve differences. he will be joined by treasury secretary mnuchin, larry kudlow and peter navarro, and wilbur ross. free trade -- their behavior is highly protectionist, much more than the united states. this weekend daily currency was weakened by much more than u.s. analysts expected. the people's bank of china cut weaker thane level, the average estimate in a bloomberg survey of 21 traders

and analysts. the turkish lira has weakened after a credit rating was lowered by s&p global, starting a detroit -- citing a outlook.ting inflation s&p reduced its foreign currency ranking, putting it on par with brazil in vietnam, below where it is currently related -- ranked by moody's and fitch. jumping in hong kong up to the u.s. treasury extended, the -- and allows shareholders to divest from c ompany.the treasury target him in a sanctions package presidentey allies of peyton. utin.

practical measures to resolve the irish border question could take years. wants a veryaid he substantial agreement on future relations with the european union in place by october. he was speaking before ministers to discuss how they see britain's trading relationship with the bloc after brexit. global news, 24 hours a day, on on twitter,ic toc powered by journalists and analysts in more than 120 countries. checking on the market action in asia as we resume trade, the nikkei is down by a third of 1%. toyota weighing on the market. able to bit of weakness coming through in hong kong and china

li little bit -- a little bit of weakness coming through hong kong and china. it is the time to add to positions in asia suppliers. apple came through with those numbers in taipei, up by about 6%. is falling. the ceo of xerox is resigning. will that $6.1 billion deal with ahead?a lot of positivity coming through in these casino players. revenue up in the mass killing market. better than even the most bullish analyst forecast. >> juliette, thank you. reserve is notl expected to hike rates today, despite a strong economy and inflation hitting targets.

there will be no press conference. mckee has the story. --hel: michael: the fed is deciding whether to hand about future modes. -- moves. rate increases continue to run below their 2% target. the index level was reached in march. policymakers say they have met their mandates. two mores at least rate increases by the end of 2018. the question is whether there will be a third, with unemployment so low and commodity prices rising. tuesday's drop in the ism manufacturing index is blamed on

a -- an economy to strong -- that is too strong. higher commodity prices are generally viewed as transitory. if they don't move now because there is no press conference at this meeting, june is the next logical time. that means any hint about the future may be looked as more of a fourth rate move this year. expectations have been rising, which has pulled up the market odds of that happening. the market reaction to the igh,es high, -- fed is h even with no move this month. >> michael mckee, there. we have a reporter in london on set. toid, perfect on fed day talk through some of this, even through the state of inflation in the united states. no change in interest rate is expected.

trajectory should be watched. david: closely. fed could which the open their press statement would be, i told you so. >> [laughter] wasd: inflation year, and we last talked about what the weakness was singling. they said, this would be transitory. alive and labor markets and tightening inflation will piocck up. >> we might get a little postscript from janet yellen? >> i told you so. >> what about the inflation story? to getong does it have to change the conversation in the united states? dial, between

three and four or beyond? to payroll brings us on friday. to really move the dial, we need to see an acceleration in wage pressures, further declines in unemployment. we startoyment drops, getting confirmation we are getting broad-based wage pressure developing in the united states economy as it becomes full capacity for unemployment. actually, we need to start putting our foot on the brake harder. unemployment is very much close to their target. the fed funds rate is negative in real terms, still.

we actually need to pick this up -- i think they might signal that in june. and how close to the speed limit the u.s. economy is. lengthening for u.s. factories, waiting an average of 67 days. this goes to the tuesday ism, weakle -- a little bit because the economy is running too strong. there is a shortage of materials and labor. is this an early side of something that results in those higher wages? there could be very tight labor markets. that are emerging. seeing in terms of the ism, singling expectations that are building.

i think the u.s. economy is very we still have the stimulus from the tax cuts and additional spending. in overld really kick the course of this year. extent, theo some market is pricing the skew for the inflation risk. there are still other things weighing on inflation. we not really getting a reflationary impulse. not from europe. there is a good argument for building domestic inflation. >> we will hear later about the treasury issuance plans, how much money they want to borrow on the market next quarter.

we heard from steve mnuchin earlier this week. canaid the debt market handle it. how confident are you? he is right -- it is getting bigger. about $1 trillion bigger every year for the next several years based on current policies. if you look at the imf's latest projections, going out five years, the u.s. and italy will have the same levels of government debt to gdp. that is a potential wake-up call for policymakers in washington. >> and controversial? will it get us back over 3% on what gets us back 3% over the yield? if we start getting an

acceleration of wage pressures data, and a fed starting signal that they are more comfortable, we could see a break in terms of the treasury yields beyond 3%. the market has priced the fed for this year. there needs to be a shift in fed guidance for a more meaningful pick up in the rate of inflation. >> thank you, david riley. he stays with us here on the program in london. have a special report as the fed announces its latest policy decision. se all of that at 7 p.m. london timee. if you have to switch off bloomberg television, find bloomberg radio on your mobile area. or in the london dave davis warns fixing the

irish border could take years. theresa may discusses brexit. later, the lundin petroleum ceo joins us for the first interview of the day after 7 a.m.. this is bloomberg. ♪ >> this is "bloomberg daybreak:

europe." full complement of markets in the asian session today. the msci asia-pacific down by 4/10 of 1%. brexit negotiators resume talks in brussels. the customs union gets a lot of talk this week. minister,al prime arriving in canada to me justin trudeau.

-- meet justin trudeau. announcementolicy with no expectation about rate hike. a have to sayked about the gathering momentum behind inflation in the -- we will look at what they have to say about gathering momentum behind inflation in the u.s. >> apple shares jumped after six quarter-- a second revenue rose on the year. the company sold more than 52 million iphones and announced a 100 million dollars stock repurchase plan. the tech giant gave a bullish revenue forecast. >> it is growing at a double-digit number, year-over-year. with that kind of change and the services we have now and others i think thisg on,

is a huge opportunity. out a newk is rolling feature that will help connect those who are not friends. mark zuckerberg wants to help build long-term relationships delvingjust hookups by into the dataing -- delving into dating platforms. stanchart's turnaround comes as a welcome relief to the ceo who struggled to grow the bank in his three years in charge. these recommendations are part of an agreement with investors who objected -- resignations are part of an agreement with investors who objected to the

company takeover by fujifilm. xerox will have a new chief executive. a disappointing message from snapchat. a recent shakeup designed to revive the app have not gone well. inr growth slowed even more the first quarter amid public backlash. revenue gains will be even smaller in this upcoming quarter. the ceo says the changes will work eventually. that is your bloomberg business flash. juliette their unmatched diverse range of stories. there on that diverse range of stories. the brexit war cabinet is due to meet to discuss the future of the u.k. trading relationship with the european union. are meetingiators

in brussels. a want to talk about on that front this weekend. -- a lot to talk about on that front this weekend. let's take these issues one at a time. there are complex suggestions. no matter what complex solutions if the. comes up with, european union doesn't like them, that is the end of that? what has been proposed is quite unique and complex. game is part of the approach of the u.k. of trying to show decisions, this custom arrangement where the u.k. is operating the customs border for , with importsnion into the united kingdom.

i think what we are heading for this isuation where sent out, but in practice with that means is the u.k. will effectively be part of a customs union with the european union. it will take a lot of time for the european union to secure bilateral trade deals. is the european union complete the projects that approach. -- completely reject that approach. they could allow the compromise to continue and drag along. challenging this within parliament brings pressure on theresa may. could we be heading for some political bust up over this?

is this something that still moves the pound? david: it does move sterling, but the most recent moves have been by expectations around the bank of england. when i look at sterling and we have seen it move over 10 days the kind of move we expect to see with an emerging market currency. 136 right now? >> more strategists need to get out of the leafy suburbs of -- high streets are getting boarded up in the united kingdom. it is very much challenged in terms of low productivity, the relationship with the european aion, in terms of brexit and change in government, a quite

radical government, with the bank of england. they are marching us up the hill and back down. they changed their expectations for 2018 and 2019. the bank of england is hiking the euro versus the pound. we have not seen sterling recover very much. what are your expectations from the bank of england? you have always been skeptical about a rate hike. : i did not see a wage price spiral developing within the united kingdom. brexit is a sort of negative supply potential. u.k. consumption has pretty much maxed out its credit card. it is running on fumes. i don't expect the bank to be raising rates during the course of this year.

>> david stays with us in london. xt, revenue for apple grows the most since 2015. this is bloomberg. ♪ >> good morning.

this is "bloomberg daybreak: europe." , ratesare in japan pretty flat on the dollar against the year. numbers are coming through from lundin petroleum. well. as ahead of the 400 -- 456 million dollars, ahead of the $439 million that was estimated.

there is solid on the top line. lots to talk about with the ceo of lundin petroleum. they will be speaking with him shortly. i want to talk about the oil price. we will get behind his thinking on the revenue number, and the cost front. lots to talk about. let's get up to date on the broader market. good morning. >> we have a number of markets reopening after the holiday, in china, hong kong, south korea. today is the only day this week on the equity markets are open in asia. -- all the equity markets are open in asia. this index is lower slightly on the session. the s&p 500 closed slightly higher yesterday. we have a little pressure today.

on the charts show a tale of towng averages, a tale of moving averages -- two moving averages. the s&p 500 trapped in the past six sessions. the dollar went above 92, holding above that in the session. there is a key technical level going above the 200 day moving average. it looks like be turned has done that for the first time since may 2017 --the chart has done that for the first time since may 2017. we saw this drop below 120 for the first time since january. it also dropped below the 200 day moving average for the first time since the first round of the french presidential election in april 2017. the options market can tell us what is going on below the surface. when we look at when you're risk

risksals, -- one year reversals, they cost below the one day moving average. -- crossed below the one day moving average. options traders are not yet bearish on euro. this is big on the dollar on the chart i showed earlier. at what point did that dollar strength become a pain trade for the market? this is largely short of the dollar, and the euro as well. >> anna, talking about currencies. breaking news from european corporate. this is the danish drugmaker, the world's largest maker of drugs for the diabetes market. -- they have been hunting for new drugs to revive its order business. first quarter, 12.5 billion krone,gs and krone, -- in another solid set of earnings.

ahead of estimates. biscuits guides for -- this gives guides for full year sales. intense competition for farmer's unit and the diabetes business. we are watching the next generation of diabetes treatments. were outbid when trying to rival.buy a we will keep an eye or nordisk. corporate news we've already had. apple will return more capital to shareholders as it moves it share buyback plan by $100 million. the world's most viable company grew the most since two -- 2015, calming concerns about iphone demand.

witnesses alex webb. webb.h us is alex david riley is with us. alex, where has all this cash come from? alex: iphone is the biggest revenue driver, it's not in notenue, in percentage -- if in revenue, in percentage. --are being funded with get returns are being funded with debt. money is being repacked traded. -- money is being repacked traded. they are looking to cash neutral position -- back a cash neutral position. >> i have a chart that shows the services revenue story. is this part of the reason?

>> one of the reasons. analysts have reduced their forecast because they saw what is coming out of the supply chain. they are squeezing more money out of every iphone. they are charging more for each iphone. expectationsevenue were less than expected, but they are getting more in-service revenue. after christmas is when everyone goes and buys an iphone and they start downloading apps. we saw apple participating last year. there were investment-grade bonds. their expectations among analysts that apple will not be raising quite so much this year -- there are expectations among analysts apple will not be raising quite so much this year. credit is relative to

european credit. the asian bid has fallen away, very important because of hedging costs. we make it a fair amount of supply. -- may get a fair amount of supply. the market has been anticipating decline because of repacked creation -- r epatriation. issuance is still running very mna. partly because of well,he tax reform as these cash balances aren't held in cash only, but in things like commercial paper as well. apple has been selling that paper, one of the reasons why we

have these increasing rates. we have been discussing the 2.5%, eurosects of cash rates is the single biggest change we have seen so far this year in terms of global markets. now.is an asset, talk aboutazing we the company the size of apple in what it chooses to do with its cash can have such an impact on the whole credit market. let's talk about a different cash story, tesla, the opposite cash flow problem. they are going through a lot of it and i have a lovely chart that indicates their cash flow in recent years. x: i would recommend the story are colleagues wrote the other day. tesla -- a lot of investors and

analysts are expecting tesla is going to run out of money. valuation, but the expectation is it turns to equity rather than debt to pump up its confidence. >> this has been an interesting period for tesla. they have fallen short on production targets. a person was killed in a crash on assisted driving mode. nothing is ever particularly normal with tesla. that is why you invest. it is a curiosity in many ways. the question is going to be whether they managed to rip a up productionramp significantly. facebook, the data gap --

roiling competitor stocks in the united states. >> it is looking for new ways to generate revenue beyond customer data. that is an interesting narrative. >> tesla is not planning a dating app. grand ambitions. alex, thank you. us.d riley, stays with interact users can with the charts we are showing during the program. go to gtb go on your bloomberg -- tv go on your bloomberg. restaurants for future reference. -- restaurants for future reference. ts for futurer reference.

issued a trump temporary waiver on the aluminum and steel tariffs later this week. we asked why the white house is not yet reached an agreement with the european union. ross: we are having productive discussions and we can hope we can reach an .greeable resolution for national security. what will you be doing over the course of the next month to reach an agreement? talks will continue. >> what do europeans need to deal -- need to do?

disease to beat negotiated in the conference room, not in the press room -- this needs to be negotiated in the conference room, not in the press room. >> what about wto rules, lower tariffs on imported u.s. cars -- if the e.u. were to apply, countries like china could be a big beneficiary. how do you respond? >> there are many technicalities to trade with asia. it is an oversimplification. way they could give us an arrangement they don't give to china. they have a free-trade agreement with mexico.

cars go into europe duty-free. it can be done. europeans may be offended because they are being asked to negotiate in the first place. and the trump administration is annoyed, because president trump go directly to individual countries. -- can't go directly to individual countries. how do you go about finding fun between the united states and europe -- finding common ground between the united states and europe? ross: there is an official trade negotiator for all of these countries. countries --ual wilbur was secretary ross at the milken institute global conference.

a fascinating conversation fu.een him and scarlet if you have to turn off bloomberg television, bloomberg radio can be live on your mobile device or on digital radio in the london area. we are about to discuss the fed rate decision and investing in the united states. president trump puts pressure on the middle east economy by threatening to walk away from the iran nuclear deal. this is bloomberg. ♪ >> this is "bloomberg daybreak:

europe." over in the united states and in new york, a fairly flat open suggested. could be a better

performance because of apple earnings. and the possibility of a subpoena against president trump in relation to the ongoing special counsel investigation. let's get to the bloomberg business flash. e: apple shares jumped in extended trading after second-quarter revenue rose 16% on the gear to more than $61 billion. the company sold more than 52 million iphones and announced a new 100 dollars stock repurchase plan. the tech giant highlighted a surging services business. facebook is rolling out a new dating feature that will help connect people who were not facebook friends. news sent shares plunging in tender and okcupid and match group. mark zuckerberg says he wants to help build long-term relationships and not just hookups. >> it is going to be totally optional. want, you can make a

dating profile. a lot of you were going to have questions. we designed this with privacy and safety in mind. friends are not going to see your profile. this is only going to be with people who are not your friends. juliette: stan chart has posted its highest quarterly revenue, $3.9 billion in the first quarter, nearly matching analyst estimates. this comes as welcome relief for the ceo, who has struggled to go -- grow the bank in his three years in charge. a disappointing message from snapchat. the recent shakeup designed to revive the fortunes of the app has not gone well. user growth and sales slowed even more in the first quarter amid a public backlash. revenue gains in the current quarter will be even smaller. shares were sent plunging.

the ceo says the changes will work eventually. that is your bloomberg business flash. >> thank you. tensions in the middle east are rising. president trump threatens to plot of the iran accord -- pull out of the iran accord. we spoke about the difficulties of investing in the region. >> these messages are all difficult. you have a religious rift, sunnis and shias and jews, a cessational rift, the of the oil appetite. the messages are appropriated at different times. was regional conflict and it should be left to the regions to resolve. they know how to resolve them. i am a believer that with american support, regional issue

will drift away. with the leadership of these new will arab leaders, they find an answer to the 200 million euros spread -- youth spread from egypt to iran, under 25, who don't have jobs. you need to give them hope. able tos it you are maintain such good relations with people on both sides of the saudi's on the one side and the qataris on the other? it is because i don't have much gray martyr, only artificial intelligence -- gray matter, only artificial intelligence. i have great respect for all of them. in thebeen a trader desert with all of them. from the same family. we have to allow them to resolve this in their own way. >> are used to working with the qataris? >> i work with all of them,

saudi's, qataris, iraqis. they are all friends. >> you have done work with saudi arabia investing. where specifically 10: the north north star colony healthy -- help the pif even more? the saudi arabian kingdom has been revolutionized. it does not need money, it needs expertise. he is moving that culture slowly and elegantly further to the west.

city. he needs us to weigh in by investing their as much as pif -- investing there as much as pif is in vesting -- investing in major companies everywhere. hospitality, entertainment, resorts, things inconceivable. >> that was the colony north star executive chairman talking about investments in the middle east. us.d riley i9s still with clearly the way the iran tensions have played out in market so far has been around the oil price. do you anticipate, as long as it remains tense, the relationship between the united states, that these levels will be maintained? >> there will be a geopolitical premium building into some enterprises. way think it which one there could be a hedging about geopolitical risk -- in which

one way there could be a hedging about geopolitical risk is exposure to credit. there has been a huge amount of issuance that has come out of this region. you do need to think carefully about how this will potentially , somewhere like lebanon iran, israel,ween saudi, qatar. to oil isme exposure not a bad thing to do. it is interesting to see whether the market is willing to take a lot more of geopolitical tensions on the right. you have this delegation from the u.s. going to china to talk trade. bob white house are is one of hauser ambassador like

-- lighthauser is one of those. what wilburp as to ross had to say country deficits. -- as to what he had to say on trade deficits. traden you look at , you can seeecades this number going up to unfathomable numbers. kaiser was robert like -- lighthizer speaking at the u.s. business conference in washington. if this is the big focus for this u.s. administration, what will success look like in the strait negotiations? they have to focus on getting down these trade deficit somehow.

somehow.ts david: in the 80's, there was focus on getting japan to reduce its trade surplus with the u.s.. china and the united states are geopolitical and strategic rivals in a way that the united states and japan were not. will have a hard time with the u.s. trying to cut this deficit by $100 billion. it matters a lot for the global economy and emerging markets. germany has been given a hard time. they are running trade deficits with the u.s. as well. >> david, thank you for joining us. david riley, the head of credit strategy at moon bay asset

management. continuing the conversation at 7:30 a.m. u.k. time. up next, earnings and the oil price. this is bloomberg. ♪

♪ anna: good morning from bloomberg's european headquarters in london. i am edwards. this is "bloomberg markets: the european open -- bloomberg daybreak: europe. apple announces a $100 million buyback program and boosts its dividend after sales top estimates. investors take another bite as shares jump after hours. it is fed decision day as the u.s. treasury and announces its quarterly -- refunding plans. how much could america boost borrowing? 's inner circle meets today to discuss the customs union. the irish border looms large as talks continue in brussels.

good morning, this is bloomberg daybreak: europe carried welcome to the program this wednesday. let's look at how the futures suggest we open. an hour to go till the start of cash trading, but things look flat to positive. the ftse 100 looks to add another .4% at the start of trade. there could be a currency impact there. we have seen the pound under pressure because of a reassessment of where the bank of england heads and the customs union. dax and cac futures up, but not by much. .2% at this hour. we look flat to negative on most of the u.s. futures because of concerns around president trump and whether he would be inpoenaed to testify connection with the special

investigation by robert mueller. refuses to be voluntarily interviewed. the nasdaq futures point higher as a result of the apple numbers. let's put up the risk radar and show where we are on the markets more generally and in the asia session, down .4%, drifting lower. weis the only day this week have a full complement of asian markets in the mix. the u.s. 10 year yield on fed day, we will hear from the federal reserve, 2.9% is the yield. we are edging higher. what will we hear from the fed around the pce and the fact that we are not far from the target. is alsog dollar index edging down a little this morning. tohade weaker as we wait hear from the federal reserve later. we have had a host of corporate earnings in the united states. reporting example, numbers. speaking of earnings, we had numbers through from moon to -- the ceo will be

speaking to us after the company beat first-quarter earnings. we will get his take on where here.l market heads from here is a first word update with juliette saly. the u.s.,in prosecutors working for robert mueller have made clear to donald trump's legal team that he would consider a subpoena compelling the president to testify before a grand jury if he refuses to participate in a voluntary interview. according to two officials, robert mueller believes he has -- standing to subpoena a president, even though it hasn't been tested. the trump administration is playing down expectations for a quick dash's with breakthrough on trading with china. senior officials prepare to bit -- visit beijing this week. that as robert light hauser says it is a big challenge to resolve differences.

he will be joined on the visit by steven mnuchin, white house advisers and commerce secretary wilbur ross. china, as you probably know, talks a lot about free trade but isfact, their behavior highly protectionist, much more protectionist than the u.s.. itsette: china has weakened current daily fixed -- more than expected after high-ranking u.s. officials arrive in the country to discuss trade issues. the pboc cut the reference level to 6.370 per dollar, weaker than 6.3610rage estimate of in a bloomberg survey of 21 analyst. weakenedsh lira has after the nation's credit ranking was lowered by s&p global citing a deteriorating inflation outlook and the long-term depreciation in volatility of the nation's exchange rate. s&p reduced its rating to bb minus be, putting it on par with

brazil and vietnam. rusal has jumped in hong kong after the u.s. treasury extended until june the deadline for them to drop related entities. it is authorizing transactions necessary for shareholders with 50% or more to the vest from rusal and deripaska fits that description. trading sanctions hit him and titans. brexit secretary has warned practical measures to resolve the irish border question could take years, but taking questions from the house of lords, david davis said he wants a "substantial agreement eufuture relations with the by october." he spoke a day before ministers are due to speak on how they see the relationship with the block after brexit and negotiators

resume talks in brussels. global news 24 hours a day, on air and tic toc on twitter, powered by more than 2700 journalists and analysts in more .han 120 countries you can find more stories on the bloomberg at top . of the weekding day this week where we are seeing every asian market open. let's look at japan, closing out the session by 2 -- .2%. we have seen the yen gain against the dollar. nissan and toyota weighing on the japanese session after we saw u.s. car sales slip. in late day trade, we had australia close higher by around .6%. looking closer at the apple suppliers. let's look at the stocks in the region after apple came through with numbers overnight in the u.s.. lg up 5% in taipei. number of saying now is the time to add to your poor folio in the region.

fujifilm under pressure after we saw the board and chairman start to resign. six board members on the back of activist intervention from carl icahn. samsung biologics the worst performer when you look at member ranked returns. falling the most since its ipo in 2016 on the back of an accounting scandal happening in south korea. that is adding to the corporate woes across south korea and japan. juliette saly on the market in singapore. let's talk about corporate earnings in europe. specifically, around the oil sector. in, beatingted analyst estimates. joining us, the ceo of lundin petroleum. rate have you on the program. toplinelk about the

performance. revenue coming in well above the estimate. is there something that analysts missed? what explains the fact that the strong has come in so versus what was expected? alexandre: the strong number is on the back of strong production from key assets and we have seen excellent up signs and have reached production levels in the upper range of the guidance and that has led our numbers to be very strong. with low trading costs. we have reached operating costs below four dollars a barrel -- $40 a barrel. a record low. anna: record low operating costs. the you see that continue -- do you see that continuing for the rest of the year? alexandre: not just for the year, but a long time because we are currently working very hard to put on stream one of the largest projects in the world

offshore. it is due to come on stream by the end of 2019. by that time, we will continue to operate -- generate low operating costs for 10 years, so this number is here to stay and this is the result of very -- which will be the majority of our assets at lundin petroleum. anna: going into your thinking our assumptions around the oil price. $67.59 is where we trade. what are your expectations around the oil price? what goes into the models that lundin? alexandre: we aren't surprised to see a strengthening in price. inventories reaching the five-year average and are seeing strong demand. opec,as led -- and the

that despite the strong growth in the u.s. oil production. , in my view, is there to stay at this level. i also think in the future we will see further strengthening as a result of the low investment we have seen in the industry and that eventually will be seeing. that will probably trigger a strengthening of the oil price. anna: do you think there is an upside rather than down risk -- downside risk at the moment? alexandre: i am relatively optimistic and i see more upside than downside. especially in the second half of 2018 and 2019. anna: when we talked about the cost base, you gave us your strength in that area and the way you have managed to drive down those costs. when you look at the industry, you are not concerned that we return to cost spirals we saw in the decade running up to 2014? you think the industry will avoid that kind of scott -- cost liar -- spiral environment?

alexandre: i think there is a recovery in the market and the remains undercost control and it is something we have to be careful of. but it is a good example, a very large project and since we submitted the plan to develop it today, we saved almost 50% in cost. almost $4 billion in savings. we have to keep an eye on the market and make sure we don't see again what we saw five years ago where there was strong inflation, but at this moment, i would say there is still large supply and i don't see yet any sign of inflation. it is something we have to keep an eye on. anna: you don't see it yet, though. of cash tourn shareholders, you announced your first cash dividend earlier this year.

price, you said there is upside risk. your cost base seems to be under control. is there a possibility of returning more cash than planned? definitely. tomorrow, we have our general assembly and will be proposing $165 million of return cash to shareholders. we already stated that next year, we want to double this amount to $350 million as a minimum. we come on stream, we will have the ability to increase that number. the intention is to definitely increase the dividend and redistribute some of the cash to shareholders. that has always been the plan, as -- thought to do this came on stream. we are able to do this before the onset of first oil, which is good news. anna: you talked about doing deals with the oil price looking stronger. is that pushing up the price of potential targets? what is the window for doing m&a

in the sector? alexandre: it is more difficult. assets,arly very good people have i expectations. the strengthening of the oil price has made deals more difficult, but you have to find a win-win situation and deals are possible. i expect to see some activity on that level, but you are right. with the oil price strengthening, the expectation will be higher. anna: alex, thank you for your time this morning. alexandre schneiter, ceo of lundin petroleum. revenues beat estimates. up on daybreak, europe. will president trump pull out of that iran accord? we will discuss what the uncertainty means for investors and hear from an interview with the middle east director. stick with bloomberg, we are joined at 10:00 a.m. u.k. time.

perhaps oil prices

morning, bloomberg daybreak: europe. 7:17 in london. 42 minutes from the start of equity trading this wednesday morning. but we arels, waiting to hear from the federal reserve later on today. it looks like the futures are treading water on both sides of the atlantic. euro stoxx 50 stocks unchanged. futures pretty flat. the nasdaq stands out, futures expected to go higher on the apple story. here is a first word update with juliette saly.

manus: apple shares jumped in extended trading after second-quarter revenue rose on the year to more than $61 billion. the company sold more than 52 million iphones and announced billion dollars stock repurchase plan. a bullish revenue forecast and a surging services business. out a news rolling dating feature that will help connect people who are not facebook friends. the news sent shares play -- plunging in tender and match group. zuckerberg wants to help build real long-term relationships and not just hookups. >> it is in the facebook app, but totally optional. can make a, you dating profile. i know a lot of you are going to have questions about this so i want to be clear we have designed this with privacy and safety from the beginning. here fend -- friends will not see your profile. you will only be suggested

people who are not your friends who have opted into dating. chartered hasdard posted its highest quarterly revenue under bill winters, operating income rose 7% to $3.9 billion in the first quarter, nearly matching analyst estimates. led by transaction banking and mortgages. that will come as a relief to to row, who struggled the bank in his three years in charge. and six board members are resigning in a win for activist shareholders. the resignations are part of an agreement with investors carl icahn who objected to the company's plan to take over by fujifilm. the ceo of i come into prices is expected to become chairman, while john the sentence is expected to be the new chief executive. that is your bloomberg first word news. anna: i am slightly reeling from

the facebook story, no matter how many times i hear it. donald trump continues to weigh the u.s. stance on the iran nuclear accord. speculation that he will pull thehas added pressure on rainy economy, sending the reality to a record low. we are joined with more from dubai. is the middle east coping with this uncertainty? : there is a lot of focus on the implications for the commodity markets. if the sanctions snap back into place. if iranian exports, they are saying, do come to a halt, no one will ask -- necessarily fill the void, including opec and allies. in terms of the other part of the conversation around financial stability within iran, the imf made a case that they either shrink their budget

deficit and accelerate reforms to create more of a buffer for potential uncertainty down the road. here is my conversation with the central asia for the imf. states leavingd the deal will include uncertainty. first of all, the exchange rate in a positive direction will allow the market to be more predictable and include competitiveness. the official -- fiscal situation gradually, reforming the banking system is the right set of measures that will allow the iranian economy to adjust, as well as stabilize. yousef: in terms of the oil exporters in this part of the world, the rebound in oil price

continues. in the past, the lower price has been incentive to reform. with a higher oil price, what else needs to be done in terms of change? background, what we seeing is a rebound in the economy in the oil exporters. the economy bottomed out in 2017. we expect growth to be at 2.8% this year. recovery in oil exporting economy is not enough for them to address the long structural issues, namely creating jobs and allowing the private sector to the leading role in growing the economy. pursuing on what they have already started in terms of fiscal adjustment, by having on a country by country basis, the right pace of adjustment.

the saudi, by balancing the budget by 2023 is the right objective. this is on one hand. continue on the structural reforms and improving the business environment, including ,nvestment in technology reforming education, to allow the private sector to lead the growth. becauselet me jump in, the private sector has been slow to respond. is there anything you would say they could do better to give this some life? thed: first of all, recovery was driven by the nonoil sector over the last few years. what i think is important going forward is to go deeper in terms of reforms. in order to allow small and medium-sized enterprises to create growth and jobs. this is where i think it is that wet not to forget

are still in the middle of the broad reform agenda and not because of oil price increasing over the last few months. policies need to be the rate of change. oil exported countries as well as oil importing countries. this recovery we are seeing is an opportunity because it will help them accelerate reforms and not forget there are still risks. there are some clouds in the blue sky. interest rates will go up, geopolitical tensions could be additional uncertainty and trade tensions could reach the region. it is not the time to relax and complacency should not be in the -- on the radar. anna: yousef, interesting conversation. away from the geopolitical issues in the region, domestically in saudi arabia, we

understand there is an issue with paying workers on time. this matters because of the size of the public sector in this country. yousef: absolutely. we hear that in some cases, contractors are waiting months to get paid. when the oil price plunged in 2014, money was sucked out of the system and saudi arabia and the government slow down in many cases payment. now you have a rebound in oil prices, a return on the fiscal front this year. the government decided to spend more, but that is not trickling through to a lot of contractors. perhaps the new projects are being prioritized. ofunderstand the backlog payments is not as severe as in 2014. context, the nonoil private sector, the engine of job creation, shrank in the first three months of 2016 and growth was 1% in six of the following seven quarters.

we have yet to get feedback from the ministry on this story but ultimately, it is weighing on sentiment. anday be threatening economic recovery in saudi arabia. anna: bloomberg's yousef gamal el-din joining us with the politics and domestic in the middle east. in europe, we are 30 three minutes away from the start of the european equity trading day. let's talk about stocks we have firmly inside. one has announced their first-quarter numbers. they said they will return 500 million pounds to shareholders. dialog semiconductor, the apple halo effect if you will. we talked about this in the asian section. stocks that were positively impacted by apple and the iphone x. watch out for dialogue. they could go stronger. also in focus, increasing guidance.

keep an eye on its key diabetes drug. that is it for "bloomberg daybreak: europe." this is bloomberg. ♪

♪ guy: welcome, this is "bloomberg markets: the european open." we are live from our european headquarters in london. i am guy johnson. matt: i am matt miller. asian stocks drifting lower and european looking flat. the start of cash is 30 minutes away. guy: apple shares surging overnight after the world's most valuable company unveiled a $100 billion share buyback.